Australian Securities Commission v Marlborough Gold Mines Ltd [2025] FCA 522 | Case summary

The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days' notice of the hearing of this application.
The Court is satisfied that ASIC has had a reasonable opportunity to:

(a) examine the terms of the proposed scheme of arrangement to which the application relates (Scheme) and a draft explanatory statement relating to that Scheme; and

(b) make submissions to the Court in relation to the Scheme and the draft explanatory statement.

The Court notes the letter from ASIC to the directors of the Plaintiff (TRS) dated 15 May 2025 produced at the hearing.

Pursuant to subs 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act), TRS convene and hold a meeting (Scheme Meeting) of its members holding fully paid ordinary shares (TRS Shareholders):

(a) for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed Scheme between TRS and TRS Shareholders, the terms of which are set out in Annexure A to these orders;

(b) to be held on 23 June 2025 commencing at 2.30pm (Melbourne time) virtually via an online platform.

Pursuant to subs 411(1) and s 1319 of the Act, the Scheme Meeting be convened by sending on or before 21 May 2025 to each TRS Shareholder:

(a) in the case of shareholders who have provided TRS with an email address and have elected to receive communications in relation to company meetings electronically (Email Shareholders), an email substantially in the form of the template email at pages 278-279 of Annexure LRH-7 to the affidavit of Lauren Rebecca Harris affirmed on 14 May 2025 (Harris Affidavit) which contains:

(i) hyperlinks to an online portal or website from which the Email Shareholder may:

(A) access and download an electronic copy of a document substantially in the form which appears at pages 63 to 256 of Annexure LRH-2 to the Harris Affidavit (including the annexures to that document), as amended in the manner set out in Annexure KAP-2 to the affidavit of Kelly Ann Powers sworn on 15 May 2025 (Scheme Booklet);

(B) access an online platform to listen to and participate in the Scheme Meeting;

(ii) instructions on how Email Shareholders can lodge a proxy vote;

(b) in the case of shareholders who have provided TRS with a physical address and have elected to receive communications in relation to company meetings in hard copy (Hard Copy Shareholders), the following documents in hard copy:

(i) the Scheme Booklet;

(ii) a personalised proxy form (Proxy Form); and

(iii) a reply-paid envelope for the return of completed Proxy Forms;

(c) in the case of shareholders who are not Email Shareholders or Hard Copy Shareholders (No Election Shareholders), the following documents in hard copy:

(i) a letter substantially in the form which appears at pages 282-283 of Annexure LRH-8 to the Harris Affidavit which contains:

(A) the URL address of an online portal or website from which the shareholder may access and download an electronic copy of the Scheme Booklet;

(B) instructions on how to lodge a proxy vote, and instructions on how to access an online platform to listen to and participate in the Scheme Meeting;

(ii) a Proxy Form; and

(iii) a reply-paid envelope for the return of completed Proxy Forms.

The documents referred to in Orders 2(b) and 2(c) are to be sent:

(a) in the case of TRS Shareholders whose registered address is within Australia, by prepaid ordinary post addressed to the relevant addresses recorded in TRS's share register; and

(b) in the case of TRS Shareholders whose registered address is outside Australia, by airmail or international courier service addressed to the relevant addresses recorded in TRS's share register.

A proxy in respect of the Scheme Meeting will be valid and effective if, and only if, a Proxy Form is completed and delivered in accordance with its terms or a proxy is lodged online in accordance with the instructions on the website referred to in Orders 2(a) and (c) and received by TRS by 2.30pm (Melbourne time) on 21 June 2025.
Steven Fisher or, failing him, David Grant, be chairperson of the Scheme Meeting.
Voting on the resolution to agree to the Scheme is to be conducted by way of a poll.
TRS Shareholders whose names are recorded in the register of members of TRS at 2.30pm (Melbourne time) on 21 June 2025 will be eligible to vote at the Scheme Meeting.
The chairperson of the Scheme Meeting shall have the power to adjourn the Scheme Meeting to such time, date and place as he considers appropriate in accordance with its Constitution and, in that event, notwithstanding any other part of these orders:

(a) only TRS Shareholders whose names are recorded in the register of members of TRS at 2.30pm (Melbourne time) on the date that is two calendar days before the date that the adjourned meeting resumes will be eligible to vote at the Scheme Meeting; and

(b) a reference in these orders to the Scheme Meeting is taken to include a reference to the adjourned meeting.

TRS shall have power to postpone the Scheme Meeting to such time, date and place as it considers appropriate in accordance with its Constitution and, in that event, notwithstanding any other part of these orders:

(a) only TRS Shareholders whose names are recorded in the register of members of TRS at 2.30pm (Melbourne time) on the date that is two calendar days before the date of the postponed meeting will be eligible to vote at the Scheme Meeting;

(b) a proxy in respect of the Scheme Meeting will be valid and effective if, and only if, a Proxy Form is completed and delivered in accordance with its terms or a proxy is lodged online in accordance with the instructions on the website referred to in Orders 2(a) and (c) and received by TRS at least 48 hours before the time scheduled for the commencement of the postponed Scheme Meeting; and

(c) a reference in these orders to the Scheme Meeting is taken to include a reference to the postponed meeting.

