CORPORATIONS - schemes of arrangement - application for order that company convene meetings of members and optionholders
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Original judgment source is linked above.
Catchwords
CORPORATIONS - schemes of arrangement - application for order that company convene meetings of members and optionholders
Judgment (9 paragraphs)
[1]
Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act), the explanatory statement contained in the scheme booklet, which is Exhibit C in the proceeding, as amended by inclusion of the substituted pages identified in the affidavit of Tracy Jill Rafferty made 2 October 2015 (the Scheme Booklet), be approved for distribution to the members and optionholders of the plaintiff.
Pursuant to s 411(1) of the Act:
(a) The plaintiff convene a meeting of its members (the share scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure B to the Scheme Booklet (the share scheme).
(b) The plaintiff convene a meeting of its optionholders (the option scheme meeting) for the purpose of considering, and if thought fit, agreeing to, with or without any amendment or any alterations or conditions, the scheme of arrangement in Annexure C to the Scheme Booklet (the option scheme).
(c) The share scheme meeting and the option scheme meeting be held at Unit 4/42 Carrington Road, Castle Hill, New South Wales, on 6 November 2011, with the share scheme meeting commencing at 10.30 am and the option scheme meeting commencing at 11.00 am.
(d) Robin Archibald, or failing him, Marcelo Javier Rouco, be the chairperson of the share scheme meeting and the option scheme meeting, with power to adjourn each or either meeting in his absolute discretion for such time as he considers appropriate.
Pursuant to s 1319 of the Act, r 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the share scheme meeting or the option scheme meeting, except in so far as that rule applies reg 5.6.13 (without the form 530 stipulated therein) of the Corporations Regulations 2001 (Cth).
Subject to these orders and pursuant to s 1319 of the Act, the share scheme meeting be:
(a) convened using the notice of meeting in the form or substantially in the form of the notice in Annexure F of the Scheme Booklet; and
(b) conducted in accordance with the provisions of Part 2G.2 of the Act that apply to members of a company and the provisions of the plaintiff's constitution that are not inconsistent therewith.
Subject to these orders and pursuant to s 1319 of the Act, the option scheme meeting be:
(a) convened using the notice of meeting in the form or substantially in the form of the notice in Annexure G of the Scheme Booklet; and
(b) convened on the basis that two optionholders present in person or by proxy, corporate representative or attorney under power and entitled to vote shall constitute a quorum.
All voting at the share scheme meeting and the option scheme meeting be by poll declared by the chairperson.
Subject to registration of the Scheme Booklet with the Australian Securities and Investments Commission pursuant to s 412(6) of the Act, the plaintiff despatch, on or before 2 October 2015, the Scheme Booklet, a proxy form, a roll-over election form and a reply-paid envelope addressed to Security Transfer Registrars Pty Limited to each member on the plaintiff's register of members and each optionholder on the plaintiff's register of optionholders to the relevant address set out in the relevant register by:
(a) in the case of each member or optionholder who has a registered address in Australia, prepaid post; and
(b) in the case of each member or optionholder who has a registered address outside Australia, prepaid airmail or air courier.
Despatch of the documents referred to in Order 7 of these orders in accordance with its terms be taken to be sufficient notice of the share scheme meeting or option scheme meeting (as the case might be).
The time by which the members and optionholders must return their proxy forms for the share scheme meeting and the option scheme meeting is 10.00 am on 4 November 2015.
If the matter is to be relisted for orders approving the share scheme and the option scheme, the plaintiff give notice of the hearing by advertisement published in The Australian newspaper, such advertisement to be substantially in the form set out in Annexure A to these orders, and to be published on or before 20 November 2015.
The proceeding be adjourned to 27 November 2015 at 2.15 pm before Yates J for the hearing of any application to approve the share scheme and the option scheme.
These orders be entered forthwith.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Form 6 Notice of hearing to approve compromise or arrangement
(rule 3.4)
TO all the creditors and members of Ecosave Holdings Limited ACN 160 875 016 (Ecosave Holdings).
