Australian Securities Commissions v Marlborough Gold Mines Ltd

Affidavit evidence

1. Tassal reads the affidavit dated 12 September 2022 of its solicitor, Mr Luke Hastings, on which I have drawn in setting out the background to the application above.
2. By his affidavit dated 29 September 2022, Mr James Fazzino, who is the chair and an independent non-executive director of Tassal, refers to proposed arrangements for the scheme meeting and indicates his consent to act as chair of that meeting. He also discloses his interests in respect of the scheme and addresses the consideration of the scheme by Tassal's board. Mr Fazzino notes that none of Tassal's directors have a relevant interest in equity incentives issued by Tassal, other than its managing director and chief executive officer, Mr Mark Ryan, whose interests are disclosed in section 9.2 of the scheme booklet. Mr Fazzino also addresses the proposed treatment of Tassal performance rights held by Mr Ryan under the scheme, and indicates that the Tassal board (excluding Mr Ryan) have formed the view that, despite those arrangements, it is appropriate for Mr Ryan to make a recommendation on the scheme, given his role in Tassal's operation and management. Mr Fazzino notes that Mr Ryan also considers that it is appropriate for him to make a recommendation. Mr Fazzino refers to a disagreement between Mr Ryan and Tassal as to the treatment of his existing and proposed performance rights, and refers to Mr Ryan's contention that his unvested Tassal performance rights should either vest or, if they are to lapse, equivalent replacement long term incentives should be put in place for him. Mr Fazzino records that Tassal disagrees with Mr Ryan's position and indicates the basis on which it does so. This disagreement is appropriately disclosed in the scheme booklet, although it should have no impact on Tassal shareholders, since Mr Ryan's performance rights will not be affected if the scheme does not proceed, and, if the scheme proceeds, the issues arising from this matter need to be addressed by Tassal only after it has become a wholly owned subsidiary of Aquaculture.
3. By her affidavit dated 26 September 2022, Ms Georgina Lynch, who is an independent non-executive director of Tassal, consents to act as chair of the scheme meeting if Mr Fazzino is unwilling or unable to do so, and also addresses her interests in Tassal shares.
4. By an affidavit dated 28 September 2022, Ms Angela Liapis, who is a relationship manager employed by Computershare Investor Services Pty Ltd ("Computershare"), which provides registry services to Tassal, deals with the process for dispatch of scheme documents to Tassal shareholders. That process contemplates the provision of the scheme booklet and other documents by electronic means to shareholders who have elected to receive communications electronically or provided an email address to Tassal's share register, and the provision of the scheme booklet and other documents in hard copy form to shareholders who have not made such an election, and to shareholders to whom electronic notification fails. An exhibit to Ms Liapis' affidavit indicates a form of voting reminder which Tassal proposes to provide to Tassal shareholders.
5. By his affidavit dated 29 September 2022, Mr Ian Jedlin, who is a managing director of Kroll Australia Pty Ltd, sets out his independent expert's report in respect of the scheme.
6. By his affidavit dated 29 September 2022, Mr Simon Barrile, who is the general counsel and company secretary of Tassal, deals with the process adopted by Tassal for verification of the scheme booklet, which was in orthodox form, and with board approval of the scheme booklet.
7. By his affidavit dated 29 September 2022, Mr Ryan, who is the managing director and chief executive officer of Tassal, addresses the nature of Tassal's business and the background to the transaction, and compares the consideration payable to acquire Tassal shares under the scheme with previous trading prices of Tassal shares. He also addresses the retainer of Kroll to prepare the independent expert report and the position in respect of conditions precedent to the scheme. He also deals with the terms of and the negotiation of a break fee and exclusivity provisions in respect of the scheme and with the proposed arrangements for the scheme meeting.
8. Mr Ryan also notes that Tassal has engaged a shareholder communications firm, Morrow Sodali, to host a shareholder information line and exhibits an "Inbound Q&A Script" which would be used in responding to shareholders calls and an "outbound engagement script" by which Morrow Sodali will initiate calls to about 9,500 Tassal shareholders who hold at least 500 Tassal shares, in order to provide information concerning the scheme. Mr Ryan also refers to a proposed briefing of proxy adviser firms in respect of governance processes adopted in respect of the scheme. I will address the question of any Court approval of those communications below.