Pursuant to r 1.3 of the Federal Court (Corporations) Rules 2000 (Cth), compliance with rr 2.4(1), 2.15, 3.4 and Form 6 is dispensed with.
TRS is to publish an announcement via the ASX Market Announcements Platform substantially in the form which appears at page 319 of Annexure LRH-12 to the Harris Affidavit, which sets out the details for the hearing of any application to approve the Scheme and the process for any person wishing to appear at that hearing to oppose the approval of the Scheme.
The notice referred to in Order 11 must be published at least 5 days before the date of the hearing of any application to approve the Scheme.
The further hearing of the Originating Process is adjourned to 10.15 am (Melbourne time) on 30 June 2025 for the hearing of any application to approve the Scheme.

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

[The Order entered is available on the Commonwealth Courts Portal, which attaches the Scheme.]

By originating process filed on 24 April 2025, the Plaintiff, The Reject Shop Limited (TRS), has applied for orders and directions pursuant to ss 411(1) and 1319 of the Corporations Act 2001 (Cth) (the Act) in relation to a scheme of arrangement (Scheme) proposed by TRS, the commercial purpose of which is to effect the acquisition of all of TRS's shares by a Canadian company, Dollarama International Inc., in return for a cash payment of $6.68 per share. At this stage, TRS seeks orders under s 411(1) of the Act to convene and hold a meeting of its members (Scheme Meeting) to consider and, if thought fit, agree to the proposed Scheme (with or without modification).
On 16 May 2025, at the conclusion of the first hearing, I made Orders in the terms sought by TRS convening the Scheme Meeting. These are my reasons for making those Orders.

TRS is an Australian public company limited by shares. It is listed on the Australian Securities Exchange (ASX). TRS currently has on issue 37,365,917 ordinary shares and 1,826,500 performance rights (with each performance right entitling the holder to be issued one TRS share upon the vesting of the performance right).
Dollarama International is a wholly-owned subsidiary of Dollarama Inc., which is also a Canadian company and is listed on the Toronto Stock Exchange. Dollarama is a value retailer offering a broad range of consumer products and general merchandise in stores throughout Canada.
The application brought by TRS is supported by the following evidence:

(1) the affidavit of Steven Mark Casper affirmed on 24 April 2025 (Casper Affidavit). Mr Casper is a partner at SBA Law, the solicitors for TRS. His affidavit describes the proposed Scheme in general terms, and annexes:

(i) a copy of the Scheme Implementation Agreement dated 27 March 2025 between TRS and Dollarama (SIA);

(ii) a copy of a company extract for TRS obtained from the Australian Securities and Investments Commission (ASIC) on 24 April 2025; and

(iii) a copy of the ASX announcement in relation to entry into the SIA;

(2) the affidavit of Lauren Rebecca Harris affirmed on 14 May 2025 (Harris Affidavit). Mr Harris is the General Counsel and Company Secretary of TRS. The Harris Affidavit gives evidence about the business and capital structure of TRS and provides an overview of the main features of the Scheme and the SIA. The Harris Affidavit also sets out the interests of TRS directors in the Scheme, and refers to the unanimous recommendation of directors that TRS Shareholders vote in favour of the Scheme. The Harris Affidavit also addresses various matters in relation to the draft Scheme Booklet (including verification) and the Scheme Meeting (including the prescribed matters relating to the proposed chairperson of the Scheme Meeting). Finally, Ms Harris provides an overview of the proposed communications with TRS shareholders, and addresses the proposal to publish notice of the second court hearing on the ASX announcements platform;

(3) the affidavit of Laurence L'Abbé affirmed on 15 May 2025 (L'Abbé Affidavit). Mr L'Abbé is the Senior Vice President, Legal Affairs and Corporate Secretary of Dollarama Inc. The L'Abbé Affidavit provides details in relation to Dollarama and Dollarama International, the funding of the Scheme Consideration, and the verification of the "Dollarama Information" in the Scheme Booklet. Finally, the L'Abbé Affidavit annexes a copy of the Deed Poll executed by Dollarama and Dollarama International; and

(4) the affidavit of Kelly Ann Powers sworn on 15 May 2025 (Powers Affidavit). Ms Powers is a partner at SBA Law, the solicitors for TRS. Her affidavit deposes to the minor amendments made to the Scheme Booklet and shareholder information as a result of additional comments raised by ASIC in the days leading up to the hearing, and annexes a copy of ASIC's "indication of intent" letter which was sent to TRS' solicitors in the standard form on 15 May 2025.

