Envirosuite Limited, in the matter of Envirosuite Limited (No 2) [2025] FCA 941 (8 August 2025)

... the court will determine: (1) whether all the conditions required by s 411 have been complied with; (2) whether the majority of members or creditors, though acting regularly, have acted in good faith and not in pursuit of some illegitimate purpose; and (3) whether the proposal was "at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such member, might approve it".* Fundamentally, the jurisdiction is supervisory; the court is concerned to be satisfied that there has been an absence of oppression and that the compromise or arrangement is one which is capable of being accepted: see Re Dorman Long & Co Ltd [[1934] Ch 635]; Scottish Insurance Corp Ltd v Wilsons and Clyde Coal Co Ltd [1949] UKHL 3; [1949] AC 462 at 486.

* Per Fry LJ in Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1890] UKLawRpCh 171; [1891] 1 Ch 213 at 247.

1. In deciding whether to give final approval to a scheme of arrangement, the Court will typically wish to be satisfied of the following matters:

(a) that the orders of the Court convening a meeting of members were complied with;

(b) that the meeting of members so convened has approved the scheme with the requisite majority;

(c) that all the statutory requirements have been complied with;

(d) that the majority of members have acted in good faith and not for any illegitimate purpose;

(e) that there is no suggestion of oppression of any minority;

(f) that the scheme is fair and reasonable so that an intelligent and honest person, who is a member and acting alone in respect of his or her interest as a member, might approve it;

(g) that there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme; and

(h) that the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion.

See Re NRMA Ltd at [41] per Santow J; Re Seven Network Ltd (No 3) [2010] FCA 400; 267 ALR 583 at [31]- [44] per Jacobson J; Re Solution 6 Holdings Ltd [2004] FCA 1049; 50 ACSR 113 at [18]- [21]; Re Signature Capital Investments Ltd (No 2) [2016] FCA 385 at [4]; Re Medical Australia Ltd (No 2) [2017] FCA 1429 at [4]- [5]; Re Permanent Trustee Co Ltd [2002] NSWSC 1177; 43 ACSR 601 at [8]- [10]; and Re Healthscope Ltd (No 2) [2019] FCA 759; 136 ACSR 259 at [6]- [7], [11]-[14].

1. The FCH Orders required Envirosuite to convene the Scheme Meeting by sending electronically or via post to Envirosuite Shareholders a copy of the Scheme Booklet substantially in the form in which it appeared at pages 94 to 390 of Annexure NC-2 to the affidavit of Nicola Charlston dated 30 June 2025 (Final Draft Scheme Booklet).
2. Following the first court hearing, the Final Draft Scheme Booklet was amended in minor or technical respects (Final Scheme Booklet).
3. On 1 July 2025, following the conclusion of the first court hearing, KWM lodged a copy of the sealed FCH Orders with ASIC.
4. On 1 July 2025, following the conclusion of the first court hearing, KWM lodged with ASIC a copy of the Final Scheme Booklet for registration pursuant to s 412(6) of the Act.
5. On 1 July 2025, KWM received email confirmation from ASIC that it had registered the Final Scheme Booklet pursuant to s 412(6) of the Act.
6. Thus, the requirements of r 3.5(b) of the Federal Court (Corporations) Rules 2000 (Cth) and s 412(6) of the Act have been satisfied.

Dispatch of scheme materials to Envirosuite shareholders

1. Paragraph 2(a), (b) and (c) of the FCH Orders required the scheme materials to be sent to Email Shareholders, Hard Copy Shareholders and Hybrid Shareholders in particular ways.
2. The Third Charlston Affidavit, at paragraphs 15-17, establishes that the scheme materials were sent to shareholders in accordance with paragraph 2 of the FCH Orders

