86 400 Holdings Ltd, in the matter of 86 400 Holdings Ltd (No 2) [2021] FCA 524

Counsel for National Australia Bank Limited: Nicholas De Young QC

Solicitor for National Australia Bank Limited: King and Wood Mallesons

ORDERS VID 111 of 2021 IN THE MATTER OF 86 400 HOLDINGS LTD BETWEEN: 86 400 HOLDINGS LTD Plaintiff

AND: NATIONAL AUSTRALIA BANK LIMITED Other

order made by: ANDERSON J DATE OF ORDER: 11 May 2021

The Court notes that there has been produced to the Court a statement in writing by the Australian Securities and Investments Commission (ASIC) in accordance with section 411(17)(b) of the Corporations Act 2001 (Cth) stating that ASIC has no objection to the Scheme of Arrangement between the plaintiff and its members referred to in this order.

1. Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the plaintiff and its members (other than National Australia Bank Limited) agreed to by the said members at the meeting held on 6 May 2021, the terms of which are as set out in Annexure A to these orders (Scheme), be and is hereby approved.
2. Pursuant to section 411(12) of the Act, the plaintiff be exempted from compliance with section 411(11) of the Act in relation to the Scheme.
3. Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A Scheme of Arrangement

INTRODUCTION 1 On 29 March 2021, I made orders requiring the plaintiff (86 400) to convene and hold a meeting of its shareholders (Scheme Meeting) for the purposes of considering and, if thought fit, agreeing to a proposed Scheme of Arrangement (Scheme) between 86 400 and its shareholders (other than National Australia Bank Limited (NAB)) (Convening Orders): 86 400 Holdings Ltd, in the matter of 86 400 Holdings Ltd [2021] FCA 311 (Reasons). 2 The Scheme Meeting was held on 6 May 2021. The resolution to agree to the Scheme was passed by 100% of the votes cast and 100% of shareholders present and voting (in each case, in person or by proxy, attorney or corporate representative). 3 By this application, 86 400 seeks orders approving the Scheme. 4 The second hearing of this proceeding came on for hearing on 11 May 2021. At that hearing, Mr Holmes of counsel appeared for 86 400 and Mr De Young QC appeared for NAB. 86 400 had filed written submissions and Mr Holmes made oral submissions at the hearing on 11 May 2021. Those submissions were supported by Mr De Young QC. On the basis of those submissions and the affidavit material that had been filed, on 11 May 2021, I made orders which, in substance, approved the Scheme between 86 400 and its members (other than NAB). These are my reasons for doing so.

EVIDENCE 5 86 400 relies upon the following affidavit evidence: (a) the scheme booklet which was annexure "JDL-12" to the third affidavit of James David Lonie sworn on 26 March 2021 (Scheme Booklet); (b) affidavit of James David Lonie sworn on 6 May 2021 (Fourth Lonie Affidavit). Mr Lonie is a Partner at HWL Ebsworth Lawyers, solicitors for 86 400, and he gives evidence concerning the registration of the scheme booklet with the Australian Securities and Investments Commission (ASIC) prior to its dispatch. He also gives evidence concerning the advertisement of the second court hearing, and the fact that HWL Ebsworth Lawyers has not received any notice from any person wishing to oppose approval of the Scheme; (c) affidavit of Christina May Seppelt affirmed on 6 May 2021 (Seppelt Affidavit). Ms Seppelt is the General Counsel and Company Secretary of 86 400, and she gives evidence concerning the dispatch of the scheme booklet to 86,400 shareholders; (d) affidavit of Paul Alan Lahiff affirmed on 9 May 2021 (Second Lahiff Affidavit). Mr Lahiff is a non-executive director of 86 400 and has been the chair of 86 400 since 30 April 2021. He is also chair of the Independent Board Committee established by 86 400 to evaluate the proposal received from NAB to acquire all of the shares in 86 400 that NAB did not already own. Mr Lahiff was chair of the Scheme Meeting, and he was also chair of the general meeting held by 86 400 which also considered a resolution to agree to the Scheme (General Meeting). Mr Lahiff gives evidence concerning the conduct of the Scheme Meeting and the General Meeting, including the voting results of each meeting; (e) affidavit of Deborah Elsie Austin affirmed on 9 May 2021 (Austin Affidavit). Ms Austin is Head of Meetings at Link Market Services Limited (Link), which was engaged by 86 400 to assist in the conduct of the Scheme Meeting and the General Meeting. Ms Austin was the returning officer of both meetings, and she gives evidence as to the conduct of each meeting and the voting results. She also gives evidence about the receipt and recording of proxy votes prior to the meetings; and (f) affidavit of James David Lonie sworn on 11 May 2021 (Fifth Lonie Affidavit). The Fifth Lonie Affidavit annexed certificates from 86 400 and NAB confirming that all conditions precedent have been satisfied or waived, as well as a letter from ASIC stating that it has no objection to the Scheme for the purposes of s 411(17)(b) of the Corporations Act 2001 (Cth) (Act).

