Re Methven Ltd - [2019] NZHC 608

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2019-404-0104

[2019] NZHC 608

IN THE MATTER of Part 15 of the Companies Act 1993

AND

IN THE MATTER

of an application by METHVEN LIMITED for orders approving a scheme of

arrangement under Part 15 of the Companies Act 1993

Applicant

Hearing: On the papers

Counsel:

J C Caird and J C Dickson for the Applicant T B Fitzgerald for GWA

M E Cunliffe for the Takeovers Panel

Judgment:

27 March 2019

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 27 March 2019 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

.....................................................
Registrar / Deputy Registrar

Solicitors:
Simpson Grierson, Auckland (Applicant) Bell Gully, Auckland (GWA)
Takeovers Panel, Wellington

Re. Methven Limited [2019] NZHC 608 [27 March 2019]

[1] The applicant (“Methven”) is an iconic New Zealand designer and manufacturer of kitchen and bathroom plumbing fittings. It is a company registered under Part 2 of the Companies Act 1993, and has more than 50 shareholders and share parcels.

[2] Methven seeks final orders approving a proposed arrangement under Part 15 of the Companies Act 1993, by which its shares would be acquired by GWAIL (NZ) Limited.

Legal context

[3] Under s 236, I may order arrangements, including for acquisition of the whole of a company’s shares by a third party,1 to be binding:

236 Approval of arrangements, amalgamations, and compromises

(1)Notwithstanding the provisions of this Act or the constitution of a company, the court may, on the application of a company or any shareholder or creditor of a company, order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the court may specify and any such order may be made on such terms and conditions as the court thinks fit.

(2)Before making an order under subsection (1), the court may, on the application of the company or any shareholder or creditor or other person who appears to the court to be interested, or of its own motion, make any 1 or more of the following orders:

(a) an order that notice of the application, together with such information relating to it as the court thinks fit, be given in such form and in such manner and to such persons or classes of persons as the court may specify:

(b) an order directing the holding of a meeting or meetings of shareholders or any class of shareholders or creditors or any class of creditors of a company to consider and, if thought fit, to approve, in such manner as the court may specify, the proposed arrangement or amalgamation or compromise and, for that purpose, may determine the shareholders or creditors that constitute a class of shareholders or creditors of a company:

(c) an order requiring that a report on the proposed arrangement or amalgamation or compromise be prepared for the court by…

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 Re Methven Ltd

Details

AGLC: Re Methven Ltd [2019] NZHC 608
Case: [2019] NZHC 608
Decision Date: 27 March 2019

CaseChat Overview and Summary

Methven Limited, an iconic New Zealand designer and manufacturer of kitchen and bathroom plumbing fittings, sought final orders approving a proposed scheme of arrangement under Part 15 of the Companies Act 1993 by which its shares would be acquired by GWAIL (NZ) Limited. Methven had more than 50 shareholders and share parcels, and the proposed arrangement would affect its voting rights by reducing those held by existing shareholders from 100 per cent to zero, and conversely increasing voting rights held by GWAIL (NZ) Limited from zero to 100 per cent. The court was required to decide whether the requisite statutory provisions had been met, whether the proposed arrangement had been fairly put to shareholders, whether shareholders were fairly represented by those in attendance, and whether the arrangement might reasonably be approved by reasonable and intelligent business people, acting in their own interests.

The court found that requisite majorities of Methven’s shareholders had approved the proposed arrangement by resolution, and the Takeovers Panel had indicated it had no objection to the court ordering the arrangement binding. The court was satisfied that the relevant statutory provisions had been met, that the proposed arrangement had fairly been put to shareholders, that shareholders were fairly represented by those in attendance, and that the arrangement might reasonably be approved by reasonable and intelligent business people, acting in their own interests. The court concluded that the proposed arrangement generally would be fair and equitable, and shareholders’ approval of it by resolution should be given full self-determinative force.

The court therefore ordered the arrangement described in the Scheme Plan annexed to draft final orders filed in this Court on 20 March 2019 shall be binding on Methven Limited, GWA Group Limited, GWAIL (NZ) Limited, and every person who is a Scheme Shareholder in terms of the Scheme Plan. Methven Limited has leave to apply to the Court for approval of any amendment, modification or supplement to the arrangement.

Orders