The terms of the proposed Scheme are found in Schedule 2 to the Scheme Booklet. The Scheme Booklet also provides an overview of the Scheme in section 4. A copy of the Scheme is annexed to the Orders which I made on 16 May 2025.
The parties' obligations in relation to the Scheme are set out in the SIA executed by TRS and Dollarama on 27 March 2025, which annexes a copy of the proposed Scheme and a copy of the draft Deed Poll in the form required to be executed by Dollarama and Dollarama International.
An executed copy of the Deed Poll is annexed to the Scheme Booklet at Schedule 3. Pursuant to the Deed Poll, Dollarama undertakes to each Scheme Participant that, in the event that Dollarama International does not fulfill its obligations under the Scheme or the Deed Poll, Dollarama will perform those obligations as if it were the primary obligor.
If the Scheme becomes effective, pursuant to s 411(10) of the Act, and is implemented, then it is proposed that:

(a) on the Special Dividend Payment date (14 July 2025), the Special Dividend of $0.77 per share will be paid to each person who held TRS shares on the Special Dividend Record Date (7 July 2025);

(b) on the Implementation Date (22 July 2025), Scheme Participants (being TRS shareholders as at 15 July 2025) will receive $6.68 cash for each Scheme Share, less the amount of any Special Dividend (Scheme Consideration). The Scheme Consideration is to be provided by Dollarama International;

(c) also on the Implementation Date, Scheme Participants will transfer all of the Scheme Shares to Dollarama International; and

(d) TRS will become a wholly-owned subsidiary of Dollarama International, and TRS will apply to the ASX for termination of the official quotation of TRS shares on the ASX, and for TRS to be removed from the official list of the ASX.

The directors of TRS appointed Kroll Australia Pty Ltd as an Independent Expert to prepare an Independent Expert Report in relation to the Scheme. The Independent Expert Report concludes that:

(a) the value of a TRS share is between $4.80 and $5.24.

(b) because the Scheme Consideration of $6.68 per share exceeds this valuation range, the Scheme is fair and, as such, is also reasonable and in the best interests of TRS shareholders, in the absence of a superior alternative proposal.

A draft Scheme Booklet has been prepared by TRS, which includes a detailed description of the Scheme and its advantages and disadvantages, and annexes inter alia the Independent Expert Report. A copy was first lodged with ASIC on 1 May 2025, and amendments were subsequently made in response to comments received from ASIC. An amended draft (including its annexures) was provided to ASIC on 13 May 2025, and ASIC indicated that day that it had no further comments on the Scheme Booklet. Following this, ASIC did however raise further comments on 14 and 15 May 2025 which required further minor amendments, as detailed in the Powers Affidavit. Upon those amendments having been made, on 15 March 2025, ASIC provided TRS' solicitors with a letter in the usual form, known as a "preliminary no objection letter." The letter stated that, based on ASIC's examination of the terms of the Scheme and the Scheme Booklet, ASIC did not propose to appear at the first court hearing to make submissions or intervene to oppose the Scheme. Consistently with that statement, ASIC did not appear at the first court hearing.
The Scheme Booklet, at section 5.5, records that the TRS directors unanimously recommend that the TRS Shareholders vote in favour of the Scheme, subject to there being no "superior proposal" (as that term is defined in the SIA) and subject to the Independent Expert continuing to conclude that the Scheme is in the best interests of the TRS Shareholders. Consistently with that recommendation, the TRS directors all intend to vote any TRS shares owned or controlled by them - which amounts in aggregate to only 0.65% of the total number of TRS shares on issue - in favour of the Scheme, subject to those same qualifications.
TRS submitted that in these circumstances it was appropriate for the first court hearing to proceed and for the Court to make the orders sought for the dispatch of the Scheme Booklet and the convening and holding of the Scheme Meeting.

TRS submitted, and I accept, that the principles applicable to this first step of the procedure provided for under Part 5.1 of the Act are those which were recently summarised in Re Rex Minerals Limited [2024] FCA 1051, where O'Bryan J said at [21]-[27]:

[21] Part 5.1 of the Act provides a procedure whereby an arrangement between a company and its members can be made binding on all members. Section 411 is the principal provision. The procedure involves three main steps:

(a) an application to the Court for an order to convene a scheme meeting (s 411(1));

(b) if such an order is made, the convening of such a meeting at which a resolution to agree to the scheme is considered (s 411(4)(a)); and

(c) if the resolution is passed by the necessary majorities, an application to the Court for an order approving the scheme (ss 411(4)(b) and 411(6)).

[22] The present application concerns the first stage, being an application to the Court for an order to convene the Scheme Meeting. Section 411 of the Act confers a discretion on the Court to make an order convening the Scheme Meeting if certain statutory conditions are met, namely:

(a) an arrangement is proposed between a Pt 5.1 body and its members (or any class of them (s 411(1));

(b) an application for the order is made in a summary way by that body (s 411(1));

(c) 14 days' notice of the hearing of the application has been given to ASIC (or such lesser period as the Court or ASIC permits) (s 411(2)(a)); and

(d) the Court is satisfied that ASIC has had a reasonable opportunity to:

(i) examine the terms of the proposed arrangement to which the application relates and a draft explanatory statement relating to the proposed arrangement; and

(ii) make submissions to the Court in relation to the proposed arrangement and the draft explanatory statement required by s 412 (ss 411(2)(b) and 411(3)).

[23] In addition to these requirements of s 411, the procedure is regulated by s 412 of the Act and reg 5.1.01 and Sch 8 to the Corporations Regulations 2001 (Cth) (Regulations), and by the Federal Court (Corporations) Rules 2000 (Cth) (Rules). The Regulations and the Rules prescribe certain information which is required to be sent to the members about the Scheme.