THE SCHEME 6 The purpose of the Scheme is to provide for the acquisition of all the shares in 86 400 by NAB, save for the shares in 86 400 that are already owned by NAB. 7 Upon approval of the Scheme, on the "Implementation Date", two events will occur. First, each Scheme participant will receive the "Scheme Consideration" from NAB of $2.25 cash per Scheme share. Second, following the provision of the Scheme Consideration to the Scheme participants, all of the Scheme shares will be transferred to NAB. 8 As explained in the submissions relied upon by 86 400 at the first court hearing, it was a possibility that the Scheme Consideration of $2.25 may be reduced if 86 400 were to conduct a "Permitted Capital Raising" pursuant to the Scheme Implementation Agreement (SIA) in the form of a rights issue. However, in order to undertake a Permitted Capital Raising, the 86 400 board had to make a determination 15 business days before the Scheme Meeting that it was necessary to do so. The 86 400 board did not make that determination by that time (or at all), and, accordingly, there will not be any adjustment to the Scheme Consideration. 9 There are a number of conditions precedent to the Scheme, and all conditions precedent were required to be either satisfied or waived by 8.00am on the day of the approval hearing, being 11 May 2021.

ROLE OF THE COURT 10 In its essential respects, s 411(4)(a)(ii) of the Act provides that a scheme of arrangement is binding on members and the plaintiff company if: (a) at a meeting of members, it is passed by a majority of members present and voting (in person or by proxy) and by 75% of votes cast; and (b) it is approved by order of the court. 11 The role of the Court at the approval stage was summarised by Beach J in Amcor Limited, in the matter of Amcor Limited (No 2) [2019] FCA 842 (Re Amcor (No 2)) at [7] to [11] as follows: 7. … In essence, my role at the second court hearing is to assess the Scheme taking into account whether the Scheme is sufficiently fair and reasonable such that an intelligent and honest shareholder properly informed and acting alone might approve it. Of course, I can only approve a scheme of arrangement if the requisite majority of shareholders vote in favour of it, but I am not bound to approve the Scheme simply because I previously made orders for the convening of a Scheme meeting and subsequently the requisite majority agreed to it. But I accept that shareholders voting collectively at the Scheme meeting are better judges than I of what is to their commercial advantage and in their interests and accordingly, absent good reason, I should give effect to their intentions. … 11. Now as I have said, my task is to consider whether the Scheme is fair and reasonable with the test of fairness and reasonableness including a consideration of whether "an intelligent and honest [shareholder], properly informed, acting alone, might approve [the scheme]" (Fowler v Lindholm (2009) 178 FCR 563 at [79] per Emmett, Gordon and Jagot JJ). But the Scheme shareholders' vote in favour of the Scheme is evidence of its inherent fairness. Put another way, if a majority of the Scheme shareholders have approved the Scheme, it is unlikely that the Scheme would be unreasonable. Further, I do not have to be satisfied that no better Scheme could have been devised. 12 I respectfully agree with, and adopt, Beach J's above statement of principle as to the role of the Court at the approval stage of a scheme of arrangement. 13 In Re Amcor (No 2) at [8] and [9], Beach J described the matters to which the Court will ordinarily have regard at the approval stage as follows: 8 Now whilst there is no exhaustive statement of the matters as to which I must be satisfied before granting approval, it is not in doubt that in exercising my power under s 411(4)(b), I should be satisfied that: (a) the Scheme complies with the law, including the relevant procedural requirements; (b) the Scheme was approved by shareholders acting in good faith and for proper purposes; (c) there has been an accurate and comprehensive disclosure of the details of the Scheme and its effect to those voting on it; (d) there is no suggestion of oppression of any minority; (e) there is no evidence that any third parties will be disproportionately adversely affected by the operation of the Scheme; (f) the Scheme does not offend against any aspect of public policy; and (g) all matters that could be considered relevant to the exercise of my discretion have been drawn to my attention. 9 I also need to be satisfied that the conditions precedent to the Scheme have been met, save for Court approval, and that ASIC has been given the opportunity to draw to my attention any relevant matter(s). 14 I also respectfully agree with, and adopt, Beach J's above statement of principle on the matters to which a Court will ordinarily have regard at the approval stage. 15 It is convenient to group the matters to which the Court will ordinarily have regard into the following two categories. First, the Court must ensure that all statutory and procedural requirements in relation to s 411 of the Act have been observed. Second, the Court must determine, in the exercise of its discretion, whether to approve the scheme. 16 86 400 submits that it has satisfied all relevant statutory and procedural requirements, and that it is appropriate for the Court to exercise its discretion to approve the Scheme. That submission should be accepted for the following reasons.

