FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd

OUTLINE OF SCHEME 2 Programmed is an Australian public company that is admitted to the official list of ASX Limited. Programmed's issued share capital comprises 257,525,748 fully paid, ordinary shares (Programmed Shares). The holders of Programmed Shares (Shareholders) were entitled to participate in the Scheme. 3 The Scheme involves the acquisition of all of the issued share capital in Programmed by Autalent Solutions Pty Ltd ACN 620 805 647, an indirect wholly-owned subsidiary of PERSOL HOLDINGS CO., LTD, a company incorporated in Japan under Corporate Number 8011001058176 and listed on the Tokyo Stock Exchange. Autalent is an Australian proprietary company limited by shares and incorporated in Western Australia. It was established by PERSOL for the purpose of acquiring the Programmed Shares. 4 For each Programmed Share, Shareholders will receive an aggregate cash payment of $3.02 which will comprise: (a) a fully franked special dividend of $0.16 to be paid by Programmed (Special Dividend); and (b) a cash payment of $2.86 to be paid by Autalent (Scheme Consideration). 5 PERSOL has undertaken to provide sufficient funding to Autalent to pay the Scheme Consideration. The Scheme Consideration will be funded by a combination of PERSOL's own cash reserves and funds made available to it pursuant to two new, external debt facility agreements with Sumitomo Mitsui Banking Corporation and The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6 On the Scheme becoming effective, Programmed will pay the Special Dividend, and Autalent will pay the Scheme Consideration, to Shareholders. 7 Programmed has on issue 4,567,000 unlisted performance rights, each of which entitles the holder to be issued one new Programmed Share on and subject to vesting (Performance Rights). 8 PERSOL's objective (through Autalent) is to acquire 100% of Programmed. As such, PERSOL and Programmed have agreed that Programmed would ensure that all unlisted performance rights on issue to Shareholders would vest prior to the relevant record dates for the Scheme, such that the Programmed Shares issued on vesting of the Performance Rights participate in the Scheme and holders of Performance Rights are entitled to receive both the Special Dividend and the Scheme Consideration.

FIRST SCHEME HEARING: APPROVAL OF THE SCHEME MEETING

Materials 9 For the purposes of the first court hearing, Programmed relied on the following: (a) the affidavit of Christopher Glen Sutherland sworn on 15 August 2017 (First Sutherland Affidavit); (b) the supplementary affidavit of Christopher Glen Sutherland sworn on 28 August 2017 (Supplementary Sutherland Affidavit); (c) the affidavit of Mr Toshihiro Ozawa, a director of PERSOL made on 25 August 2017 (PERSOL Verification Affidavit); and (d) the affidavit of Rowan Robshaw Krasnoff affirmed on 29 August 2017 on behalf of Programmed which annexed a letter from ASIC stating its response to Programmed's application.

Relevant Principles 10 The principal questions relevant to the first stage are as follows: (a) Is there a compromise or arrangement? (b) Is there a Pt 5.1 body? (c) Are there members of a company? (d) Are there classes of members? (e) Should the Court make orders to convene a meeting? 11 The standard of review at the first stage is whether the proposed scheme is not inappropriate and is one that sensible business people might consider is of benefit to its members: Re Sonodyne International Ltd (1994) 15 ACSR 494 (at 499) per Hayne J. 12 If the proposed arrangement is one that seems fit for consideration by a meeting of members and is a commercial proposition likely to gain the Court's approval if passed by the necessary majorities, then leave should be given to convene the meeting: Re ACM Gold Limited; Re Mt Leyshon Gold Mines Ltd (1992) 34 FCR 530 (at 535) per O'Loughlin J. 13 The Court is not required to be satisfied either at the convening or approval stage that no better scheme could have been devised: Re Amcom Telecommunications Ltd [2015] FCA 341 (at [10]). 14 While s 411(2) contains a statement of the circumstances in which a scheme meeting must not be ordered, s 411 contains no statement of the criteria that must be satisfied before a meeting is ordered: Re CSR Ltd (2010) 183 FCR 358 (at [10]). 15 The convening of the Scheme Meeting and approval of the dispatch of the scheme booklet (explanatory statement) in relation to the Scheme (Scheme Booklet) should be ordered if the Court is satisfied of the following matters: (a) the Scheme is an arrangement in respect of which the Court may order a meeting of the participating Shareholders: s 411(1). That is: (i) the Scheme is an arrangement; (ii) Programmed is a Pt 5.1 Body; (iii) the participating Shareholders are members of Programmed; and (iv) the Scheme Meeting will be convened between members of the same class; (b) ASIC has had a reasonable opportunity to examine the terms of the Scheme and Scheme Booklet and to make submissions to the Court in relation to them: s 411(2)(b); (c) the Scheme Booklet: (i) provides adequate disclosure: s 412(1)(a)(i); and (ii) contains the prescribed information: s 412(1)(a)(ii), and reg 5.1.01 and Sch 8 cll 8301-8310 of the Corporations Regulations 2001 (Cth). (d) the procedural requirements of the Federal Court (Corporations) Rules 2000 (Cth) have been met; and (e) there is no apparent reason why the Scheme should not, in due course, receive the Court's approval if the necessary majority of members' votes is achieved. Re International Goldfields Ltd (2003) 21 ACLC 1199 (at [9]-[32]) per Barker J.

