A-Cap Energy Limited, in the matter of A-Cap Energy Limited (No 2) [2023] FCA 1356

Convening and holding meetings and statutory majorities

Convening meetings 5 Subject to two matters, I am satisfied, based on A-Cap's submissions and the affidavit material, that the meetings were convened in accordance with the orders of 15 September 2023 and there has been compliance with the other aspects of those orders. The first matter is that typographical errors in Annexure E and Annexure F of the Scheme booklet were corrected before that document was printed and dispatched. However, the version published on A-Cap's investor portal website was not corrected. The second matter is that the Scheme booklet and other materials were to be despatched to shareholders and optionholders which appeared on the relevant registers on 12 September 2023. In fact, the documents were despatched to shareholders and optionholders which appeared on the relevant registers on 15 September 2023. 6 As to the first matter, the typographical error concerned numbering that had no effect on the contents of the documents which were notices of the meetings. Dispatch or publication of the Scheme booklet with or without the errors corrected falls within the scope of para 7 of the orders of 15 September 2023 in that there is no substantive alteration to the contents of the Scheme booklet the Court approved. 7 As to the second matter, there has been substantial compliance with para 8 of the orders of 15 September 2023. Moreover, there has been compliance with substance or purpose of the order which was to ensure that the Scheme booklet was sent to shareholders and optionholders recorded on the relevant registers as near as practicable to the time the Scheme booklets were despatched. To the extent necessary, the terms of para 8 of the orders of 15 September 2023 are to be taken to be varied nunc pro tunc so as to be to the effect that the Scheme booklet be despatched to shareholders and optionholders recorded on the relevant registers on 15 September 2023 not 12 September 2023. 8 On 15 September 2023 a Scheme booklet substantially in the form approved at the first court hearing and a copy of the sealed orders of 15 September 2023 were provided to ASIC. On the same day A-Cap also published a notice on the ASX Market Announcement Platform. On 18 September 2023 a copy of the Scheme booklet was uploaded onto the A-Cap website. On the same day electronic or hardcopy communications were sent to shareholders and optionholders in the manner required by the orders of 15 September 2023. 9 It follows that there has been compliance, or substantial compliance, with para 8 of the orders of 15 September 2023 and s 412 of the Act.

Scheme meetings 10 The Scheme meetings were held on 20 October 2023. Mr Ingram was Chair of the meetings. Voting upon each of the resolutions to approve the Schemes was conducted by way of a poll. Representatives of Advanced Share Registry, which provides share registry services to A-Cap, acted as returning officers, supervised the voting procedures and reported the outcome of the polls to Mr Ingram. I am satisfied that entitlements to vote at the meetings and the polls at the meetings were in accordance with para 3 and para 4 of the orders of 15 September 2023. 11 The report of the poll at the Share Scheme meeting records that 99.95% of votes cast (voting power) were in favour of the resolution and 99.02% of shareholders voting (headcount) were in favour of the resolution. Therefore, the statutory majorities were met. 12 The number of votes cast was 675,432,782. That represents approximately 54% of the 1,242,050,471 fully paid ordinary shares A-Cap has issued. There were 104 shareholders present in person or by proxy. That represents approximately 4% of shareholders. While relatively low, based on voter turnout at general meetings of A-Cap's members for the last two years, the turnout and number of votes cast at the meeting on 15 September 2023 was in line with and greater than voter turnout at those meetings. 13 The report of the poll at the Option Scheme meeting records that 100% of votes cast were in favour of the resolution and 100% of optionholders voting were in favour of the resolution. Therefore, the statutory majorities were easily met. 14 The number of votes cast was 8,732,464. That represents approximately 19% of the votes that could have been cast by optionholders. There were 33 optionholders present in person or by proxy. That represents approximately 10% of optionholders. 15 As will be explained shortly, the votes of 13 optionholders were cast by proxies that Mr Smartt completed online with the authority of those optionholders. The circumstances in which Mr Smartt came to receive the authority of those optionholders creates an element of doubt about the validity of counting the votes of those optionholders. If the proxies of those optionholders were excluded, the votes cast at the Option Scheme meeting would remain 100% of votes and optionholders. Therefore, the statutory majorities would still be met. However, the votes would represent approximately 3% of the votes that could have been cast and approximately 6% of optionholders. 16 On any view, the turnout at each of the Scheme meetings was low. Nonetheless, for the reasons given later, I am satisfied that the votes cast at the Share Scheme meeting and at the Option Scheme meeting (with or without counting the proxies that were completed by Mr Smartt) are representative of the views of the shareholders and optionholders, as a whole, as to the commercial merits of the Schemes. Also, I am satisfied that the meetings were convened, held and conducted in accordance with para 2 of the orders of 15 September 2023.