[24] The principles which apply to the exercise of the Court's discretion at this first stage are well-known. In Re Amcor Ltd [2019] FCA 346 (Amcor), Beach J described the Court's role at the first court hearing as follows (at [47], emphasis in original):

My function on an application to order the convening of a meeting is supervisory. At this stage I should generally confine myself to ensuring that certain procedural and substantive requirements have been met including dealing with adequate disclosure, with limited consideration of issues of fairness. But having said that, it is appropriate to consider the merits or fairness of a proposed scheme at the convening hearing if the issue is such as would unquestionably lead to a refusal to approve a proposed scheme at the approval hearing, that is, the proposed scheme appears now to be on its face "so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further" (Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 at [44] per French J).

[25] It is not the Court's role to usurp the shareholders' decision whether to agree to a scheme. The question whether or not to accept particular consideration for shares is quintessentially a commercial matter for the members to assess, and they ought not be prevented from having the opportunity to do so, provided that the Court can be satisfied that they are acting on sufficient information and with time to consider what they are voting on: Crown Resorts Ltd, Re Crown Resorts Ltd [2022] FCA 367 at [27], citing Amcor at [50] and Re ACM Gold Ltd (1992) 34 FCR 530 at 534.

[26] Therefore, if the arrangement is one that seems fit for consideration by the meeting of members, and is a commercial proposition likely to gain the Court's approval if passed by the necessary majorities, then orders should be made to convene the meeting: Re Foundation Healthcare Ltd [2002] FCA 742; 42 ACSR 252 (Foundation Healthcare) at [36].

[27] In summary, the Court's task at the first court hearing is to assess first, whether the statutory prerequisites to the making of orders convening a meeting have been met and second, whether it is appropriate for the Court to exercise its discretion in favour of making those orders. Each of those matters is considered in turn.

His Honour's summary was recently endorsed by this Court in Re Capitol Health Limited [2024] FCA 1120 at [48] and in Re Queensland Teachers' Union Health Fund Limited [2025] FCA 481 at [15], and an identical formulation was subsequently set out by his Honour in Re Selfwealth Ltd [2025] FCA 214 at [20]- [26], which was recently quoted with approval by Bennett J in Re PointsBet Holdings Limited [2025] FCA 463 at [15].
I turn now to apply the relevant criteria.

TRS submitted, and I am satisfied, that all relevant statutory prerequisites have been satisfied.
First, as required by s 411(1) of the Act, TRS has made an application in relation to a compromise or arrangement that is proposed between a Part 5.1 body and its members. That is so because:

(a) TRS' application was made in a "summary way", being the Originating Process filed on 24 April 2025;

(b) TRS, as a company registered under the Act, is a "Part 5.1 body". The ASIC company extract for TRS, found at page 109 of Annexure SMC-2 to the Casper Affidavit, demonstrates the company's registration; and

(c) the proposed Scheme is an "arrangement" between TRS and its members within the meaning of s 411(1).

Secondly, s 411(2)(a) of the Act requires that 14 days' notice of the hearing of this application be given to ASIC, or such lesser period of notice as the Court or ASIC permits. This requirement has been satisfied in circumstances where TRS' solicitors on 1 May 2025 wrote to ASIC and submitted a copy of the draft Scheme Booklet via ASIC's regulatory portal. ASIC's letter of 15 May 2025 acknowledges this (Powers Affidavit at 11).
Thirdly, s 411(2)(b) of the Act requires that ASIC be given a reasonable opportunity to examine the terms of the proposed Scheme and the draft explanatory statement, and to make submissions to the Court in relation to those matters. In this regard, I am aided by ASIC's statement in its letter of 15 May 2025 that it is of the view that it has had a reasonable opportunity. ASIC also stated that it has examined the terms of the Scheme and the draft explanatory statement in accordance with the policy contained in Regulatory Guide 60, and that based on that examination, it did not propose to appear at the first court hearing to make submissions to the Court (Powers Affidavit at 11). As such, even independently of ASIC's view, I am satisfied that ASIC has been given a reasonable opportunity. The requirement in s 411(2)(b) has therefore been satisfied.
Fourthly, r 2.4(1) of the Federal Court (Corporations) Rules 2000 (Cth) (the Rules) requires that, unless the Court otherwise directs, an originating process must be supported by an affidavit stating the facts in support of the process. Paragraph 3(b) of the Practice Note states that:

"the Court will generally be prepared to dispense with the requirement under rule 2.4(1) of [the Rules] for the initial affidavit filed in support of the application to state the facts in support of the Originating Process, where that will be addressed by later evidence. It is ordinarily sufficient for that affidavit to identify, in brief terms, the nature of the scheme and key dates, and annex a company search."

