Genea Limited, in the matter of Genea Limited (No 2) [2018] FCA 2044

Federal Court of Australia|2018-12-12|Before: Markovic J

Pursuant to s 411(4) of the Corporations Act 2001 (Cth) (Corporations Act), the Scheme of Arrangement between the plaintiff and its shareholders in the form of Annexure A to these Orders (Merger Scheme) be approved.
Pursuant to s 411(4) of the Corporations Act, the Scheme of Arrangement between the plaintiff and its shareholders in the form of Annexure B to these Orders (Demerger Scheme) be approved.
Pursuant to s 411(12) of the Corporations Act, the plaintiff be exempted from compliance with s 411(11) of the Corporations Act in respect of each of the Merger Scheme and the Demerger Scheme.
These orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 On 29 October 2018 the Court made orders, among others, pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Corporations Act) convening meetings of members of Genea Limited (Genea) to consider and vote upon two proposed schemes of arrangement, being: (1) a scheme between Genea and its members relating to the proposed acquisition of shares in Genea by MW Fertility Pte Limited (MW Fertility) (Merger Scheme); and (2) a scheme between Genea and its members relating to the proposed demerger of Genea's stem cell research business (Demerger Scheme). 2 At that time, the Court also made orders approving a Merger Scheme booklet and Demerger Scheme booklet to be distributed to the members of Genea. 3 At the Merger Scheme meeting and the Demerger Scheme meeting, both held on 3 December 2018, the Merger Scheme and Demerger Scheme were each approved by 100% of the votes cast by members present in person or by proxy at those meetings. 4 Genea now seeks orders pursuant to s 411(4)(b) of the Corporations Act approving the Merger Scheme and the Demerger Scheme.

Legal principles 5 The Court's role in approving a scheme of arrangement is supervisory. The Court has a discretion whether to approve a scheme pursuant to s 411(4)(b) of the Corporations Act and is not bound to approve it merely because it previously made orders for the convening of a meeting or because the statutory majorities have been achieved. 6 In deciding whether to give final approval to a scheme of arrangement, the Court will typically wish to be satisfied that: (1) there has been compliance with the orders of the Court convening the scheme meeting; (2) the resolution to approve the scheme was passed by the requisite majorities; (3) all other statutory requirements have been satisfied; (4) the scheme is fair and reasonable so that an intelligent and honest shareholder properly informed and acting alone might approve it. In considering this issue, it is not the role of the Court to impose its own commercial judgment on the scheme or consider whether a better scheme might have been proposed; (5) the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of its discretion; and (6) there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme. See, for example, Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[21]; Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400 at [35]-[40]; Signature Capital Investments Limited, in the matter of Signature Capital Investments Limited (No 2) [2016] FCA 385 at [4]; Medical Australia Ltd, in the matter of Medical Australia Ltd (No 2) [2017] FCA 1429 at [5].

consideration 7 Genea relies on the following affidavits and evidence: (1) affidavit affirmed by Robert John Woolcott on 4 December 2018. Mr Woolcott chaired the Merger Scheme and Demerger Scheme meetings and gave evidence as to the conduct of those meetings and the result of the voting as summarised at paragraph [3] above; (2) affidavit affirmed by Lucy Alexandra Sarah Basten on 7 December 2018, general counsel of Genea and company secretary of Genea and Genea Biocells Australia (Holdings) Limited (Genea Biocells). Ms Basten gave evidence of dispatch of the Merger Scheme and Demerger Scheme booklets in accordance with the Court's orders as well as compliance with orders made by the Court on 5 and 8 November 2018 requiring further material to be dispatched by way of clarification; the processing of proxy forms; the placement of advertisements in accordance with the Court's orders; and the process undertaken for parties to vote at the Merger Scheme and Demerger Scheme meetings; (3) affidavit of Lee Dominic Horan, sworn on 11 December 2018, a partner at King & Wood Mallesons (the solicitors for Genea), in which Mr Horan gives evidence as to the registration of the Merger Scheme and Demerger Scheme booklets in accordance with the requirements of s 412 of the Corporations Act and correspondence with the Australian Securities and Investments Commission (ASIC) concerning relief given by ASIC from compliance with regs 8302(d) and 8302(h) of Pt 3 of Sch 8 to the Corporations Regulations 2001 (Cth); affidavit sworn by Alexander Basil Morris, a partner at King & Wood Mallesons, in which Mr Morris relevantly gives evidence that as at 8.05 am on 12 December 2018 he had not received notice from any person that they propose to appear before the Court at the hearing today to make any application to the Court in the proceeding and annexes a letter from ASIC dated 11 December 2018 addressed to the directors of Genea. In its letter, ASIC advises that it has no objection to the proposed schemes of arrangement under Pt 5.1 of the Corporations Act between Genea and its members pursuant to s 411(17)(b) of the Corporations Act; (4) counterparts of a conditions precedent deed dated 12 December 2018 executed by Genea, Genea Biocells and MW Fertility; and (5) a deed in the form of a letter, dated 11 December 2018 executed by Genea, Genea Biocells and MW Fertility in which, among other things, the parties agree to amend the definitions of record date and scheme implementation date, as a result of the change of date for the second Court hearing, and in which the bidder waives the non-fulfilment of the "Thailand condition precedent". 8 At the commencement of the hearing, the matter was called outside the court room and no party or person appeared to oppose the schemes. 9 Having regard to the evidence relied on by Genea and the written submissions provided to the Court by senior counsel appearing on behalf of Genea, I am satisfied that the procedural requirements of s 411 of the Corporations Act and the Court's orders made on 29 October 2018 and subsequently in connection with the schemes have been complied with. I am also satisfied that other formal matters that are required to be addressed have been addressed by Genea and that there have been no intervening events since the first Court hearing that would warrant a departure from the conclusion I reached following that hearing that the proposed Merger Scheme and the proposed Demerger Scheme were of such a nature that if approved at their respective meetings by the requisite majorities the Court would be likely to approve them on the hearing of an unopposed application: see Genea Limited, in the matter of Genea Limited [2018] FCA 1681 at [47].

CONCLUSION 10 Having regard to those matters, I am satisfied that the orders sought by Genea should be made. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.

Corporations Act 2001(Cth)s 411(4)(b)

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