9. By his affidavit dated 29 September 2022, Mr Antony Damian, who is a partner in the firm of solicitors acting for Tassal in respect of the scheme, referred to correspondence with the Australian Securities and Investments Commission ("ASIC") in respect of the scheme, to Tassal's board approval for disclosures in respect of the scheme, and to regulatory relief which had been sought by Tassal in respect of the scheme. The scheme booklet was an exhibit to Mr Damian's affidavit, and I was taken through that scheme booklet by Mr Williams at the first Court hearing.
10. By his affidavit dated 27 September 2022, Mr John Held, who is general counsel, executive vice president and secretary of a company within the Cooke Group, and was involved in negotiating the SID and other transaction documents on behalf of the Cooke Group, addresses the verification process which has been adopted in respect of information concerning the Cooke Group in the scheme booklet and the process of negotiation of exclusivity provisions and reimbursement fee and also, properly, identifies the nature of the costs incurred by Cooke and Aquaculture which would be compensated by the reimbursement fee.
11. By her affidavit dated 29 September 2022, Ms Lauren Henderson, who is an associate in a law firm in New Brunswick, Canada, provides her legal opinion in respect of, inter alia, the execution and enforceability of the deed poll executed by Cooke Inc in respect of the scheme, under the laws of the Province of New Brunswick, Canada and the Federal Laws of Canada.
12. Tassal also tendered (Ex A1) a letter from ASIC, in common form, indicating that it did not seek to be heard at the first Court hearing or oppose the convening of the scheme meeting.

The applicable principles and Tassal's submissions

1. Mr Williams submits, uncontroversially, that the Court will order the convening of the scheme meeting and approve the draft scheme booklet if it is satisfied that the plaintiff is a Part 5.1 body; the proposed scheme is an arrangement within the meaning of s 411 of the Act; the scheme booklet will provide proper disclosure to members; the scheme is bona fide and properly proposed; ASIC has had a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions and has had 14 days' notice of the proposed hearing date; the procedural requirements of the Supreme Court (Corporations) Rules 1999 (NSW) have been met; and there is no apparent reason why the scheme should not, in due course, receive the Court's approval if the necessary majority of votes is achieved: Re Staging Connections Group Ltd [2015] FCA 1012 at [19]-[20]; Re Atlas Iron Ltd (2016) 112 ACSR 554 at [30]; Re DUET Finance Ltd [2017] NSWSC 415 at [15] ("DUET Finance"); Re BIS Finance Pty Ltd [2017] NSWSC 1713 at [20] ("BIS Finance"); Re Villa World Ltd [2019] NSWSC 1207 ("Villa World") at [15].
2. Mr William also submits that the Court's approach at the first Court hearing is that it will not ordinarily summon a scheme meeting unless the scheme is of such a nature and cast in such terms that, if it receives the statutory majority at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed: F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72, approved in Australian Securities Commissions v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 504. He refers to the often quoted observation of French J in Re Foundation Healthcare Ltd (2002) 42 ACSR 252; [2002] FCA 742 at [36] and [44], cited with apparent approval in Re CSR Ltd (2010) 183 FCR 358 at [58], that: "It is however important to bear in mind that, by granting leave to convene the meeting, the court does not give its imprimatur to the proposed scheme. If the arrangement is one that seems fit for consideration by the meeting of members or creditors and is a commercial proposition likely to gain the court's approval if passed by the necessary majorities, then leave should be given: Re ACM Gold Ltd (1992) 34 FCR 530; 107 ALR 359; 7 ACSR 231; 10 ACLC 573 (O'Loughlin J). The court is not required to give close consideration to the effects of the scheme upon individual members of the classes of members or creditors affected. So to do would be to "introduce burdensome and to a large extent ineffectual consideration at this interlocutory stage": Re Jax Marine Pty Ltd [1967] 1 NSWR 145 at 148 (Street J). … The court at the stage of ordering a meeting to approve a scheme does not ordinarily go very far into the question of whether the arrangement is one which warrants the approval of the court … That question is to be answered when the scheme returns to the court for final approval. That is not to exclude the possibility that a scheme may appear on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further."