The Casper Affidavit (which was filed together with the Originating Process) has been prepared in accordance with the Practice Note. My Orders made on 16 May 2025 therefore included an order dispensing with the additional requirements of r 2.4(1) of the Rules.
Fifthly, r 2.4(2) of the Rules requires that the evidence in support of an application includes an ASIC company extract in relation to the Plaintiff carried out no earlier than 7 days before the originating process was filed. As the company extract for TRS annexed to the Casper Affidavit was obtained on 24 April 2025, being the same date as the filing of the Originating Process, this requirement has been satisfied.
Sixthly, rr 3.2(a) and (b) of the Rules require that the Plaintiff provides evidence about the willingness of the proposed chairperson and alternate chairperson to chair the Scheme Meeting. TRS has provided the required evidence at [59]-[61] of the Harris Affidavit, including evidence regarding any prior dealings with those proposed persons and any conflicts of interest which may arise.
Seventhly, as required by r 3.3(1) of the Rules, my Orders dated 16 May 2025 which convene the Scheme Meeting annexed a copy of the Scheme.
Eighthly, the disclosure requirements in relation to the explanatory statement, namely those set out in s 412 of the Act, reg 5.1.01 and Schedule 8 (Part 3) of the Corporations Regulations 2001 (Cth) (the Regulations), must be considered. There are three aspects to the requirements of s 412(1) (see eg, Re Pointsbet at [25]; Re Amcor Limited [2019] FCA 346 at [91]):

(1) first, the explanatory statement must explain the effect of the compromise or arrangement, and in particular state any material interest of the directors, and the effect on those interests of the compromise or arrangement so far as it is different from the effect on the like interests of other persons. The effect of the Scheme is addressed in various parts of the material filed in this proceeding, including in the letter from the Chair of TRS in the Scheme Booklet, and it is also addressed in section 4 of the Scheme Booklet. The required information in relation to the material interests of TRS directors is addressed in sections 5.5 and 5.7 of the Scheme Booklet;

(2) secondly, the explanatory statement must set out the prescribed information, being the information set out in reg 5.1.01 and Schedule 8 of the Regulations. The evidence as to verification of the information contained in the Scheme Booklet by both TRS (Harris Affidavit at [33]-[50]) and Dollarama (L'Abbé Affidavit at [19]-[32]) demonstrates that this requirement has been satisfied; and

(3) thirdly, the explanatory statement must set out any other information that is material to the making of a decision by the members as to whether or not to agree to the compromise or arrangement. In this respect, it is submitted by TRS, and I accept, that the Scheme Booklet is clear and comprehensive and, along with the Independent Expert Report which is annexed to the Scheme Booklet, contains a detailed evaluation of the Scheme, presented in a way that enables a TRS shareholder to form their own view of the merits of the Scheme.

Further, because the proposed Scheme is solely a members' scheme, s 412(6) of the Act requires that the explanatory statement (in the case, the Scheme Booklet) be registered by ASIC before being sent to the TRS Shareholders. Before registering the statement, ASIC must conclude that it appears to comply with the requirements of the Act, and must form the opinion that the Scheme Booklet does not contain any matter that is false in a material particular, or materially misleading in the form and context where it appears: ss 412(7) and (8). I accept that, should ASIC proceed to register the Scheme Booklet, that fact will provide further assurance as to the satisfaction of the disclosure requirements (Re Oz Minerals Limited [2023] FCA 197 at [69]; Re CW Group Holdings Limited [2024] FCA 1471 at [35]).
Finally, the notice required by paragraph 6 of the Practice Note is included in the "Important Notices" section on page i of the Scheme Booklet. Consistently with those requirements, the notice states that the fact that the Court has made the convening orders for the Scheme Meeting, and directed that an explanatory statement accompany the Notice of Scheme Meeting, does not mean that the Court has formed any view as to the merits of the proposed Scheme or how members should vote, or has prepared, or is responsible for the content of, the explanatory statement.
As such, I am satisfied that the procedural requirements have been met. It follows that the Court's discretion to make the convening orders sought is enlivened.

As has been summarised in numerous recent decisions of this Court (see eg, Re Rex Minerals at [35]; Re Selfwealth at [34]; Re Pointsbet at [30]), the relevant discretionary consideration involves two main questions:

(1) first, whether the Scheme is fit for consideration by the members (see FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72 (Street CJ); Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; 177 CLR 485 at 504 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ)); and

(2) secondly, whether the members are to be properly informed as to the nature of the Scheme (see Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; 156 FLR 349 at [30] (Santow J); Re Foundation Healthcare Ltd [2002] FCA 742; 42 ACSR 252 at [38] (French J)).

The Scheme is fit for consideration by the members

In considering the first question, the Court will scrutinise the terms of the Scheme to satisfy itself that the Scheme is of such a nature and cast in such terms that, if agreed to at the Scheme Meeting, the Court would be likely to approve the Scheme at the second court hearing (Re Rex Minerals at [36]; Re Selfwealth at [35]; Re PointsBet at [32]).
Additionally, in the context of schemes for the transfer of all of the shares in a company to an acquirer, the Court will also scrutinise the terms of the agreement between the scheme company and the acquirer to implement the scheme (which in this case is recorded in the SIA). As O'Bryan J said in Re Rex Minerals at [37]:

Typically, the company and the acquirer agree commercial terms governing their negotiations and dealings, including such matters as representations and warranties, exclusivity arrangements, break fees if the transaction does not proceed and the funding arrangements for the proposed transaction. Strictly, commercial terms of that kind are not part of the scheme and do not form any part of the arrangements that are approved by shareholders pursuant to the scheme. They are a commercial arrangement between the company and the acquirer. The appropriateness of such commercial terms is a matter for the business judgment of the directors of the company. However, the Court will seek to ensure that the terms agreed between the company and the acquirer have no potential to cause prejudice or unfairness to the company's shareholders in connection with their consideration of the scheme and the implementation of the scheme if it is approved. For example, break fees may adversely affect the interests of shareholders if the amount and terms of the fee are such that it is likely to coerce shareholders into agreeing to a scheme: see Re SFE Corporation Ltd [2006] FCA 670; (2006) 59 ACSR 82 at [7]; Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 at [37]- [55]; Re Toll Holdings Ltd [2015] VSC 123 at [27]- [30].