TAKE NOTICE that at 2.15 pm on 27 November 2015, the Federal Court of Australia at Level 17, Law Courts Building, Queens Square, Sydney, New South Wales, 2000 will hear an application by Ecosave Holdings seeking the approval of a compromise or arrangement between the company and its members as proposed by a resolution passed by a meeting of the members of the company held on 6 November 2015 and a compromise or arrangement between the company and its optionholders as proposed by a resolution passed by a meeting of the optionholders of the company held on the same day.
If you wish to oppose the approval of either compromise or arrangement, you must file and serve on the plaintiff a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on the plaintiff at its address for service at least 1 day before the date fixed for the hearing of the application.
The address for service of the plaintiff is:
HWL Ebsworth Lawyers
Level 14, Australia Square
264-278 George Street
Sydney NSW 2000.
Name of person giving notice or of person's legal practitioner is:
Mark James Webeck
HWLE Ebsworth Lawyers
[2]
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1100 of 2015
[3]
IN THE MATTER OF ECOSAVE HOLDINGS LIMITED ACN 160 875 016
ECOSAVE HOLDINGS LIMITED ACN 160 875 016
[4]
JUDGE: YATES J
DATE: 23 OCTOBER 2015
PLACE: SYDNEY
[5]
REASONS FOR JUDGMENT
1 The plaintiff, Ecosave Holdings Limited, applies for orders under s 411(1) of the Corporations Act 2001 (Cth) (the Act) convening separate meetings of members and optionholders to consider, and if thought fit approve (with or without amendments, alterations or conditions), schemes of arrangement between, respectively, the plaintiff and its members (the share scheme) and the plaintiff and its optionholders (the option scheme).
2 The purpose of the schemes is to effect a redomiciliation of the plaintiff by "top-hatting" a Delaware corporation, Ecosave Holdings Inc, which will become, if the schemes are approved, the holding company of the plaintiff and the ultimate holding company of all the other companies in the plaintiff's group.
[6]
background
3 The plaintiff is a public company incorporated in Australia. It employs engineers, environmental scientists and energy/water efficiency specialists who assess, design and implement energy efficient solutions to businesses and governments in Australia and the United States by delivering energy and water saving projects to its customers. It has completed over 500 energy and resource saving projects in over 3,000 sites across Australia, New Zealand and North America. The plaintiff's head office is located in Sydney with satellite offices in Melbourne, Wellington and Philadelphia. For the 2014 financial year, the revenue of the group exceeded $14 million.
4 The plaintiff was admitted to the official list of the Australian Securities Exchange (ASX) on 11 January 2013. In 2014, the plaintiff determined to have an increasing focus on the group's operations in the United States. In order to achieve that focus, the plaintiff concluded that the group should become a US-headed group with primary operations based in the United States. On 31 July 2015, the plaintiff's members approved its removal from the official list of the ASX no earlier than one month after 31 July 2015. The plaintiff was removed from the official list as from the close of trading on 16 September 2015.
5 The restructure will enable the group to achieve its strategic goal of growing its business in the United States. It is expected that the restructure will enhance the group's ability to:
access the pool of equity capital available in the United States and international markets to thereby enable the group to expand its business and deliver greater shareholder value;
attract and retain key staff with appropriate industry knowledge and experience who can advance the growth of the group's business by utilising equity-based components of remuneration that are comparable to that used by competitors; and
pursue acquisitions and other growth and diversification opportunities in the United States in accordance with its strategic plan.
6 The plaintiff has 31,224,789 shares on issue and 471,982 options on issue.
[7]
the schemes
7 Under the share scheme, the plaintiff's members will exchange their shares in the plaintiff for shares in Ecosave Holdings Inc on a one-for-one, like-for-like basis. Under the option scheme, the plaintiff's optionholders will exchange their options in the plaintiff for options in Ecosave Holdings Inc on a one-for-one, like-for-like basis.