Is there an arrangement? 16 The word 'arrangement' is of wide import. 17 The board of directors of Programmed has unanimously recommended that Shareholders vote in favour of the Scheme, in the absence of a superior proposal and provided that the independent expert concludes (and continues to conclude) that the Scheme is in the best interests of Shareholders, based on the facts and circumstances set out in section 1 of the Scheme Booklet. 18 The Independent Expert engaged by Programmed to assess the Scheme, has concluded that the Scheme is fair and reasonable, and in the best interests of the Shareholders in the absence of a superior proposal. 19 The proposal before the Court is an arrangement.

Part 5.1 body 20 Section 411 of the Act confers jurisdiction on the Court in respect of a Pt 5.1 body. The term 'Part 5.1 body' is defined in s 9 of the Act to mean, relevantly, a company. Programmed is a company.

Members 21 The term 'member' is defined in s 9 of the Act to mean, in relation to a company, a person who is a member under s 231. Broadly, a person is a member of a company if they are a member of the company on its registration, or agree to become a member of the company after its registration and their name is entered on the register of members. In this case, the participating Shareholders are members of Programmed.

Classes of members 22 An arrangement to which s 411(1) applies is one between a company and its members or any class of them. 23 Section 411 does not define the term 'class'. In Sovereign Life Assurance Company v Dodd [1892] 2 QB 573, Bowen LJ said (at 583) that the term ought to be given such a meaning: …as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest. 24 The principle on which the classes of members are to be constituted is that they should depend on the similarity or dissimilarity of their rights against the company and the way in which those rights are affected by the scheme, and not upon the similarity or dissimilarity of their private interests arising from matters extraneous to such rights: Re HIH Casualty and General Insurance Ltd (2006) 200 FLR 243 per Barrett J (at [67]) approving a statement of Lord Millett in UDL Argos Engineering & Heavy Industries Co Ltd v Li Oi Lin [2001] 3 HKLRD 634 (at [17]). 25 All participating Shareholders will receive the same benefits, be entitled to the same aggregate cash payment (comprising the Scheme Consideration and the Special Dividend), and have the same rights against Programmed under the Scheme (provided that they continue to hold the Programmed Shares on the applicable record dates). There is, therefore, no requirement for more than one class of members to be constituted for the purpose of the Scheme Meeting.

Performance Rights 26 Following the approval of the Scheme, the Performance Rights will vest on an accelerated basis and the holders of Performance Rights will be issued one Programmed Share in respect of each Performance Right held by them. The Programmed Shares will be issued on or around the date on which the Scheme becomes effective. These Programmed Shares will participate in the Scheme, such that the holder will be entitled to receive both the Special Dividend and the Scheme Consideration for each Programmed Share that they are issued with on the vesting of the Performance Rights (provided that they continue to hold those Programmed Shares on the applicable record dates). 27 Some holders of the Performance Rights currently also hold Programmed Shares. Those holders of Performance Rights will, upon the scheme being approved and becoming effective, receive the Special Dividend and Scheme Consideration in respect of the new Programmed Shares that they are issued on the accelerated vesting of the Performance Rights (provided that they continue to hold those Programmed Shares on the applicable record dates), in addition to receiving the Special Dividend and Scheme Consideration in respect of the Programmed Shares that they currently hold. The rights of these holders of Performance Rights to the extent that they are also participating Shareholders are not so dissimilar to other Shareholders as to require more than one class of members to be constituted for the purpose of the Scheme Meeting.

