Colonial Sugar Refining Co Ltd v Dilley

The substantial matter in dispute is whether the provisions of ss. 184 or 185 of the Companies Act apply to a "take-over" offer made by two companies jointly or whether they are applicable only to the case of such an offer when made by one company. It is clear enough that s. 184 was introduced for the purpose of protecting the shareholders of a company to whom a take-over offer is made and there can be no doubt that it was the purpose of the legislature to require that "take-over" offers should be made only in conformity with its provisions (see sub-s. (6)). But it certainly appears that in enacting its provisions, and also those of s. 185, the legislature did not contemplate the possibility of a so-called joint take-over offer being made. But, having regard to s. 21 (b) of the Interpretation Act of 1897 N.S.W., it was contended before us that the provisions are capable of being applied and are applicable to cases such as the present. That sub-section, which is in a well-known form, provides, in effect, that unless the contrary intention appears, words in the statute expressed in the singular shall include the plural and words in the plural shall include the singular.

It seemed to the learned judge of first instance that, reading s. 184 as a whole and the provisions of the Tenth Schedule to the Act, which prescribe conditions to be observed in "take-over" proceedings, it was not possible to give effect to the appellants' contention. Likewise he thought that s. 185 read as a whole contemplated "singularity" and that sufficient appeared to preclude the application of the statutory rule. Moreover he was of the opinion that "s. 184 and s. 185 are intended to work together, s. 185 providing the power of acquisition and s. 184 providing the machinery by which the interests of those affected would be safeguarded" and that "the fact that s. 184 does not apply to joint take-over offers confirms the view that s. 185 does not apply to joint take-over offers".

Upon full consideration of the arguments advanced by the appellants we feel forced to the conclusion that his Honour was right. It is, we think, beyond doubt that the draftsman did not contemplate nor - what is more important - provide for the case of a take-over by a so-called consortium of companies and it seems clear to us that s. 21 (b) of the Interpretation Act cannot do the work for which the appellants contend. It is impossible to achieve the result which the appellants seek to achieve simply by reading the expressions "Offeree corporation" (in s. 184) and "transferee company" (in s. 185) in the plural; such a result could only be achieved by transforming both the form and substance of the sections. For example, "Take-over scheme" is defined by s. 184 to mean, inter alia, "a scheme involving the making of offers for the acquisition by or on behalf of a corporation of any shares in another corporation which (together with shares, if any, already held beneficially by the first-mentioned corporation or by any other corporation that is deemed by virtue of subsection (5) of section six to be related to that corporation) carry the right to exercise, or control the exercise, of not less than one-third of the voting power at any general meeting of the other corporation." (Our italics.) Then by sub-s. (2) there is required to be given together with the notice for which that sub-section provides a statement that complies with the requirements set out in Pt B of the Tenth Schedule to the Act. Clause 1 (c) of Pt B provides that such a statement shall specify the number and description and amount of marketable securities in the offeree corporation held by or on behalf of the offeror corporation. Clause 1 (d) provides that if the shares are to be acquired for a consideration other than wholly in cash the statement shall set out, inter alia, the reports which, if the statement were a prospectus issued on the date on which notice of the take-over scheme is given to the offeree corporation, would be required to be set out in it under pars. 20 and 23 in Pt II of the Fifth Schedule. A perusal of these paragraphs shows that the former refers to a report by a registered company auditor with respect to the profits and losses and assets and liabilities of the company and any guarantor company referred to in the prospectus together with certain other information concerning the rates of dividend paid by the company. Paragraph 23 refers to a report by the directors as to the business of the company, its current assets, its contingent liabilities and other information concerning the company. It is beyond doubt that the word "company" in these provisions, relating as they do, to prospectuses is not capable of referring to a plurality of companies and cl. 4 (1) (d) would seem also to proceed on the same basis. Clause 4 (d) of the Tenth Schedule provides that the statement shall set out whether or not there is any agreement or arrangement whereby any shares acquired by the offeror corporation in pursuance of the scheme will or may be transferred to any other person, and, if so - (i) the names of the persons who are a party to the agreement or arrangement and the number, description and amount of the shares which will or may be so transferred; and (ii) the number, if any, and description and amount of shares of the offeree corporation held by or on behalf of each of these persons, or if no such shares are so held, a statement to that effect. By par. (8) it is provided that where the take-over scheme relates to securities which are not listed in or dealt in on a Stock Exchange, the statement shall contain all the information which the offeror company may have as to the number, amount and price at which the securities have been sold in the three months immediately preceding the date on which notice of the scheme is given to the offeree corporation and, if the offeror corporation has no such information, a statement to that effect.

Then by sub-s. (7) of s. 184 it is provided that the provisions of ss. 46 and 47 shall apply to and in relation to a statement given by an offeror corporation to an offeree corporation in pursuance of par. (a) of sub-s. (2) of the section as if (a) each reference in those sections to a prospectus were a reference to such a statement or copy of such a statement; (b) the reference in sub-s. (1) of s. 46 to persons who subscribe for or purchase any shares or debentures were a reference to a person who accepts a take-over offer; and (c) each reference in those sections to the allotment or sale of shares or debentures were a reference to the acceptance of a take-over. Section 46 of the Act provides that each of the following persons shall be liable to pay compensation to all persons who subscribe for or purchase any shares or debentures on the faith of a prospectus for any loss or damage sustained by reason of any untrue statement therein, or by reason of the wilful non-disclosure therein of any matter of which he had knowledge and which he knew to be material, that is to say every person who is a director of the corporation at the time of the issue of the prospectus and certain other persons.

The insuperable difficulties in the way of applying these provisions to so-called joint take-over offers are mentioned by way of example only but it seems to us that their language cannot be accommodated to the case of such offers; the language is, we think singularly appropriate to, and only appropriate to, the case of a take-over offer made by one company and accordingly we are of opinion that s. 184 can have no application to joint take-over offers.

We also agree with the learned judge of first instance that s. 185 provides merely for the consequences of a take-over offer made pursuant to s. 184. But we also think that the language of that section makes it clear that its provisions are inapplicable to the case of a joint take-over. Without referring to all the difficulties arising on the face of the section it should be noticed that sub-s. (2)(a) provides that notwithstanding anything in sub-s. (1), where shares in the transferor company of the same class or classes as shares whose transfer is involved are already held to a nominal value greater than one-tenth of the aggregate of their nominal value and that of the shares (other than those already held as aforesaid) whose transfer is involved the provisions of sub-s. (1) of that section shall not apply unless - "(a) the transferee company offers the same terms to all holders of the shares (other than those already held as aforesaid) whose transfer is involved, or, where those shares include shares of different classes, of each class of them". It is impossible to accommodate the language of these provisions to a case such as the present where, although the offer is called a joint offer, it contains an offer by each of the companies concerned to allot shares as part of the consideration. Equally, it seems impossible to accommodate the language of sub-s. (3), which entitles a dissenting shareholder "to require the company by a demand in writing served on that company to be supplied with a statement in writing of the names and addresses of all other dissenting shareholders", to the notion of a joint take-over. Again, sub-s. (4) provides that: "Where in pursuance of any such scheme or contract shares in a company are transferred to another company or its nominee and those shares together with any other shares in the first-mentioned company held by, or by a nominee for, the transferee company or its subsidiary at the date of the transfer comprise or include nine-tenths in nominal value of the shares in the first-mentioned company or of any class of those shares, then - (a) the transferee company shall within one month from the date of the transfer give notice of that fact in the prescribed manner to the holders of the remaining shares of that class who have not assented to the scheme or contract; and (b) any such holder may within three months from the giving of the notice to him require the transferee company to acquire the shares in question."

These provisions, again, are referred to by way of illustration only and are not exhaustive. But it is apparent that the possibility of a so-called joint take-over offer never presented itself to the legislature and that it has not made provision for such a case. Indeed the language of the section is quite clearly appropriate only to deal with a take-over offer made by one company alone. For these reasons we think that it is impossible to achieve the result for which the appellants contend simply by the application of s. 21 (b) of the Interpretation Act; indeed it is clear that the provisions of that sub-section cannot be applied and that the argument in support of the appeals must be rejected. Accordingly the appeals and the motions for special leave should be dismissed.