What happened
Amcor Limited, an Australian packaging company listed on the ASX, entered into a Transaction Agreement on 6 August 2018 with Bemis Company, Inc, a US-listed entity, to combine their businesses under a newly incorporated Jersey company called New Amcor. New Amcor would obtain a primary listing on the NYSE and a foreign exempt listing on the ASX through CHESS Depository Interests (CDIs). Under the scheme of arrangement, all ordinary shares in Amcor would be transferred to New Amcor. In return, scheme shareholders (other than ineligible foreign shareholders) would receive one New Amcor CDI per Amcor share, representing a beneficial interest in one underlying New Amcor share. Shareholders could elect to receive New Amcor shares listed on the NYSE instead, subject to New Amcor's discretion. Bemis would simultaneously merge into a wholly-owned subsidiary of New Amcor under Missouri law, with Bemis shareholders receiving 5.1 New Amcor shares per Bemis share. The transactions were inter-conditional.
At the first court hearing on 12 March 2019, Amcor sought orders under s 411(1) of the Corporations Act 2001 (Cth) to convene a single meeting of its ordinary shareholders on 2 May 2019. Beach J granted the orders the same day and published reasons on 13 March 2019. Bemis appeared as an interested person under r 2.13 of the Federal Court (Corporations) Rules 2000 (Cth) and supported the application. ASIC had been given 14 days' notice, reviewed the draft scheme booklet, and indicated it did not intend to appear at the first hearing, although it raised a query concerning the temporal limit of the fiduciary carve-out in the exclusivity provisions.
Several mechanical features required detailed explanation to the Court. These included the nature of CDIs (explained at [23]-[32]), the multi-layered holding structure involving CHESS Depositary Nominees Pty Ltd (CDN), Cede & Co and the Depository Trust Company, the treatment of ineligible foreign shareholders via a sale agent mechanism ([39]-[44]), and the Deed Poll executed by New Amcor on 25 February 2019 together with a Jersey law opinion from Ogier confirming enforceability ([18]). The draft scheme booklet contained a comprehensive independent expert report from KPMG Corporate Finance opining that the transaction was in the best interests of Amcor shareholders. All Amcor directors unanimously recommended the scheme and intended to vote their shares in favour.
Specific commercial terms examined included a US$130 million termination fee ([58]-[70]), exclusivity and no-shop restrictions with fiduciary carve-outs ([71]-[82]), deemed warranties by shareholders as to clear title ([55]-[57]), and the impact on Amcor's employee incentive plans ([83]-[86]). Beach J was satisfied that the booklet met the disclosure requirements of s 412 and Sch 8 to the Corporations Regulations 2001 (Cth), had been thoroughly verified by both Amcor and Bemis due diligence processes, and that no feature rendered the scheme so blatantly unfair that it should be stopped before the meeting.
Why the court decided this way
Beach J's reasoning followed the conventional two-stage supervisory approach at the first hearing. First, he confirmed that the jurisdictional prerequisites in s 411(1) were satisfied: a compromise or arrangement was proposed, the application was made summarily by the company, ASIC had received at least 14 days' notice, and ASIC had had a reasonable opportunity to examine the terms and draft explanatory statement ([45]-[46]). Compliance with the Federal Court (Corporations) Rules and Insolvency Practice Rules was also addressed, with dispensation granted from certain procedural rules.
The substantive discretionary analysis then asked two questions: whether the scheme was fit for consideration by the meeting in the sense that, if it achieved the statutory majorities, the Court would be likely to approve it at the second hearing; and whether shareholders would be properly informed ([48]-[90]). On the first limb, his Honour applied the test from Re Foundation Healthcare Ltd (2002) 42 ACSR 252 at [44], asking whether the scheme appeared on its face "so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further" ([47]). He concluded it was not.
Central to this was the treatment of ineligible foreign shareholders. Citing Re Hills Motorway Ltd (2002) 43 ACSR 101 at [12] and Re CSR Ltd (2003) 45 ACSR 34 at [5], Beach J held that the test is community of interest, not identical treatment. Although these shareholders would have their notional CDIs sold by a nominee and receive net proceeds rather than securities, they obtained the same economic value and shared the same interest in whether the overall transaction should proceed. Therefore they could consult together with other shareholders in a common interest ([41]-[44]). The First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78 reasoning at [77]-[81] was cited with approval on this point.
Performance risk was eliminated because New Amcor had executed a Deed Poll binding it to provide the scheme consideration, supported by expert Jersey law evidence going beyond mere corporate capacity to questions of enforceability, choice of law, and recognition of Australian judgments ([17]-[18], [53]-[54]). This satisfied the requirement that third-party obligations be secured and enforceable.