Retention Payments 28 PERSOL and Programmed have agreed to offer retention payments to 49 individuals in Programmed's senior management team. The retention payments will be made subject to the offerees remaining employed by Programmed on 1 July 2019, or a shorter period if the person ceases to be employed by Programmed in certain specified circumstances. 29 To the extent that these individuals are also participating Shareholders, and they satisfy the terms of the retention payment by remaining employed by Programmed for the required period, they will receive a benefit in addition to the Special Dividend and the Scheme Consideration. 30 In my view, the receipt of this benefit does not result in these individuals receiving a right or benefit under the Scheme that is different to other participating Shareholders, as that benefit will be received by these individuals not as a Shareholder but in their capacity as members of Programmed's senior management team, and will only be received if they satisfy the terms of the retention payment by remaining employed by Programmed for the required period. 31 The relevant offerees who are also participating Shareholders will not receive any benefit that could be regarded as a benefit or right that is additional to or different from the benefits and rights the other participating Shareholders will receive under the Schemes: see Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554 (at 563).

Draft explanatory statement 32 The draft Scheme Booklet containing the draft explanatory statement for the Scheme was lodged with ASIC on 7 August 2017 was annexed to the First Sutherland Affidavit. A copy of the final and complete Scheme Booklet reflecting all of the comments from ASIC was annexed to the Supplementary Sutherland Affidavit. The complete Scheme Booklet comprises: (a) the body of the text; (b) Annexure A - Summary of terms of Scheme Implementation Deed; (c) Annexure B - Deed Poll; (d) Annexure C - Scheme of Arrangement; (e) Annexure D - Notice of Scheme Meeting; and (f) Annexure E - Independent Expert's Report.

Disclosure 33 The emphasis is on proper disclosure: Re Seven Network Ltd [2010] FCA 220 (at [8]). The explanatory statement must provide proper disclosure as required in s 411(3). It must essentially set out 'all the main facts as will enable shareholders to exercise their judgement on the proposed scheme': Re Dorman Long & Co Ltd [1934] Ch 635 (at 665-666) per Maugham J; applied by Santow J in Re NRMA Insurance Ltd (No 1) (2000) 33 ACSR 595 (at [16]). 34 The Scheme Booklet prepared by Programmed in relation to the Scheme has been drafted to satisfy the disclosure requirements prescribed in: (a) ASIC Regulatory Guides 60, 111 and 112; and (b) section 411(3) and s 412 of the Act; and (c) Schedule 8 of the Corporations Regulations.

Prescribed information - Part 3 of Schedule 8 of the Corporations Regulations 35 Regulation 5.1.01 of the Corporations Regulations prescribes the information for the explanatory statement as required by s 411(3)(b) and s 412(1)(a)(ii) of the Act. In respect of a scheme between a Pt 5.1 body and its members, or a class of its members, reg 5.1.01(1)(b) requires the explanatory statement to state the matters set out, and have annexed to it the reports and copies of documents mentioned, in Pt 3 of Sch 8 to the Corporations Regulations. 36 Part 3 of Sch 8 to the Corporations Regulations is entitled 'Prescribed information relating to proposed compromise or arrangement with members or a class of members' and contains ten items, item 8301 to item 8310 inclusive. I am satisfied that the explanatory statement contained the relevant information required by the Act.

Procedural matters 37 Rule 3.2 of the Corporations Rules requires Programmed to file an affidavit stating the names of the persons who have been nominated to be the chairman and alternate chairman of the meeting, that each person nominated is willing to act as chairman, has had no previous relationship or dealing with Programmed, or any other person interested in the Scheme except as disclosed in the affidavit, and has no interest or obligation that may give rise to a conflict of interest or duty if the person were to act as chairman of the meeting, except as disclosed in the affidavit. This requirement was met by the First Sutherland Affidavit.

