Re Zinifex Limited (No 2)
[2008] VSC 632
•20 June 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
| AT MELBOURNE COMMERCIAL AND EQUITY DIVISION |
CORPORATIONS LIST
No. 5736 of 2008
IN THE MATTER OF
ZINIFEX LIMITED (ABN 29 101 657 309)
---
| JUDGE: | ROBSON J |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 20 June 2008 |
| DATE OF JUDGMENT: | 20 June 2008 |
| CASE MAY BE CITED AS: | Re Zinifex Limited (No 2) |
| MEDIUM NEUTRAL CITATION: | [2008] VSC 632 |
---
CORPORATIONS – scheme of arrangement – scheme meeting held pursuant to order made – resolution passed to approve scheme – application to approve scheme pursuant to s 411(4)(b) of the Corporations Act 2001 – application for exemption from requirement of s 411(11) of the Corporations Act 2001 pursuant to s 411(12) of Corporations Act 2001 – whether s 411(17) tests have been satisfied.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J G Santamaria QC | Allens Arthur Robinson |
| For Oxiana Limited | Mr P Crutchfield | Clayton Utz |
Re Coles Group Limited (No 2) (2007) 25 ACLC 1876
Re Hostworks Group Limited (No 2) [2008] FCA 248
Re Lonsdale Financial Group Ltd (No 2) [2007] VSC 525
Re NRMA Insurance Ltd (No 1) (2000) 33 ACSR 595
RE Zenyth Therapeutics Ltd v Smith (2006) 60 ACSR 548
Re Zinifex Limited (No 1) [2008] VSC 631
HIS HONOUR:
INTRODUCTION
This application was commenced on 17 April 2008 by way of originating process, in which Zinifex Limited (“Zinifex”) sought orders:
(a) that Zinifex convene a meeting of the holders of ordinary shares issued by Zinifex to be held on 16 June 2008 at 2:00pm at The Function Centre,
Melbourne & Olympic Park, Batman Avenue, Melbourne in the State of
Victoria (“the Scheme Meeting”);
(b) that the Scheme Booklet (which was annexed as Schedule A to the proposed
Court order), including a notice of the Scheme Meeting, be sent to Zinifex
shareholders; and
(c) that further orders be made relating to the proposed Scheme.
On 9 May 2008, the court made the orders sought by Zinifex and gave directions as to the manner in which the Scheme Meeting was to be conducted, the place at which it was to be held, and the materials that were to be distributed to shareholders (“the Order”).[1]
[1] Re Zinifex Limited (No 1) [2008[ VSC 631.
MASTER’S HEARING
On 18 June 2008, Master Efthim made orders declaring that in accordance with r 16.6 of the Supreme Court (Corporations) Rules 2003 (“the Corporations Rules”):
(a) the Scheme Meeting was duly convened and held in accordance with the Order; and
(b) at the Scheme Meeting, the resolution to approve the Scheme was duly
passed.
THIS HEARING
Zinifex seeks orders:
(a) approving the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (“the Act”); and
(b) exempting Zinifex from compliance with s 411(11) of the Act, pursuant to s
411(12) of the Act.
NOTICE OF THE HEARING
Order 13 of the Order provides that:
Zinifex publish once, on or before 14 June 2008, in The Australian newspaper, an advertisement in substantially the form of Schedule G to these Orders and Zinifex shall otherwise be exempted from compliance with Rule 3.4 of the Corporations Rules.
On 13 June 2008, an advertisement was published in The Australian newspaper giving notice of Zinifex’s application for orders approving the Scheme. A supplementary affidavit made by Craig Henderson was filed, exhibiting (amongst other things) the advertisement which was published in The Australian.
In addition, the Scheme Booklet which was dispatched to shareholders stated, in effect, that if the Scheme was approved by the requisite majorities at the Scheme Meeting and the other conditions precedent (apart from Court approval) were satisfied or waived, Zinifex intended to apply for Court approval of the Scheme. The Key Dates listed in the Scheme Booklet note that the second court hearing is scheduled for today, 20 June 2008.
It is submitted by Zinifex that Zinifex shareholders have received sufficient notification of this hearing, and their right to be heard at, and oppose, the application for approval of the Scheme.
As at the date of this hearing, Zinifex has not received any notice that any person intends to appear at the hearing to oppose the Scheme. I accept that submission.
CONDITIONS PRECEDENT
The Scheme is subject to a number of conditions precedent being satisfied, including:
(a) the non-occurrence of certain prescribed events and changes with respect to Zinifex and Oxiana;
(b) Zinifex shareholders approving the Scheme by the requisite majorities under
the Act;
(c) approval of the Scheme at the Scheme Meeting, the dispatch by Oxiana of a
notice of extraordinary general meeting to each Oxiana shareholder providing
for a change of company name, a confirmation of new directors to the board
of the merged company and an increased remuneration cap for directors of
the merged company;
(d) obtaining certain regulatory approvals; and
(e) obtaining Court approval of the Scheme.
Certificates prepared by Zinifex and Oxiana in respect to the satisfaction or waiver of all conditions precedent to the Scheme, apart from Court approval, were tendered.
