Chevron (TAPL) Pty Ltd v Chevron Australia Pty Ltd, in the matter of Chevron

Introduction of a condition 39 An issue was raised during the course of the second hearing, that required consideration of whether it was appropriate to introduce a condition with respect to approval of the Scheme. 40 Mr Alexander's second affidavit annexed a copy of a public announcement issue by Livent on its Livent Investor Relations website with respect to the outcome of the meeting of Livent shareholders. The meeting was held at 9.00 am New York time on 19 December 2023. As set out in the first reasons (at [9]), Allkem, Livent and Arcadium entered into a Transaction Agreement on or about 10 May 2023 to facilitate (among other things) the implementation of the Scheme, insofar as Allkem shareholders are concerned, and the implementation of a Merger in accordance with Delaware law, insofar as Livent stockholders are concerned. These processes are separate but parallel. 41 The public announcement relevantly indicated that the stockholders approved the proposal to adopt the Transaction Agreement. However, certain proposals were also put at the meeting by way of a non-binding advisory vote. Those proposals related to potential amendments to the provisions of the Articles of Association of Arcadium, which the Livent stockholders supported in a non-binding manner. 42 The Articles were included by way of Exhibit E to the Transaction Agreement, a copy of which was adduced in evidence by way of the affidavit of Mr Wang ([18(a)] of first reasons). The Scheme Booklet included (at Annexure D) a 'Summary of Transaction Agreement', and noted that a copy of the Transaction Agreement was available on the ASX website. 43 Relevantly, the proposals relate to matters addressed by current Articles 7.3(f)(17), 7.3(g)(7) and 7.3(h)(3) and 8.3. 44 Article 77.3 deals with nominations and proposals by shareholders. Article 7.3(f) sets out the information that a member is to provide in any notice providing for the nomination of person for election to the Board or for other business proposed to be brought before a general meeting. It sets out a long list of information about the member to be included. Relevantly, Article 7.3(f)(17) currently provides that the member must also provide 'such additional information that the Company may reasonably request regarding such member or [associate persons]'. 45 Article 7.3(g) deals with information to be provided by a member with respect to any nominee for election to the Board. Again, a long list of information is prescribed. Article 7.3(g)(7) currently provides that the members must also provide 'such additional information as the Company may reasonably require…'. 46 Article 7.3(h) deals with information to be provided by a member regarding business proposed to be brought before a general meeting. Similarly, a list of information is prescribed. Article 7.3(h)(g) currently provides that in addition, a member must also provide such additional information that the Company may reasonably require. 47 Article 8.3 currently provides that a director may be removed in a number of circumstances, 'including but not limited to' where a director is convicted of an offence or a material act of dishonesty. 48 I was informed that as a result of the outcome of the non-binding advisory votes referred to above, negotiations are continuing between the parties as to whether Articles 7.3(f)(17), 7.3(g)(7) and 7.3(h)(3) are to be deleted, and as to whether Article 8.3 is to be deleted and substituted by the words: 'A director may be removed from office by ordinary resolution of the Company in a general meeting with or without clause'. 49 Accordingly, and to provide for agreement between the parties to amend the Articles in that manner, Allkem sought an order that: Pursuant to s 411(6) of the Corporations Act, any amendment to Arcadium Lithium plc's Articles of Association (being Exhibit E to the Transaction Agreement annexed to the affidavit of James Yu-Wen Wang affirmed 18 October 2023 as 'JYW-3') made prior to Scheme Implementation (as defined in the Scheme) be limited to: (a) deletion of Article 7.3(f)(17), 7.3(g)(7) and 7.3(h)(3); and (b) deletion of Article 8.3 and replacement with 'A director may be removed from office by ordinary resolution of the Company in a general meeting with or without clause'. 50 Section 411(6) of the Corporations Act provides: (6) The Court may grant its approval to a compromise or arrangement subject to such alterations or conditions as it thinks just. … 51 This power of the court is broad and is expressed without limitation. In Snowside Pty Ltd as trustee for the Snowside Trust v Boart Longyear Ltd [2017] NSWCA 215 (Bathurst CJ, Beazley P and Leeming JA) the Court said: [25] …It would be quite inconsistent with the statutory language to read down the broad terms of s 411(6) by reference to a decision on a legislative scheme which lacked such a power. It is clear that s 411(6) empowers the court to grant its approval to a scheme which is different from that which was approved by members or creditors; if that were not so, the subsection would be entirely otiose. [26] Subsection 411(6) is not without limitation. But the power is not circumscribed by the limitations favoured by the appellants, namely, to alterations which are not 'material' or 'substantial' or 'significant'. Instead, it is circumscribed by the requirement that the Court thinks the alteration is one that is just. 52 There is no question that the discretion must be exercised judicially. 