MHM Automation Limited - [2023] NZHC 3610

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-664

[2023] NZHC 3610

UNDER Part 19 of the High Court Rules 2016

IN THE MATTER

of a scheme of arrangement under Part 15 of the Companies Act 1993

BETWEEN

MHM AUTOMATION LIMITED

Applicant

AND

Hearing: (On the papers)

Counsel:

E D Peers for Applicant

Judgment:

11 December 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

RE MHM AUTOMATION LIMITED [2023] NZHC 3610 [11 December 2023]

[1] The applicant, MHM Automation Limited (MHM) wishes to implement a scheme of arrangement (the Scheme) between it and its shareholders concerning the acquisition of 100 per cent of the shares in MHM by Merlin NZD Bidco Limited (Merlin).

[2] MHM has made an interlocutory application without notice for interim orders under pt 15 of the Companies Act 1993 (the Act). Mr Peers, counsel for MHM, has filed detailed submissions in support of the without notice application.

[3] Mr Peers explains that although it is not a pre-condition to an order approving a scheme of arrangement under s 236(1) of the Act, in practice, the parties seeking approval of a scheme will also apply for interim orders relating to the procedural steps including the materials to be provided to shareholders. After the special meeting of shareholders (the Scheme Meeting) and assuming the proposal is approved by the requisite quorum of shareholders, there will be a second hearing where the Court is asked to give its final approval to the Scheme.

[4] Accordingly, this judgment relates only to the application for interim procedural orders.

[5] In summary, the orders sought relate to the process by which all relevant parties are to be served with the Scheme, the arrangements for the Scheme Meeting, along with the mechanics as to how shareholders will vote.

[6] Mr Peers also seeks a hearing date for the Court to give its final approval to the Scheme, assuming it is approved at the Scheme Meeting.

[7] The Court must be satisfied that the application for interim orders can be dealt with on a without notice basis. I accept Mr Peers’ submission that it is standard for such interim orders to be granted on a without notice basis as they are essentially procedural. Given MHM is a publicly listed company it would be impractical and involve a substantial and disproportionate time and cost for service on all shareholders. I accept Mr Peers’ submission that it is appropriate that such procedural orders be dealt with on the papers.

Part 15 of the Companies Act 1993 – eligibility

[8] The proposed acquisition of MHM’s shares by a third party is an arrangement for the purposes of pt 15 of the Act.1

[9] Section 236(2) of the Act sets out the Court’s jurisdiction to make initial orders in respect of proposed schemes. The purpose of these orders is to ensure there is a process by which all interested or affected…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading MHM Automation Limited

Details

AGLC: MHM Automation Limited [2023] NZHC 3610
Case: [2023] NZHC 3610
Decision Date: 11 December 2023

CaseChat Overview and Summary

MHM Automation Limited, a publicly listed New Zealand company, sought interim procedural orders from the High Court of New Zealand to facilitate a scheme of arrangement for the acquisition of its shares by Merlin NZD Bidco Limited. The application was made under Part 15 of the Companies Act 1993 and was heard by Associate Judge Lester. The central legal issue was whether the interim procedural orders sought by MHM were appropriate and should be granted on a without notice basis.

The Court considered that the orders were procedural in nature, and it was standard practice to grant such orders without notice. Given MHM’s status as a publicly listed company, serving all shareholders would be impractical and excessively costly. The Court accepted that the orders were necessary to ensure that interested parties were properly consulted and informed before the Court made its final decision on the scheme. The orders included provisions for serving the scheme materials to shareholders, conducting the scheme meeting, and the mechanics of shareholder voting. The Court concluded that the draft orders were appropriate and granted them in terms of the attached draft. No order as to costs was made.

The Court scheduled the originating application for final orders to be heard on 29 February 2024, with an alternative date of 4 March 2024 if there was any opposition. The orders also provided for the service of scheme materials to shareholders, the conduct of the scheme meeting, and the reporting of the meeting's outcome. MHM was permitted to make minor amendments to the scheme materials and given leave to apply for variations to the orders at short notice.

Orders