Australia and New Zealand Banking Group Limited, in the matter of Australia and New Zealand Banking Group Limited (No 2) [2022] FCA 1547

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 At a hearing held on 26 October 2022 (the convening hearing), I made orders (the convening orders) requiring the plaintiff (ANZBGL) to convene and hold a meeting of its shareholders (Scheme Meeting) to consider a proposed Scheme of Arrangement (Scheme). I gave reasons for making those orders on 18 November 2022: Australia and New Zealand Banking Group Limited, in the matter of Australia and New Zealand Banking Group Limited [2022] FCA 1378 (ANZBGL (No 1)). 2 The Scheme Meeting was held on 15 December 2022, and the resolution to agree to the Scheme (Scheme Resolution) was passed by 99.17% of the votes cast and by 90.62% of shareholders present and voting (in each case, in person or by proxy). 3 The Australian Securities and Investments Commission (ASIC) has provided a letter stating that, under s 411(17) of the Corporations Act 2001 (Cth) (Act), ASIC has no objection to the Scheme. 4 At the second court hearing held on 19 December 2022, ANZBGL sought orders approving the Scheme pursuant to s 411(4)(b) of the Act (approval hearing). No shareholder or other person appeared at the approval hearing to object to the Scheme. 5 At the conclusion of the approval hearing, I made the orders sought by ANZBGL. These are my reasons for making those orders.

Overview of the Scheme 6 The Scheme is one of the steps required to implement a proposed internal restructure of ANZBGL and each of its subsidiaries (ANZ Group). The proposed restructure involves the following two steps: (a) ANZ Group Holdings Limited (ANZ NOHC) will be established as a non-operating holding company and will be the new listed parent company of the ANZ Group, in place of ANZBGL. This step will occur pursuant to the Scheme. (b) After the Scheme is implemented, the ANZ Group proposes to undertake an internal restructure whereby the ANZ Group's banking and certain non-banking businesses and assets will be separated into two principal subsidiary groups under ANZ NOHC, namely, the "ANZ Bank Group" and the "ANZ Non-Bank Group", and certain property interests will be transferred to ANZ ServiceCo, which will become an internal service company. 7 The Scheme, if approved, will involve ANZ NOHC acquiring all of the ordinary shares in the capital of ANZBGL (ANZBGL Shares) held by those persons recorded in the ANZBGL register of members as the holders of ANZBGL Shares as at the Scheme Record Date (Scheme Shareholders). In consideration for the transfer of each ANZBGL Share to ANZ NOHC, ANZ NOHC will issue one share in ANZ NOHC (ANZ NOHC Share) (Scheme Consideration). The Scheme Consideration will be issued to: (a) Scheme Shareholders who are not Ineligible Foreign Shareholders (as defined in the Scheme) (Eligible Shareholders); or (b) a sale agent as nominee for Ineligible Foreign Shareholders, and the sale agent must sell those shares and remit the cash proceeds to the Ineligible Foreign Shareholders. 8 After the implementation of the Scheme and the restructure, ANZ NOHC will own all ANZ Group businesses and assets.

Relevant principles 9 Section 411(4) of the Act provides that a scheme of arrangement is binding if, 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 it is subsequently approved by order of the Court. 10 In deciding whether to grant approval of a scheme of arrangement, the Court will ordinarily have regard to the following matters (see Re Vault Intelligence Ltd (No 2) [2020] FCA 1504 at [11], and the cases cited therein): (a) that the orders of the Court convening a meeting of members were complied with; (b) that the meeting of members so convened has approved the Scheme with the requisite majority; (c) that all other requirements of the Act and the Federal Court (Corporations) Rules 2000 (Cth) (Rules) have been satisfied; (d) that the 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; (e) that there has been full and fair disclosure to members and creditors of all information material to the decision whether to vote for or against the applicable scheme; and (f) that the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion.