ASIC's consideration 38 ASIC considers that its role is to assist the Court by, inter alia, reviewing the content of scheme documents, reviewing the nature and function of a proposed scheme, representing the interests of investors and creditors, and bringing all relevant matters to the court's attention before it orders a scheme meeting or confirms a scheme: see ASIC Regulatory Guide 60 at RG 60.4. 39 The jurisdiction of the Court to make an order convening meetings under s 411(1) is conditional upon the matters set out in s 411(2). Section 411(2) requires that the Court be satisfied of two matters before making an order. First, that ASIC has been given 14 days' notice of the hearing, or such lesser period of notice as the Court or ASIC permits: s 411(2)(a). Second, that ASIC has had a reasonable opportunity to examine the terms of the scheme and the draft explanatory statement and to make submissions to the Court: s 411(2)(b). 40 The Scheme Booklet was first lodged with ASIC on 7 August 2017. ASIC has examined the terms of the Scheme and the draft Scheme Booklet and provided comments to Programmed. Programmed has lodged revised versions of the Scheme Booklet, and a revised version of the Independent Expert's Report which is Annexure E to the Scheme Booklet, with ASIC responding to those comments. 41 On 7 August 2017, ASIC was given notice that Programmed intended to seek to have the first Court hearing listed for hearing on 30 August 2017. On 11 August 2017, ASIC was given notice that the first Court hearing had been provisionally listed for hearing on 30 August 2017. On 16 August 2017, ASIC was provided with the filed and stamped copy of the originating process which stated that the first Court hearing would take place on 30 August 2017. 42 On the evening of 29 August 2017, ASIC informed the Programmed's solicitors by letter that it did not 'propose to appear to make submissions, or intervene to oppose the Scheme at the first hearing'. ASIC also confirmed its view that it had been given at least 14 days' notice of the first scheme hearing and that it had a reasonable opportunity to examine the terms of the Scheme and the draft explanatory statement. 43 Further, Programmed confirmed that the Scheme Booklet would be registered by ASIC before it was dispatched in accordance with s 412(6) and that prior to the second Court hearing, Programmed would seek and provide a statement from ASIC pursuant to s 411(17)(b).

Unusual aspects of the transaction 44 The Court will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that, if it achieves the statutory majority at the members' meeting, the Court would be likely to approve it on the hearing of the petition which is unopposed: FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 (at 72) per Street CJ. 45 The role of the Court at this stage of the process of a company propounding and implementing a scheme of arrangement is not to scrutinise finally whether the scheme should be approved: Re CSR Ltd (at [64]-[65]); Re Amcom Telecommunications Limited (at [16]). The decision of whether the scheme should be approved must await the expression of the will of the members at the meeting and any argument that may be advanced on behalf of dissenting members or other interested parties at the time of the application for approval: Re Sonodyne International Ltd (at 497). 46 The Independent Expert's conclusion that the Scheme is in the best interests of Shareholders confirms that the Scheme is one which sensible business people would consider to be of benefit to the participating Shareholders. 47 The following points raised address matters relating to the fairness and appropriateness of the Scheme. Although none of these matters provide a basis for refusing to convene the Scheme Meeting, the plaintiff drew the Court's attention to them because the application is made ex-parte.

Proper purpose 48 The Court should be satisfied that a proposed scheme is properly proposed (bona fides and intra vires). Where there is no suggestion of an improper purpose on the material before the Court, bona fides is a matter for consideration on any application to approve the scheme: Re NRMA Insurance Ltd (No 1) (at [22]-[24]). 49 The Scheme is not prevented by Programmed's constitution. There is nothing in the material before the Court that suggests the Scheme has not been properly proposed.

Proper disclosure 50 The Court should be satisfied, prima facie, that there has been proper disclosure with nothing misleading or deceptive in any material sense: Re NRMA Insurance Ltd (No 1) (at [3]). 51 The Scheme Booklet meets the disclosure requirements as set out above. I am satisfied that there has been proper disclosure. 52 There is nothing apparently misleading or deceptive in the Scheme Booklet. I note in particular: (a) Programmed has undertaken a process for the purpose of verifying the accuracy of the statements and information provided by Programmed in the Scheme Booklet, and a Due Diligence Working Group was established by Programmed to, amongst other things, oversee the verification of the statements and information provided by Programmed in the Scheme Booklet so as to ensure that those statements and information are accurate and complete; (b) further changes made to the Scheme Booklet since the first version lodged with ASIC on 7 August 2017 have also been subject to the same verification process as overseen by the Due Diligence Working Group; and (c) the PERSOL Verification Affidavit made on 25 August 2017 confirms that PERSOL has undertaken a process for verifying the accuracy of the statements and information provided by PERSOL and Autalent in the Scheme Booklet.