Investor telephone information line 17 A-Cap provided to Advance Share Registry a document with scripted answers to be used for answering questions by operators on A-Cap's investor information telephone line. Mr Ingram deposes that the script was reviewed and considered to be consistent with the information in the Scheme booklet and the operators of the information line were instructed not to deviate from the scripted answers. I have no reason to doubt Mr Ingram's evidence.

ASX announcements 18 On 22 September 2023 Lotus released its audited consolidated financial results for the financial year ended 30 June 2023. On 26 September 2023 A-Cap released its audited consolidated financial results for the 2023 financial year. These were published through ASX releases. 19 BDO Corporate Finance was provided with copies of the financial results and, on 27 September 2023, confirmed that the financial results had not affected the opinions expressed in the IER that formed part of the Scheme booklet. After receiving that confirmation, A-Cap published an ASX announcement to that effect on 28 September 2023. 20 On 4 October 2023 BDO Corporate Finance emailed a letter to the directors of A-Cap advising that, having considered movements in the uranium price since the date of the IER with input from the Technical Expert (Valuation & Resource Management), BDO Corporate Finance had concluded that there had been no material change in the information contained in the IER and that a supplementary independent expert report was not required. After receiving that letter, on 5 October 2023, A-Cap published an ASX announcement setting out the substance of the letter.

Informal communications 21 Mr Smartt deposes that he sent emails directly to a number of optionholders to encourage them to vote (by way of proxies) at the Option Scheme meeting. The evidence of Mr Smartt is to the effect that on or about 27 September 2023 he became aware that A-Cap had received a low number of proxy votes for the Option Scheme meeting. Between 4 and 8 October 2023, without consulting A-Cap's Due Diligence Committee, Mr Smartt took it upon himself to send emails directly to around 20 of the larger optionholders. He also sent an email to Mr Michael Soucik, of Mahe Capital, a corporate advisory firm that had provided corporate advisory services to A-Cap for the rights issue pursuant to which the listed options had been issued. Mr Smartt deposes that he had experienced 'technical issues' with his emails that resulted in him losing 'some emails' from his account. As a consequence, A-Cap tendered, as Exhibit C, an incomplete sample of the email correspondence between Mr Smartt and the relevant optionholders. 22 The form of the emails was not consistent, but the substance of the communications was to draw the addressees' attention to the announcement concerning the 'merger with Lotus and the fact that [the optionholder] will be issued Lotus shares for [the options]' and to offer to vote with the optionholder's authority online. The emails invited the optionholder to send an email with a statement to the effect that the optionholder granted Mr Smartt authority to vote online for the optionholder. In some cases, Mr Smartt's email invited the optionholder to express the grant of authority in the form: 'in favour of the resolution' in other cases 'in favour (or against) the resolution'. In some cases, optionholders were also sent a PowerPoint presentation dated 13 July 2023. 23 The PowerPoint presentation provided an overview of the transaction, rationale for the 'merger' and benefits for A-Cap shareholders. The PowerPoint presentation provided no information about the potential disadvantages of the 'merger' and was not completely consistent with the Scheme booklet the Court approved for distribution to shareholders and optionholders on 15 September 2023. 24 Mr Smartt deposes that, in response to his communications, he received authority to vote online for 14 optionholders in favour of the resolution. He carried out the voting instructions of 12 of those optionholders. In the case of one optionholder, he appointed the Chair with an open (undirected) proxy rather than directing the Chair to vote in favour of the resolution. In the case of another optionholder, he failed to process that optionholder's authority and, therefore, no proxy was appointed and no votes were counted for that optionholder at the Option Scheme meeting. 25 Mr Smartt deposes that separately he also received an instruction and authority from a shareholder to process that shareholder's votes in favour of the resolution at the meeting of shareholders. Mr Smartt processed that shareholder's proxy online in accordance with that instruction and authority. 26 Mr Smartt deposes that, after processing the votes online for the shareholder and optionholders and following consultation with the Due Diligence Committee, on 11 October 2023, he sent a further email directly to eight optionholders and, in the case of six optionholders, to the investment advisor who had given instructions to Mr Smartt to vote on their behalf. That email confirmed that Mr Smartt had appointed the Chair as the optionholder's proxy and directed him to vote in favour of the resolution. Further, it said that Mr Smartt had proceeded on the basis that the optionholder had read the Scheme booklet and encouraged the addressee to read it, gave instructions as to how to locate and access a copy of it and information about the A-Cap shareholder information line. The email also informed the addressee that the proxy voting directions could be changed and provided information and instructions on the manner in which to change the proxy voting directions. It concluded that if no action were taken the appointment of the Chair to vote in favour of the resolution would stand. 27 Mr Smartt deposes that on 12 October 2023 he emailed a further 25 shareholders and six optionholders and provided them with instructions on how to access and use the online proxy appointment platform. That email provided no other information. 28 All votes cast at the meeting of shareholders and the meeting of optionholders in accordance with the instructions and authorities given to Mr Smartt were counted in the polls taken at those meetings. In the case of the proxy incorrectly appointing the Chair with an open proxy, the Chair voted in favour of the resolution and, therefore, indirectly the vote was cast in accordance with that optionholder's instructions to Mr Smartt.