(Emphasis added.)

In the present case, the terms of the Scheme and the SIA are in a form commonly found in acquisition schemes, and I am satisfied on my review that none of those terms give rise to the potential to cause prejudice or unfairness to the TRS Shareholders in connection with their consideration of the Scheme or its implementation. In reaching that conclusion, I have also had regard to several other factors as follows.

Because the acquirer, Dollarama International, is not a party to the Scheme and is not directly bound by it, it is also important to ensure that it is bound to perform the actions attributed to it under the Scheme and that its obligations are able to be enforced.
In this regard, O'Bryan J observed in Re DuluxGroup Ltd [2019] FCA 961; 136 ACSR 546 at [25] that:

... the entity that will be providing the Scheme Consideration is not party to the Scheme and is not (and cannot be) directly bound by it. As such, its obligations do not depend upon s 411 of the Act, which is confined to the obligations of the plaintiff company and its members: Re Westfield Holdings Ltd [2004] NSWSC 458; (2004) 49 ACSR 734 at 739. In considering whether to approve a scheme involving the participation of a person other than the plaintiff company and its members ... it is important to ensure that that other party is bound to perform the role assigned to it and that its obligations are able to be enforced**. In this context, the courts have considered the "performance risk" as regards the obligations to be performed by the non-scheme party**: see for example Re Amcor Ltd [2019] FCA 346 at [53]; Re Coles Group Ltd (2007) 25 ACLC 1380 at 1386 [38]; Re Lonsdale Financial Group Ltd [2007] VSC 394 at [42]; Re KAZ Group Ltd [2004] FCA 738 at [4]- [5]; Re Healthscope Ltd [2010] VSC 367 at [31]- [32]; Re Mitchell Communication Group [2010] VSC 423 at [30]- [31]; Re AWB Ltd [2010] VSC 456 at [16]; and Re AXA Asia Pacific Holdings Ltd [2011] VSC 4 at [21]- [25].

(Emphasis added.)

I accept TRS' submission that the Scheme effectively eliminates any performance risk by adopting the following safeguards:

(a) first, the terms of the Scheme provide that the transfer of the Scheme Shares to Dollarama International is subject to the Scheme Consideration having first been provided to the Scheme Shareholders in accordance with clause 5 of the Scheme. Accordingly, the terms of the Scheme ensure that there is no risk that the Scheme Shareholders will be required to transfer their shares without receiving the promised consideration. This effectively eliminates any performance risk in so far as the transfer of the Scheme Shares is concerned; and

(b) secondly, consistently with usual practice, the SIA required Dollarama International to enter into the Deed Poll in favour of the Scheme Shareholders, which binds Dollarama International to perform the actions attributed to it under the Scheme (including the provision of the Scheme Consideration). In addition, as I have noted previously, Dollarama has also executed the Deed Poll, pursuant to which it undertakes in favour of each Scheme Participant that, in the event that Dollarama International does not fulfill its obligations under the Scheme or the Deed Poll, Dollarama will perform those obligations as if it were the primary obligor. That undertaking by the subsidiary obviates any performance risk as far as the acquirer's obligations are concerned.

In considering the terms of the Scheme and the SIA to ensure that those terms have no potential to cause prejudice or unfairness to the TRS Shareholders in connection with their consideration of the Scheme (and its implementation if approved), I have had particular regard to the break fee and exclusivity provisions. In this respect, I accept TRS' submissions that:

(a) the SIA includes customary break fee and exclusivity provisions on terms which accord with the well-known principles set out in the authorities (see for example Re Japara Healthcare Limited [2021] FCA 1150; 156 ACSR 695 at [50] and the authorities cited therein);

(b) the break fee represents approximately 1% of the equity value of TRS, consistent with the guideline in [48] of the Takeovers Panel Guidance Note No. 7 Deal Protection (August 2023) as to what is considered "reasonable" - which guideline has been referred to by courts in a number of cases (see for example Re QMS Media Ltd [2019] FCA 2172 at [60] and the authorities cited therein);

(c) the break fee is not framed so as to coerce the TRS Shareholders into agreeing to the Scheme, which is an important consideration in this context (Re Rex Minerals at [54]). In particular, the break fee is not payable by reason of the TRS Shareholders failing to approve the Scheme; and

(d) the exclusivity provisions are in a conventional form that has been accepted in many schemes of arrangement, and contain the usual fiduciary carve-outs and matching-right provisions.