53 In their text Schemes, Takeovers and Himalayan Peaks, Fourth Edition, at [4.7], Tony Damian and Andrew Rich explain the principles and collect a large number of examples where the court has exercised its discretion to grant approval to a scheme, subject to alterations or conditions. Unsurprisingly, none of those examples are directly analogous to the present case, but they provide guidance as to the matters that might be relevant in the exercise of the discretion. 54 In light of the urgency with which this matter required determination, it was not possible to consider a large body of authorities. However, relevant themes that emerge from the cases cited by Damian and Rich are: (a) the discretion may be exercised if the alteration is of a minor or technical kind that does not really affect the detail of the scheme, but may also be used where the alteration is of a more substantive nature; (b) a relevant question is whether it affects the substantive nature of the scheme or is more of a minor kind that improves the working of the scheme; (c) the court is to consider whether the scheme would still have been agreed to by the requisite majorities if the members had considered and voted on the scheme with the suggested amendments in place; (d) what is important is whether the scheme remains, in substance, what was agreed by the members; and (e) the discretion is unconfined by any particular statutory criteria other than the alteration or condition must be 'just'. 55 Examples referred to by Damian and Rich where the discretion under s 411(6) has been utilised include provision for substitution of a proposed bidder by a subsidiary; changes of record dates; and changes to the method of payment of consideration. Changes to transactional documents or conditions relating to amendments to ancillary arrangements were provided for in Quintis Limited, in the matter of Quintis Limited (subject to deed of company arrangement) (receivers and managers appointed) (No 2) [2018] FCA 1510 (Yates J) and Re Ovato Print Pty Ltd [2020] NSWSC 1882 (Black J). 56 I do not consider that the potential amendments to the Articles are of a minor or typographical nature. Clearly they are more substantive. However, I accepted Allkem's submission that the possible changes to the Articles do not alter the substance of the Scheme and appear to be in the interests of the members. The identified changes have the potential to remove particular restrictions that the company may otherwise impose on the members' ability to put matters before a meeting of members, thus increasing the power of members to participate in the company's business at meetings. They potentially enhance the manner in which members may control the constitution of the Board. The proposed change to Article 8.3 would make the position more consistent with that under Australian law. The proposed changes were supported in a non-binding manner by the Livent stockholders. In those circumstances, I accepted the submission that it can safely be inferred that the requisite majority of Allkem shareholders would have voted in favour of the Scheme regardless of such changes, had they been invited to do so. 57 I was also taken to the disclosures that were made within the Scheme Booklet about the Articles, to assess the significance of the potential changes. Shareholders were referred to organisational materials relating to what was then referred to as NewCo, and in particular were referred to section 7.13 of the Scheme Booklet and Annexure H. Although section 7.13 mentioned the Articles, nothing was said relevant to the present matters. Annexure H contained a comparison of shareholder rights and corporate laws under Australian and Jersey law. Shareholders were invited to read the Newco organisational documents, including the Articles if they wished to do so, and were referred to Exhibit E to the Transaction Agreement available on the ASX website. In a section that compares the rights of shareholders to bring a resolution before a meeting, current Article 7.3(h) is paraphrased, including 7.3(h)(3). Current Article 8.3 is also paraphrased. There is also reference to shareholders having the right to nominate director nominees if they comply with notice requirements. 58 I took into account these disclosures, which highlighted matters that a shareholder may have noticed if they chose to read the Articles, but nothing in the manner in which they are described in the Scheme Booklet altered my view that it can safely be inferred that the requisite majority of members would have voted in favour of the Scheme regardless of the potential changes to the Articles, had they been invited to do so. 59 In all of the circumstances I considered it just to provide for the potential that there would be changes agreed to the Articles as a result of negotiations between the parties prior to the Scheme implementation, but confined to those set out in the order sought by Allkem. 60 I made order 2 accordingly.