Fowler v Lindholm

FORMAL AND STRUCTURAL MATTERS 5 I must be satisfied that: (1) The statutory majority required for a members scheme by s 411(4)(a)(ii) of the Act has been obtained; (2) There has been compliance with the orders made at the first hearing; and (3) ASIC has indicated that it has no objections to the scheme under s 411(17).

Statutory majorities and voter turnout 6 The statutory majorities in favour of the scheme have been obtained. 7 At the meeting of STG's shareholders apart from Equity Management Unit Holdings Pty Ltd ("EMUH"), the resolution to approve the scheme was passed by 99.98% of votes cast and 96.51% of persons present at the meeting. No one spoke against the resolution at the meeting. There was one abstention. 8 The voter turnout percentages for the meeting of non-EMUH shareholders were 81.69% of votes and 16.99% of shareholders. The latter figure compares favourably with the shareholder turnout at the 2014 annual general meeting of 6.32%. The figures also compare favourably with the voter turnout percentages recorded in Lion Nathan Limited, in the matter of Lion Nathan Limited (No 2) [2009] FCA 1261 at [6], Re MB Group PLC [1989] BCLC 672 at 675 and Avoca Resources Limited, in the matter of Avoca Resources Limited [2011] FCA 208. 9 At the meeting of EMUH, EMUH passed the resolution to approve the scheme. EMUH held a meeting alone, because it was treated differently under the scheme from the other shareholders. EMUH is a bank-owned entity.

Compliance with 17 August 2015 orders 10 I am satisfied that: (1) The orders made on 17 August 2015 and the scheme booklet were provided to ASIC. This was demonstrated by the evidence of Mr Pietersz including a copy of the scheme booklet stamped by ASIC; (2) Scheme booklets (with immaterial changes from the document tendered at the first court hearing) and proxy forms were printed and served on members of STG by Link Market Services Limited ("Link"), which provides share registry services to STG. There was a conversion of E class shares to ordinary shares and, on conversion, the relevant shareholders were sent proxy forms; (3) Proxy forms for each of the scheme meetings were received. An employee of Link collated the proxy forms which were returned. No invalid proxy forms were detected; (4) Gregory James Robertson chaired the scheme meetings which were held on 24 September 2015 at the time and place specified in the scheme booklet. An employee of Link was appointed to act as returning officer for each of the meetings; (5) The date of the second court hearing was advertised in The Australian newspaper on 25 September 2015; (6) No notice of intention to appear at the second court hearing was received; (7) All conditions precedent (other than court approval of the scheme) have been either satisfied or waived.

No objections from ASIC 11 By letter dated 30 September 2015, ASIC advised that it had no objection to the proposed scheme pursuant to s 411(17)(b) of the Act.

General principles 12 The general principles which guide the Court's discretion at the second court hearing are very well established. The Court has a discretion whether to approve a scheme, and is not bound to approve it merely because it has previously made orders for the convening of meetings or because the statutory majorities have been achieved: In Re Seven Network Ltd (ACN 052 816 789) (No 3) [2010] FCA 400; (2010) 267 ALR 583 ("Re Seven Network") at [31], citing Re NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 156 FLR 412 ("Re NRMA Ltd") at [22]. 13 The Court will usually approach the task upon the basis that the members are better judges of what is in their commercial interests than the Court: Re Seven Network at [32] and [33]. 14 At [35] to [40] of Re Seven Network, Jacobson J set out the following six principles which courts have taken into account as informing their discretion whether or not to approve a scheme: (1) whether the shareholders have voted in good faith and not for an improper purpose: Re Foundation Healthcare Ltd (No 2) [2002] FCA 973; (2002) 43 ACSR 680; (2) whether the proposal is fair and reasonable so that an intelligent and honest man or woman who was a member of the relevant class, properly informed and acting alone might approve it: Fowler v Lindholm [2009] FCAFC 125; (2009) 178 FCR 563 at [79]; (3) whether 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: Re Permanent Trustee Co Ltd [2002] NSWSC 1177; (2002) 43 ACSR 601 at [7]; (4) whether there has been full and fair disclosure of all information material to the decision: Re NRMA Ltd (No 2) at [30]; (5) whether minority shareholders would be oppressed by the scheme: Re Ranger Minerals Ltd; Ex parte Ranger Minerals Ltd [2002] WASC 207; (2002) 42 ACSR 582; (6) whether the scheme offends public policy. See, for example, CSR Limited, in the matter of CSR Limited [2010] FCAFC 34; (2010) 265 ALR 703 at [51] - [56].

Have the shareholders voted in good faith and not for an improper purpose? 15 This is an uncontested proposal and those shareholders who attended the meeting voted overwhelmingly in its favour. There is nothing to suggest that members voted other than in good faith, or that they cast their votes for an improper purpose, or that any member has been treated in way that might be characterised as oppressive.

Is the proposal fair and reasonable? 16 I am satisfied that the proposal is fair and reasonable, by reference to the following matters: (a) No one has come forward to STG or the Court to oppose the scheme. There were no contentious issues raised by members at the Scheme meetings. No regulator has raised an objection to the scheme; (b) The scheme has been overwhelmingly supported by those shareholders who attended the meetings and there was substantial attendance at the meeting; (c) The expert report of BDO Corporate Finance (East Coast) Pty Ltd expresses an independent opinion that the scheme is fair and reasonable and in the best interests of STG shareholders other than EMUH; (d) I infer from EMUH's passage of the resolution that it considers the scheme to be in its commercial interest.

Has STG brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's jurisdiction? 17 This has been done by: (a) Isolating the standard matters necessary to be proved in the "road map"; (b) Providing evidence about voter turnout; and (c) Informing the Court about the conversion of E class shares as disclosed in section 7.4(b) of the Scheme Booklet.

Has there been full and fair disclosure to shareholders of all information material to their decision to approve or reject the scheme? 18 There is no criticism of the substance of the disclosure by any member or by ASIC. Nothing has been brought to my attention which would lead me to think that STG shareholders might have been provided with inadequate information.

Would minority shareholders be oppressed under the scheme? 19 There is nothing to suggest that minority shareholders would be oppressed under the scheme.

Does the scheme offend public policy? 20 Nothing has been brought to my attention which suggests that the scheme may offend public policy in any way.

Conclusion 21 For those reasons, I was satisfied that I should approve the scheme and make the other orders that I made on 1 October 2015. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.