STATUTORY AND PROCEDURAL REQUIREMENTS 17 The main statutory and procedural requirements which must be satisfied to enliven the Court's discretion to approve the Scheme are as follows: (a) compliance with the Federal Court Rules 2011 (Cth) (Rules) and the orders from the first court hearing in relation to the convening and conduct of the Scheme Meeting; (b) compliance with the disclosure obligations under s 412(1) of the Act; (c) passing of the approval resolution by the requisite majorities required by s 411(4)(a)(ii); (d) satisfaction or waiver of conditions precedent; and (e) satisfaction of s 411(17) of the Act: see Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [No 2] [2018] WASC 357 (Re Wesfarmers (No 2)) at [12].

General Meeting 18 86 400 did not seek any orders in relation to the General Meeting, as that meeting was to be convened and conducted pursuant to the provisions of the 86 400 Constitution, the Shareholders' Agreement and Part 2G of the Act. 19 However, it is a condition precedent to the Scheme that 86 400 shareholders approve the proposed Scheme at the General Meeting by a "Special Majority Shareholders' Resolution", being a resolution of the 86 400 shareholders (who are not disqualified from voting on that resolution), who between them hold not less than 75% of the total number of 86 400 shares held by all the 86 400 shareholders (who are not disqualified from voting on that resolution) and who are present and voting on that resolution (in person, by proxy, attorney or, in the case of a company, by corporate representative). 20 I am of the opinion that the evidence establishes that the condition precedent was satisfied. In particular, at the General Meeting (which was held immediately prior to the Scheme Meeting), 100% of shareholders present (in person, by proxy, attorney or corporate representative) and voting, voted 100% of their shares in favour of a resolution to agree to, and approve, the Scheme (General Meeting Resolution). 21 In addition, the scheme booklet stated that NAB had advised that it intended to abstain from voting any of its 86 400 shares on the General Meeting Resolution. I am satisfied that the evidence establishes that NAB did not register for or vote its shares at the General Meeting. NAB attended the General Meeting as an observer only.

Scheme Meeting - compliance with Court Rules and Convening Orders

Scheme Booklet registered by ASIC 22 The explanatory statement (which is included within the scheme booklet) was registered by ASIC on 30 March 2021, prior to being sent to shareholders, as required by s 412(6) of the Act. 23 An office copy of the Convening Orders was lodged with ASIC on 29 March 2021, as required by r 3.5(b) of the Rules.

Scheme Booklet and notices of meeting provided to shareholders 24 Order 4 of the Convening Orders required that the Scheme Meeting be convened by providing various documents to 86 400 shareholders on or before 6 April 2021. The principal document was the scheme booklet, which comprised the explanatory statement required by s 412(1) of the Act, and which annexed the notices of meeting for the Scheme Meeting and the General Meeting, and related documents. 25 I am satisfied that the evidence establishes that the requirements of the Convening Orders in relation to dispatch were complied with. The table below sets out the requirements of the Convening Orders and refers to the evidence which establishes that those requirements were satisfied. Requirement of Convening Orders Evidence that requirement satisfied An email substantially in the form of pages 441-443 of annexure PAL-1 to the affidavit of Paul Alan Lahiff affirmed on 25 March 2021 (Email) be sent by 6 April 2021 to all shareholders who had nominated an electronic address for the purposes of receiving communications from 86 400. Seppelt Affidavit at [13] to [17]. The Email was required to contain a link to an electronic copy of the Scheme Booklet. Seppelt Affidavit at [10] to [12] and [16]. The Email was required to contain a link to an online portal or website that was accessible by the shareholder and which enabled the shareholder to complete and lodge their proxy and voting instructions for the Scheme Meeting online. Seppelt Affidavit at [14] and [16].