8 The share scheme is not conditional on approval of the option scheme. However, the option scheme is conditional on approval of the share scheme. Accordingly, if the share scheme resolution is not passed, the option scheme will fail. However, if the option scheme resolution is not passed, the share scheme will still proceed. The consequences of the share scheme resolution passing, but the option scheme resolution failing, are set out in the scheme booklet, which will stand as the explanatory statement for both schemes under s 412 of the Act.
[8]
Discussion
9 The plaintiff's directors consider the schemes to be in the best interests of members and optionholders and have recommended that members and optionholders vote in favour of them. Each director who holds shares or options has stated that he intends to vote in favour of the scheme resolutions at the scheme meetings.
10 Further, substantial shareholders holding voting rights representing 70.32% of the total voting rights have indicated their intention to support the schemes subject to the schemes remaining in the best interests of members and optionholders.
11 The restructure and the terms of the schemes have no obvious controversial features.
12 As is now commonplace, each scheme contains a warranty given by members or optionholders (as the case might be) that their shares or options will be free from encumbrances at the time of transfer. The attention of members and optionholders is sufficiently drawn to the relevant warranties in the scheme booklet: Re APN News & Media Ltd (2007) 62 ACSR 400 at [57]-[63]; Re Sino Gold Mining Ltd (2009) 74 ACSR 647 at [29]-[31].
13 In the present case, there is no requirement under the Corporations Regulations 2001 (Cth) (the Corporations Regulations) for an independent expert's report, and the plaintiff does not intend to include one in the scheme booklet. In my view, given the nature of each scheme, I can see no other reason for requiring an independent expert's report as a condition of making orders convening the meetings or of giving court-approval of the schemes should they be approved by members and optionholders.
14 In this connection, I note that the scheme booklet includes sections on the taxation consequences for members and optionholders should the schemes be approved and the restructure proceeds; the differences between the legislation applying to the plaintiff and the legislation applying to Ecosave Holdings Inc, as a Delaware corporation; and the advantages and disadvantages of the schemes. I am satisfied that the scheme booklet provides members and optionholders with sufficient information to consider whether or not to vote in favour of the schemes.
15 The accuracy and completeness of the information in the scheme booklet has been verified by Robin Archibald, a director of the plaintiff and its Chief Operating Officer. Mr Archibald has consented to act as chairperson of each scheme meeting. Marcelo Javier Rouco, another director of the plaintiff, has consented to act as Mr Archibald's alternate.
16 A Bidder Share Deed Poll, in favour of members, and a Bidder Option Deed Poll, in favour of optionholders, have been executed by Ecosave Holdings Inc under which it covenants to perform its obligations under, amongst other things, the share scheme and the option scheme. I understand that, in conformity with the observations made by Farrell J in Simavita Holdings Limited, in the matter of Simavita Holdings Limited [2013] FCA 1274 at [43]-[44], the plaintiff will provide evidence at the second court hearing of the due execution of each deed poll.
17 The Australian Securities and Investments Commission (ASIC) has granted certain exemptions under reg 5.1.01(1) of the Corporations Regulations in respect of matters to be contained in the explanatory statement. ASIC has also examined a draft of the explanatory statement and provided confirmation that the requirements of s 411(2)(b) of the Act have been met. ASIC has also signified that the requirement of s 411(2)(a) of the Act has been met. ASIC did not appear at the first court hearing or otherwise oppose the making of orders convening the scheme meetings.
[9]
Conclusion and disposition
18 I am satisfied that the plaintiff is a Pt 5.1 body and that each scheme is an arrangement for the purposes of s 411(1) of the Act. I am also satisfied that the formal requirements that are preliminary to the Court convening the meetings under s 411(1) of the Act have been satisfied.
19 I am satisfied that the schemes are of such a nature and cast in such terms that, if each were to receive the requisite statutory majority, the Court would be likely to approve them on the hearing of unopposed applications.
20 It is appropriate that orders be made for convening the scheme meetings.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.