Sharesies Limited

[2020] NZHC 3270

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-002032

[2020] NZHC 3270

UNDER

Part 19 of the High Court Rules

IN THE MATTER OF

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

AND

IN THE MATTER OF

SHARESIES LIMITED
First Applicant

AND

SHARESIES GROUP LIMITED

Second Applicant

Hearing:	On the papers
Appearances:	T B Fitzgerald & Z E L Farquhar for the Applicants
Judgment:	10 December 2020

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 10 December 2020 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel: Bell Gully, Auckland

SHARESIES LIMITED v SHARESIES GROUP LIMITED [2020] NZHC 3270 [10 December 2020]

Introduction

[1]                 The applicants, Sharesies Ltd and Sharesies Group Ltd, seek final orders under s 236 of the Companies Act 1993 approving a scheme of arrangement. I made initial orders on 3 November 2020.

[2]                 The applicants have filed three affidavits in support by Leighton Roberts, a director of both applicants. The affidavits are dated 27 October 2020, 2 November 2020, and 4 December 2020. In the last of those affidavits Mr Roberts deposes as to the applicants’ compliance with the initial orders.

[3]                 Counsel filed submissions in support dated 7 December 2020. Those submissions address compliance with the initial orders, and supplement the earlier (comprehensive) submissions dated 28 October 2020. Counsel also filed draft final orders on 7 December 2020.

[4]                 The scheme is a relatively straightforward restructure of Sharesies Ltd’s equity ownership. It interposes a new company – Sharesies Group Ltd – between Sharesies Ltd and its existing shareholders. Existing shares and options to purchase shares in Sharesies Ltd will be exchanged on a one-for-one basis with shares and options to purchase shares in Sharesies Group Ltd.

[5]                 In accordance with the initial orders, a meeting of Sharesies Ltd’s shareholders and of holders of options to purchase shares in Sharesies Ltd was held on 27 November 2020. At that meeting, resolutions to approve the proposed scheme were put separately to the shareholders and to the option holders. Each resolution passed unanimously. The shareholders who voted at the meeting represented 82.0 per cent of the total issued shares. The option holders who voted represented 82.1 per cent of the total options.

[6]                 The initial orders required that any person who wished to oppose or be heard on the application file and serve a notice of opposition, or notice of appearance, by   5 pm on 4 December 2020. No such notices have been filed.

[7]                 Given the relatively straightforward nature of the scheme, the unanimous support, and the lack of any opposition, I have decided that the application can be determined on the papers, without the need to hear further from counsel at the hearing scheduled for 11 December 2020.

Law

[8]                 Section 236(1) of the Companies Act 1993 provides this Court with jurisdiction to approve a scheme of arrangement, subject to such terms and conditions as the Court thinks fit. Section 237(1) provides the Court with power to make additional orders giving effect to any arrangement approved under s 236(1).

[9]                 Section 235 defines “arrangement” in a non-exhaustive fashion. A transfer of shares from existing shareholders to a new acquirer comes within the definition of “arrangement”.1 So does the modification of rights arising under share options.2

[10]              To approve a scheme of arrangement under s 236 the Court must be satisfied that:3

(a)There has been compliance with the statutory provisions as to meetings, resolutions, the initial Court orders and similar procedural requirements.

(b)The arrangement has been fairly put to the classes concerned, and that if a circular or booklet has been sent out to those classes, it gives all the information reasonably necessary to enable the recipients to judge and vote upon the proposals.

(c)The classes were fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing

1      Recent examples include Re Westland Co-operative Dairy Co Ltd [2019] NZHC 1683 and Re Trade Me Group Ltd [2019] NZHC 840.

2      Re Michael Hill International Ltd [2016] NZHC 1393.

3      Re CM Banks Ltd [1944] NZLR 248 (SC) at 253; and Re Milne and Choyce Ltd [1953] NZLR 724 (CA) at 754.

the minority in order to promote interests adverse to those of the classes whom they purport to represent.

(d)The arrangement is such that an intelligent and honest person of business, a member of the classes concerned, and acting in respect of her or his interest, might reasonably approve it.

(e)The arrangement is fair and reasonable to all of the classes concerned.

Decision

[11]              I am satisfied, based on Mr Roberts’ comprehensive third affidavit, that the applicants have complied with the Act’s provisions and with the initial orders.

[12]              I am also satisfied that the resolutions were fairly put to the classes concerned (namely the shareholders and the option holders). A scheme booklet was distributed to shareholders and option holders in advance of the meeting, in accordance with the initial orders. I approved a draft of that booklet when making the initial orders (subject to some minor changes). The booklet, as distributed, provided ample information to enable shareholders and option holders to consider and vote on the proposals. That information was clearly set out.

[13]              The classes were fairly represented at the meeting. There was a high turnout. Given the unanimity, there is no relevant minority.

[14]              The arrangement is undoubtedly one that an intelligent and honest person of business, acting in respect of her or his interest, might reasonably approve. Mr Roberts explained, in his first affidavit, the reasons for the arrangement. Those reasons made sense to me. They clearly also made sense to the shareholders and option holders who voted unanimously to approve it.

[15]              Finally, the arrangement is fair and reasonable to all of the classes concerned. The arrangement essentially treats the shareholders and the option holders in the same way.

[16]              For those reasons, I am satisfied that it is appropriate to exercise my discretion to approve the scheme of arrangement.

Result

[17]              I approve the scheme of arrangement described in the Implementation Plan annexed to the draft final orders filed on 7 December 2020. I order that the scheme is binding upon:

(a)Sharesies Ltd.

(b)Sharesies Group Ltd.

(c)Every person who is a Shareholder at the Record Date in terms of the Implementation Plan.

(d)Every person who is an Option holder at the Record Date in terms of the Implementation Plan.

(e)Leighton Craig Roberts.

(f)Such other persons as may be necessary to give effect to the scheme.

[18]              The applicants are granted leave to apply to the Court at short notice for approval of any amendment, modification or supplement to the scheme.

Campbell J