Receipt and recording of proxy votes 26 Order 7 of the Convening Orders provided that a proxy in respect of the Scheme Meeting will be valid and effective, if, and only if, a proxy is lodged via the online portal or website in accordance with the instructions appearing on the portal or website by 10.20am on Tuesday, 4 May 2021 (being 48 hours in advance of the Scheme Meeting). 27 86 400 has raised two matters in relation to Order 7 of the Convening Orders. First, the order inadvertently failed to refer to the cut-off time for proxies lodged in hard copy or by email. In particular, the notice of meeting for the Scheme Meeting (Notice of Scheme Meeting) stated that a proxy could be lodged either online, or by completing and returning the proxy form annexed to the Notice of Scheme Meeting by mail, email, fax, or hand delivery (Hard Copy/Email Proxies). The order only referred to online lodgement. 28 Second, the proxy-cut off time set out in the Notice of Scheme Meeting differed from the time set out in the Convening Orders. That is, the Notice of Scheme Meeting specified a cut-off time of 10.00am for both online and Hard Copy/Email Proxies, whereas the Convening Orders specified 10.20am (in each case on 4 May 2021). 29 86 400 submits that any confusion was likely caused by the fact that the Scheme Meeting was to commence after the conclusion of the General Meeting, and the General Meeting was scheduled to commence at 10.00 am. The proxy cut-off time for the General Meeting was specified as 10.00am in the notice of meeting for the General Meeting. That notice of meeting and the Notice of Scheme Meeting both stated that shareholders wishing to appoint a proxy would need to appoint a proxy for the General Meeting as well as for the Scheme Meeting, as the appointment of a proxy for one meeting would not be effective as an appointment of a proxy for the other meeting. Both notices of meeting therefore had a common cut-off time for receipt of proxies, being 10.00am on 4 May 2021. 30 86 400 submits that the evidence is that the proxy cut-off time in fact applied was 10.20am on 4 May 2021, for both online proxies and Hard Copy/Email Proxies. 86 400 submits that this is consistent with s 250B(1) of the Act, which provides that, in relation to a general meeting, for an appointment of proxy to be effective, a proxy appointment must be received at least 48 hours before the time for which the meeting was called. Whilst this 48 hour period may be extended by the constitution of a company or by the notice of meeting, it cannot be reduced. The objective of requiring that the 48 hour period for return of proxies may not be reduced is to ensure that shareholders are not given less time to exercise their rights to vote by proxy. The 86 400 Constitution is consistent with s 250B, as it specifies the relevant period as 48 hours (in relation to a general meeting). 31 86 400 submits that, as a consequence, in specifying 10.20am on 4 May 2021 as the proxy cut-off time for the receipt of online proxies, the Convening Orders were accurate but incomplete, whereas the cut-off time specified in the Notice of Scheme Meeting was inaccurate, in that it ought to have specified 10.20am and not 10.00am on 4 May 2021. 32 86 400 submits that the fact that the Notice of Scheme Meeting specified 10.00am rather than 10.20am amounts to a procedural irregularity that did not cause any substantial injustice. 86 400 submits that the proceedings at the Scheme Meeting are therefore automatically validated by reason of s 1322 of the Act. The evidence in support of this submission is as follows: (a) shareholders received more than 28 days' notice of the Scheme Meeting, including receiving the detailed Scheme Booklet which included the Notice of Scheme Meeting and information concerning the return of proxies; (b) as noted above, the proxy cut-off time that in fact applied for both online proxies and Hard Copy/Email Proxies was 10.20am on 4 May 2021; (c) 157 shareholders returned proxies by 10.20am on 4 May 2021: 116 proxy forms were received via email, and none were received by fax, mail or by hand, and 41 online proxy voting instructions were received. This represented 90.2% of the total number of 86 400 shareholders entitled to vote at the Scheme Meeting (being 174 shareholders); (d) the total number of shares represented by the proxies received was 84,185,267, being 77.2% of the total issued share capital of 86 400 (being 109,066,281 shares); (e) all proxy voting instructions received were either in favour of the resolution, or open, and shareholders were informed in the Notice of Scheme Meeting and in the proxy form that any proxies left open would be voted by the chair of the Scheme Meeting in favour of the resolution to agree to the Scheme; (f) 100% of the shares represented by the returned proxies, returned via email and online, were voted in favour of the resolution to approve the Scheme at the Scheme Meeting; (g) no Hard Copy/Email Proxies or online proxy voting instructions were received after 10.20am on 4 May 2021; (h) there is no evidence that any shareholder held any concerns in relation to the proxy cut-off time stated in the Notice of Scheme Meeting, or of any injustice or prejudice having been suffered. 33 86 400 submits that, in the circumstances, it could not be said that there is any realistic possibility that the irregularity could have affected the outcome of the Scheme Meeting: Clough Limited, in the matter of Clough Limited (No 2) [2013] FCA 1346 (Re Clough Limited (No 2)) per Siopis J at [8]. In Re Clough Limited (No 2), Siopis J referred to circumstances in which the relevant Court orders required that the scheme booklet be sent to those shareholders who were registered as such on 11 October 2013, but the scheme booklet and notice of the meeting was in fact sent to the shareholders who were registered as such on 8 October 2013: Re Clough Limited (No 2), [8]. Siopis J stated that this matter impacted only four shareholders, who represented 0.012% of the total shareholding in the relevant company. Siopis J stated at [8]: It is obvious, therefore, that even though there has been an irregularity in relation to the giving of notice of the meeting, it is not an irregularity which could have had any possible impact upon the integrity of the resolution that was passed at the meeting. The defect in giving notice of the meeting is a procedural irregularity for the purpose of s 1322(1)(b)(ii) of the Act. 34 86 400 submits that the objective of requiring at least 48 hours for the return of proxies is to ensure that shareholders are not given less time to exercise their rights to vote by proxy. However, notwithstanding this objective, there are a number of cases where courts have applied the validating effect of s 1322 where less than the required notice of a scheme meeting is given and shareholders accordingly have less time to consider their position and exercise their rights to vote by proxy. 