Tower Limited
[2025] NZHC 455
•12 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-003083
[2025] NZHC 455
UNDER Part 15 of the Companies Act 1993 IN THE MATTER
of an application by TOWER LIMITED for approval of an arrangement
Applicant
Hearing: On the papers Counsel:
S C D A Gollin and A E Simkiss for the Applicant
Judgment:
12 March 2025
JUDGMENT OF ANDERSON J
This judgment was delivered by me on 12 March 2025 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules 2016.
………………………………
Registrar/Deputy Registrar
Solicitors:
Minter Ellison Rudd Watts, Auckland
RE TOWER LTD [2025] NZHC 455 [12 March 2025]
[1] The applicant, Tower Limited (Tower), seeks final orders under s 236 of the Companies Act 1993 (the Act) approving a scheme of arrangement (Arrangement). Initial orders were made on 16 December 2024 (Initial Orders).
[2] The Arrangement is to return approximately NZ$45 million of capital to shareholders by way of a pro rata cancellation of one share in every 10 ordinary shares.
[3] Counsel for Tower has filed a memorandum in support of final orders dated 24 February 2025 together with two updating affidavits. The material filed addresses compliance with the Initial Orders and supplements the earlier submissions and affidavits, filed by Tower on 28 November 2024.
[4] In accordance with the Initial Orders, at Tower’s annual general meeting on 11 February 2025 (Meeting) a resolution to approve the proposed scheme was put to the shareholders. Those shareholders voting approved the Arrangement, with
99.25 per cent of the votes cast in favour of the scheme. Accordingly, the Arrangement has received overwhelming approval from shareholders participating in voting.
[5] The Initial Orders required that within a specified timeframe, any person who wished to oppose or be heard on the application file and serve a notice of opposition or notice of appearance. No notices have been filed.
Law
[6] Section 236(1) of the Act 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 the power to make additional orders giving effect to any arrangement approved under s 236(1).
[7] Section 235 defines “arrangement” in a non-exhaustive fashion. In my minute in which I made the Initial Orders, I ruled that the Arrangement falls within the definition. The present Arrangement is the latest in several Part 15 schemes that the
Court has approved involving capital repayments to shareholders by pro rata cancellation of shares.1
[8] To approve a scheme of arrangement under s 236 the Court must be satisfied that:2
(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 the statutory majority are acting bona fide and are not coercing 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.
Compliance with statutory provisions and initial orders
[9] I am satisfied on the basis of the comprehensive affidavits filed that Tower has complied with the provisions of the Initial Orders. It has also complied with relevant provisions of its Constitution, the Act and other legislation.
[10]Relevant to this aspect:
1 Re Auckland International Airport [2014] NZHC 405; Re Tilt Renewables Ltd [2020] NZHC 1398; Re PGG Wrightson Ltd [2014] NZHC 405; Re Tower Limited [2022] NZHC 328; and Burger Fuel Group Ltd v Mason Trustee Ltd [2024] NZHC 1352.
2 Re CM Banks Ltd [1944] NZLR 248 (SC) at 253; and Re Milne and Choyce Ltd [1953] NZLR 724 (CA) at 754.
(a)Section 236A of the Act places obligations on code companies (as defined in s 2A of the Takeovers Act 1993) proposing to undertake a scheme of arrangement where the proposed arrangement “affects the voting rights of a code company”. Although Tower is a code company, s 236A does not apply, because there will be no change to the relative voting rights of the shareholders if the Arrangement is approved and implemented, subject to insignificant impacts of rounding.
(b)Tower has provided a copy of all documents filed in this matter to the Reserve Bank of New Zealand. This satisfies the requirements of s 157(1(a) of the insurance (Prudential Supervision) Act 2010.
Arrangement was fairly put to shareholders
[11]I am also satisfied that the resolution was fairly put to the shareholders.
[12] Shareholder Materials were sent to shareholders on 10 January 2025 by the means outlined in the Initial Orders, and also posted on the websites of Tower, NZX and ASX for inspection and download. These materials included Tower’s without notice application, my minute of 16 December 2024, and the sealed orders dated 17 December 2024.
[13] The Shareholder Materials fully and fairly explained the Arrangement to shareholders including what was proposed, its intended effect and the reasons why the Board had decided to recommend a return of capital. At the Meeting, Tower’s Chairman, Michael Stiassny, also explained the Arrangement and answered shareholders’ questions.
Shareholder fairly represented and acting bona fide without coercion
Single class of shares
[14] I ruled in my minute in which Initial Orders were made that the Tower shareholders belong to a single class with the same rights notwithstanding potentially different tax treatment for Tower’s Australian shareholders compared with its New Zealand shareholders.
[15] Counsel had directed me to case law on class definition focussed on legal rights in relation to the company3 and to the majority in the Supreme Court decision in Trends Publishing International Ltd v Advice Wise People Ltd.4 This articulated a broader test in relation to Part 14 compromises based not just on the legal rights and interests of creditors. There is a question whether that decision applies to Part 15 arrangements.5
[16] Although the tax treatment may differ between Australian and New Zealand shareholders, all Tower shareholders have the same legal rights and interests. Shareholders will be treated equally by the Arrangement in relation to those shares. Shareholders in different jurisdictions may commonly be subject to differing tax rules. That is a matter personal to them. I do not consider it makes a difference that Tower is registered on both the NZX and ASX. Any differing tax treatment of the returned capital based on the tax location of the shareholder is not a matter “in relation to the company” as contemplated by Trends.6 It is a matter extraneous to it.