Dispatch of Scheme materials 11 An office copy of the convening orders was lodged with ASIC on 26 October 2022, as required by r 3.5(b) of the Rules. 12 The convening orders required ANZBGL to convene the Scheme Meeting by providing various documents to its shareholders on or before 16 November 2022. The principal document to be provided to Scheme Shareholders was the Scheme Booklet, defined in the convening orders as a document substantially in the form of the document which is Annexure "BCF-8" to the affidavit of Baden Charles Furphy affirmed on 25 October 2022 (Third Furphy Affidavit). The Scheme Booklet was required to annex the Notice of Scheme Meeting (amongst other annexures). 13 The Scheme Booklet was registered by ASIC on 27 October 2022 prior to being sent to Scheme Shareholders in accordance with s 412(6) of the Act. The registered Scheme Booklet was in the same form as the scheme booklet at Annexure BCF-8 to the Third Furphy Affidavit, save for minor corrections. 14 A copy of the registered Scheme Booklet, as amended, was subsequently dispatched to Scheme Shareholders. In terms of method of dispatch, the convening orders required that: (a) each ANZBGL shareholder who had elected to be sent documents by ANZBGL in electronic form (Email Shareholder) must be sent an email which includes hyperlinks to an electronic copy of the Scheme Booklet, a personalised electronic proxy form and an online portal or website to view, listen to and participate in the Scheme Meeting online; (b) each ANZBGL shareholder who had elected to receive documents from ANZBGL in physical form (Hardcopy Shareholder) must be sent (i) a physical hard copy of the Scheme Booklet, (ii) a hard copy proxy form and a reply-paid envelope; and (iii) a letter setting out URL addresses for access to an electronic copy of the Scheme Booklet, a personalised electronic proxy form and an online portal or website to view, listen to and participate in the Scheme Meeting online; and (c) each ANZBGL shareholder who was not an Email Shareholder or Hardcopy Shareholder (Postal Shareholder) must be sent a hard-copy letter setting out URL addresses from which the Postal Shareholder could download an electronic copy of the Scheme Booklet, access an online portal or website to view, listen to and participate in the Scheme Meeting online and to lodge online any proxy or direct voting instructions, and a proxy form and reply-paid envelope. 15 Based on the evidence adduced at the approval hearing, I am satisfied that those requirements were complied with.

Additional shareholder communications 16 The evidence relied upon at the convening hearing deposed to ANZBGL's intention to refer to the Scheme as part of its broader communications to Scheme Shareholders in relation to ANZBGL's 2022 financial results. In particular, the Third Furphy Affidavit stated that, if the Court ordered ANZBGL to convene the Scheme Meeting, then, shortly after the Scheme Booklet and related materials were announced to the ASX, ANZBGL would undertake certain communications with shareholders which were identified in that affidavit (and the proposed contents of the communications were annexed to that affidavit). The evidence adduced at the approval hearing confirms that these communications were made in the form anticipated. 17 ANZBGL brought three further matters regarding shareholder communications to the Court's attention. 18 First, a shareholder information line was available to Scheme Shareholders who had any questions in relation to the Scheme. The details of the shareholder information line were referred to in the chairman's letter on page 6 of the Scheme Booklet under the heading "further information". 19 Second, on 29 November 2022, ANZBGL's Chief Executive Officer, Shayne Elliot, attended a live webcast Q&A session organised by the Australian Shareholders Association during which he answered questions about the Scheme and the Business Restructure. 20 Third, on 6 December 2022, ANZBGL published an article by Ken Adams, Group General Counsel of ANZBGL, in relation to the Scheme and Business Restructure on the Bluenotes section of its website. There is evidence that the contents of this communication was in material alignment with the content included in the Scheme Booklet. 21 ANZBGL submitted, and I accept, that no issues arose in relation to any of these communications which should impact upon the exercise of the Court's discretion to approve the Scheme.

Receipt and processing of proxy voting instructions 22 Order 8 of the convening orders provided that a proxy in respect of the Scheme Meeting would be valid and effective if, and only if, it was completed and delivered in accordance with its terms, or a proxy or direct voting instruction was lodged online in accordance with the instructions on the online portal or website referred to in Order 2, and in each case received by ANZBGL by 4:00pm Melbourne time / 3:30pm Adelaide time on 13 December 2022. 23 The evidence adduced by ANZBGL shows that all proxies received prior to the proxy cut-off time were duly processed and audited, with the voting instructions recorded against the relevant ANZBGL shareholder's details in Computershare's software. A report recording all proxy votes received prior to the proxy cut-off time was prepared for the purposes of the Scheme Meeting.