Integrity of Scheme meetings 29 A scheme proponent will inevitably have to communicate with scheme class members in respect of a proposed scheme after the first court hearing. Many communications will be of an administrative character. However, some communications may have a bearing on the information provided with or as part of the Court approved explanatory statement. Where a scheme proponent intends to communicate with class members about matters affecting the substantive information provided in relation to the scheme and that intention has been formed before the first court hearing, the scheme proponent should bring the fact of the intended communication to the Court's attention at the first court hearing. If it is a communication that is intended to be sent with the explanatory statement, approval of the Court should be sought as to the form of that communication. If the intended communication is in the form of the provision of information about the proposed scheme through proxy solicitation campaigns or information lines or investor presentations, the nature of the information intended to be provided should be disclosed to the Court at the first court hearing. 30 There may be other communications after the first court hearing of which the scheme proponent is not aware at all, or the precise nature of which the scheme proponent is not aware, at the time of the first court hearing. For example, the scheme proponent may be obliged to make disclosure of information of which it becomes aware after the first court hearing to comply with continuous disclosure obligations under s 675 of the Act or other obligations to publish information under the Act, the Corporations Regulations 2001 (Cth) or listing rules of an applicable stock exchange. Publication of that information may affect information contained in the explanatory statement or other documents the Court approved for dispatch at the first court hearing. 31 In this case, A-Cap made the Court aware at the first court hearing that between the first court hearing and the meetings of shareholders and optionholders both A-Cap and Lotus would likely publish financial results for the financial year ended 30 June 2023. Further, that A-Cap intended to ask the independent expert if anything in those financial results changed the opinion that the Share Scheme was in the best interests of shareholders and the Option Scheme was in the best interests of optionholders and, if not, publish that information by an ASX announcement. In circumstances in which the Court is made aware at the time of the first court hearing of the intention to publish a statement to the effect that financial information does not alter the opinion of an independent expert despatched with an explanatory statement, Court approval to publish that statement would not generally be necessary: e.g., Andean Resources Limited, in the matter of Andean Resources Limited [2010] FCA 1190 at [26] (Jagot J). I do not consider it was necessary for A-Cap to seek specific approval of the Court to publish the announcement it made on 28 September 2023 to the effect that BDO Corporate Finance had not changed its opinion after publication of the A-Cap and Lotus 2023 financial results. 32 Differing views have been expressed concerning the necessity to obtain approval of the Court before making other statements or communications relating to a proposed scheme of arrangement after the first court hearing and before the scheme meetings to scheme participants. Jackman J considered and surveyed many of the authorities in Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400 at [27]-[35]. After considering those authorities, Jackman J expressed the view that 'it is neither necessary nor desirable for the Court to consider whether it should approve such subsequent communications, unless a supplementary explanatory statement is required' (at [32]). As a general statement of the necessity and desirability of Court approval of subsequent communications, I agree, however, there may be circumstances in which Court approval (or direction) would be appropriate if the intended communication is inconsistent with or qualifies the explanatory statement the Court has approved albeit that a supplementary explanatory statement is not considered necessary or appropriate in the circumstances of the case: see, e.g., Essential Metals Limited, in the matter of Essential Metals Limited [2023] FCA 240 at [100]-[102] (Banks-Smith J). Court approval of (or direction about) communications after the first court hearing may also be prudent lest the scheme proponent jeopardise approval of the scheme at the second court hearing. 33 In any event, in this case, A-Cap did not seek the Court's approval to make (or direction about) the ASX announcement it made on 5 October 2023 to the effect that BDO Corporate Finance had expressed an opinion that movements in the uranium price had not made a material change to the information contained in the IER. Nor, obviously, did it seek the Court's approval to make (or direction about) the various communications that Mr Smartt sent to optionholders. 