Watermark Market Neutral Fund Limited v Equity Trustees Limited, in the matter of Watermark Market Neutral Fund Limited

Watermark Market Neutral Fund Limited sought orders to convene a meeting of its shareholders to consider and vote on a proposed scheme of arrangement under s 411(1) of the Corporations Act 2001 (Cth). The scheme involved the transfer of Watermark’s assets to the Watermark Absolute Return Fund, managed by Equity Trustees Limited. The primary issues were whether the scheme was fair and reasonable to the shareholders and if the requisite majority approval could be obtained. The court found that the scheme was fair and reasonable, considering the sub-optimal performance of Watermark's assets, the high costs of maintaining a listed entity, and the persistent discount to net tangible assets at which Watermark’s shares traded. The court granted the orders to convene the shareholder meeting, distribute the necessary documentation, and publish a notice of hearing. The case was stood over for the hearing of any application to approve the scheme.