35 86 400 submits that, in Excelsior Gold Limited, in the matter of Excelsior Gold Limited [2018] FCA 2064 (Re Excelsior), the Court considered a number of procedural irregularities, including the late dispatch of the scheme booklet (which included the notice of meeting and proxy form). The Court had ordered that the scheme booklet and proxy forms (or a link to a website for any electronic proxy lodgement) be sent by 15 August 2018 to the shareholders who appeared on the register of members on 10 August 2018 for a scheme meeting to be held on 19 September 2018. The proxy forms specified a proxy cut-off date of 11.00am on 17 September 2017. However, the documents were sent to shareholders appearing on the register as at 8 August 2018, and an additional two shareholders joined the register after that date but before 10 August 2018. The error was not identified until 12 September 2018, one week before the scheme meeting, and those shareholders were sent the scheme booklet and proxy form that day. However, the proxy cut-off date of 17 September 2017 at 11am did not change: when shareholders were sent the relevant of documents, the shareholders were informed of the need for them to lodge a proxy by that time if they wished to vote. The Court held that this was a procedural irregularity, being a deficiency of notice within s 1322(1)(b)(ii) that was validated or cured automatically under s 1322(2) of the Act: Re Excelsior at [102] and [104]. 36 86 400 also relies upon Mosaic Oil NL, in the matter of Mosaic Oil NL (No 2) [2010] FCA 1186; 80 ACSR 281(Mosaic Oil NL (No 2)). In that case, proxy forms initially dispatched erroneously stated that the resolution for the scheme meeting was "to approve the Employee Share Scheme", rather than to "approve the scheme". The company sent out amended proxy forms to correct the error, but the amended proxy form was dispatched to shareholders less than 28 days prior to the meeting. The Court held that this was a procedural error that was validated by s 1322(1)(b)(ii) of the Act. Jacobson J stated at [14]-[15]: 14. The error, or omission, in relation to the invalid proxy form, is a procedural error under s 1322(1)(b)(ii) of the Act. It is a deficiency of notice or time because the amended proxy form was dispatched to shareholders less than 28 days prior to the meeting. However, the deficiency was a matter of only two days and, in my opinion, it is a procedural irregularity which does not invalidate the proceeding unless the Court is of the opinion that it has caused or may cause substantial injustice and declares the proceeding to be invalid. 15. Here, in my view, the deficiency of a matter of only two days is one which has not caused substantial injustice bearing in mind, in particular, the large element of support for the Scheme at the meeting. It is unnecessary for there to be a validating order because validation is brought about by s 1322(2) of the Act: see SGIC Insurance Limited v Insurance Australia Limited (2004) 51 ACSR 593 at [12] - [16]. 37 Although the circumstances of these two cases differ from the present case, 86 400 submits that the conclusions reached apply with at least equal force to the present matter. 38 Accordingly, 86 400 submits that, pursuant to s 1322(2) of the Act, the resolution passed at the Scheme Meeting was not invalid merely because of the procedural irregularity: citing Re QT Mutual Bank Ltd (No 2) [2016] QSC 265 at [25], referring to Re Pembury Pty Ltd [1993] 1 Qd R 125; (1991) 4 ACSR 759. 39 86 400 submits that, because s 1322(2) of the Act provides for automatic validation, no validation order is necessary. In this respect, s 1322(2) provides: A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. 40 Section 1322(1)(a) of the Act provides that, in s 1322, "a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not". Section 1322(1)(b) of the Act provides that in s 1322: a reference to a procedural irregularity includes a reference to: (i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and (ii) a defect, irregularity or deficiency of notice or time. 41 86 400 submits that a procedural irregularity is validated or cured automatically under s 1322(2) of the Act, unless the Court is satisfied of substantial injustice and makes an order declaring the proceedings invalid. 86400 submits that, if there is no substantial injustice, s 1322(2) operates in relation to the meeting, such that the meeting and the resolution are valid, notwithstanding any irregularity: see Re Clough Limited (No 2) at [10]. 42 Finally, in light of the evidence referred to above, 86 400 submits that the fact that the Convening Orders inadvertently failed to refer to the cut-off time for Hard Copy/Email Proxies has not caused any prejudice and does not raise any concern with respect to the validity of the proxies returned by email, or of the results of the Scheme Meeting: citing cl 14.3 of the 86 400 Constitution and s 250B of the Act, and r 3.3(2) of the Rules. 43 At the hearing of this matter on 11 May 2021, I enquired of Mr Holmes of counsel about this procedural irregularity. In short, Mr Holmes submitted that the irregularity can be succinctly described in this way. First, the Notice of Scheme Meeting stated that the cut-off time would be 10am, which was 20 minutes earlier than it, in fact, was. Second, it is not the case that this erroneous 20 minutes was, in fact, applied. Rather, the erroneous 20 minutes was incorrectly noted in the Notice of Scheme Meeting. 44 I asked Mr Holmes whether anyone had raised any issue with 86 400's solicitors in respect of this irregularity. Mr Holmes confirmed that no person has raised any such issue and no person has objected or filed any notice or given any notification that they proposed to appear at the hearing on 11 May 2021 to oppose the approval of the Scheme. 45 I accept the submissions of 86 400 that the Notice of Scheme Meeting specifying 10am rather than 10.20am amounts to a procedural irregularity that did not cause any substantial injustice and that the proceedings at the Scheme Meeting are automatically validated by reason of the operation of s 1322 of the Act. I am satisfied, and I find, that the procedural irregularity could not have affected the outcome of the Scheme Meeting.