Conduct of the Scheme Meeting and voting results 24 In accordance with order 1(b) of the convening orders, the Scheme Meeting commenced at approximately 3:05 pm Melbourne time / 2:35 pm Adelaide time on 15 December 2022 after the conclusion of ANZBGL's Annual General Meeting (AGM). In accordance with order 1(c), it was conducted in-person at the Adelaide Convention Centre, North Terrace, Adelaide and electronically via an online platform. 25 In accordance with order 9 of the convening orders, the Scheme Meeting was chaired by Paul O'Sullivan. 26 In accordance with order 7 of the convening orders, voting on the resolution to agree to the Scheme was conducted by way of a poll. 27 In accordance with s 411(4)(a)(ii) of the Act, the Scheme Resolution 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 Scheme Resolution. Specifically, the evidence establishes that the Scheme Resolution was passed by 99.17% of the votes cast and by 90.62% of shareholders present and voting (in each case, in person or by proxy). 28 The number of shares voted at the Scheme Meeting as a percentage of ANZBGL's total issued share capital was approximately 51.11%, and the number of shareholders who voted as a percentage of the total number of ANZBGL's shareholders was approximately 1.50%. ANZBGL submitted, and I accept, that although the level of shareholder turnout was low, this does not give rise to any concern that shareholders were deterred from attending the Scheme Meeting or did not have notice of it. Relevantly, ANZBGL gave evidence that the number of ANZBGL shareholders who voted at the four most recent AGMs of ANZBGL as a percentage of the total number of ANZBGL's shareholders was as follows: (a) 2019 AGM - approximately 3.25%; (b) 2020 AGM - approximately 1.07%; (c) 2021 AGM - approximately 1.21%; and (d) 2022 AGM - approximately 1.94%. 29 I accept that the low voter turnout at the Scheme Meeting does not give rise to any concern that shareholders were deterred from attending or did not have notice of the Scheme Meeting. As Farrell J observed in Re TriAusMin Ltd (No 2) [2014] FCA 833, while "[l]ow shareholder turnout may be an indication that some procedural irregularity occurred", it is "inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme" (at [10]). In particular, I accept that the matters considered relevant to the matter of low voter turnout in Re Amcor (No 2) [2019] FCA 842 at [19] are apposite to the present circumstances: (a) there is nothing to suggest that there was any irregularity in the manner of dispatch of material to the shareholders; (b) shareholders were provided with notice of the Scheme Meeting; (c) there is no evidence of any issue that would have deterred shareholders from voting at or from attending the Scheme Meeting; and (d) shareholders who did vote demonstrated overwhelming support for the Scheme.

Advertisement of the approval hearing 30 Rule 3.4 of the Rules requires a scheme company to publish a notice of the hearing of the application for orders approving a scheme in a daily newspaper circulating generally in the State or Territory where the company has its principal, or last known, place of business. The notice must be published at least five days before the date fixed for the hearing of the application, and the notice must be in accordance with Form 6 of the Rules. On 29 November 2022 I made orders relisting the approval hearing to 10.15 am on 19 December 2022 and altering the form of the required notification. ANZBGL has satisfied the requirements of that order. 31 ANZBGL gave evidence that it had not received any notice from any party indicating an intention to oppose the approval of the Scheme or indicating an intention to appear at the approval hearing. No shareholder or other person appeared at the approval hearing to object to the Scheme.

Conditions precedent 32 Before approving a scheme, the Court will ordinarily require that all conditions precedent to the scheme (other than the Court's approval of the scheme and the scheme coming into effect) have been satisfied or waived. 33 As I stated in ANZBGL (No 1) at [31], there are four primary transaction documents relevant to the restructure, being the NOHC Restructure Implementation Deed (NOHC RID), the Scheme, a Deed Poll by ANZ NOHC and a Restructure Deed between ANZBGL and ANZ NOHC. 34 There are a number of conditions precedent to the NOHC RID and the Scheme. Clause 3.2 of the Scheme requires that, on the Second Court Date, ANZBGL and ANZ NOHC must provide to the Court a certificate confirming whether or not all of the conditions precedent in cl 3.1 of the NOHC RID (other than the condition relating to Court approval of the Scheme) and the condition precedent in cl 3.1(b) of the Scheme (that neither the NOHC RID nor the Deed Poll have been terminated) have been satisfied or waived. ANZBGL adduced evidence that, in accordance with cl 3.2 of the Scheme, on 19 December 2022 ANZBGL and ANZ NOHC executed a certificate certifying (in respect of matters within their respective knowledge) that each of these conditions precedent has been satisfied.

Full and fair disclosure to members 35 On the basis of the evidence relied upon at the convening hearing, I accepted that the Scheme Booklet satisfied the disclosure obligations imposed by s 412 and that appropriate verification processes had been implemented to ensure accuracy of the statements made in the Scheme Booklet and that full disclosure had been given. Further, in advance of the approval hearing, ANZBGL provided evidence regarding the conduct of the Scheme Meeting. On the basis of this evidence I am satisfied that there has been full and fair disclosure to members of all material information.

