Australian Leaders Fund Ltd v Equity Trustees Ltd, in the matter of Australian Leaders Fund Ltd

Pursuant to subsection 411(4)(b) and subsection 411(6) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between Australian Leaders Fund Limited (ACN 106 845 970) (ALF), and its members, in the form of Exhibit "P1" in the proceeding, be approved (Scheme).
ALF lodge with the Australian Securities and Investment Commission a copy of the approved Scheme at the time of lodging a copy of these Orders.
Pursuant to subsection 411(12) of the Act, ALF be exempted from compliance with subsection 411(11) of the Act in relation to Order 1.
Pursuant to section 413 of the Act (and using the definitions in the Scheme), on the Implementation Date, the ALF Assets be transferred to the defendant in its capacity as responsible entity for the Watermark Absolute Return Fund, such transfer to be implemented in accordance with clauses 4.2 and 4.3 of the Scheme.
Liberty reserved to either party to apply for any further orders as may be considered necessary or desirable under section 413 of the Act. THE COURT NOTES THAT:
For the purposes of subsection 411(6) of the Act the alteration to clause 2(b) of the Scheme, being the addition of the number of ALF shares on issue as at the date of this Order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

18 Insofar as it is instructive to compare those results with other cases where schemes have been approved, in Re Lion Nathan Ltd (No 2) [2009] FCA 1261 at [6], Emmett J noted that 64% of eligible shares had been represented and voted in the scheme meeting. In Re MB Group PLC [1989] BCLC 672 at 675, Harman J described the turnout of 52% of scheme shares as "a high turnout". 19 In Re Avoca Resources Ltd [2011] FCA 208 at [25], Gilmour J noted, in respect of a members' scheme, that 72.38% of shares on issue were represented and voted and 11.49% of shareholders were represented at the meeting. In Re Auzex Resources Ltd (No 2) [2012] QSC 101 at [18], Applegarth J noted, in respect of a members' scheme, that voter turnout was 42.3% of votes and 9.75% by way of head count. 20 In the present case, 46.58% as a percentage of total voting shares is reasonably close to what Harman J had described as a high turnout. Further, 12.88% as a percentage of total shareholders is more than the turnout for other schemes that were approved. 21 A way of testing whether the figures reflect some flaw in the process is to have regard to the figures of attendance at the company's annual general meetings. I note that at the 2018 annual general meeting 14 members attended in person, representing 0.18% of the total register of members. At the 2019 annual general meeting 37 members attended in person, which represented 0.56% of the company's total register of members. Those figures suggest that the number of members present and voting at the scheme meeting was high and can give confidence in the process. 22 There is nothing in the turnout figures to suggest that there has been a flaw in the convening process. I have, in any event, examined that process on the evidence provided and I am satisfied that the scheme meeting was properly convened. 23 The form of the orders sought today does not go beyond existing practice. Order 1 expresses the power pursuant to s 411(4)(b) and s 411(6) to reflect the "alteration" to clause 2(b) of the scheme to state the number of shares on issue. This is an alteration of a minor kind that does not materially affect the details of the scheme. It is, therefore, clearly within the power under s 411(6). See Re InvestInfo Ltd [2005] FCA 1848; (2006) 24 ACLC 44 at [5]-[7] per Gyles J. 24 An order has also been sought for exemption from compliance with s 411(11). That is an orthodox exemption. See Re Equinox Resources Ltd [2004] WASC 143; 49 ACSR 692 at [21]-[22]. 25 In all the circumstances, I am satisfied that the following orders should be made: (1) Pursuant to subsection 411(4)(b) and subsection 411(6) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between Australian Leaders Fund Limited (ACN 106 845 970) (ALF), and its members, in the form of Exhibit "P1" in the proceeding, be approved (Scheme). (2) ALF lodge with the Australian Securities and Investment Commission a copy of the approved Scheme at the time of lodging a copy of these Orders. (3) Pursuant to subsection 411(12) of the Act, ALF be exempted from compliance with subsection 411(11) of the Act in relation to Order 1. (4) Pursuant to section 413 of the Act (and using the definitions in the Scheme), on the Implementation Date, the ALF Assets be transferred to the defendant in its capacity as responsible entity for the Watermark Absolute Return Fund, such transfer to be implemented in accordance with clauses 4.2 and 4.3 of the Scheme. (5) Liberty reserved to either party to apply for any further orders as may be considered necessary or desirable under section 413 of the Act. 26 Finally, the Court notes that for the purposes of subsection 411(6) of the Act the alteration to clause 2(b) of the Scheme, being the addition of the number of ALF shares on issue as at the date of this Order. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

At a glance

Court

Decision date

Before

Source

Judgment (3 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (9)