Advertisement of second court hearing 46 On 3 May 2021, a notice advertising the hearing listed for 11 May 2021 was published in The Australian newspaper in accordance with Order 11 of the Convening Orders. 47 In light of the above matters, I find that there has been compliance with the Rules and the Convening Orders.

Compliance with disclosure obligations under s 412(1) 48 86 400 submits that registration of the Scheme Booklet by ASIC is evidence of compliance with the disclosure obligations imposed by s 412 of the Act. I accept this submission for the following reasons. 49 As the Scheme is a members' scheme only, it is necessary that the explanatory statement be registered by ASIC before the notice of meeting is sent to 86 400 shareholders. Before registering the statement, ASIC must conclude that it appears to comply with the requirements of the Act, and must form the opinion that the statement does not contain any matter that is false in a material particular or materially misleading in the form and context where it appears: Act, ss 412(6) and 412(8). 50 Section 412(8) of the Act is of particular importance. It provides that ASIC must not register the explanatory statement unless the statement appears to comply with the Act and ASIC is of the opinion that the statement does not contain any matter that is false in a material particular or materially misleading in the form or context in which it appears. 86 400 submits that, in light of ASIC's registration of the Scheme Booklet on 30 March 2021, ASIC must be taken to have been satisfied that the requirements of s 412(1) of the Act were met. I accept this submission. 51 86 400 submits that, on the evidence, verification procedures were implemented to ensure that the Scheme Booklet did not contain any misleading statements and that it satisfied the applicable disclosure requirements. I accept this submission.

Conduct of Scheme Meeting and passing of the approval resolutions 52 86 400 submits that the evidence establishes that the requirements of the Convening Orders in relation to the conduct of the Scheme Meeting were complied with. The table below sets out the requirements of the Convening Orders and refers to the evidence which establishes that those requirements were satisfied: Requirement of Convening Orders Evidence that requirement satisfied The Scheme Meeting is to be held on 6 May 2021 immediately after the General Meeting but not before 10:20am: Order 3. Austin Affidavit at [30]; Second Lahiff Affidavit at [19] The Scheme Meeting is to be conducted electronically through an online platform: Order 3. Austin Affidavit at [18] - [24]. The Scheme Meeting is to be chaired by Mr Lahiff or failing him Ms Belinda Cooney: Order 8. Second Lahiff Affidavit at [21]. Voting on the resolution to approve the Scheme is to be conducted by way of poll: Order 6. Second Lahiff Affidavit at [29]; Austin Affidavit at [31] and [33].

53 I accept that the evidence establishes that the requirements of the Convening Orders in relation to the conduct of the Scheme Meeting have been complied with. 54 In accordance with the requirements in s 411(4)(a)(ii) of the Act, I am satisfied that the evidence establishes that the resolution to agree to the Scheme was passed by a majority in number of members present and voting (either in person or by proxy) at the Scheme Meeting, and by 75% of the votes cast on the resolution. In particular, I am satisfied that the evidence establishes that the resolution to agree to the Scheme was passed by 100% of votes cast and 100% of shareholders present and voting (in person or by proxy). 55 Finally, the Scheme Booklet stated that NAB would not vote any of its 86 400 shares at the Scheme Meeting. I am satisfied that the evidence establishes that NAB did not register for or vote its shares at the Scheme Meeting. NAB attended the Scheme Meeting as an observer only.

Voter Turnout 56 On the evidence, there was a substantial voter turnout. As a consequence, the issue of low voter turnout which is sometimes considered at the second court hearing does not arise in this case: see Re Amcor (No 2) at [18] - [20].

