Fowler v Lindholm

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. On 15 July 2025, I made orders under s 411(4)(b) of the Corporations Act 2001 (Cth) approving a Scheme of Arrangement between Clean Seas Seafood Limited ACN 094 380 435 and the holders of fully paid ordinary shares (shareholders) in the capital of Clean Seas. The proposed Scheme was accepted by the shareholders at a meeting convened for that purpose on 8 July 2025.
2. On 15 July 2025, I also made orders pursuant to s 411(12) of the Act that Clean Seas be exempt from compliance with s 411(11) of the Act in relation to the Scheme.
3. These are the reasons for those orders.
4. Pursuant to the Scheme, Clean Seas will become a wholly owned subsidiary of Yumbah Aquaculture Ltd. In exchange for Clean Seas shares, shareholders will receive consideration either in cash or scrip, in accordance with the terms set out in a Supplementary Scheme Booklet and explanatory memorandum. The implementation of the Scheme will effect the transfer of all ordinary shares in Clean Seas to Yumbah.
5. The Scheme Meeting was convened initially pursuant to orders made by the Court on 12 May 2025. The Meeting was adjourned and further orders made on 18 June 2025 to allow the dispatch of a Supplementary Scheme Booklet and to revise the Scheme Meeting date.
6. In accordance with those orders, the Scheme Meeting was held in person at 12:00pm (ACST) on 8 July 2025 at Level 3, 170 Frome Street, Adelaide. Ms Katelyn Marie Adams acted as chairperson of the meeting. The total number of Clean Seas shareholders was 3,151 - of which 271 attended and voted.
7. The resolution to approve the Scheme was passed by 98.78% of the votes cast and 81.55% of the shareholders voting either in person or by proxy, thereby satisfying the statutory majorities required under s 411(4)(a) of the Act.
8. The Scheme is subject to conditions precedent - being those required under the Scheme Implementation Deed - including both shareholders and Court approval. All conditions have been satisfied save, of course, for Court approval which is the subject of these reasons.
9. The role of the Court at this stage is to determine whether the Scheme is fair and reasonable, such that an intelligent and honest shareholder, properly informed and acting alone might approve it: Fowler v Lindholm (2009) 178 FCR 563; (2009) ALR 298 at [79].
10. The Court is not required to determine whether the Scheme is the best possible arrangement, nor is it required to substitute its commercial judgment for that of the shareholders. Rather, if the requisite statutory majorities have been achieved, then in the absence of any clear legal or procedural deficiencies, the Court should be slow to withhold approval where the Scheme has the informed support of its members. In Re NRMA Ltd (No 2) (2000) 34 ACSR 261; [2000] NSWSC 408, Santow J observed that shareholders are generally best placed to assess their own commercial interests and, absent good reasons, their collective decision should be given effect.
11. In considering whether to approve the Scheme, I must be satisfied that:

(a) The Scheme complies with the procedural and substantive requirements of the law;

(b) Shareholders voted in good faith and for proper purposes;

(c) The disclosure of materials in the Scheme Booklet was accurate and comprehensive;

(d) There is no oppression of any minority or evidence of unfair prejudice;

(e) No third parties will be disproportionately adversely affected;

(f) The Scheme is not contrary to public policy; and

(g) All relevant matters have been brought to the attention of the Court.

1. Clean Seas read the affidavits of Ms Katelyn Adams affirmed 14 July 2025, Mr Robert Gratton affirmed 14 July 2025 and Mr Jonathan Kramersh affirmed 15 July 2025. On the basis of the matters deposed to in those affidavits, I am satisfied as to each of those matters.
2. While shareholder turnout at the Scheme Meeting was relatively low - 8.6% of total shareholders - the number of shares voted as a percentage of Clean Seas total issued share capital was high at 69.3%. There is no evidence before me to suggest that shareholders did not receive notice, and as I have noted, there is no suggestion that any procedural irregularities occurred in the dissemination of information, or that any shareholders were deterred from attending or voting.
3. Further, when the votes of what are known as the Hall Entities, being those entities who held shares in Yumbah and Clean Seas were excluded, the results remained substantially the same, with 98.20% of the total number of votes in favour representing 81.41% of the shareholders present and voting.
4. The Australian Securities Investment Commission (ASIC) has been given appropriate notice of the Scheme and has registered the Scheme Booklet pursuant to s 412(6) of the Act. A no-objection letter has been received under s 411(17)(b), satisfying the requirement of s 411(17).
5. I am satisfied that no aspect of the Scheme is designed to circumvent the operation of Chapter 6 of the Act, or any other relevant provisions.
6. No competing proposal has emerged in the months since the Scheme was first announced, and no shareholder has filed any notice of intention to oppose approval of the Scheme or appeared at the second court hearing.
7. The Scheme has been recommended by the Independent Board Committee of Clean Seas and supported by an expert report concluding that it is fair, reasonable, and in the best interests of shareholders. Further, the Scheme contains mechanisms to manage risk and protect shareholder interests.
8. Based on the evidence before the Court, I am satisfied that there is no impediment to the Scheme proceeding.
9. Clean Seas seeks exemption under s 411(11) from the requirement to annex the Court's orders to its constitution. I am satisfied that such an exemption is appropriate in circumstances where Clean Seas will become a wholly owned subsidiary of Yumbah. The Scheme does not modify any constitutional rights, nor does it affect the interests of creditors or shareholders in a way that necessitates this annexure.

1. I am satisfied that the Scheme is fair and reasonable such that an intelligent and honest shareholder, properly informed and acting alone might approve it. Further, I am satisfied that all statutory and procedural requirements have been complied with. In all the circumstances, it is both appropriate and necessary to exercise the Court's discretion to make orders approving the Scheme under s 411(4)(b) of the Act.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.