34 As to the announcement regarding the uranium price, I do not consider that it was necessary for A-Cap to seek approval of the Court to make that announcement or that it necessitated a supplementary explanatory statement. It was information in a similar category to the release of the financial results. Change in the uranium price was public information that might have affected the assumptions underpinning or opinions expressed in the IER. It was appropriate for A-Cap, once it became aware that BDO Corporate Finance had considered that issue and concluded that there was no material change to the information contained in the IER, to make that information public. Had it requested the Court to approve making an announcement to that effect it would have been granted. Also, there is no reason for considering that the announcement has or may have rendered the Scheme booklet inaccurate or misleading. 35 As to the communications Mr Smartt sent to optionholders, there are a number of potential problems with informal communications of that nature from an officer of a scheme proponent to selected scheme class members. Communications targeted to selected class members have the potential to promote the views of part rather than the whole of the class members and, thereby, unfairly influence or skew the votes cast at the scheme meeting. Likewise, such communications have the potential to be coercive or to mislead the targeted class members. In short, such communications have the potential to undermine the integrity of the voting process: see, e.g., Walsh & Company Investment Limited as responsible entity of Fort Street Real Estate Capital Fund I, Fort Street Real Estate Capital Fund II, Fort Street Real Estate Capital Fund III and Fort Street Real Estate Capital Fund IV [2020] NSWSC 1746 at [66]-[67] (Black J). 36 With respect to communications with class members after the first court hearing, in Vita Group (at [33]) Jackman J made the following observations with which I agree: 33 … the judgments of [the Supreme Court of New South Wales] … contain very useful guidance for the scheme company in terms of the approach that should be taken to subsequent communications with shareholders in order to minimise or negative the risk of misleading conduct which might jeopardise Court approval at the second court hearing. Black J, in particular, has usefully stated that no difficulty arises where the content of the proposed presentation largely mirrors that contained, in more detail, in the scheme booklet and where it prominently directs recipients to read the scheme booklet before making any voting decision in respect of the proposed merger: Re Tabcorp Holdings Ltd [[2022] NSWSC 448] at [22]. Further, a degree of advocacy is permissible in communications with shareholders given that the explanatory statement invariably contains a recommendation, provided that such advocacy is fair and honest: Re Investa Listed Funds Management Ltd [2016] NSWSC 344 at [5] (Brereton J); Re AGL Ltd [2022] NSWSC 576 at [42] (Black J). Those statements in my opinion contain valuable guidance for scheme companies in deciding for themselves what communications should be made with scheme shareholders and others in advance of the scheme meeting. 37 Here, Mr Smartt communicated directly with optionholders without informing members of the Due Diligence Committee and, I infer, members of A-Cap's board of directors. For the reasons already given, that conduct was imprudent and had the potential to jeopardise approval of the Schemes if, as was the case, the statutory majorities were obtained at the Scheme meetings. However, having reviewed the sample of communications tendered as Exhibit C, while some of the communications may be considered somewhat one-sided, the communications as a whole, including the email sent after the Due Diligence Committee became aware of Mr Smartt's communications, fall into the category of advocating in favour of the Option Scheme. Promotion of the Option Scheme was ultimately balanced by an admonition to read the Scheme booklet, which provides more detailed and balanced information, and directions as to how to access the information in the Scheme booklet. 38 Further, by choosing to communicate with selected optionholders rather than the whole class, Mr Smartt ran the risk of undermining the representativeness and fairness of the Option Scheme meeting. However, given that no optionholder which voted at the Option Scheme meeting voted against the resolution, it cannot be said that 'targeting' certain optionholders had any influence on the outcome of the meeting. Moreover, on balance, I accept Mr Smartt's statement to the effect that his intention when communicating with optionholders was to encourage them to participate in the Option Scheme meeting. 39 I am satisfied that the informal communications of Mr Smartt with optionholders has neither undermined the integrity of the voting process nor resulted in any optionholder being influenced by unfair, unbalanced or misleading information.