3. Mr Williams also points out that, at the first Court hearing, the Court is not concerned with whether final approval should be given to the scheme, but whether the scheme is one which is adequately explained to those who have a financial interest in it, and whether there is any obvious flaw in the scheme, such that it would be inappropriate even for it to be submitted for consideration: Re Abacus Funds Management Ltd (2006) 24 ACLC 211; [2005] NSWSC 1309 at [23]; Villa World at [18]. The Court is also not required to be satisfied that no better scheme could have been proposed, and the question is whether it is reasonable to suppose that sensible business people might consider the arrangement proposed is of benefit to members: Re Centrebet International Ltd [2011] FCA 870 at [29]; Re SAI Global Ltd [2016] FCA 1312 at [18]; DUET Finance at [14]; BIS Finance at [22].
4. Mr Williams rightly points to the evidence that Tassal is a Part 5.1 body; the text of the scheme, which is included in Annexure 2 of the scheme booklet, which provides prima facie evidence that there is an "arrangement" within the meaning of s 411 of the Act, and an "acquisition" scheme of this nature generally involves an "arrangement" within the meaning of the Act: Re Staging Connections Group Ltd at [55]; Re Simavita Holdings Ltd [2013] FCA 1274 at [2]. The SID (as attached to Tassal's ASX announcement of the proposed scheme) provides prima facie evidence that Tassal has committed itself to propounding the scheme and that the scheme is bona fide and has been properly proposed: Re Staging Connections Group Ltd at [61]. Cooke and Aquaculture have executed a deed poll in favour of Tassal shareholders, and Tassal has led opinion evidence establishing the due execution of the deed poll under the laws of Canada, and the enforceability in Canada of an Australian judgment in relation to that deed poll, consistent with the approach contemplated in Re Staging Connections Group at [44]-[48]; Re Veda Group Ltd [2015] FCA 1506 at [30]-[33]; Re Intega Group Ltd [2021] NSWSC 1707; at [10] Re rhipe Ltd [2021] NSWSC 1170 at [6] and [14] ("rhipe"); Re Afterpay Ltd [2021] NSWSC 1435 at [46].
5. I have referred above to Mr Barrile's and Mr Held's affidavit evidence of the verification process adopted relating to the factual information in the scheme booklet concerning Tassal and Cooke respectively. Mr Williams points out that Mr Jedlin's affidavit verifies the independent expert's opinions contained in the scheme booklet. Mr Fazzino and Ms Lynch respectively consent to act as chair and alternate chair of the proposed scheme meeting. Tassal has also led Ms Liapis' affidavit evidence, which I noted above, as to the means by which Tassal shareholders will be notified of the scheme meeting and provided with the scheme booklet. Perhaps unusually in recent times, the scheme meeting will be held as a physical meeting and not a virtual meeting, and Tassal shareholders can also vote by lodging a proxy.
6. ASIC was notified of the hearing and provided with a draft of the scheme booklet and the scheme more than 14 days before the first Court hearing in accordance with the requirements of 411(2)(a) of the Act has been satisfied and, as I noted above, ASIC has provided its "usual letter" indicating that it does not propose to appear at the first Court hearing, and reserving its position as to 411(17)(b) of the Act until the second Court hearing.