1. In accordance with paragraph 1(b) of the FCH Orders, the Scheme Meeting commenced at 9.00 am (AEST) on 1 August 2025 and was conducted virtually via an online platform.
2. In accordance with paragraph 3 of the FCH Orders, Mr Colby Manwaring acted as Chairman of the Scheme Meeting for the duration of the meeting.
3. Ms Cassandra Fidel, Meetings Manager at Boardroom (Envirosuite's share registry services provider) was appointed as returning officer for the Scheme Meeting, for the purposes of supervising the voting procedures to be adopted at the Scheme Meeting.
4. Voting at the Scheme Meeting was conducted by way of a poll.
5. Paragraphs 24 to 26 of the Third Charlston Affidavit provide the following evidence about (a) the percentage of votes cast in favour of the resolution and (b) the percentage of shareholders present and voting (including by proxy) who voted in favour of the resolution:
   1. Following the conclusion of the Scheme Meeting, Boardroom sent Envirosuite a copy of a poll report (Poll Report) indicating the total votes cast 'For', 'Against' and 'Abstain' in relation to the resolution to approve the Scheme (Scheme Resolution). The Poll Report recorded that 99.54% of the votes cast on the poll were in favour of the Scheme Resolution. The Poll Report did not record the number of shareholders voting on the poll.
   2. The Poll Report was released via the ASX Market Announcements Platform on 1 August 2025 at 12:19pm (ASX Announcement). The ASX Announcement stated that the Scheme Resolution was passed by the requisite majority of Envirosuite Shareholders and that, in summary, 99.54% of the votes cast on the poll were in favour of the Scheme Resolution, and 0.46% of Envirosuite Shareholders present and voting at the Scheme Meeting were in favour of the Scheme Resolution. The reference in the ASX Announcement to 0.46% of Envirosuite Shareholders voting in favour of the Scheme Resolution was a clerical error. Upon becoming aware of this error, Envirosuite made a subsequent ASX announcement on 1 August 2025 at 2:44pm (Subsequent ASX Announcement), which stated the correct numbers of Envirosuite Shareholders who voted in favour of the Scheme Resolution, being 90.21 % of all Envirosuite Shareholders present and voting. The Subsequent ASX Announcement attached a copy of an updated Poll Report (Updated Poll Report), which included the number of Envirosuite Shareholders present and voting at the Scheme Meeting and the way in which those shareholders voted. Copies of the ASX Announcement (including the Poll Report) and the Subsequent ASX Announcement (including the Updated Poll Report) are at pages 13 to 16 of NC-3.
   3. The results of the poll (as shown in the Updated Poll Report) in respect of the Scheme Resolution were as follows:

1. In response to a query from the Court, Envirosuite provided further evidence in relation to the percentage of shareholders present and voting (including by proxy) who voted in favour of the resolution. This was contained in the Fourth Charlston Affidavit. That affidavit annexes relevant primary documents that show the number of shareholders that voted for and against the resolution. The evidence in that affidavit, including the annexures, satisfies me that 90.21% of shareholders present and voting (including by proxy) voted in favour of the resolution.
2. In light of the further material that has been provided, I am satisfied that the Scheme Resolution was passed:

(a) by a majority in number of the members present and voting (either in person or by proxy); and

(b) by at least 75% of the votes cast on the resolution.

1. I therefore find that the majorities required by s 411(4)(a) were satisfied.

1. The number of shareholders present and voting (including by proxy) constituted 10.4% of the total number of Envirosuite Shareholders, and the number of votes cast (including by proxy) constituted 64.1% of the total number of shares eligible to be voted.
2. A number of decisions have considered the proper approach to low voter turnout for schemes of arrangement, focussing on the number of shareholders who voted (which is commonly much lower than the number of shares voted). Generally speaking, "low" in this context means less than 10%: see, eg, Re Dropsuite Limited (No 2) [2025] FCA 487 at [19], referring to Re Crown Resorts Limited (No 2) [2022] FCA 710 at [37] and Re Midway Limited [2025] FCA 47 at [28].
3. Given that voter turnout in the present case was above 10%, Envirosuite submits that the level of voter turnout is not properly to be considered low.
4. In any event, Envirosuite submits that the level of voter turnout at the Scheme Meeting does not provide any reason for the Court to withhold its approval of the Scheme.
5. The leading authority on the Court's approach to low voter turnout is Re TriAusMin Ltd (No 2) [2014] FCA 833 (Re TriAusMin Ltd), where Farrell J held as follows (at [10]):

Although the statutory requirement under s 411(4)(a)(ii) has been satisfied, it is the usual practice of the court at the second court hearing to consider the number of shareholders who attended the Scheme Meeting in person or by proxy. Low shareholder turnout may be an indication that some procedural irregularity occurred. It is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme: Re Professional Investment Holdings Ltd (No 2) [2010] FCA 1336 at [7] and Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583 ... at [61] per Jacobson J; apathy should not be presumed to be antagonism: Re Matine Ltd (1998) 28 ACSR 268 at 295 per Santow J.