Validity of proxies Mr Smartt procured 40 The orders made at the first court hearing required that the meetings be convened, held and conducted in accordance with the provisions of Pt 2G.2 of the Act that apply to a meeting of the members of A-Cap and the provisions of A-Cap's Constitution that apply to such meetings to the extent not inconsistent with Pt 2G.2 of the Act. 41 Section 250A, in Pt 2G.2, of the Act provides: 250A Appointing a proxy (1) An appointment of a proxy is valid if it is signed, or otherwise authenticated in a manner prescribed by the regulations, by the member of the company making the appointment and contains the following information: (a) the member's name and address; (b) the company's name; (c) the proxy's name or the name of the office held by the proxy; (d) the meetings at which the appointment may be used. An appointment may be a standing one. (1A) The regulations made for the purposes of subsection (1) may prescribe different requirements for the authentication of an appointment given to the company by different means (electronic or otherwise). (2) If a company has a constitution, the constitution may provide that an appointment is valid even if it contains only some of the information required by subsection (1). … 42 Section 250B, in Pt 2G.2, of the Act provides (notes omitted): 250B Proxy documents Documents to be received by company before meeting (1) For an appointment of a proxy for a meeting of a company's members to be effective, the following documents must be received by the company at least 48 hours before the meeting: (a) the proxy's appointment; (b) if the appointment is signed, or otherwise authenticated in a manner prescribed by regulations made for the purposes of subsection 250A(1), by the appointor's attorney - the authority under which the appointment was signed or authenticated or a certified copy of the authority. … Receipt of documents (3) A company receives a document referred to in subsection (1): (a) when the document is received at any of the following: (i) the company's registered office; (ii) a fax number at the company's registered office; (iii) a place, fax number or electronic address specified for the purpose in the notice of meeting; and (b) if the notice of meeting specifies other electronic means by which a member may give the document - when the document given by those means is received by the company as prescribed by the regulations. … 43 Paragraphs 11 and 12 of the orders of 15 September 2023 modified s 250B(1) by providing that proxy forms would be valid and effective if and only if completed and delivered by 10.00 am (Share Scheme) or 11.00 am (Option Scheme) on 18 October 2023. That is, 48 hours before the scheduled times of the Scheme meetings. 44 Regulation 2G.2.01 of the Regulations provides: 2G.2.01 Authentication of appointment of proxy (Act s 250A) (1) For subsection 250A(1) of the Act, an electronic authentication of an appointment of a proxy must include: (a) a method of identifying the member; and (b) an indication of the member's approval of the information communicated. (2) If a member appoints a proxy by e mail or Internet based voting: (a) the member must be identified by personal details (for example, the member's name, address and date of birth); and (b) the member's approval of the information communicated must be communicated by a form of security protection (for example, the entering of a confidential identification number such as a shareholder registration number or holder identification number). 45 Article 49.1 and Art 49.2 of the A-Cap constitution provide: 49.1 An appointment of a proxy is valid if it is signed by the Member making the appointment and contains the information required by subsection 250A(l) of the Corporations Act. 49.2 For the purposes of clause 49.1, an appointment received at an electronic address will be taken to be signed by the Member if: (a) a personal identification code allocated by the Company to the Member has been input into the appointment; or (b) the appointment has been verified in another manner approved by the Directors. 46 A-Cap submits that the shareholder and optionholders proxy appointments Mr Smartt made were valid in accordance with s 250A(1) of the Act because they were authenticated electronically in the manner prescribed in reg 2G.2.01. Further, it does not matter that Mr Smartt was the person who entered the information electronically because Mr Smartt was, in substance, appointed as the agent of the shareholder and optionholders for that purpose. That is, the proxies were appointed by the shareholder and optionholders within the meaning of s 250A(1) of the Act. Alternatively, Mr Smartt was appointed their attorney and A-Cap received the emails as the authority under which he was appointed for the purpose of s 250B(1)(b) of the Act. 47 While the informality of the instruction and authority given to Mr Smartt, as company secretary, by the shareholder and optionholders should not be regarded as best practice, I am satisfied on the evidence that Mr Smartt was appointed as agent to enter the applicable information electronically on behalf of the shareholder and optionholders in question. I also infer that A-Cap accepted the emails received from the shareholder and optionholders as valid appointments of Mr Smartt as their agent for the purpose of entering the information electronically. 48 Although Mr Smartt does not depose to the facts in direct terms, I infer from the invitation to vote online on behalf of the optionholders and his statement to the effect that he appointed the Chair as proxy that, on behalf of the shareholder and optionholders, Mr Smartt entered information by Internet based voting that included: (a) information of the kind referred to in s 250A(1) of the Act; (b) identification of the shareholder or optionholder and an indication of the shareholder's or optionholder's approval of the information communicated for the purposes of reg 2G.2.01(1) of the Regulations; (c) personal details of the kind referred to in reg 2G.2.01(2)(a) of the Regulations identifying the shareholder or optionholder; and (d) the personal identification code allocated to the shareholder or optionholder of the kind referred to in Art 49.2 of the A-Cap Constitution and that code met the description of a 'form or security protection' for the purposes of reg 2G.2.01(2)(b) of the Regulations. 49 Based on the affidavit evidence and inferences drawn from it, I am satisfied that the appointment of the proxies met the requirements of s 250A(1) of the Act and reg 2G.2.01(1) of the Regulations and were taken to have been signed by the shareholder and optionholders in accordance with Art 49.2 of A-Cap's Constitution. Therefore, as the proxies were taken to have been signed by the shareholder or optionholder for the purposes of the A-Cap Constitution the proxies were not signed or authenticated by the shareholder's or optionholders' 'attorney' for the purposes of s 250B(1)(b) of the Act. However, that conclusion is not free from doubt and it may have been necessary for A-Cap to receive the authority under which Mr Smartt was appointed 'attorney' 48 hours before the scheduled commencement times of each of the Scheme meetings in accordance with the requirements of s 250B(1)(b) of the Act as modified by the orders of 15 September 2023. In that case, as noted above, A-Cap appears to have accepted the emails from the shareholder and optionholders to Mr Smartt as that authority. In the circumstances and in the absence of any challenge, on the evidence before the Court, I am satisfied that there is no reason to doubt the validity of the relevant proxy appointments for the purpose of counting the votes in the polls taken at each of the Scheme meetings. 50 In any case, whether or not the votes cast on those proxy appointments were correctly counted in the polls, if incorrectly counted they made no difference to the outcome of the resolutions. In those circumstances, the Court may declare the result of the Scheme meetings valid notwithstanding any irregularity: e.g., Fairfax Media Limited, in the matter of Fairfax Media Ltd (No 2) [2018] FCA 1930; (2018) 366 ALR 516 at [111] (Gleeson J) (and the authorities there cited).