7. Mr Williams points out that Tassal's directors unanimously recommend that Tassal shareholders vote in favour of the scheme, in the absence of a superior proposal, and subject to the independent expert continuing to conclude that the scheme is fair and reasonable and in the best interests of Tassal shareholders (other than the Excluded Shareholders) (chair's letter and sections 1.1, 1.2, 2, 4.6 and 7.1 of the scheme booklet) and, subject to those matters, each Tassal director intends to vote any Tassal shares held or controlled by them in favour of the scheme. There is no reason to doubt, at least for the purposes of the first Court hearing, that the scheme in the best interest of Tassal shareholders so as properly to be put to them for approval. The independent expert's report , which is contained in Annexure 1 to the scheme booklet, compares the value of a Tassal share on a control basis with the scheme consideration And concludes that the scheme consideration is fair and reasonable and consequently in the best interests of Tassal shareholders (other than Excluded Shareholders), in the absence of a superior proposal. For that and other reasons, the independent expert has also concluded that the scheme is in the best interests of Tassal shareholders other than the Excluded Shareholders, in the absence of a superior proposal.

Particular aspects of the scheme

1. Mr Williams addresses several aspects of the scheme, consistent with the approach noted by Barrett J in Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at 603.
2. First, Mr Williams notes that Tassal operates a long term incentive plan ("LTIP") under which performance rights are offered to senior executives. Under the LTIP, performance rights entitle the holder to receive Tassal shares, subject to achievement of specified performance criteria during the performance period. The number of performance rights which vest depends on the extent to which the performance criteria are met. Clause 4.5 of the SID provides that Tassal must ensure that there are no performance rights in existence by the scheme record date, and identifies the means by which that may be achieved. Tassal has also agreed with Cooke and Aquaculture that it will not make any grant of performance rights for the performance period from 1 July 2022 ("2022 Performance Rights") or make a cash payment in respect of any such performance rights without Cooke's prior written consent.
3. On 13 September 2022, the Tassal Board (excluding its chief executive officer, Mr Ryan) resolved, subject to the receipt of a waiver from ASX under Listing Rule 6.23, to deal with the performance rights, subject to the scheme becoming effective, by causing all performance rights on issue to vest on a pro-rata basis on specified terms and, following that vesting, issuing one fully paid Tassal share to relevant participants for every vested performance right that they hold prior to the scheme record date, subject to a maximum number of performance rights to vest. The necessary ASX waiver has been granted and Tassal's intended treatment of performance rights is disclosed in section 9.2 of the scheme booklet. I have noted Mr Ryan's disagreement with aspects of that approach above. Mr Williams submits and I accept that holders of performance rights who are also Tassal shareholders are not in a separate class of members by reason only that they also hold incentive rights: Re Foster's Group Ltd (No 2) [2011] VSC 547 at [38]-[43]; Re Cashcard Australia Ltd (2004) 48 ACSR 738.
4. Second, Mr Williams addresses the question of the interests of Tassal's managing director and chief executive officer, Mr Ryan. Mr Ryan holds 363,740 unvested performance rights, comprised of 177,154 performance rights granted under the 2020 LTIP and 186,586 performance rights granted under the 2021 LTIP. The chair's letter and section 9.2 of the scheme booklet disclose that 231,040 out of Mr Ryan's 363,740 unvested performance rights will vest if the scheme becomes effective, and 231,040 Tassal shares will be issued to him in respect of those vested performance rights, and Mr Ryan's remaining 132,700 performance rights will lapse. Mr Ryan will then become entitled to receive $1,208,339 by way of scheme consideration for the Tassal shares issued upon vesting of his performance rights. He will not be entitled to vote those shares at the scheme meeting since they will only be issued after the scheme meeting, if the scheme becomes effective. The Tassal board has formed the view that, despite the financial benefits to be received by Mr Ryan in connection with the scheme, it is appropriate for Mr Ryan to make a recommendation on the scheme given his role in the operation and management of Tassal and since Tassal shareholders would wish to know Mr Ryan's views in relation to the scheme, and Mr Ryan also considers that it is appropriate that he to makes a recommendation on the scheme. The case law has recognised that a director who will receive such a benefit may make such a recommendation, if sufficient disclosure of that director's interest is given to shareholders, and I adopt that approach here: Re Kidman Resources Ltd [2019] FCA 1226 at [115]; Villa World at [38]; Re GBST Holdings Ltd [2019] NSWSC 1280 at [24]-[30]; Re DWS Ltd [2020] FCA 1590 at [41]-[49]. I am satisfied that, where the benefit that Mr Ryan will receive if the scheme is implemented is sufficiently disclosed in the scheme booklet, his recommendation to Tassal shareholders (other than Excluded Shareholders) is not a reason to decline to convene the scheme meeting.