Conditions Precedent 57 The Scheme is subject to the satisfaction or waiver of a number of conditions precedent. Before approving a scheme, the Court will ordinarily require that all conditions precedent to the scheme (other than the Court's approval and the lodgement of the Court's approval order with ASIC) have been satisfied or waived. The concern of the Court in this respect is to remove any future doubt as to the binding nature of the scheme: see eg Re Glendale Land Development Ltd (In Liq) [1982] 2 NSWLR 563 at 567-568; 7 ACLR 171 at 178-179 and In the Application of United Medical Protection Limited [2007] FCA 631 at [19]. 58 The Fifth Lonie Affidavit annexed certificates from 86 400 and NAB confirming that all conditions precedent have been satisfied or waived. Mr Lonie also exhibited to his Fifth Affidavit a letter from ASIC dated 10 May 2021 which stated that ASIC has no objection to the Scheme for the purposes of s 411(17)(b) of the Act. Mr Lonie also deposed in his Fifth Affidavit that notice of the second court hearing commencing at 9.30am on Tuesday, 11 May 2021, had been published in The Australian newspaper on 3 May 2021 advising any person if they wished to appear that they must file a notice of appearance and affidavit in support at least one day before the date fixed for hearing. Mr Lonie deposes that he was informed by Mr Kramersh and Mr Perl, solicitors at HWL Ebsworth, that, at the time of swearing the affidavit, no notice of appearance had been received nor any affidavit nor any informal notice from any persons wishing to oppose the approval of the Scheme. I accept Mr Lonie's evidence in this regard.

Section 411(17) 59 The Court's power to approve a scheme is restricted by s 411(17) of the Act. Section 411(17) provides: The Court must not approve a compromise or arrangement under this section unless: (a) it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or (b) there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement; but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b). 60 At the approval stage, the Court must be satisfied that there is no proscribed purpose as described in s 411(17)(a). The Court must be satisfied that there has been provided to the Court a statement in writing by ASIC that it has no objection to the arrangement: see Act, s 411(17)(b)). 61 As I have referred to above, ASIC has provided a letter dated 10 May 2021 which states that, "under [section] 411(17)(b)", ASIC "has no objection" to the Scheme. I am satisfied that this letter from ASIC meets the requirements of s 411(17)(b) and, consequently, the bar under s 411(17)(b) for approval of the Scheme has been removed: see In the matter of Tatts Group Limited (No 2) [2017] VSC 770 (Re Tatts Group) at [35]; Re Toll Holdings Limited (No 2) [2015] VSC 236, [13]-[15]; Re Coles Group Limited (No 2) [2007] VSC 523; 215 FLR 411; 65 ACSR 494.

All necessary matters have been brought to the attention of the Court 62 86 400 has confirmed in submissions by its counsel, Mr Holmes, that there are no other matters of which it knows which warrant the attention of the Court and which may present an impediment to the approval of the Scheme.

EXERCISE OF DISCRETION 63 I have set out above principles from Re Amcor (No 2) at [7]-[11]. In Re Wesfarmers (No 2), Vaughan J at [13] and [15] stated: The role of the court in approving a scheme of arrangement is supervisory. The court has a discretion whether to approve a scheme and is not bound to approve merely because it previously made an order to convene the scheme meeting or because the statutory majorities have been achieved. However, the court will usually approach its task on the basis that the members are better judges of what is in their own commercial interests than the court. … The function of the court does not extend to usurping the views of the shareholders. However, the court is not a mere rubber stamp and will look at the arrangement to ensure that it is a reasonable one. In doing so the court is primarily concerned with whether the proposal is 'fair and reasonable' in the sense described in the second factor mentioned in the preceding paragraph. In that respect the court does not determine that the scheme is intrinsically in the members' interest or otherwise. The court ought only require satisfaction that the arrangement is one which is capable of being accepted. (Citations omitted.) 64 I have previously referred to these authorities in Opticomm Limited, in the matter of Opticomm Limited [2020] FCA 1679. 65 To summarise, the Court must be satisfied that: (a) there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme; and (b) the relevant scheme is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it.