Low optionholder turnout 51 Irrespective of whether or not the relevant proxy appointments were valid, the voter turnout at the Scheme meetings was low. Approximately 4% of shareholders voted, approximately 10% of optionholders voted if the Smartt proxy appointments are counted and approximately 6% if they are not. 52 Voter turnout has no statutory significance provided that there is a quorum and the votes cast at the scheme meeting meet the statutory majorities prescribed in s 411(4)(a) of the Act. However, voter turnout may have a bearing on discretionary considerations if, for example, there is reason to consider that due to low turnout the statutory majorities are not truly representative of the views of the scheme class members. Also, low voter turnout may suggest a flaw in the process of convening the meeting: see, e.g., Fairfax Media (No 2) at [83]-[84] (Gleeson J) (and the authorities there cited); TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833 at [10]-[12] (Farrell J); Decimal Software Limited, in the matter of Decimal Software Limited (No 2) [2018] FCA 2040 at [20] (Banks-Smith J). 53 In my view, the low voter turnout is not indicative of any flaw in the procedure for convening the Scheme meetings. The same convening procedure was used for the Share Scheme meeting and Option Scheme meeting. The turnout of shareholders was in line with and higher than the turnout for the last two general meetings of members. The turnout of optionholders was in line with or better than the turnout of shareholders. Here, although the turnout was low, all except one shareholder present voted in favour of the resolution at the Share Scheme meeting and all optionholders present at the Option Scheme meeting voted in favour of the resolution. There is nothing in the materials before the Court to suggest that the low turnout renders the votes cast at the Scheme meetings unrepresentative of views of the shareholders or optionholders. Apathy should not be presumed to equate to dissent: Re Matine Ltd (1998) 28 ACSR 268 at 295 (Santow J).