1. In Re TriAusMin Ltd, 10.94% of shareholders holding 52.90% of the total number of shares voted at the scheme meeting.
2. In my view, the level of voter turnout here does not give rise to any concern that shareholders were deterred from attending or did not have notice of the Scheme Meeting. In particular:

(a) there is nothing to suggest any irregularity in the dispatch of material to the shareholders;

(b) shareholders were provided with notice of the Scheme Meeting;

(c) there is no evidence of any issue that would have deterred shareholders from voting at or from attending the Scheme Meeting, and Envirosuite has not received any complaint from any shareholder that they did not receive notice of the meeting; and

(d) those shareholders who did vote, voted overwhelmingly in favour of the Scheme.

1. Further, the level of voter turnout at the Scheme Meeting was higher than the level of voter turnout at Envirosuite's Annual General Meetings in 2022, 2023 and 2024.

1. Paragraph 8 of the FCH Orders required Envirosuite to publish by no later than 1 August 2025 an announcement via the ASX Market Announcements Platform setting out the details of the second court hearing and the process for any person wishing to appear at that hearing. Paragraph 8 required that this notice be substantially in the form of pages 620 to 621 of Annexure NC-1 to the First Charlston Affidavit (Draft Notice).
2. On 29 July 2025, Envirosuite published a notice of the second court hearing via the ASX Market Announcements Platform, which was in the form of the Draft Notice.
3. As at 11.00 am on 7 August 2025, Envirosuite had not been served with any notices of appearance from shareholders wishing to oppose approval of the Scheme.

1. A certificate has been provided by Envirosuite, which attaches a certificate provided by Ideagen, confirming that all conditions precedent (other than Court approval) have been satisfied.

1. All statutory and procedural requirements having been met, the Court has a discretion to approve the scheme pursuant to s 411(4)(b).
2. As noted above, in exercising its discretion, the Court will consider whether the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it. I am satisfied of these matters in the present case for the following reasons:

(a) the overwhelming support of the Envirosuite members reflected in the voting results of the Scheme Meeting. In my view, proof of the relevant statutory majorities establishes that prima facie the Scheme is fair;

(b) the recommendation from all Envirosuite directors that Envirosuite shareholders vote in favour of the Scheme for the reasons given in the Scheme Booklet, and the fact that each Envirosuite director stated their intention to vote the Envirosuite shares held or controlled by them in favour of the Scheme;

(c) the opinion set out in the IER that the Scheme is in the best interests of Envirosuite shareholders;

(d) the disclosures in the Scheme Booklet which set out a detailed description of the Scheme, including its potential benefits and disadvantages;

(e) the fact that there is no application to oppose the orders approving the Scheme, and no evidence suggesting any oppression in the conduct of the Scheme Meeting; and

(f) the fact that the Scheme contains measures to protect shareholders against performance risk.

1. In light of these matters, I consider that it is appropriate for the Court to exercise its discretion to approve the Scheme.

1. The Court's power to approve a members' scheme is restricted by s 411(17). At the approval stage, the Court must be satisfied that there is no proscribed purpose as described in s 411(17)(a), or there must be provided to the Court a statement in writing by ASIC that it has no objection to the arrangement (see s 411(17)(b)).
2. A 'no objection' statement has been provided by ASIC prior to this hearing. Such a letter satisfies the requirements of s 411(17)(b), and consequently the bar under s 411(17) to approval of the Scheme has been removed.

1. Section 411(11) requires, subject to s 411(12), that a copy of the Court's orders approving a scheme of arrangement be annexed to every copy of the company's constitution issued after the orders are made. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which the provision shall apply.
2. It is appropriate to grant such an exemption for the reasons set out in Envirosuite's submissions.

1. I will therefore make orders substantially as sought by Envirosuite.

I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.