Disclosure 66 Having regard to the affidavit material relied on by 86 400, including the material referred to earlier in these reasons, I am satisfied that there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the Scheme. This is so for the following reasons. 67 First, the explanatory statement contained in the Scheme Booklet was registered by ASIC prior to dispatch as required by s 412(6) of the Act. 86 400 submits, and I accept, that such registration by ASIC is evidence of compliance with the disclosure obligations imposed by s 412 of the Act. 68 Second, 86 400 has adduced evidence of the conduct of the Scheme Meeting, including the address given by the chairman: Second Lahiff Affidavit at [25]. 69 Third, Mr Lahiff gives evidence that, since dispatch of the Scheme Booklet, he has not become aware of any new information not otherwise disclosed to shareholders that was material to their decision whether to agree to the Scheme: Second Lahiff Affidavit at [38]. Mr Lahiff does identify one change from what is stated in the Scheme Booklet, which concerns whether the current directors of 86 400 will remain directors as at the Implementation Date. In this respect, the Scheme Booklet states in s 4.7 that, if the Scheme is implemented, NAB intends to replace all, or the majority, of the directors of 86 400 and its subsidiaries with its own nominees, and that, accordingly, it is not possible for the current 86 400 board to provide a written statement to shareholders as to their intentions regarding the 86 400 business. The Second Lahiff Affidavit notes that, on 30 April 2021, NAB notified 86 400 that all current directors of 86 400 (other than Mr Craig Kennedy) would remain directors of 86 400 as at the Implementation Date. 86 400 submits, and I accept, that the fact of this change in intention as to the post-implementation composition of the 86 400 board is not a matter that would have been material to shareholders in deciding whether or not to agree to the Scheme. In this respect, 86 400 noted, and I accept, that NAB's intentions regarding the 86 400 business post-implementation are set out in cl 5.7 of the Scheme Booklet, and have not changed since the dispatch of the Scheme Booklet. 70 In light of these matters, 86 400 submits that, through the Scheme Booklet and further consideration given to the Scheme at the Scheme Meeting, there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the Scheme. I accept that submission.

Fairness and reasonableness 71 I am also satisfied that the Scheme is fair and reasonable in the sense that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it. This is so for the following reasons. 72 First, there exists the overwhelming support of the shareholders, which is reflected in the voting results of the Scheme Meeting. 73 Second, the independent directors have recommended that shareholders vote in favour of the Scheme for the reasons given in the Scheme Booklet. In addition, all directors stated their intention to vote all of the 86 400 shares held or controlled by them in favour of the Scheme. 74 Third, the relevant independent expert has provided an opinion that the Scheme is fair and reasonable and in the best interests of 86 400 shareholders. 75 Fourth, the Scheme Booklet contained disclosures of the potential benefits and disadvantages of the Scheme. 76 Fifth, there is nothing to suggest that the Scheme has been proposed other than in good faith or that the shareholders voted other than in good faith or that any shareholder was oppressed. 77 Sixth, there is no evidence of opposition to approval by the Court, or as to oppression in the conduct of the Scheme Meeting; 78 Finally, the Scheme contains measures to protect shareholders against performance risk. In particular, the terms of the Scheme (supported by the Implementation Agreement) prevent any transfer of the Scheme Shares to NAB unless, and until, the Scheme Consideration has been issued. In addition, NAB has executed a Deed Poll by which it is legally bound to perform the roles assigned to it under the Scheme with respect to the issue of the Scheme Consideration.

EXEMPTION FROM SECTION 411(11) 79 Section 411(11) of the Act requires, subject to s 411(12), that a copy of the Court's order approving a scheme of arrangement be annexed to every copy of the company's constitution issued after the order is made. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which it shall comply. 80 In Re Equinox Resources Ltd [2004] WASC 143; 49 ACSR 692, EM Heenan J at [22] indicated that the purpose of s 411(11) was: ... to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved. 81 The above passage has been quoted with approval in a number of subsequent decisions: see eg Re Amcor (No 2) at [40]; Re AXA Asia Pacific Holdings Ltd (No 2) [2011] VSC 102; 82 ACSR 501 at [36]; and Hostworks Group Limited ACN 008 010 820, in the matter of Hostworks Group Limited ACN 008 010 820 (No 2) [2008] FCA 248 at [36]. 82 86 400 submits that exemption from compliance with s 411(11) is appropriate for three reasons. First, 86 400 submits that the Scheme will not alter the constitution of 86 400 or the rights of shareholders, creditors or other persons dealing with the company. 86 400 submits that no ongoing purpose will be served by requiring the orders approving the Scheme to be annexed to 86 400's constitution. Second, 86 400 submits that current shareholders are fully informed of the Scheme and will be informed in the event that the Court approves the Scheme. Third, 86 400 submits that the orders will be irrelevant once the Scheme is implemented and 86 400 becomes a wholly-owned subsidiary of NAB. To support these submissions, 86 400 cited Re Amcor (No 2) at [41]; Healthscope Limited, in the matter of Healthscope Limited (No 2) [2019] FCA 759; 136 ACSR 259 at [41]; Re Lion Selection Ltd [2009] VSC 546 at [24], which was cited with approval in Re Tatts Group at [57], Re Transcomm Credit Co-Operative Ltd [2016] VSC 835 at [33] and Re Skilled Group Limited (No 2) [2015] VSC 805 at [31]. 83 I accept 86 400's submissions in this regard and will make an order exempting 86 400 from compliance with s 411(11) of the Act.

DISPOSITION 84 For the reasons given, on 11 May 2021, I made the orders sought by 86 400. I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anderson.