Fowler v Lindholm

Second Court Hearing 3 The second court hearing was held on a digital platform. The Court list noted that anyone who wished to participate in the hearing or any member of the public who wished to observe the hearing must contact my Associate at a specified email address prior to the second court hearing. At the commencement of the hearing, I invited any person who was observing the proceedings who wished to be heard in relation to ONT's application to make themselves known but there was no response. Accordingly, no shareholder or creditor appeared to oppose orders being made under ss 411(4)(b) and 411(12) of the Corporations Act. 4 ONT and BidCo appeared by senior counsel. 5 ONT relied on written submissions dated 16 November 2021 prepared by its senior counsel, evidence before the Court at the first court hearing and the following evidence which was read and exhibits tendered at the second court hearing: (a) An affidavit of Robert Francis Jones affirmed on 16 November 2021; (b) Two affidavits of Melanie Louise Mitchell sworn on 16 November 2021 and 17 November 2021 respectively; (c) An affidavit of Thomas Charles Gardner affirmed on 16 November 2021; (d) An affidavit of Jessie Antoinette Yerma affirmed on 16 November 2021; (e) An affidavit of Lee Dominic Horan sworn on 16 November 2021; and (f) Exhibit 2 being a copy of the proposed scheme of arrangement between ONT and its ordinary shareholders which Ms Mitchell emailed to my Associate at 9.44 am (Sydney time) on Wednesday, 17 November 2021 and senior counsel for ONT tendered at the hearing. 6 The evidence establishes the following matters. 7 First, the following documents were filed with the Australian Securities and Investments Commission (ASIC) on 12 October 2021: a registration copy of the scheme booklet, a copy of the orders that I made on 12 October 2021 and an ASIC Form 105. 8 Second, as at 14 October 2021, in relation to the General Scheme Meeting there were 1021 ONT shareholders who had nominated an electronic address for the purpose of receiving notices of meeting (email shareholders), 61 ONT shareholders who had elected to receive documents from ONT in hard copy by ordinary post or prepaid airmail (hard copy shareholders) and 379 shareholders who had made no election (postal shareholders). All Founder Shareholders had elected to receive notices by email. On 14 October 2021: (a) A covering email (in the same form as annexure RFJ-12) was despatched to 1,021 email shareholders providing hyperlinked access to both the scheme booklet and the webpage on which ONT shareholders could lodge proxy forms for the relevant scheme meeting; and (b) 440 individually addressed packages were despatched to the other ONT shareholders containing: (i) for hard copy shareholders: the scheme booklet, a proxy form (in the same form as annexure RFJ-6) and a reply paid envelope addressed to Computershare Investor Services Pty Ltd (hard copy documents); and (ii) for postal shareholders: a letter containing the URL address to the scheme booklet (in the same form as annexure RFJ-13), a proxy form (in the same form as annexure RFJ-6) and a reply paid envelope addressed to Computershare. 9 On 21 October 2021, hard copy documents were sent to five new shareholders and five email shareholders in respect of whom a "bounceback" message had been received; on 25 October 2021, hard copy documents were sent to four new shareholders and on 1 November 2021, hard copy documents were sent to three new shareholders. 10 Third, as at 7 pm (Sydney time) on Wednesday, 10 November 2021, there were 23,678,384 ONT shares on issue held by 1,435 ONT shareholders. Of these, there were 14,161,027 ONT shares held by two Founder Shareholders eligible to vote at the Founder Scheme Meeting. Accordingly, there were 9,517,357 ONT shares held by 1,433 ONT shareholders eligible to vote at the General Scheme Meeting. 11 Fourth, by 9.30 am (Brisbane time) on Wednesday, 10 November 2021, Computershare received three proxy forms from Founder Shareholders in respect of 14,161,027 ONT shares. 12 Fifth, by 9.00 am (Brisbane time) on Wednesday, 10 November 2021, Computershare received 199 valid proxy forms in relation to the General Scheme Meeting representing 5,422,639 ONT shares. Three shareholders who had submitted valid proxy forms sold their ONT shares before 7.00 pm (Sydney time) on that date and their voting entitlement was reduced to nil. Two invalid proxy forms were received relating to 10,447,014 ONT shares held by members who participated in the Founder Scheme Meeting and were therefore ineligible to vote at the General Scheme Meeting. 13 Sixth, the General Scheme Meeting and the Founder Scheme Meeting were held on Friday, 12 November 2021 at 9.00 am and 9.30 am (Brisbane time) respectively by video conferencing technologies. Mr Jones acted as chairman of the scheme meetings in accordance with the orders I made on 12 October 2021. 14 Seventh, the General Scheme Meeting was attended by three shareholders who had not lodged a proxy form and one proxy holder representing 184 shareholders by proxy. The resolution to approve the scheme was passed by the following majorities: Votes cast Headcount Number % Number % For 5,406,645 99.31 177 95.68 Against 37,727 0.69 8 4.32 Total 5,444,372 100.00 185 100.00 Abstained 13,580 2

15 Accordingly, turnout at the General Scheme Meeting was as follows: (a) Voters: 187 of 1,433 eligible ONT shareholders (or 13%) attended the General Scheme Meeting in person or by proxy; and (b) Votes cast: including abstentions, the ONT shares participating in the General Scheme Meeting were 5,457,952 of 9,517,357 ONT shares (or 57%) conferring eligibility to vote at that meeting. 16 By comparison, excluding shares held by Founder Shareholders, votes cast at the ONT annual general meetings held in 2019, 2020 and 2021 were as follows: Number participating Total available % of total available 2019 shares 2,778,095 9,517,357 29.19 2019 headcount c.92 (82 by proxy) 1,600 5.75 2020 shares 3,449,333 9,517,357 36.24 2020 headcount c. 74 (64 by proxy) 1,547 5.08 2021 shares 4,340,411 9,517,357 45.61 2021 headcount c.125 (115 by proxy) 1,433 8.72