5. Third, Mr Williams draws attention to the difference of view between Tassal and Mr Ryan in respect of his performance rights entitlements, which I noted above. The matter is disclosed in section 9.2(b) of the scheme booklet and is addressed in Mr Fazzino's affidavit to which I referred above. Mr Williams submits, and I accept, that: "Whilst acknowledging it is an unusual circumstance for a scheme proponent to be in a dispute with its chief executive as to their entitlement to participate in the scheme in respect of incentive rights, it is submitted that the dispute between Tassal and Mr Ryan is not a matter which should prevent the convening of the Scheme Meeting. The existence of the dispute is disclosed in the Scheme Booklet noting Mr Ryan is providing a recommendation in relation to the Scheme, and was disclosed to Cooke and [Aquaculture] prior to execution of the [SID]. The fact of the dispute does not affect the rights of Tassal Shareholders under the Scheme given the resolution of the matter is not a condition precedent to the Scheme. Nor does it impact on what Mr Ryan will in fact receive under the Scheme as the number of shares which will be granted to him in respect of his performance rights is the number determined by the Tassal Board. Mr Ryan has not threatened or indicated any intention to commence proceedings or otherwise enforce his claimed entitlements prior to the implementation of the Scheme. If Mr Ryan were to bring a claim against Tassal following implementation of the Scheme, that is a matter that would affect Cooke but would not affect other Tassal Shareholders."
6. Fourth, Mr Williams addresses the question of funding of the scheme consideration and performance risk. He notes that Aquaculture intends to fund the scheme consideration through a combination of funding from Cooke and external debt funding. Cooke has committed to provide Cooke Sub with an amount not more than $782,007,232 no later than 5 business days before the implementation date of the scheme, which will be funded by existing cash reserves and a credit facility with a syndicate of lenders. Cooke and Aquaculture have also entered into a debt commitment letter with a syndicate of senior debt financiers for a secured facility to Aquaculture, and s substantial part of that amount is available to fund part of the scheme consideration. The credit facility and senior loan facility are subject to customary conditions precedent and Cooke is not aware of any reason why those conditions will not be satisfied. The funding arrangements are described in section 6.3 of the scheme booklet. Mr Williams points out that Cooke and Aquaculture are parties to the deed poll and Tassal shareholders have direct rights as against Cooke in respect of its funding commitment.
7. Mr Williams also submits and I accept that the provision for payment of the scheme consideration to the trust account operated by Tassal or on its behalf, prior to transfer of the Tassal shares, is a safeguard against the risk that Tassal shareholders will suffer delay or default in the provision of the scheme consideration after their shares have been transferred to Aquaculture and avoids the risk that Tassal shareholders will be left to the remedy of suing on the deed poll: Re APN News & Media Ltd [2007] 62 ACSR 400 at 405 ("APN News"); DUET Finance Ltd at [47]. These matters provide no reasons not to convene the scheme meeting.
8. Fifth, Mr Williams addressed the proposed manner of dispatch of scheme materials to Tassal shareholders. It is proposed that Tassal shareholders who have elected to receive communications electronically or have provided Tassal's registry with an email address will be notified by email of the scheme meeting, with a link to a website where they can view and download the scheme booklet, notice of meeting and addresses proxies and lodge questions prior to the meeting. Tassal shareholders who have made a positive election to receive communications by post or who have not provided Tassal's registry with an email address will be posted hard copies of the scheme booklet and proxy form to them. Tassal also has arrangements for further despatch of scheme documents where communications are returned to Computershare because the physical address on the register is unknown or incorrect. The proposed despatch arrangements are consistent with s 110E of the Act and give rise to no reason not to convene the scheme meeting.