TRS provided extensive written submissions on the relevance to my exercise of discretion of the Board's decision as to whether to declare a Special Dividend to the TRS Shareholders. However, at the hearing, Counsel for the Plaintiff clarified that the consideration to be paid to the TRS Shareholders is in fact comprised of two components: one being a Special Dividend; and second, the Scheme Consideration of $6.68 per share, less the amount of any Special Dividend. Consequently, shareholders will receive $6.68 per share, whether or not a Special Dividend is in fact declared.
I am therefore satisfied that the status of the Special Dividend, and its nature as being conditional upon the Scheme becoming effective, are not matters which cause any concern as to the fitness of the Scheme for consideration by the TRS Shareholders such that the Court ought to decline to convene the Scheme Meeting.
Even if there were some concern, recent decisions of this Court, including that of Jackman J in Re Vita Group Ltd [2023] FCA 400; 165 ACSR 576 at [8]- [9], conclude that the concern is alleviated by adequate disclosure to the shareholders of the company of both the intention to declare the dividend and its contingent nature, such that those matters are not reasons to refuse to order that a Scheme Meeting be convened. In this case, the TRS Board's decision as to the declaring or otherwise of the Special Dividend will be communicated by an ASX announcement by 19 June 2025, being four days before the Scheme meeting is to be held on 23 June 2025 and two days before the closure of proxies on 21 June 2025. Further, the contingent nature of any Special Dividend has been disclosed in the Scheme Booklet at page 15 and section 4.2.

Section 9.2 of the Scheme Booklet discloses that TRS has on issue the following performance rights:

(a) 75,000 Vested Performance Rights;

(b) 387,100 Lapsing Performance Rights (being Performance Rights granted to certain employees of TRS and which have not vested). The SIA requires TRS to take all such actions as are necessary to ensure that all such rights shall lapse or be cancelled on or prior to the Implementation Date in exchange for a cash payment equal to the Scheme Consideration for each Lapsing Performance Right held; and

(c) 1,439,400 Vesting Performance Rights (being the balance of the Performance Rights, which also have not vested). The SIA provides that, subject to the Scheme becoming effective, TRS will take all such actions as are necessary to ensure that all such rights will vest and be exercised and have any applicable restrictions removed before the Special Dividend Record Date.

TRS submitted, and I accept, that the proposed treatment of the Lapsing Performance Rights and the Vesting Performance Rights is a conventional mechanism for dealing with performance rights under a scheme of arrangement. Moreover, courts have consistently held that holders of performance rights or other equity incentives who are also shareholders of the scheme company do not constitute a separate class for voting purposes at a meeting ordered under s 411(1). This is because the legal rights of these shareholders are not so dissimilar from the rights of other shareholders as to make it impossible for them to consult together with a view to their common interest. They will each participate in the Scheme on the same basis and receive the same consideration as all other shareholders (see Re Pointsbet at [33] (Bennett J); Re Japara at [69] (Moshinsky J); Re Amcor at [85]-[86] (Beach J); Re Newcrest Mining Ltd [2023] FCA 1080 at [60] (Beach J); Re Healthscope Ltd [2019] FCA 542; 139 ACSR 608 at [166]- [167] (Beach J); Re Citadel Group Ltd [2020] FCA 1580; 148 ACSR 598 at [63] (Beach J); Re DWS Limited [2020] FCA 1590; 148 ACSR 616 at [40] (Beach J); Re RXP Services Ltd [2021] FCA 38 at [37]- [45] (Beach J)).

A further matter that was raised during the hearing was the issue of class-creative conduct. In this regard, Counsel for the Plaintiff submitted that the proposed letter from the Chair of the TRS Board to the TRS Shareholders, contained at pages 1-2 of the Scheme Booklet (Harris Affidavit at 67-68), is not class-creative. The letter notes, inter alia, the intention of TRS' largest shareholder, Kin Group Pty Ltd, which controls approximately 20.7% of TRS shares on issue, to vote all its TRS shares in favour of the Scheme (subject to the aforementioned conditions placed on the Board's recommendation to TRS Shareholders, including the absence of a superior proposal).
Counsel relied in this respect on the decision of Black J in Re ERM Power Ltd [2019] NSWSC 1502, where his Honour accepted that "a public statement to the effect that a shareholder intends to vote in favour of a scheme of arrangement in the absence of a superior proposal will not, without more, cause that shareholder to form a separate class" (at [21], citing Re Gerard Lighting Group Ltd [2012] FCA 941 at [2], [6]; Re Viralytics Ltd [2018] FCA 637; and Re Tawana Resources NL [2018] FCA 1456 at [53]-[56]). In my view, nothing in the statement of Kin Group's voting intention in this case warrants a departure from that principle. The letter is not such that a separate class is required for the major shareholder.

