American Pacific Borates Limited, in the matter of American Pacific Borates Limited (No 2) [2022] FCA 472

Introduction 1 These reasons assume familiarity with my earlier reasons in Re American Pacific Borates Limited [2021] FCA 1590 and adopt the definitions used in those reasons. 2 On 27 October 2021, I made orders requiring the Plaintiff, American Pacific Borates Limited (ABR), to convene and hold a meeting of shareholders (the Scheme Meeting) to consider the proposed scheme of arrangement (the Scheme). The Scheme Meeting duly went ahead and the resolution to agree to the Scheme was passed by 99.38% of the votes cast and by 98.47% of shareholders present and voting. 3 ABR now seeks orders approving the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth). In support of this application, ABR relies on the following evidence: (1) an affidavit of Sean Peter Duffy sworn on 23 February 2022 (the Fourth Duffy Affidavit); (2) an affidavit of Emilia Varga affirmed on 9 December 2021 (the Varga Affidavit); (3) an affidavit of Jacinta Ann Pattison affirmed on 9 December 2021 (the Pattison Affidavit); (4) an affidavit of Michael Milan Milivojac affirmed on 10 December 2021 (the Milivojac Affidavit); (5) an affidavit of Oliver James Bampfield affirmed on 9 December 2021 (the Bampfield Affidavit); (6) an affidavit of Wendy Turner affirmed on 9 December 2021 (the Turner Affidavit); (7) an affidavit of David Jay Salisbury sworn on 14 December 2021 (the Second Salisbury Affidavit); and (8) an affidavit of Sean Peter Duffy sworn on 24 February 2022 (the Fifth Duffy Affidavit).

Consideration 4 I have been provided with comprehensive and well-structured submissions which identify the various procedural requirements with which ABR was required to comply. Based on the evidence before the Court, I am satisfied that the procedural requirements contained in the Act, as reflected in the orders I made on 27 October 2021, have been complied with. 5 In addition, I am satisfied that it is appropriate, as a matter of discretion, to approve the Scheme. It should be understood that in this context, the Court's discretion resides within its supervisory jurisdiction: see, eg, Re Afterpay Limited [2021] NSWSC 1709 at [14] (Black J) and Re Isentia Group Limited [2021] NSWSC 1069 at [9] (Black J). There is nothing, in my view, that would warrant a refusal to make the orders sought having regard to the Scheme having been endorsed by such a large majority of shareholders. 6 The considerations relevant to the exercise of the Court's discretion are well established, and they have been considered in a number of recent decisions: see, eg, Re Healthscope Ltd (No 2) [2019] FCA 759; 136 ACSR 259 at [6] - [14] (Beach J). As Beach J said in Re Amcor Limited (No 2) [2019] FCA 842 at [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. I gratefully and respectfully adopt his Honour's concise statement of the Court's proper function in this application. 7 In my view, the Scheme should be approved for the reasons advanced by ABR in its written submissions; namely, that: (1) all relevant procedural requirements in relation to the convening and conduct of the meeting have been satisfied; (2) the scheme was approved by shareholders in the requisite majorities, acting in good faith and for proper purposes, and there is no suggestion of oppression of any minority; (3) there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme; (4) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it; (5) all matters that could be considered relevant to the exercise of the court's discretion have been drawn to the court's attention; (6) the Australian Securities and Investments Commission (ASIC) has been given the opportunity to draw the court's attention to any relevant matter and indicated in writing that it has no objection to the Scheme; and (7) the conditions precedent to the scheme have been satisfied or waived, save for court approval. 8 I am also satisfied that it is appropriate to make an order pursuant to s 411(12) of the Act that ABR be exempted from compliance with s 411(11) of the Act in respect of the Scheme. That section provides dispensation with the requirement 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. 9 In Re Equinox Resources Ltd [2004] WASC 143; 49 ACSR 692, Heenan J explained at [22] that the purpose of s 411(11) of the Act: … is 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. 10 That decision has been repeatedly cited with approval, including in Re Isentia at [15] (Black J) and in Re 86 400 Holdings Ltd (No 2) [2021] FCA 524 at [80] (Anderson J). 11 In circumstances where the Scheme does not involve any modification of any rights of shareholders, of creditors or of persons dealing with the company, I am satisfied that ABR can be exempted from compliance with s 411(11) of the Act.

Disposition 12 For the above reasons, I am satisfied that all applicable statutory and procedural requirements for approval of the Scheme, and that it is appropriate that the Court exercise its discretion in favour of approving the Scheme. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.