9. Sixth, Tassal seeks an order approving the despatch of email "reminder to vote" communications to Tassal shareholders who have not submitted proxy instructions, reminding them of the deadline for submitting instructions and encouraging them to vote. The "reminder to vote" emails proposed to be sent to electronic recipients are exhibited to Ms Liapis' affidavit and are not controversial. Such reminders have been approved in other schemes including rhipe and Re Sydney Airport Ltd and the Trust Company (Sydney Airport) Ltd as responsible entity for Sydney Airport Trust 1 [2022] NSWSC 25 at [42].
10. Seventh, Tassal has put before the Court the documents proposed to be used in communications with shareholders and proxy advisers so that the Court has visibility and oversight of such communications, consistent with the principle that the Court should approve any proposed supplementary disclosure in circumstances where it is being called upon to approve the explanatory material: Re Centro Retail Ltd [2011] NSWSC 1320 at [11]; Re Trust Company Ltd [2013] NSWSC 1946 at [6]-[8]; Re Investa Listed Funds Management Ltd [2016] NSWSC 344 at [4]; Re Investa Listed Funds Management Ltd [2016] NSWSC 369 at [1]; Re Tawana Resources NL (No 2) [2018] FCA 1724 at [18]; Re Walsh & Company Investments Ltd [2020] NSWSC 1746 at [66]; Re AGL Ltd [2022] NSWSC 576 at [42]. There has been a degree of focus on communications with shareholders in recent schemes, and those communications can become controversial and, at least, complicate the approval of a scheme at a second Court hearing or potentially put that approval at risk: see, for example, the issues that arose in Re ResApp Health Ltd [2022] NSWSC 1353 ("ResApp"), although the scheme was approved at the second Court hearing in that case.
11. Mr Williams notes that Tassal has engaged a communications firm, Morrow Sodali, to host a shareholder information line, and a copy of the "Inbound Q&A Script" to be used in responding to questions from shareholders who call the line is exhibited to Mr Ryan's affidavit. I do not think it is necessary for the Court to approve the inbound call script, where shareholders information lines have used in schemes for many years, and I reviewed relevant case law in ResApp and need not repeat that review here. Any issues arising from that form of engagement with shareholders can be addressed at the second Court hearing.
12. Tassal proposes that Morrow Sodali also conduct an outbound call campaign in which it will seek to call approximately 10,000 Tassal shareholders holding more than 500 shares to provide information about the scheme and encourage shareholders to vote, and a copy of the "Outbound Engagement Script" for these calls is also exhibited to Mr Ryan's affidavit. An outbound call campaign is distinct from a shareholder information line in that the scheme company seeks to initiate an engagement with a shareholder which has not sought it and seems to involve a greater practical risk of distorting, or distracting attention from, the information provided in the scheme booklet than a response to incoming shareholder questions. It seems to me that Court approval should generally be sought at the first Court hearing or in a separate application to the Court at least for any outbound call campaign, for the pragmatic reason that it will generally be preferable to identify any difficulties which would result in that approval being withheld at an early stage, and before the call campaign is undertaken, than to expose the scheme company and its shareholders to the risk that that call campaign might undermine the integrity of the scheme meeting and lead the Court to decline to approve a scheme at the second Court hearing, consistent with the principles which I set out in ResApp Health. I am satisfied that the outbound call script should be approved here, where it does not travel beyond the information in the scheme booklet, presents information in a balanced manner, and draws attention to advantages and disadvantages of the scheme and encourages shareholders to read the scheme booklet in its entirety.
13. Tassal also proposes that Morrow Sodali also facilitate a proxy adviser engagement process by offering to assist in scheduling meetings between the major proxy advisers and independent members of the Tassal board, and the slide presentation and "Proxy Adviser Engagement Q&A script" for these proposed meetings are also exhibited to Mr Ryan's affidavit. Mr Williams indicated, from the bar table, that the experience of the solicitors which acted for Tassal is that such briefings of proxy advisers have been common in the past, although this is the first occasion on which such a briefing has been specifically drawn to my attention at a first Court hearing. It seems to me that the proposed briefing of proxy advisers is analogous to a one-on-one briefing of a substantial shareholder and not a matter which requires the Court's approval in advance, although the content of that briefing will be scrutinised at the second Court hearing, at least if any issue arose in respect of it, and would be relevant to whether the scheme should be approved.