Electronic dispatch of documents 53 Some of the Shareholders have elected to receive shareholder material in electronic format. Programmed proposed that these shareholders will be given access to a website maintained by Computershare from which they can download copies of the Scheme Booklet and associated materials, being the same materials that will be dispatched by ordinary post to the remainder of the Shareholders. 54 The Court can make orders to provide for the electronic dispatch of a scheme booklet: Re Alinta Ltd (No 2) [2007] FCA 1378 per Emmett J; Re Amcom Telecommunications Limited (at [45]). 55 This approach is increasingly being adopted in relation to the dispatch of materials in relation to members' schemes of arrangement. The electronic dispatch of materials in relation to the Scheme is equivalent to (and does not give rise to any additional risk in comparison to) dispatch by post.

No performance risk 56 In relation to the cash payment of the Scheme Consideration: (a) PERSOL must provide sufficient funding to Autalent for Autalent to pay the Scheme Consideration; (b) PERSOL will be funding Autalent through a combination of existing cash resources and two new acquisition facility agreements with each of Sumitomo Mitsui Banking Corporation and The Bank of Tokyo-Mitsubishi UFJ, Ltd; and (c) by no later than two business days before the implementation date for the Scheme, Autalent must, and PERSOL must procure that Autalent, deposit in cleared funds an amount equal to the aggregate amount of the Scheme Consideration payable to each Shareholder in an Australian dollar denominated trust account operated by Programmed as trustee for the Shareholders. 57 In these circumstances, there is no material performance or credit risk beyond the terms and conditions of the acquisition facility agreements themselves (the key terms of which are summarised in the final Scheme Booklet).

Conditions precedent to the Scheme 58 There are a number of conditions precedent to implementation of the Scheme as set out in the Scheme Implementation Deed. The outstanding conditions precedent are summarised in the Scheme Booklet.

Exclusivity restrictions 59 The Scheme Implementation Deed contains 'no shop' and 'no talk' restrictions. These restrictions: (a) were the subject of arm's length negotiations between Programmed and PERSOL; (b) are fully disclosed in the Scheme Booklet and are subject to customary fiduciary carve-outs (in the case of the 'no talk' restriction); and (c) are on terms that are consistent with market practice.

Break fee 60 The Scheme Implementation Deed contains 'break fee' provisions. PERSOL will be obliged to pay the break fee to Programmed if the Scheme is not implemented and if Programmed terminates the Scheme Implementation Deed on the grounds of a material breach by PERSOL. 61 Programmed will be obliged to pay the break fee to PERSOL if the Scheme is not implemented and if: (a) PERSOL terminates the Scheme Implementation Deed on the grounds of a material breach by Programmed; or (b) prior to the End Date (as that term is defined in the Scheme Implementation Deed), any director of Programmed fails to recommend, adversely changes, qualifies or withdraws their recommendation in favour of the Scheme, or recommends a Programmed Competing Proposal or Potential Competing Proposal (as those terms are defined in the Scheme Implementation Deed); or (c) prior to the End Date, a Programmed Competing Proposal is announced or made and within 12 months the relevant third party effectively acquires control of or merges with Programmed. 62 The break fee: (a) was the subject of arm's length negotiations between Programmed and PERSOL; (b) is fully disclosed in the Scheme Booklet; (c) does not contravene the Takeovers Panel Guidance Note 7, on the basis that it does not exceed 1% of Programmed's fully diluted equity value; and (d) is on terms that are consistent with market practice.

Shareholder warranty 63 The Scheme contains a provision in which the participating Shareholders are deemed to have warranted that their shares are fully paid and unencumbered. Such a warranty is consistent with the requirements of authority: Re APN News & Media Ltd (2007) 62 ACSR 400 (at [57]-[63]). 64 Warranties in these terms generally do not give rise to the concern, expressed by some Courts, that encumbrances may gain the impression that the transfer adversely affects their security: Re APN News & Media Ltd; Re Investa Properties Limited [2007] FCA 1104.

