APN Outdoor Group Limited, in the matter of APN Outdoor Group Limited (No 2) [2018] FCA 1633

legal principles 4 The role of the Court in approving a scheme of arrangement is supervisory. The Court has a discretion whether to approve a scheme pursuant to s 411(4)(b) of the Act. It is not bound to approve it merely because it previously made orders for the convening of a meeting or because the statutory majorities have been achieved. However, the Court will usually approach its task on the basis that members are better judges of what is in their own commercial interests than the Court: see Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583; [2010] FCA 400 (Re Seven Network) at [31]-[32] (per Jacobson J). 5 The matters of which the Court will need to be satisfied in deciding whether to approve a scheme relevantly include that: (1) there has been compliance with the orders of the Court convening the scheme meeting; (2) the resolution to approve the scheme was passed by the requisite majorities; (3) all other statutory requirements have been satisfied; (4) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it. In considering this issue, it is not the role of the Court to impose its own commercial judgment on the scheme or to consider whether a better scheme might have been proposed; (5) the plaintiff has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion; and (6) there has been full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme. See Re Seven Network at [35]-[39]; Signature Capital Investments Limited, in the matter of Signature Capital Investments Limited (No 2) [2016] FCA 385 at [4]; Medical Australia Ltd, in the matter of Medical Australia Ltd (No 2) [2017] FCA 1429 at [5].

Compliance with September Orders 6 The evidence established that: (1) subject to the issues referred to at [7]-[8] below, copies of the Scheme booklet in substantially the same form as Exhibit A and the proxy form (Scheme Materials) were distributed to Members on 13 September 2018; (2) a notice of hearing in the form of Annexure A to the September Orders was published in The Australian newspaper on 11 October 2018; and (3) the Scheme meeting was held at the time and place specified in the September Orders and Lisa Chung acted as chairperson of the meeting. 7 Order 8 of the September Orders required that Members who had nominated an electronic address for the purpose of receiving communications from APN Outdoor, such as notices of meeting and proxy appointment forms for APN Outdoor, would be sent the Scheme Materials electronically and either by ordinary post or airmail, subject to the location of their registered addresses. However, according to Aaron Lindsay Calder, a senior client relationship manager at Link Markets Services (Link) which maintains APN Outdoor's register of shareholders, and Jennifer Rachel Thomas, a customer relationship manager at Link DigiCom Pty Ltd (Link DigiCom) which was engaged by Link to dispatch all communications to Members, only those Members who had not nominated an electronic address were sent hardcopies of the Scheme Materials by post or airmail. While the evidence established that each Member received a copy of the Scheme Materials either electronically or in hard copy, the method of dispatch did not strictly comply with Order 8 of the September Orders. 8 Further, on 18 September 2018 Mr Calder ran a report to identify any new shareholder that acquired APN Outdoor shares between 7.00 pm (Sydney time) on 11 September 2018 and 7.00 pm (Sydney time) on 17 September 2018. That report identified 14 new members who had come onto APN Outdoors' share register in that period. On 21 September 2018 Link DigiCom sent a hard copy of the Scheme booklet to those new members. 9 Despite APN Outdoor's failure to fully comply with Order 8 of the September Orders, I was satisfied that there had been substantial compliance with those orders and that the non-compliance which had occurred was not sufficient to cause me to decline to approve the Scheme. The evidence established that every Member had received a copy of the Scheme Materials either electronically or by post and there was no evidence of any prejudice to any Member as a result of the non-compliance with the September Orders.

Approval of Scheme by Members 10 The evidence, as summarised at [2] above, established that the statutory majorities in s 411(4)(a)(ii)(A) and (B) had been satisfied.

Statutory requirements are otherwise satisfied 11 By letter dated 17 October 2018 the Australian Securities and Investments Commission informed APN Outdoor that, pursuant to s 411(17)(b) of the Act, it had no objection to the Scheme. 12 Accordingly, all statutory preconditions to the Court's approval were satisfied.

Scheme is fair and reasonable 13 At the first Court hearing, based on the evidence before the Court, I was satisfied that the Scheme was "of such a nature and cast in such terms that, if it receives the statutory majority at the meeting of members, the Court would be likely to approve it on the hearing of an unopposed application": see APN Outdoor (No 1) at [20]. 14 Nothing had occurred since the first Court hearing which warranted a departure from that conclusion. In particular no one came forward to APN Outdoor or the Court to oppose the Scheme and no issues were raised by Members at the Scheme Meeting. The Scheme was overwhelmingly supported by those Members who attended the meeting in person or by proxy. 15 At the hearing, APN Outdoor tendered a certificate dated 18 October 2018 signed by APN Outdoor and JCDecaux ANZ Pty Ltd, the acquirer, confirming that each of the conditions precedent in: (1) cl 3.1 of the Scheme Implementation Agreement, other than Court approval, had been satisfied or waived in accordance with the terms of that agreement; and (2) cl 3.1(a) and cl 3.1(b) of the scheme of arrangement between APN Outdoor and the Members had been satisfied or waived.

All necessary matters brought to the Court's attention 16 At the first Court hearing, APN Outdoor notified the Court of several matters warranting the attention of the Court. Those matters were considered not to be of concern to the Court: see APN Outdoor (No 1) at [21]. Further, none of those matters led me to conclude that I should refuse approval of the Scheme at the second Court hearing. I was satisfied that APN Outdoor had brought all necessary matters to the Court's attention.

Full and fair disclosure 17 At the first Court hearing, the Court was satisfied that the Scheme booklet would provide proper disclosure to Members: see APN Outdoor (No 1) at [18] and [22]-[26]. The evidence established that the Scheme booklet provided to Members was substantially in the form approved for dispatch by the Court in the September Orders. I was satisfied that the Scheme booklet met the requirements of s 411(3) and s 412(1) of the Act.

conclusion 18 For those reasons I was satisfied that I should approve the Scheme and make the orders sought by APN Outdoor. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic .