Consolidated Media Holdings Limited, in the matter of Consolidated Media... [2012] FCA 1224 | Case summary

REASONS FOR JUDGMENT 1 On 24 September 2012, the Court ordered, pursuant to s 411 of the Corporations Act 2001 (Cth) (the Corporations Act), that the plaintiff, Consolidated Media Holdings Limited (CMH), convene a meeting of the holders of ordinary shares in its capital (Scheme Meeting) for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement (Scheme) with or without modification between CMH and its shareholders. CMH has now moved the Court for an order approving the Scheme under s 411(4)(b) of the Corporations Act. 2 I am satisfied that, subject to the matters that I shall briefly mention, the Scheme Meeting was convened in accordance with the orders made on 24 September 2012. The Australian Securities and Investments Commission has also written to CMH's solicitors indicating that it has no objection to the proposed Scheme. At the Scheme Meeting, which was held on 31 October 2012, the resolution proposed was passed by a substantial majority. There were 2,811 shareholders present, either in person or by proxy, representative or attorney. Of those, 2,493 shareholders voted in favour of the resolution and 273 shareholders voted against the resolution. The 2,811 shareholders who voted cast an aggregate of 483,233,812 votes, representing 99.91 per cent of the votes cast, in favour of the resolution, and 415,679 votes, representing 0.086 per cent of the votes cast, against the resolution. Some 66,312 "abstain" votes were also cast. In the circumstances, the prerequisites of s 411 in relation to the approval of the Scheme by shareholders have been satisfied. 3 I am also satisfied, from the evidence, that the hearing today has been advertised in accordance with the requirements. There has been no appearance today, other than by senior counsel on behalf of CMH and the acquiring entities. That is to say, nobody has sought to appear to oppose the approval of the Scheme. 4 Two brief matters to which the Court's attention has been drawn need to be mentioned. First, there was an oversight in the preparation of the copy of the Scheme included in the booklet sent to shareholders, in that the date of the deed poll was omitted. That omission was rectified. Clearly, the amendment is of a minor technical nature. It had no effect on the substance of the Scheme. There is no suggestion that any shareholder would have been disadvantaged by the omission of the date. 5 Secondly, the Court's attention has been drawn to the fact that the Scheme booklet was not despatched to new shareholders whose names were entered in the register after 7pm on 20 September 2012, that being the cut-off time used for the purpose of despatch of the Scheme documents. Some 108 new shareholders, holding approximately 1 per cent of the total issue share capital as at 7pm on 29 October 2012, being the cut-off time used for determining eligibility to vote on the Scheme, were entered in the register. I do not consider that the fact that the Scheme booklet and associated documents were not sent to those shareholders is in any way an impediment to the making of the orders now sought. 6 The constitution of CMH provides, relevantly, that a person who, because of a transfer of shares, becomes entitled to any shares registered in the name of a member, is taken to have received every notice which, before that person's name and address is entered in the register of members for those shares, is given to the member complying with the relevant rule. Under the constitution, CMH may give notice to a member by sending it by prepaid post to the member's address in the register of members, or any other address the member supplies to CMH for the purpose of giving notices, or by sending it by electronic means to the electronic address that the member has supplied to CMH for giving notices. 7 The Scheme documents were despatched either by prepaid post, to those members appearing in the register at the relevant time, or by email, to those members who had notified an electronic address for service. In those circumstances, I am satisfied that there was no deficiency in the giving of notice of the Scheme Meeting to persons who became members after 20 September 2012. Even if there were, the deficiency is clearly a procedural one relating to a proceeding under the Corporations Act, within the meaning of s 1322(2). It is a procedural irregularity that did not in any way invalidate the convening of the Scheme Meeting. There is certainly no suggestion that it caused any substantial injustice. There is therefore no basis for the Court declaring that the proceeding should be invalid. 8 Further, the number of shares involved would have had no effect on the passing of the resolution, had the shareholders all voted against the resolution. There is no suggestion that the material would not have been available to the 108 new shareholders, if they were interested in finding out what was involved. The Scheme booklet was available on the website of CMH and announcements were made to the Australian Securities Exchange concerning the despatch of the Scheme booklet and proxy forms to shareholders. Indeed, two of the new shareholders lodged proxy forms for the purposes of the Scheme Meeting. It is easy to draw the inference that shareholders would have been aware of the proposal. 9 I am satisfied that all of the prerequisites of s 411 have been complied with. There is no suggestion that the majority of the shareholders who voted in favour of the resolution acted otherwise than in good faith or for any illegitimate purpose. Having regard to the evidence that was provided to the Court in connection with the application to convene the Scheme Meeting that the Scheme is fair and reasonable, there can be no suggestion that the proposal is not one that an intelligent and honest person, who is a shareholder and acting alone in respect of his or her interest as a shareholder, might approve. 10 In all of the circumstances, I propose to make an order under s 411(4)(b) of the Corporations Act that the Scheme be approved. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Consolidated Media Holdings Limited, in the matter of Consolidated Media Holdings Limited (No 2) [2012] FCA 1224

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