Performance Rights and Retention Payments 65 As set out above: (a) the Performance Rights will vest subject to the Court approving the Scheme at the second Court hearing and the resulting issued Programmed Shares will be dealt with in accordance with the Scheme. The treatment of the Performance Rights is fully disclosed in sections 3.10 and 10.1 of the Scheme Booklet; and (b) the Retention Payments have been offered to 49 members of Programmed's senior management team, and will only be paid if the offerees are still employed by Programmed on 1 July 2019 or a shorter period of the offeree ceases to be employed by Programmed in specified circumstances. The Retention Payments are fully disclosed in sections 6.10(d) and 10.4(b) of the Scheme Booklet.

Section 411(17) 66 Section 411(17) is not considered at the first Court hearing. It is a second Court hearing issue: Re Macquarie Private Capital A Ltd [2008] NSWSC 323 (at [23]-[31]).

Conclusion regarding first scheme hearing 67 The submissions and material in support of the application to convene a Scheme meeting was extensive. Overall I was satisfied that each of the matters relevant to an order convening a Scheme meeting under s 411 was addressed and that of the orders sought by Programmed, none went beyond existing practice.

Issues and standard of review for Second Court hearing 68 The Court's primary concern at the second Court hearing in respect of a scheme is that all legal requirements have been met. The Court must be satisfied that Programmed has complied with the orders made by this Court at the first Court hearing on 30 August 2017 (Orders) and any statutory requirements. 69 In relation to the statutory requirements, the Court must be satisfied: (a) under s 411(17) of the Act that the Scheme has not been proposed to avoid the operation of Chapter 6 of the Act or, alternatively, that Programmed has received a written statement from ASIC to the effect that ASIC has no objection to the Scheme; and (b) under s 411(4)(b) of the Act that the Scheme is otherwise properly proposed, fair and reasonable. 70 In considering the principles which govern the Court's discretion to approve a scheme, Jacobson J in Re Seven Network Ltd (No 3) (2010) 267 ALR 583 (at [35]-[40]) referred to the following list of considerations set out by the Corporations and Markets Advisory Committee in its December 2009 report: (a) whether the members have voted in good faith and not for an improper purpose; (b) whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it. This leading test of fairness was set out by Fry LJ in Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213 (at 247); (c) 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; (d) whether there has been full and frank disclosure of all information material to the members' decision; (e) whether minority shareholders would be oppressed by the scheme; and (f) whether the scheme offends public policy. 71 The Court's jurisdiction in relation to an arrangement is supervisory. The Court is to be satisfied that there has been no oppression and the arrangement is one that is capable of being accepted. The Court must be satisfied that the meeting to approve the scheme has been completed and that the resolution has been passed in accordance with the statutory requirements and that the scheme is fair and reasonable to members in a general sense.

Materials 72 In addition to its submissions and the affidavits filed for the first scheme hearing (identified above at [9]), Programmed also relied upon: (a) the affidavit of Christopher Glen Sutherland sworn on 6 October 2017 (6 October Sutherland Affidavit) which provided evidence: (i) that a copy of the Scheme Booklet approved by the Court on 30 August 2017 was registered with ASIC on 31 August 2017; (ii) that a copy of the Orders as made on 30 August 2017 was lodged with ASIC on 31 August 2017; (iii) relating to the printing and dispatch of the Scheme Booklets and related materials to the Members; (iv) that the Scheme Meeting was held in accordance with Programmed's constitution, the Act and the Orders, and that the Scheme was approved at the Scheme Meeting by the requisite statutory majorities of Members; and (v) that notice of the second Court hearing was given in accordance with the Orders; (b) the affidavit of Mark Barrie Sheedy, Creative Services Manager at Financial & Corporate Relations Pty Limited (FCR), affirmed on 4 October 2017 (Sheedy Affidavit), which provides evidence of the preparation of the typeset Scheme Booklet for printing, and of the printing of the Scheme Booklet; (c) the affidavit of Rodney Rex Somes, Senior Relationship Manager at Computershare Investor Services Pty Ltd (Computershare), affirmed on 6 October 2017 (Somes Affidavit), which provides evidence relating to the dispatch of the Scheme Booklet and other meeting materials and related documents to the Members; and (d) the supplementary affidavit of Christopher Glen Sutherland sworn on 10 October 2017 (10 October Supplementary Sutherland Affidavit), which provides evidence that: (i) the conditions precedent to the Scheme becoming effective have all been satisfied or waived, with the exception of the condition precedent relating to the Court's approval of the Scheme; (ii) no party has given Programmed notice that it intends to object to the application for orders to approve the Scheme; and (iii) ASIC has no objection to the Scheme for the purposes of s 411(17)(b) of the Act.