Is the Scheme fair and reasonable? 36 ANZBGL submitted that the Scheme is fair and reasonable in the sense that an intelligent and honest shareholder, properly informed and acting alone, might approve the Scheme. I accept that submission. The overwhelming support of the ANZBGL shareholders as reflected in the voting results of the Scheme Meeting is particularly relevant to this conclusion: see Re Amcor [2019] FCA 842 at [11] per Beach J. 37 The following matters submitted by ANZBGL are also relevant: (a) the recommendation from the ANZBGL directors that ANZBGL shareholders vote in favour of the Scheme, for the reasons given in the Scheme Booklet, and the fact that each ANZBGL director stated their intention to vote the ANZBGL shares held or controlled by them in favour of the Scheme; (b) the opinion of the independent expert that the Scheme is in the best interests of ANZBGL shareholders; (c) the disclosures in the Scheme Booklet which set out a detailed description of the proposed Scheme, including the potential benefits and disadvantages of the Scheme; (d) the absence of any application to oppose the orders approving the Scheme, and of any evidence suggesting any oppression in the conduct of the Scheme Meeting; and (e) the measures in the Scheme to protect shareholders against performance risk.

Have all necessary matters been brought to the attention of the Court? 38 At the convening hearing, ANZBGL notified the Court of several matters warranting the Court's attention. I considered these matters at [48] to [66] of ANZBGL (No 1). ANZBGL submitted, and I accept, that none of those matters presents an impediment to the Court approving the Scheme. 39 ANZBGL submitted that it has otherwise brought all necessary matters to the attention of the Court.

Section 411(17) 40 Section 411(17) of the Act provides that the Court must not approve a compromise or arrangement 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 Ch 6; or (b) there is produced to the Court a statement in writing by ASIC to the effect 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 that it has no objection to the compromise or arrangement has been produced to the Court as mentioned in s 411(17)(b). 41 A "no objection" statement has been provided by ASIC, satisfying the requirement of s 411(17)(b). There is nothing to suggest that the Scheme was proposed to avoid the operation of Ch 6.

Exemption from s 411(11) 42 ANZBGL sought an order under s 411(12) exempting it from compliance with s 411(11), which requires a copy of the Court's order under s 411(4)(b) to be annexed to the company's Constitution. 43 I accept that exemption from compliance with s 411(11) is appropriate in circumstances where: (a) the Scheme will not alter the constitution of ANZBGL or the rights of ANZBGL shareholders, creditors or other persons dealing with the company; (b) no ongoing purpose will be served by requiring the orders approving the Scheme to be annexed to ANZBGL's Constitution; and (c) current shareholders of ANZBGL are fully informed of the Scheme and will be informed in the event that the Court approves the Scheme.

US Securities Law exemption 44 ANZBGL Shareholders with a registered address in the United States will be able to participate in the Scheme and, if the Scheme becomes effective, ANZ NOHC will be required to issue ANZ NOHC Shares (as defined in the Scheme) to those shareholders. 45 Pursuant to the United States Securities Act of 1933 (US Securities Act), unless an exemption applies, all securities offered in the United States must satisfy the registration requirements of the US Securities Act and be registered with the US Securities Exchange Commission. This includes securities issued as consideration in an internal corporate re-organisation. 46 As I addressed at [81] to [86] of ANZBGL (No 1), ANZBGL and ANZ NOHC will not seek registration under the US Securities Act of the ANZ NOHC Shares that are to be issued pursuant to the Scheme, but intend to rely upon the exemption to registration contained in s 3(a)(10) of that Act if the Scheme is approved. That exemption provides as follows: Except as hereinafter expressly provided, the provisions of this title shall not apply to any of the following classes of securities: [….]….. any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval. 47 At the convening hearing, I was informed by ANZBGL that before an issuer can rely on the s 3(a)(1) exemption in the US Securities Act, a number of conditions must be satisfied. One of those conditions is that the relevant court must be advised, before any hearing at which the scheme is approved, that the issuer will rely on the s 3(a)(10) exemption based on that court's approval in the event that the scheme is in fact approved. That was done at the first hearing. 48 In its submissions filed in advance of the approval hearing, ANZBGL also requested that I record the following matters for the purposes of the exemption, which I do: (a) the Court has been informed of the securities to be offered as scheme consideration, and an independent expert report has concluded that the proposal is in the best interests of shareholders (see ANZBGL (No 1) at [32]); (b) at both the convening hearing and the approval hearing, the Court has considered the fairness of the terms of the proposed Scheme; and (c) both the convening hearing and the approval hearing were open to the public to attend, any person to whom ANZ NOHC Shares are to be issued had standing to appear, and notice of the time and date of the approval hearing was advertised in a daily newspaper circulating throughout the country.

Conclusion 49 For the reasons given, I made the orders sought by ANZBGL approving the Scheme pursuant to s 411(4)(b) of the Act. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.