Re Unity Mining Limited (No 2)

Unity Mining Limited, in the context of a proposed amendment to a scheme of arrangement, sought permission from the court to further despatch materials related to this amendment. The scheme in question involved the purchase by an offeror of all shares in the target company. The target company had agreed to amend the scheme to allow for a higher purchase price, contingent on a condition that if the scheme was rejected by its shareholders, the target company would then sell its major asset to the offeror, subject to approval by the target’s shareholders in a general meeting. The court was tasked with determining whether this agreement for the sale of the major asset, under the specified circumstances, amounted to improper coercion on the part of the target company towards its shareholders to vote in favour of the scheme.

The legal issues before the court were centred on the nature of the proposed condition attached to the amended scheme of arrangement and whether it constituted improper coercion on the shareholders of the target company. The court had to consider the implications of the condition that required the shareholders to approve the sale of the major asset if the scheme was rejected, and whether this effectively influenced their decision to vote in favour of the scheme. Additionally, the court needed to assess whether such a condition was acceptable under the Corporations Act 2001 (Cth), particularly in light of the requirement for fairness to all shareholders.

The court found that the condition for the sale of the major asset, if the scheme was rejected, constituted improper coercion on the shareholders to vote in favour of the scheme. The court determined that such a condition was unacceptable as it unduly influenced the shareholders' decision-making process. The court was guided by the principle that all shareholders should have the opportunity to make an informed decision on the scheme without being coerced by conditions that could unfairly sway their vote. Consequently, the court refused the application for further despatch of materials related to the proposed amendment of the scheme. The decision was made under the authority of section 411 of the Corporations Act 2001 (Cth), which empowers the court to make orders that it considers appropriate in the circumstances of the case.