Security Matters Limited, in the matter of Security Matters Limited (No 2)

The case of Security Matters Limited, in the matter of Security Matters Limited (No 2) involved Security Matters Limited (SMX), a public company listed on the Australian Securities Exchange (ASX), seeking to merge with Lionheart III Corp, a special-purpose acquisition company (SPAC) listed on the NASDAQ. The transaction involved a reverse takeover, redomiciliation of SMX from Australia to Delaware, and a scheme of arrangement. The case also involved two schemes: one for SMX's shareholders and another for holders of certain options in SMX. The court was required to determine the appropriate method of notification and whether to postpone the date for the scheme meetings to allow for supplementary disclosure to shareholders and optionholders. The court held that a company proposing a scheme of arrangement has an ongoing obligation to bring to the attention of members or creditors all material new information that arises after the scheme booklet has been dispatched. The court varied the supplementary disclosure order to provide for specific timing and method of notification for shareholders and optionholders whose addresses are recorded in Israel. The court also reserved liberty to apply, including to the Australian Securities and Investments Commission.

The court's reasoning was based on the principle that a company proposing a scheme of arrangement has an ongoing obligation to bring to the attention of members or creditors all material new information that arises after the scheme booklet has been dispatched. The court noted that the maximum level of redemption of Lionheart shares would be known by Lionheart at 5.00pm (Eastern Standard Time, GMT-5) on 26 January 2023 (being 9.00am Australian Eastern Daylight Time on 27 January 2023), but it is not certain that that information would be made available to Scheme Securityholders at that time. The actual level of redemption of Lionheart shares would be known by Lionheart at 1.00pm (Eastern Standard Time, GMT-5) on 30 January 2023 (being 5.00am Australian Eastern Daylight Time on 31 January 2023). The court varied the supplementary disclosure order to provide for specific timing and method of notification for shareholders and optionholders whose addresses are recorded in Israel. The court also reserved liberty to apply, including to the Australian Securities and Investments Commission.

The final orders made by the court included varying the supplementary disclosure order to provide for specific timing and method of notification for shareholders and optionholders whose addresses are recorded in Israel. The court also reserved liberty to apply, including to the Australian Securities and Investments Commission. These orders were to be entered forthwith. The court's decision was based on the principle that a company proposing a scheme of arrangement has an ongoing obligation to bring to the attention of members or creditors all material new information that arises after the scheme booklet has been dispatched. The court's decision also took into account the specific timing and method of notification for shareholders and optionholders whose addresses are recorded in Israel.