14. Eighth, Mr Williams addresses the exclusivity provisions adopted in the proposed scheme. Clause 10 of the SID imposes no talk, no shop, no due diligence and notification obligations, and a matching right in favour of Cooke. The no talk and no due diligence obligations are subject to a fiduciary exception as set out in clause 10.2 of the SID. Mr Williams submits and I accept that exclusivity provisions in this form are now commonplace in schemes of arrangement and not inconsistent with Guidance Note 7: Lock-up Devices issued by the Takeovers Panel: Villa World at [23]. Mr Williams also recognises that the any exclusivity period should be for no more than a reasonable period capable of precise ascertainment; an exclusivity clause directed at dealing with an unsolicited alternative merger proposal should be subject to a fiduciary carve out; and the provision should be clearly disclosed in the explanatory statement sent to shareholders: Re TPG Telecom Ltd [2020] NSWSC 772 at [22] ("TPG Telecom").
15. Mr Williams submits and I accept that, here, the exclusivity period is defined in the SID and capable of precise ascertainment; an exclusivity period of approximately 6 months between the date of the SID and the End Date (as defined) is a reasonable period; the "no talk" and "no due diligence" restrictions are subject to the overriding obligation not to breach the directors' fiduciary or statutory duties under cl 10.2 of the SID; and, although the "no shop" restriction is not subject to fiduciary carve-out, that is consistent with authority: DUET Management Company I Ltd [2013] NSWSC 817 at [24]; Re Aveo Group Limited and Aveo Funds Management Ltd [2019] NSWSC 1348 at [44]. The exclusivity provisions are disclosed in sections 2 and 9.4 of the scheme booklet and there is evidence they were the product of arms' length negotiations between the parties. These give rise to no reason not to convene the scheme meeting.
16. Ninth, Mr Williams addresses break fee provisions in the scheme. Clause 11.2 of the SID provides that a break fee of $11,300,000 may be payable by Tassal to Cooke in certain circumstances. Those circumstances do not include the failure by Tassal shareholders to approve the scheme at the scheme meeting or the failure of the Court to approve the scheme, and that break fee is not a disincentive to Tassal shareholders in their consideration of the proposed scheme: Re Adelaide Bank Ltd [2007] FCA 1582 at [31]; Re Bolnisi Gold NL (No 2) (2007) 65 ACSR 510 at 513. That break fee represents approximately 1.0017% of the equity value of Tassal implied by the scheme consideration, and this is broadly in line with the guideline figure indicated by the Takeovers Panel in its Guidance Note 7. Mr Williams submits and I accept that break fees of this magnitude are commonplace in schemes of this kind: Re Mosaic Oil NL [2010] FCA 985 at [19]; TPG Telecom at [24]. There is evidence that the break fee was subject to negotiations of the kind referred to in APN News at 411.
17. Tenth, Mr Williams notes that cl 8.2 of the scheme provides that each scheme shareholder is taken to have given various warranties to Tassal and Cooke, including that on the Implementation Date (as defined) all their Tassal Shares are free from encumbrances and interests of third parties of any kind. That deemed warranty is properly disclosed in section 4.7 of the scheme booklet and provides no reason not to convene the scheme meeting; APN News; Re Ardent Leisure Ltd [2018] NSWSC 1665 at [26]; rhipe at [26].
18. Finally, Mr Williams notes that the Court will address the question arising under s 411(17) of the Act on the application to approve a scheme at the second Court hearing: Re Macquarie Private Capital A Ltd [2008] NSWSC 323; TPG Telecom at [31]. As I noted above, ASIC has indicated that it does not intend to appear and make submissions at the first Court hearing and has reserved its position as to that question to the second Court hearing in the usual way.

Orders

1. For these reasons, I was satisfied that the orders sought by Tassal convening the scheme meeting and ancillary orders should be made, and I made those orders at the conclusion of the first Court hearing on 30 September 2022.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 October 2022