Ecosave Holdings Limited, in the matter of Ecosave Holdings Limited [2015] FCA 1121

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1100 of 2015

IN THE MATTER OF ECOSAVE HOLDINGS LIMITED ACN 160 875 016 ECOSAVE HOLDINGS LIMITED ACN 160 875 016

JUDGE: YATES J DATE: 23 OCTOBER 2015 PLACE: SYDNEY

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.

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.

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.

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.

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.