As mentioned previously, each of the four TRS directors hold a small number of TRS shares, amounting in aggregate to only 0.65% of the total number of TRS shares on issue (Scheme Booklet at section 5.5). No TRS director holds any TRS performance rights, nor any shares in Dollarama or Dollarama International. Further, the TRS directors will not receive any benefit in connection with the Scheme, aside from their entitlement to receive the Scheme Consideration as TRS Shareholders (Scheme Booklet at section 5.7).
Consistently with the "preferable approach" (see Re PointsBet at [35]), the interests of the directors have been disclosed to the shareholders in the company in the course of the Board making their recommendation. In my view, those interests do not raise any doubt as to the propriety of the proposed Scheme.
It follows from the foregoing review that the Scheme is fit for consideration by the TRS Shareholders.

The second principal aspect relevant to the exercise of the Court's discretion to convene a Scheme Meeting is the adequacy of the information to be provided to shareholders.
Where the Court is satisfied that the statutory disclosure requirements are met, it will ordinarily be satisfied that the information to be provided to shareholders is adequate for the purposes of the exercise of the Court's discretion to convene a Scheme Meeting (Re Rex Minerals at [55], citing Re Opes Prime Stockbroking Ltd [2009] FCA 813; 179 FCR 20 at [94]- [99] and [102] (Finkelstein J)).
Schemes of arrangement are not required to be the subject of a report by an independent expert unless the parties have a common director or the acquiring company controls 30% of the scheme company: see reg 5.1.01 and Sch 8, reg 8303 of the Regulations. Neither of those circumstances arises here. Nevertheless, as stated previously, TRS has obtained a report from Kroll Australia as to whether, in its opinion, the Scheme is in the best interests of the TRS Shareholders.
As discussed above, I am satisfied that the statutory disclosure requirements are met in the present case. For this reason, and with the additional reassurance that the TRS Shareholders will have the benefit of the opinion of the Independent Expert as detailed in the Independent Expert Report, I am satisfied that the members of TRS are to be properly informed.

The Court's power to approve a scheme is restricted by s 411(17) of the Act. However, as TRS rightly submitted, this is a matter which affects the final approval of the Scheme, rather than the making of an order to convene the Scheme Meeting (Re Selfwealth at [50], citing Re Macquarie Private Capital A Ltd [2008] NSWSC 323; 26 ACLC 366 at [27]).
Section 411(17) does not present a bar to a meeting being convened at the first court hearing if it seems likely that ASIC will produce the relevant statement referred to in s 411(17)(b) at the second court hearing (Re Selfwealth at [52], citing Re Lonsdale Financial Group Ltd [2007] VSC 394 at [40]). In the present case, ASIC does not oppose the application for convening the Scheme Meeting. As such, it is appropriate to proceed on the basis that ASIC will in due course provide a statement for the purpose of s 411(17)(b). In these circumstances, s 411(17) does not present a bar to orders being made to convene the Scheme Meeting.

I am satisfied that the Scheme is of such a nature and cast in such terms that, if it achieves the statutory majorities at the Scheme Meeting, the Court would be likely to approve it, and that the Scheme Booklet will properly inform members as to the nature of the Scheme. It is therefore appropriate to make the orders sought convening the Scheme Meeting.

Approval by the Court of the explanatory statement

Section 411(1) provides that, if the Court has made an order convening a meeting of members or creditors, the Court "may approve the explanatory statement" (which in this case is in the form of the Scheme Booklet).
The practice of courts varies in this respect. Consistent with recent practice in this Court, however, I have not made an order approving the Scheme Booklet, nor was such an order sought by TRS (see Re RXP at [70]; Re Selfwealth at [54]; Re Amcor at [114]-[115]; and Re Verdant Minerals Ltd [2019] FCA 556 at [84]).

Consistently with paragraph 3(i) of the Practice Note, TRS has filed evidence (at [50] of the Harris Affidavit) as to the manner in which the Scheme Booklet is proposed to be sent to the TRS Shareholders. The proposal is to adopt a mixture of electronic and hard-copy communications according to elections which TRS Shareholders have made as to how they wish to receive company information. I am satisfied that those methods of dispatch are commonplace in schemes of arrangement and that they comply with the requirements of Div 2 of Pt 1.2AA of the Act.
Further, the contents of the proposed communications to shareholders have been disclosed in the Harris Affidavit at [53], in accordance with paragraph 3(k) of the Practice Note.

Rule 3.4 of the Rules provides that, unless the Court otherwise orders, a plaintiff must publish a notice of the hearing of an application for approval of a scheme in a newspaper at least five days before the date of the hearing, and the notice must be in accordance with Form 6. However, paragraph 3(f) of the Practice Note states that the Court will be prepared to dispense with the publication of such a notice if notice can be given by an announcement made on the ASX. TRS proposes to publish notice of the approval hearing on the ASX Market Announcements Platform, and accordingly seeks an order dispensing with compliance with r 3.4 of the Rules. This approach has been adopted in a number of recent cases before this Court, including Re PointsBet and Re Selfwealth, and it is therefore appropriate that I make such an order.

I am satisfied that this is a case where it is suitable for the Court to exercise its discretion to make orders for the convening and holding of a Scheme Meeting to enable the Scheme to be considered by the TRS Shareholders.
Accordingly, with minor amendments, I made the orders sought by the Plaintiff at the conclusion of the hearing on 16 May 2025.

I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington

Court (Corporations) Rules 2000

Australian Securities Commission v Marlborough Gold Mines Ltd

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