ANDEAN RESOURCES LIMITED (ABN 66 064 494 319) v ACN 148 066 139 PTY LTD

WHEN AN ARRANGEMENT IS BINDING 6 Section 411(4) of the Act provides that an arrangement is binding on the members of a company and the company if at a meeting convened in accordance with an order of the Court the relevant statutory majorities have been achieved and the scheme is approved by order of the Court. 7 The Court has broad discretion to approve a scheme and is not bound to approve a scheme merely because the Court has previously made orders for the convening of a meeting or because the statutory majorities have been achieved: see Re NRMA Ltd (No 2) (2000) 34 ACSR 261 at [21] per Santow J. However, where a majority of members have approved the scheme, the Court should be slow to conclude that the scheme is unreasonable or unfair, provided that the members have been properly informed of matters relevant to the making of their decision, as that would otherwise involve the Court substituting its commercial judgment for that of the body of members: Hostworks Group Limited (No 2) [2008] FCA 248 at [10]-[11] per Mansfield J.

COMPLIANCE WITH COURT ORDERS AND PROCEDURAL REQUIREMENTS 8 On 2 February 2011 the Court made orders pursuant to s 411(1) of the Act granting approval to Andean to convene a meeting on short notice of Andean's sole shareholder being the defendant company, for the purposes of considering, and if thought fit agreeing to, with or without modification, the amalgamation. 9 On 3 February 2011 the scheme meeting was held. The resolution to approve the scheme was passed by the requisite majority referred to in s 411(4) of the Act. 10 I am satisfied by having regard to the affidavits filed by Andean and [10]-[15] of the plaintiff's outline of submissions filed 7 February 2011, that there has been compliance with the Court orders made 2 February 2011 and other procedural requirements of the Act, except in relation to one procedural requirement which I will address below.

NON-COMPLIANCE WITH S 412(6) OF THE ACT 11 In written submissions filed 7 February 2011 and during the course of oral submissions, the Court's attention was directed to an irregularity concerning the procedural requirements of the Act, namely, non-compliance with s 412(6). This subsection requires an Explanatory Statement to be registered by ASIC before being dispatched to the scheme shareholders. 12 Counsel for the plaintiff contends that this was a procedural irregularity which has not caused any substantial injustice, and so does not invalidate this proceeding: see s 1322(2) of the Act. The plaintiff contends the following matters support the conclusion that no prejudice or injustice arises by reason of the late registration of the Explanatory Statement: the Explanatory Statement was ultimately registered 1 day late, in the same form as the instrument which was dispatched to the shareholder; the scheme meeting involved only one shareholder; the shareholder is a related body corporate of the scheme proponent; the shareholder was made aware of the irregularity prior to the scheme meeting; the shareholder is not prejudiced by the late registration; and ASIC is aware of the irregularity. 13 I am satisfied that s 1322(2) applies as I am not of the opinion the irregularity has caused any prejudice or injustice to arise.

NO OBJECTION BY ASIC 14 Pursuant to s 411(17) of the Act, the Court must be satisfied that the scheme has not been proposed for the purpose of avoiding the operation of Ch 6 or the plaintiff has produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the scheme, although the Court is not obliged to approve a scheme merely because such a statement has been produced. 15 On 8 February 2011, Mallesons Stephen Jaques, solicitors for Andean, received a letter from ASIC, which has been produced to the Court, stating that ASIC has no objection to the scheme of arrangement and that this advice is given having regard to ASIC's criteria for providing a statement in writing that it has no objection, as set out in Regulatory Guide 60.

CONSIDERATION 16 I am satisfied that this is a case where the amalgamation scheme should be approved. So far as compliance with s 412(6) is concerned, in the particular circumstances of this application no prejudice of any kind is demonstrated and the non-compliance, as I indicated at the hearing on 9 February 2011, is not a factor that should militate against approval being granted. I am otherwise satisfied that all the relevant criteria have been met, and the orders sought ought to be made.

orders 17 The Court orders that:

1. Pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth), the scheme of arrangement attached to the orders of the Court made 9 February 2011 be approved (Scheme).
2. Pursuant to s 411(12) of the Corporations Act 2001 (Cth), the plaintiff be exempted from compliance with s 411(11) of the Corporations Act 2001 (Cth) in relation to the Scheme.
3. Pursuant to s 413(1) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), each of the following will occur in the order set out below: (a) immediately before the Completion Time: (i) all of the Assets of the plaintiff will be transferred to and vested in the defendant, without any further act or deed; (ii) all of the Liabilities of the plaintiff will be transferred to and become Liabilities of the defendant, without any further act or deed; and (iii) all legal proceedings pending by or against the plaintiff will be continued by or against the defendant (as the case may be), without any further act or deed, other than an amendment of the record of the relevant court or tribunal; (b) and the plaintiff will be deregistered by ASIC without winding up.
4. Pursuant to s 413(1)(g) of the Corporations Act 2001 (Cth) (and using the definitions in the Scheme), as from the Completion Time the defendant and each of its directors may sign all documents and do all things required to be done by the plaintiff to complete, perfect or record the transfer of Assets and Liabilities of the plaintiff provided in these orders.
5. Liberty be reserved to any party to apply for any further orders as may be considered necessary or desirable under s 413 of the Corporations Act 2001 (Cth). I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.