F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd - [2015] FCA 1506 - FCA 2015 case summary — Zoe

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F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd

[2015] FCA 1506

Federal Court of Australia|2015-12-11|Before: Mr J, Yates J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2015-12-11

Before

Mr J, Yates J

Catchwords

CORPORATIONS - scheme of arrangement - application for order for meeting of members

Source

Original judgment source is linked above.

Catchwords

CORPORATIONS - scheme of arrangement - application for order for meeting of members

Judgment (18 paragraphs)

[1]

Pursuant to ss 411(1) and 1319 of the Corporations Act 2001 (Cth) (Act): (a) the Plaintiff, Veda Group Limited, convene and hold a meeting (the Scheme Meeting) of its members holding fully paid ordinary shares in the Plaintiff (Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be made between the Plaintiff and the Shareholders (Share Scheme), the terms of which are contained in Annexure D of the scheme booklet, a copy of which is Exhibit A (Scheme Booklet); (b) the Scheme Meeting be held at 10.30 am on 8 February 2015 at the Museum of Sydney, located at the Corner of Phillip and Bridge Streets, Sydney, New South Wales; and (c) the Scheme Booklet be approved for distribution to Shareholders (for the purposes only of s 411(1) of the Act).
Pursuant to s 1319 of the Act: (a) Dr Helen Nugent AO or, failing her, Dr Peter Shergold AC, be authorised to act as Chairman of the Scheme Meeting; (b) the Chairman of the Scheme Meeting shall have the power to adjourn each such meeting in her absolute discretion to such time, date and place as she considers appropriate; (c) at the Scheme Meeting, a Shareholder, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; (d) at the Scheme Meeting, each Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid ordinary share in the capital of the Plaintiff that the Shareholder is registered as holding at 7.00 pm on 6 February 2016; (e) a poll must be taken to decide the resolutions put to the vote at the Scheme Meeting, except for procedural motions; (f) on or before 18 December 2015, there be dispatched to: (i) each Shareholder who has nominated an electronic address for the purposes of receiving notices of meeting and proxy forms from the Plaintiff, at such address, an email substantially in the form of the document behind tab 5 in Exhibit TJW1, including URL links to documents substantially in the form of the Scheme Booklet and the proxy form in respect of the Scheme Meeting, a copy of which is behind tab 3 in Exhibit TJW1 (Proxy Form); and (ii) each other Shareholder, by hand or by pre-paid post or courier, to the address of that Shareholder as set out in the register of members of the Plaintiff, a document in substantially the form of the Scheme Booklet, a Proxy Form in respect of the Scheme Meeting, and a reply paid envelope addressed to Link Market Services Limited; and (g) the time by which proxy forms for the Scheme Meeting must be returned or lodged online in accordance with the instructions given on the proxy form is 10.30 am on 6 February 2016.

[6]

The scheme 4 On 6 October 2015, the plaintiff announced to the ASX that it had received a proposal from Equifax to acquire all of its ordinary shares by way of a scheme of arrangement. On 22 November 2015, the plaintiff and Equifax entered into a Scheme Implementation Deed in relation to that proposal. 5 Under clause 2.2 of the Scheme Implementation Deed Equifax has the right to nominate one of its subsidiaries to acquire the scheme shares by giving certain written notice. On 25 November 2015, Equifax nominated Equifax Australia Pty Limited (Equifax Australia) to acquire the scheme shares. Equifax Australia is an unlisted, wholly-owned subsidiary of Equifax, registered in Australia. 6 As at 23 November 2015, the plaintiff had 846,425,729 ordinary shares on issue. If the scheme is approved and becomes effective, the scheme shareholders will receive $2.825 in cash for each share held in the plaintiff. 7 The scheme has no unusual features. However, I note the following matters. 8 First, clause 8.2(b) of the scheme provides that each scheme shareholder will be taken to have warranted to Equifax and Equifax Australia that that shareholder's scheme shares will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties. The provisions of the deemed warranty have been drawn to the attention of members in the scheme booklet. I am satisfied that sufficient disclosure has been made: Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771 (Talent2) at [16]; Atlassian Corporation Pty Limited, in the matter of Atlassian Corporation Pty Limited [2013] FCA 1451 at [36]. 9 Secondly, clause 8.3(a) of the scheme provides that, to the extent permitted by law, the scheme shares will be transferred to Equifax Australia free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties. Clauses in this form have been found to be acceptable in other schemes of arrangement: see, for example, the discussion in Investa Properties Limited, in the matter of Investa Properties Limited (2007) 25 ACLC 1,186; [2007] FCA 1104 at [22]-[30].

[9]

Employee loans and executive arrangements 18 The plaintiff's shares were first quoted on the ASX on 5 December 2013 following an initial public offering (IPO). Prior to the IPO, certain of the plaintiff's senior executives and employees had participated in an incentive scheme for the issue of management performance shares (MPS). As part of the IPO, these executives and employees paid a "reclassification amount" to reclassify their MPS into ordinary shares. In the case of certain executives, the reclassification amount was funded by a full recourse loan advanced by Veda Advantage (Australia) Pty Limited, one of the plaintiff's subsidiaries. 19 Employee loans were also made by the plaintiff to certain executives to fund a portion of the purchase price for ordinary shares acquired by those executives under a program initiated in 2009. 20 If the scheme becomes effective, all outstanding amounts under these loans will be paid by the relevant executives. 21 The plaintiff also currently has in place a number of incentive arrangements relating to options to acquire or subscribe for the plaintiff's shares and certain Deferred Share Rights (DSRs). As at 8 December 2015, these incentive arrangements covered a total of 41,377,410 unquoted securities which are capable of being converted into 41,377,410 shares. 22 In relation to some of the options, the optionholders have entered into arrangements that, if the scheme becomes effective, they will sell their options to Equifax. The consideration for the sale will be the difference between the scheme consideration and the relevant "strike price" for the option. 23 Certain other options, being options granted under the plaintiff's Executive Incentive Plan adopted on 28 July 2014 (the EIP), will be cancelled, in consideration for which the plaintiff will pay the optionholders the difference between the exercise price for each option and the scheme consideration, funded by an amount provided to the plaintiff by Equifax. 24 In respect of the DSRs, which were also issued under the EIP, ordinary shares in the plaintiff will be transferred to the holders of DSRs in respect of all existing DSRs and these shares will, if the scheme becomes effective, be acquired by Equifax Australia under the scheme.

F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd

At a glance

Court

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Catchwords

Source

Catchwords

Judgment (18 paragraphs)

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Legislation Cited (3)

Cases Cited (9)