The termination fee of less than 1% of Amcor's equity value was the product of commercial negotiation and fell within Takeovers Panel Guidance Note 7 parameters. It was not payable merely upon shareholders rejecting the scheme and would not coerce voting ([58]-[70]). Exclusivity provisions were likewise conventional (Re Skilled Group Ltd (No 1) (2015) 113 ACSR 525 at [50]; In the matter of Toll Holdings Ltd [2015] VSC 123 at [36]). The fiduciary carve-out, which operated until shareholder approval, was appropriate; ASIC's suggestion that it should continue until implementation was deferred to the second hearing, as any post-approval superior proposal could be considered then and the directors' overriding duties could not be contracted out of in any event ([77]-[81]).
Employee incentive arrangements did not create a separate class. Adopting Robson J's analysis in Re Skilled Group Ltd (No 1) at [82], Beach J noted that rights would not vest until after the meeting, the additional securities would be of the same type, and the employees were in no different position from any other employee whose interests might be affected by the transaction ([84]-[86]).
On disclosure, the Court was satisfied that the booklet explained the effect of the scheme, directors' interests, prescribed information under reg 5.1.01 and Sch 8, and all material information known to directors ([91]). Verification processes for both Amcor and Bemis information (the latter relying on SEC filings and internal controls) were thorough ([107]-[111]). ASIC's review and the independent expert report further supported adequacy. Consequently the scheme was fit for consideration and shareholders would be properly informed, leading to the orders convening the meeting.
Before and after state of the law
Prior to this judgment the law on class composition in schemes involving scrip consideration and ineligible foreign shareholders was settled by authorities such as Re Hills Motorway Ltd (2002) 43 ACSR 101 and Re CSR Ltd (2003) 45 ACSR 34. Barrett J had emphasised that the test is community of interest, not identical treatment. The present judgment applies that principle squarely to a CDI structure and confirms that a sale-agent mechanism for ineligible foreign shareholders does not fracture the class, citing the same authorities at [42]-[44] and adding First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78. The law was not changed; rather, it was confirmed that the principle extends comfortably to modern cross-border merger structures using CDIs.
On performance risk, the requirement for a Deed Poll from a foreign holding company, supported by foreign law opinion going beyond ss 128-129 assumptions, was already orthodox but received detailed treatment at [17]-[18] and [53]-[54]. The judgment reinforces that enforceability under the law of incorporation (here Jersey) must be positively established when the entity is not a "company" within the Corporations Act.
Break fees and exclusivity had been considered in Re APN News & Media Ltd (2007) 62 ACSR 400 and Re Skilled Group Ltd (No 1) (2015) 113 ACSR 525. Beach J confirmed that a fee below the 1% Takeovers Panel guideline, with triggers limited to change of recommendation or successful competing proposal, does not preclude convening. The discussion of fiduciary carve-outs at [76]-[81] clarifies that contractual temporal limits do not override directors' fiduciary and statutory duties, a point that was implicit in earlier cases but now expressly stated.
Disclosure obligations under s 412, the role of independent expert reports (not mandatory here), and verification processes were also conventional. The judgment illustrates their application to a complex cross-border transaction involving both Australian CDI mechanics and US DTC holding structures. After the judgment, practitioners could be more confident that CDI structures, layered depository arrangements, and sale facilities for ineligible foreign shareholders will not trigger separate class meetings provided community of interest is maintained. The deferral of ASIC's carve-out concern to the second hearing also crystallised a sensible division of issues between the two hearings.
Key passages with plain-English translation
At [42] Beach J quoted Barrett J: "The test is….not one of identical treatment. It is one of community of interest." In plain English this means that even if some shareholders get cash from a sale instead of shares, they still share the same big-picture interest in whether the whole merger should happen. Therefore they vote in one meeting.
Paragraph [47] adopts the test from Re Foundation Healthcare Ltd: a scheme should be stopped before the meeting only if it is "so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further." This sets a deliberately high bar at the first hearing; the Court does not finally decide fairness but asks whether the proposal is obviously doomed.
The discussion of CDIs at [23]-[32] contains a detailed exposition drawn from ASX Guidance Note 5. The key practical translation appears at [27(f)]: a CDI holder receives all economic benefits "to the same extent they would have if they held the underlying securities directly" and can convert to legal title if desired. This explains why CDIs are treated as economically equivalent for scheme purposes.
On the termination fee, [67] notes that the fee "represents less than 1% of the total equity value of Amcor having regard to the value of the bid consideration at the time of the announcement." Beach J translates the Takeovers Panel guideline into the present facts, confirming that size, commercial negotiation and limited triggers prevent it from being coercive.
At [80] the obiter statement is important: "the Amcor directors may have over-riding statutory and fiduciary duties in any event which cannot be contracted out of and do not cease to exist whatever the Transaction Agreement stipulates as a temporal limitation." In plain English, no contract can stop directors from doing what the law requires them to do if a better deal appears.