17 Ashbourne Park Pty Ltd, a company associated with Dr Daryl Holmes, voted 550,702 ONT shares in favour of the scheme at the General Scheme Meeting. Had those votes not been cast, the resolution to approve the scheme would have been passed by a majority of 4,855,943 to 37,727 ONT shares (or 99.23% of votes cast) and 176 to 8 shareholders attending in person or by proxy (or 95.65% of shareholders). 18 Eighth, the Founder Scheme Meeting was attended by one proxy holder representing two shareholders by proxy who voted all 14,161,027 ONT shares held by Founder Shareholders in favour of the scheme. 19 Ninth, on 8 November 2021, the Founder Shareholders delivered to ONT an election form electing to retain 26.227% of their ONT shares. 20 Tenth, there are 245,895 ONT shares subject to the ONT Loan Share Plan. As discussed in the scheme booklet, the ONT board intends to waive all disposal restrictions on the Loan Shares subject to the scheme becoming effective, provided that each participant in the Plan executes a payment direction substantially in the form of annexure RFJ-8. All four participants in the Plan have executed such a direction. 21 Eleventh, on 12 November 2021, the ONT board declared a fully franked special dividend of $1.00 per ONT share, conditional on the scheme becoming effective. The total amount of the Special Dividend is $23,678,384. I note that this is within the range of 80 cents to $1.10 per share as disclosed in the scheme booklet. 22 Twelfth, an advertisement (in the form of annexure A to the orders I made on 12 October 2021) was published in The Australian on 8 November 2021. I note that the advertisement advised the time and date of the second court hearing and it set out a contact address of a person at ONT's solicitors to advise if anyone wished to oppose the scheme. No person gave such notice. 23 Thirteenth, by letter dated 15 November 2021, ASIC advised the directors of ONT that it had no objection to the proposed scheme for the purposes of s 411(17)(b) of the Corporations Act. 24 Fourteenth, certificates of satisfaction or waiver of the conditions precedent to the Scheme Implementation Agreement dated 23 August 2021 were signed on behalf of ONT and BidCo respectively on 17 November 2021.

Principles 25 The matters that the Court must take into account in deciding whether to approve a scheme are well-established. They include: (a) Whether the orders of the Court convening the scheme have been complied with; (b) Whether the resolution to approve the scheme was passed by the majorities required by s 411(4)(a)(ii) and other statutory requirements have been satisfied; (c) Whether all conditions to which the scheme is subject (other than Court approval and lodgement of the Court's orders with ASIC) have been satisfied or waived; (d) Whether the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it. In considering this question, it is not the role of the Court to usurp the decision of shareholders by imposing its own commercial judgement on the scheme or to consider whether a better scheme might have been proposed; (e) 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; and (f) Whether there was full and fair disclosure to the plaintiff's shareholders of all information material to the decision whether to vote for or against the scheme. See Solution 6 Holdings Limited ACN 003 264 006, in the matter of Solution 6 Holdings Limited ACN 003 264 006 [2004] FCA 1049; (2004) 50 ACSR 113 at [18]-[24] (Jacobson J); Permanent Trustee Company Limited [2002] NSWSC 1177; (2002) 43 ACSR 601 at [8]-[10] (Barrett J); Central Pacific Minerals NL [2002] FCA 239 at [12]-[14] (Emmett J); Seven Network Limited (ACN 052 816 789), in the matter of Seven Network Limited (No 3) [2010] FCA 400; (2010) 77 ACSR 701 at [35]-[39] (Jacobson J); Fowler v Lindholm [2009] FCAFC 125; (2009) 178 FCR 563 at [79] (Emmett, Gordon and Jagot JJ); Re Application of NRMA Ltd (No 2) [2000] NSWSC 408; (2000) 34 ACSR 261 at [5] (Santow J).

Disposition 26 Senior counsel for ONT submitted that the turnout of voters at the General Scheme Meeting set out at [15] above would not be a reason to refuse to make the orders sought. I agree, having regard to the principles relevant for consideration which I set out in TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833 at [10] to [12]. In this case, I have observed no irregularities in relation to the despatch of scheme booklets and related material to ONT shareholders, there has been no complaint from any ONT shareholders concerning the receipt of those materials or difficulty in relation to proxies or participation in the General Scheme Meeting, the number of shares participating in the General Scheme Meeting was 57% (including abstentions) of ONT shares eligible to vote at that meeting and no ONT shareholder appeared to oppose the Court making the orders sought. I also took into account that the turnout at the General Scheme Meeting exceeded both the number of voters and number of votes cast at any of the last three annual general meetings. 27 As the statutory majorities set out in s 411(4)(a)(ii) of the Corporations Act were comfortably achieved at both scheme meetings and having regard to the evidence and applying the principles set out above, I was satisfied that I should make the orders sought under s 411(4)(b) of the Corporations Act. An order under s 411(12) is customarily made where an order under s 411(4)(b) has been made in relation to a scheme designed to effect a takeover which involves no change to the constitution of the scheme company, as in this case. It was therefore appropriate to make both orders. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Farrell.