Watermark Global Leaders Fund Limited v Equity Trustees Limited, in the matter of Watermark Global Leaders Fund Limited

In the Federal Court of Australia, Watermark Global Leaders Fund Limited (WGF) sought orders to convene a meeting of its shareholders to consider a proposed scheme of arrangement (the "WGF Scheme"). The scheme was proposed to address several issues with WGF's current structure, including the sub-optimal value of its portfolio, the high costs of running WGF as a listed investment company, and the persistent discount to net tangible assets at which WGF's shares have traded. The proposed scheme involved the transfer of WGF's assets to the Watermark Absolute Return Fund, managed by Equity Trustees Limited (Equity Trustees). The court had to decide whether to grant the orders sought by WGF, including convening the meeting of shareholders and approving the distribution of the explanatory statement and proxy forms.

The court found that the application met the requirements of the relevant provisions of the Corporations Act 2001 (Cth). The explanatory statement provided sufficient information for shareholders to make an informed decision on the scheme. The court also found that the proposed meeting date and location were appropriate, and that the distribution of the explanatory statement and proxy forms would be conducted in a manner that complied with the Act. The court was satisfied that the scheme was in the best interests of WGF and its shareholders, and that the independent directors had made a recommendation in favour of the scheme after considering all relevant factors.

The court granted the orders sought by WGF, including convening the meeting of shareholders, approving the distribution of the explanatory statement and proxy forms, and standing over the proceeding for the hearing of any application to approve the scheme. The court also granted liberty to apply for further orders as necessary. The decision provides guidance on the requirements for convening a meeting of shareholders to consider a scheme of arrangement under the Corporations Act, and the factors that the court will consider in deciding whether to grant the orders sought.