Conditions precedent 54 As noted earlier, A-Cap has tendered certificates executed by each of A-Cap and Lotus stating that all conditions precedent in cl 3.1 and cl 3.3 of the SID, cl 3.1 of the Share Scheme and cl 3.1 of the Option Scheme have been satisfied or waived. (Except, of course, for Court approval.)

Section 411(17) 55 ASIC has provided a statement in writing conforming with s 411(17)(b) of the Act. In Chesser Resources I mentioned the importance of the ASIC's role and function in applications of this nature. Counsel for A-Cap submitted that ASIC was aware of the facts to which Mr Smartt deposes in his affidavit. I take into account that ASIC has not appeared or made submissions in opposition to approval of either of the Schemes nor has it brought any matter to the attention of the Court.

Discretionary considerations 56 I am satisfied that there has been full and fair disclosure to shareholders and optionholders of all information material to the decision whether or not to vote in favour of the Schemes, as set out in the Scheme booklet (including the explanatory statement). There is also evidence, in terms of the independent expert report, that the Scheme is in the best interests of the shareholders and optionholders in the absence of a superior proposal. There is otherwise no information before the Court to suggest that the Schemes are other than fair and reasonable such that an intelligent and honest shareholder or optionholder, properly informed and acting alone, would approve. There is no evidence of any superior proposal. 57 I am satisfied that all relevant matters have been brought to my attention and that orders should be made approving the Schemes. I am also satisfied that A-Cap should be exempted from compliance with s 411(11) (annexing a copy of the orders under s 411(4)(b) to the company's constitution) in accordance with s 411(12) of the Act. The Schemes will not alter the rights of the members, creditors or other persons dealing with A-Cap.

Conclusion 58 Orders will be made in terms of A-Cap's minute of proposed orders on the second court hearing. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.