INELIGIBLE FOREIGN SHAREHOLDERS
Reference was made to certain overseas Zinifex shareholders defined as “Ineligible Foreign Shareholders” under clause 1.1 and clause 4.3 of the Merger Implementation Agreement (the “MIA”).
Zinifex and Oxiana have now agreed that Zinifex shareholders in the Netherlands, Singapore, Hong Kong and Canada will be excluded from the definition of “Ineligible Foreign Shareholders” under clause 1.1 and clause 4.3 of the MIA. Based on the information provided on 17 April 2008 by Computershare Investor Services Pty Limited (which maintains Zinifex’s Share Registry), this reduces the number of shares held by Ineligible Foreign Shareholders to 634,965 shares, or approximately 0.13% of the total issued Zinifex shares.
APPROVAL OF SCHEME
Santow J of the Supreme Court of New South Wales in Re NRMA Insurance Ltd (No 1)[2] said:
When the approval stage is reached, the court's task is well settled…:
… the court will determine: (1) whether all the conditions required by CL s 411 have been complied with; (2) whether the majority of members or creditors, though acting regularly, have acted in good faith and not in pursuit of some illegitimate purpose; and (3) whether the proposal was "at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such member, might approve it". Fundamentally, the jurisdiction is supervisory; the court is concerned to be satisfied that there has been an absence of oppression and that the compromise or arrangement is one which is capable
of being accepted [citations omitted]…[3]
[2] (2000) 33 ACSR 595.
[3] Ibid [41].
In addition, in Zenyth Therapeutics Ltd v Smith,[4] , Dodds-Streeton J said, in relation to the second court hearing that:
…the court, in this context, has a discretion not to approve a scheme, but its role is supervisory. It must be satisfied that there is an absence of oppression and that the scheme is one capable of being accepted by shareholders. Where there is no opposition either from members or from ASIC and no reason to suppose that there has been inadequate disclosure, the court generally proceeds on the basis that the members are the best judges of their
commercial interests [citations omitted].[5]
[4] (2006) 60 ACSR 548.
[5] Ibid [18].
I find that there has been adequate disclosure of the Scheme to the shareholders.
In the context of the adequate disclosure requirement set out above, and having regard to:
(a) the unanimous recommendation of the Scheme by the Zinifex Board: see
section 2.5 of the Scheme Booklet;
(b) the conclusion reached by the Independent Expert (Grant Samuel &Associates Pty Limited) that the Scheme is fair and reasonable: see section 2.6
and section 12 of the Scheme Booklet, and the Scheme Booklet Supplement;
and
(c) the proportion of members present and voting at the Scheme Meeting,
whether in person or by proxy, who voted to approve the Scheme: see the
affidavit made by Francesca Lee on 17 June 2008,
it was submitted by Zinifex that the court should be satisfied that it would be
appropriate to approve the Scheme.
SECTION 411(17) OF THE ACT
Section 411(17) of the Act provides that the court cannot approve a scheme of arrangement under s 411 unless one of two alternate tests are met. To meet the first test, the court must be satisfied that the scheme has not been “proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6” (“the proscribed purpose”). The second test is met if a written statement from ASIC stating that ASIC has no objection to the scheme (a no objection statement) is produced to the court. The court retains its discretion to reject a scheme even if one or both tests are met.
Zinifex has tendered a no objection statement from ASIC in relation to the Scheme. Accordingly, there is no need for Zinifex to satisfy the proscribed purpose test.[6]
[6] Re Coles Group Limited (No 2) (2007) 25 ACLC 1876 [33] and [79]-[80]; See also, Re Lonsdale Financial Group Ltd (No 2) [2007] VSC 525.
Of course, the court retains its discretion whether or not to reject the Scheme, and can have, in that context, regard to the existence or absence of a proscribed purpose. Two submissions were made in this respect. First, the level of disclosure provided to shareholders is equivalent to that required under a Chapter 6 takeover bid, and there is no reason to believe that a proscribed purpose was present. Second, reference was made to my observations in Re Coles Group Limited (No 2)that while the existence of a proscribed purpose would be a factor for the court to take into account in deciding whether to approve a scheme,
…the existence of the no-objection statement … likewise may be a factor of
equal or similar weight and would tend to establish that the existence of the proscribed intention is not of particular significance in relation to the court's
exercise of the discretion under s 411(4).[7][7] (2007) 25 ACLC 1876 [77].
Accordingly, it was submitted that there is no proscribed purpose, and that even if the court were to find a proscribed purpose, this is balanced by the existence of the no objection statement, so that it remains appropriate for the court to approve the Scheme. I accept that submission.
SECTION 411(11) OF THE ACT
Section 411(11) of the Act requires that copies of any order made by the court under s 411(4)(b) be annexed to every copy of the Zinifex Constitution issued after the order has been made. However, under s 411(12), the court may order that Zinifex be exempt from compliance with sub-s 411(11).
It was submitted that this is an appropriate case for such an exemption to be ordered, as there is no modification in the rights of shareholders or creditors’ entitlements, simply a change in the ownership of Zinifex.[8] I accept that submission.
[8] Re Hostworks Group Limited (No 2) [2008] FCA 248 [35]-[38] (Mansfield J).
CONCLUSION
I will make the orders sought approving the scheme.
0
4
0