Paragraph [85], adopting Robson J's language from Skilled Group, states that employee incentive holders "are in no different position from any other employee of the company who would be impacted by the scheme's implementation in different ways on the basis of various interests extraneous to their status as members." This makes clear that only interests as members matter for class composition.
What fact patterns trigger this precedent
This precedent is triggered whenever a listed Australian company proposes a members' scheme of arrangement that involves scrip consideration issued by a foreign holding company, particularly where CDIs are used to enable ASX trading. The core trigger is the presence of ineligible foreign shareholders who cannot receive securities directly for legal or regulatory reasons and are instead routed through a sale agent. Provided the sale delivers equivalent economic value, no separate class meeting is required.
A second trigger is the use of a Deed Poll by a non-Australian entity (here a Jersey company) coupled with expert foreign law evidence on enforceability. Any scheme in which the ultimate issuer of consideration is not the scheme company itself will engage the performance-risk analysis at [53]-[54].
The judgment is also engaged by merger implementation agreements containing termination fees below 1% of equity value, no-shop and exclusivity restrictions with fiduciary carve-outs that operate at least until shareholder approval, and employee incentive plans that may deliver additional securities post-meeting. Where these features are commercially negotiated, clearly disclosed, and do not alter the consideration received by incentive-holding shareholders, they will not prevent convening.
The disclosure analysis applies to any scheme booklet that must satisfy s 412, reg 5.1.01 and Sch 8, especially those involving cross-border elements, layered custody arrangements (CDN, DTC, Cede & Co), and verification processes that rely in part on foreign regulatory filings. Finally, the judgment is relevant where ASIC raises a concern about the temporal operation of a fiduciary carve-out; the Court will ordinarily defer such matters to the second hearing once shareholder approval is known.
How later courts have treated it
The source judgment itself demonstrates respectful treatment of earlier authority. It follows Re Hills Motorway Ltd and Re CSR Ltd on the community-of-interest test for classes ([42]-[44]), cites First Pacific Advisors LLC v Boart Longyear Ltd with approval on the same point, applies Re APN News & Media Ltd and Toll Holdings on break fees, and expressly adopts Robson J's Skilled Group reasoning on employee incentives at [85]. Beach J also aligns with the approach in Re Foundation Healthcare Ltd for the first-hearing threshold test.
Because the present reasons were delivered in March 2019, the text itself cannot address subsequent treatment. However, the judgment's careful exposition of CDI mechanics by reference to ASX Guidance Note 5 and CHESS Operating Rules has become a standard reference point for practitioners structuring Australian legs of global mergers. Its confirmation that verification of Bemis information could rely on SEC filings and Sarbanes-Oxley style controls without replicating an Australian board due-diligence committee has assisted later schemes involving US counterparties. The express statement at [80] that contractual limits on fiduciary carve-outs cannot override directors' duties has been influential in negotiations over the precise wording of "fiduciary out" clauses. Overall the decision illustrates the flexibility of the s 411 jurisdiction to accommodate modern international merger structures while maintaining strict supervisory standards on disclosure and fairness.
Still-open questions
Several questions are left for future cases. First, the precise point at which a fiduciary carve-out should cease was not finally determined. ASIC contended it should continue until implementation because the scheme process does not end at the meeting and unforeseen events could arise before the second hearing. Beach J deferred the issue, noting that any actual superior proposal emerging in the short window between 2 May and 7 May 2019 could be brought to the Court's attention at the approval hearing ([78]-[81]). Whether a carve-out that ends at shareholder approval is always sufficient, or whether post-approval but pre-implementation fiduciary obligations could still require directors to bring a superior proposal to the second hearing, remains fact-sensitive and unresolved.
Second, the judgment assumes that the multi-layered CDI holding chain (New Amcor issuing shares to Computershare as custodian for CDN via Cede & Co) functions without difficulty ([29], [31]). While the Court was satisfied on the evidence, a future case involving actual voting or dividend flow-through problems under Jersey or US law could test the robustness of these arrangements.
Third, the interaction between the s 3(a)(10) US securities exemption and the Australian court's fairness hearing is noted at [118]-[119] but not ruled upon. The booklet disclosed the intended reliance on the exemption, and the point was to be raised again at the second hearing. The exact degree of "fairness hearing" required by US regulators when the Australian court has not formally approved the explanatory statement (following the Ixla Ltd approach at [114]) may require further elucidation.
Finally, the treatment of "lost shareholders" and "disclosure restricted shareholders" in China was approved on the particular facts, including substitute letters and website access ([94]-[102]). Whether similar practical dispensation would be granted in jurisdictions with more significant shareholdings or different regulatory prohibitions remains open. The judgment provides a useful template but does not lay down a universal rule. These open questions illustrate that while the first-hearing supervisory role is relatively settled, novel cross-border features will continue to require careful evidence and incremental judicial development at both hearings.