[17] Accordingly, as I concluded in my minute, even on the approach of the majority in Trends, Tower has only one class of shares here.7
Other matters
[18] Each shareholder was fairly represented at the Meeting either in person or by proxy. There is no suggestion that the shareholders who voted in favour of the special resolution were acting other than bona fide or there was any coercion.
[19] I am satisfied that shareholders had a sufficient amount of time to take steps to oppose the arrangement if they wished to do so. As recorded earlier, Tower has not
3 Sovereign Life Assurance Co v Dodd [1892] 2 QB 573 (per Bowen L J at 583); Re Hellenic and General Trust Limited [1976] 1 WLR 123 (per Templeman J at 125 to 126); Re Jax Marine Pty Limited [1967] 1 NSWR 145 at 148.
4 Trends Publishing International Ltd v Advice Wise People Ltd, [2018] NZSC 62, [2018] 1 NZLR 903 (SC).
5 The majority characterises the issue of classification as instrumental, facilitating a process that will produce compromises in accordance with the policy of the Act (at [64]-[65]). That directs the Court to an enquiry of the purpose of the Part 15.
6 At [68].
7 That was also the conclusion in Re Tower Limited [2022] NZHC 328 at [12].
received any opposition documents from any shareholder in the manner set out in the Initial Orders.
The Arrangement is one that an intelligent and honest person of business might reasonably approve and is generally fair and equitable
[20] The arrangement is one that an intelligent and honest person of business, acting in respect of her or his interest, might reasonably approve.8
[21]As explained by Mr Stiassny:
(a)Tower has surplus capital above its prudential solvency margin;
(b)Tower currently has a financial rating of A- Excellent, stable, outlook;
(c)The Arrangement will only proceed if the Board on the date of implementation remains satisfied that it is prudent to do so, and that Tower will comply with its solvency and prudential conditions.
(d)Tower has carried out a strategic review which commenced in December 2023. It has considered its capital structure in light of its current strategy, which is to simplify its business by focussing on its core business so as to deliver sustainable growth and efficiencies. The Board considers that there are no appropriate acquisition opportunities presently available to Tower and the surplus funds are not required for the execution of Tower’s general business strategy.
(e)The arrangement is the fairest and most efficient way to return capital to Tower’s shareholders.
[22] These are reasons similar to those relied upon in Re Tilt Renewables Ltd [2020] NZHC 1398 and by Woolford J in Re Tower [2022] NZHC 328 as demonstrating that
8 I adopt the same approach taken by Muir J to a return of capital in Re Tilt Renewables Ltd [2020] NZHC 1398, also applied by Woolford J in Re Tower [2022] NZHC 328.
the relevant scheme involving a return of capital would be approved by an intelligent and honest businessperson.
[23] The Arrangement also has the unanimous support of the Board, whose members have extensive business experience between them. It also has the overwhelming support of shareholders voting at the Meeting, with 99.25 per cent of the votes of shareholders entitled to vote voting in favour (71.83 per cent of all shares issued). These factors support that the Arrangement is one that an intelligent and honest businessperson would enter into.9
[24] I am also satisfied that the arrangement does not prejudice any third party. As stated above, the Arrangement will only proceed if the Board on the date of implementation remains satisfied that it is prudent to do so, and that Tower will comply with its solvency and prudential conditions. Tower will continue to satisfy the solvency test prescribed by the Act and the Reserve Bank of New Zealand without difficulty.
[25]In the circumstances, the Arrangement is generally fair and equitable.
Conclusion
[26] I am satisfied that it is appropriate to exercise my discretion to approve the Arrangement described in the Shareholder Materials distributed to Tower shareholders for the meeting that was held on 11 February 2025 (and attached to Tower’s without notice originating application filed with the Court on 28 November 2024).
Result
[27] I make orders on the terms sought in Tower’s without notice originating application dated 28 November 2024 as set out below:
(a)approving the Arrangement described in the draft document attached to Tower’s without notice originating application filed with the Court on 28 November 2024;
9 Re Nuplex Industries Ltd; [2016] NZHC 1677 at [24]- [25] Re Tower Ltd [2022] NZHC 328 [15].
(b)declaring the Arrangement to be binding upon Tower, all its shareholders, and all such other persons necessary to give effect to the Arrangement, with (amongst other things) the effect that:
(i)one (1) of every ten (10) ordinary shares registered in the name of each shareholder at 7 pm on the date that is five business days after the date on which these final orders are made sanctioning the Arrangement (Record Date), together with all rights attaching to those shares, will be cancelled;
(ii)within 10 business days after the Record Date, Tower will make payment by direct credit to each shareholder of NZ$1.1858 for each share registered in the name of the shareholder, which has been cancelled in accordance with paragraph (i) above;
(iii)shareholders with an address on the register in Australia at 7 pm on the Record Date will be paid NZ$1.1858 converted into Australian dollars at the exchange rate organised by Tower’s share registrar on or about that time as approved by Tower;
(iv)the Arrangement will be implemented only if the Board of Directors of Tower, at its sole discretion, remains satisfied that up to 8 am on the date the Arrangement is implemented, Tower is complying with solvency and regulatory capital requirements, including its capital management process requirements; and it remains prudent to undertake the Arrangement;
(c)dispensing with formal service of this application, or any other application made by Tower in this proceeding, on any person; and
(d)granting leave to Tower to apply to this Court for approval of any amendment, modification, or supplement to the Arrangement.
[28]No costs order is required nor sought.
Anderson J
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