Jurisdiction to approve Scheme 73 Section 411(4) of the Act relevantly provides that an arrangement is binding on the members of a company and the company if, at a meeting convened in accordance with an order of the Court, a resolution in favour of the arrangement is: (a) passed by a majority in number of the members present and voting (either in person or by proxy): s 411(4)(a)(ii)(A) (also known as the headcount test); and (b) if the body has a share capital, passed by 75% of the votes cast on the resolution: s 411(4)(a)(ii)(B) (also known as the votes test), and the arrangement is approved by order of the Court: s 411(4)(b). 74 The Court has a broad discretion to approve a scheme and is not bound to approve it merely because the Court has previously made orders for the convening of a meeting or because the statutory majorities have been achieved: Re NRMA Ltd (No 2) (2000) 156 FLR 412 (at [21]). However, courts are generally reluctant to intervene with schemes in which the requisite majority has been reached by fully informed members: Re NRMA Ltd (No 2) (at [32]).

Programmed has complied with the Orders and other procedural requirements 75 Having reviewed the materials provided by Programmed, I am satisfied that the following requirements have been met: (a) the Orders were lodged with ASIC on 31 August 2017; (b) the Scheme Booklet was registered with ASIC on 31 August 2017; (c) the Scheme Booklet was dispatched to the Members in accordance with order 8 of the Orders; (d) the Scheme Meeting was convened and held on 6 October 2017 in accordance with orders 1 to 7 of the Orders; (e) the required statutory majorities were obtained at the Scheme Meeting; (i) Headcount test: 96.46% of Members in attendance and voting voted in favour of the resolution; and (ii) Votes test: 99.85% of votes cast were in favour of the resolution; and (f) notice of the second Court hearing was given by way of advertisements in The Australian and The West Australian newspapers on 4 October 2015 in accordance with order 12 of the Orders.

The Scheme is fair and reasonable 76 The Court generally takes the view that the members are the best judges of whether an arrangement is to their commercial advantage and will be reluctant to make a decision contrary to the views expressed at meetings. 77 The Court may withhold its approval in the following instances: (a) where a majority is shown to be acting in bad faith; (b) where a majority's acceptance is in the nature of a fraud on the minority; or (c) where there is an objection to the scheme such that a reasonable person might not approve it. 78 Proof of the relevant statutory majorities is sufficient to establish prima facie evidence of fairness. 79 In this case, the conclusion of the Independent Expert is that the Scheme is fair and reasonable and in the best interests of the Members. I am satisfied that this confirms that the Scheme is one which sensible business people would consider to be of benefit to the Members. 80 Further, the requisite majorities of Members voted in favour of the Scheme at the Scheme Meeting. The Members were provided with an explanation of the operation of the Scheme at the Scheme Meeting by the Chairman. 81 The Scheme is evidently fair and reasonable because it: (a) will yield commercial benefits for the Members; and (b) is of a kind that is fair and reasonable from the viewpoint of an intelligent and honest person: Re Central Pacific Minerals NL [2002] FCA 239 (at [12]- [14]).

Satisfaction of conditions precedent to the Scheme 82 The Scheme will not come into effect until the conditions precedent to the Scheme (Scheme Conditions Precedent) have been satisfied. 83 One of the Scheme Conditions Precedent is that all of the conditions precedent set out in cl 3.2 of the Scheme Implementation Deed (other than the condition in item 4 of cl 3.2) must have been satisfied or waived in accordance with the terms of the Scheme Implementation Deed. 84 The Scheme and the Scheme Implementation Deed require Programmed and PERSOL to provide to the Court at the second Court hearing with a certificate confirming that the conditions precedent set out in cl 3.2 of the Scheme Implementation Deed (other than the condition precedent in relation to Court approval of the Scheme) have been satisfied or waived. The certificate required to satisfy cl 2.2 of the Scheme and cl 3.5 of the Scheme Implementation Deed was attached to the 10 October Supplementary Sutherland Affidavit.

Notification of right to be heard 85 On 30 August 2017, Programmed received a notice of appearance from PERSOL, Persol Australia Holdings Limited and Autalent indicating their support for Programmed's application to convene the Scheme Meeting. 86 Notice of the second Court hearing was given in accordance with order 12 of the Orders. 87 At the date of the hearing submissions, aside from the PERSOL entities' notice of appearance, Programmed did not receive a notice of appearance from any person or any notice that any person objected to approval of the Scheme.

Section 411(17) considerations 88 The Court's approval of the Scheme is dependent upon fulfilment of one of two alternative conditions set out in s 411(17) of the Act. 89 Production of a 'no objection letter' from ASIC usually brings an end to the issue, but the letter does not bring to an end the Court's discretion: Re Macquarie Private Capital A Ltd (at [29]). On 9 October 2017, Programmed received a letter from ASIC confirming that it has no objection to the Scheme in accordance with s 411(17) of the Act. 90 If a Court were to find that a scheme had been proposed for the purpose of avoiding the operation of a provision of Chapter 6 (a proscribed purpose) and that the existence of the proscribed purpose would work oppressively, unjustly or unfairly against the plaintiff's members or some other interested party, that finding may be taken into consideration as part of the exercise of the Court's discretionary power to approve the scheme under s 411(4)(b): Re Coles Group (No 2) (2007) 215 FLR 411 (at [75]-[78]). 91 As to the existence of the proscribed purpose, the Court is not to take an excessively rigid view but a liberal and practical approach. In Re ACM Gold Limited (at 538), O'Loughlin J observed that the 'proposition that ... [an] arrangement must be struck down if it could have been implemented as a takeover scheme' was 'far too rigid'. 92 I am satisfied that the Scheme has not been proposed for a proscribed purpose.

The significance of no objection from ASIC 93 ASIC Regulatory Guide 60 provides that the primary consideration for ASIC is whether, having regard to the principles in s 602 of the Act, shareholders are adversely affected by the takeover being implemented by a scheme of arrangement rather than a takeover bid (see [60.16]). These principles relate to: (a) sufficient time for shareholders to make a decision; (b) sufficient information to make a decision; and (c) reasonable and equal opportunities to share in any benefits that flow from a person acquiring a substantial interest in their company. 94 ASIC Regulatory Guide 60 (at RG 60.104) indicates that ASIC will issue a 'no objection letter' if it is satisfied that: (a) all material information has been disclosed; (b) the standard of disclosure meets the requirements of the relevant Corporations Regulations; (c) the standard of disclosure is equivalent to the standard that would be required by the disclosure obligations and principles in s 602 of the Act relating to takeover bids; and (d) there are no other reasons to oppose the scheme, such as public policy grounds.

CONCLUSION: APPROVAL OF THE SCHEME 95 Overall I was satisfied of the following: (a) the Scheme was agreed to by the statutory majorities required by s 411 (4)(a)(ii) of the Act. There is nothing to suggest that the Members voted other than in good faith or that they cast their votes for an improper purpose; (b) the conclusion of the Independent Expert is that the Scheme is fair and reasonable and in the best interests of the Members; (c) Programmed has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion, and from: (i) the disclosure in the Scheme Booklet; and (ii) the absence of complaint by any regulatory body or Member, I am satisfied that there was adequate disclosure of all information material to the Members' decision; (d) there is no material matter which casts doubt on the procedural integrity of the Scheme Meeting or indicates that any Member would be oppressed by the Scheme; (e) no other person has given notice of their intention to appear before the Court to object to approval of the Scheme; (f) the Court's directions and the statutory requirements have been complied with; (g) the requirement for a 'no objection' letter from ASIC under s 411(17)(b) was met; and (h) I am satisfied that the Scheme has not been proposed to avoid the operation of Chapter 6 and is otherwise properly proposed, fair and reasonable. 96 For these reasons I approved the Scheme and made the orders in the terms of the minute of proposed orders provided by Programmed.

Section 411(11) exemption 97 Programmed sought an exemption from s 411(11) of the Act which requires a copy of every order of the Court made for the purposes of s 411(4)(b) to be annexed to every copy of the relevant company's constitution issued after the order was made. An exemption from this requirement may be granted under s 411(12). 98 I was satisfied that in approving the Scheme, the orders made will not alter Programmed's Constitution and will not affect its true construction. Further, Programmed will, from implementation of the Scheme, be a wholly owned subsidiary of PERSOL, so there is no purpose to be served in having the order annexed to Programmed's Constitution. I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.