In the matter of Amcor Limited [2000] VSC 157 (11 April 2000)

20. Any meeting ordered to be held under s.411 is referred to as a "Court ordered meeting". It is not a meeting provided for by the Constitution of the company. This proposition has several implications:

(a) the application by the Rules of certain parts of the Corporations Regulations to the conduct of the meeting;

(b) authorities exist which relate to the material which can be sent to shareholders other than that ordered by the Court; and

(c) the Court has power under s.1319 of the Law to give such directions with respect to the convening, holding or conduct of the meeting, and ancillary or consequential directions in relation to the meeting, as it thinks fit.

26. A draft form of order was submitted. The draft form of order contemplates that the Court ordered meetings and the general meeting of Amcor will be held on 10 April 2000. If the meetings approve the Scheme, two further Court applications are necessary. First, the application for a certificate from the Master pursuant to Rule 16.6(1). Second, the application to the Court for approval of the Scheme pursuant to s.411(4) and (6) of the Law. The draft form of Order provides that the hearing before the Master will take place in the afternoon of 10 April and the application for approval will take place on 11 April.

29. It is common for each of these applications to take place relatively soon after the meetings. However, the timetable contemplated in the draft Order involves a degree of expedition. The reasons for this are associated with the public offer which is taking place at the same time that the Scheme is being considered by shareholders and by the Court.

33. Rule 1.3(2) of the Rules provide that the Rules apply in a manner which is not inconsistent with the "other rules of the Court". Accordingly, the Court has the power to dispense with the Rules. See RSC 2.04 (Dispensing with Compliance). Rule 2.3(a) provides for the Prothonotary to fix certain times and places in respect of further hearings. Amcor seeks a dispensation from this Rule on the basis that the proposed form of order itself contains provision for the matters contemplated by Rule 2.3(a). In particular, the proposed form of order contemplates that the hearing before the Master required by Rule 16.6 be fixed for hearing before Master Evans at 2:15 p.m. on 10 April 2000. Further, the proposed form of order provides that the hearing for approval will be heard before a Judge in the Corporations List at 10:30 a.m. on 11 April 2000.

36. Rule 2.15 is headed "Meetings ordered by the Court". It provides:

"Subject to the Law, these Rules and any direction of the Court to the contrary, regulations 5.6.12 to 5.6.36A of the Corporations Regulations apply to meetings ordered by the Court."

40. Amcor seeks a dispensation from this Rule. The relevant regulations are found in Part 5.6 of the Corporations Regulations_._ Part 5.6 is entitled "Winding Up Generally". Generally speaking, the regulations do not apply as effectively to a meeting of shareholders of a public listed company as do the provisions in the Constitution of that company. Regulation 9 relates more to meetings of creditors of insolvent companies. Nothing of any substance provided in those regulations has been omitted either from this order or from documents such as notices of meetings and proxies for which provision is made in those orders. In members' schemes in respect of large and solvent public companies, these regulations are often dispensed with. In the context of this matter it is appropriate that the dispensations sought from the requirements of the Rules be allowed.

43. Rule 3.2 is entitled "Nomination of Chairperson for Meeting". In an original affidavit, Mr. Guy for Amcor has sworn that Mr. Wallis, the Chairman of Amcor, or failing him Mr. Allen, another director of Amcor, is willing to chair the court-ordered meetings. It is conventional for such meetings to be chaired by such persons. Plainly, each is an officer of Amcor. Each owns shares. However, evidence has not been put before the Court of all the other relationships and interests which each have or may have with Amcor or its related bodies corporate. Consideration of s.411(7) of the Law which is the provision made relevant by this Rule reveals that it relates more clearly to the administration of a scheme between an insolvent company and its creditors. Plainly, the rule is designed to ensure that the interest of the chairperson of such a meeting is properly and fully disclosed. In such circumstances as the present a court can be satisfied that the shareholders attending such a meeting would expect the company chairman or a director to be the chairperson of the meeting.

46. Rule 3.4 is headed "Notice of Hearing (ss.411(4), 413(1) of the Law - Form T)". Amongst other things, the Rule relates to an application under s.411(4). If the members approve the Scheme of Arrangement, Amcor must make an application under s.411(4) for approval. Rule 3.4(2) requires Amcor to publish a notice of the hearing of that application. Rule 3.4(3) provides that the notice should be in accordance with Form 6 and be published in accordance with Rule 2.11. Form 6 has been drawn on the assumption that notice of the Court meeting will not be given until after the Court ordered meetings have been held. If that was to happen in the present case, Amcor would be unable to publish the Notice until after the meetings to be held on 10 April. In those circumstances, it would not be possible for the application for approval to be held on 11 April 2000. Accordingly, Amcor seeks dispensation from the requirements in Rule 3.4. In place thereof, Amcor proposes a different regime. In view of the fact that the scheme booklet contains a notice of the proposed date of the application for approval and compliance with the direction in paragraph 13 of the proposed order the Court can be satisfied that the interests of shareholders in having proper notice of the application for approval have been satisfied.

49. I turn to consider the content of the documents to be provided to shareholders.

53. Section 412(1) of the Law provides that where a meeting is convened under s.411, the company shall send to every member an "Explanatory Statement". Section 412(1)(a)(i) provides that the explanatory statement shall explain the effect of the arrangement. Section 412(1)(a)(ii) provides that the explanatory statement shall set out prescribed information. The Corporations Regulations prescribe material which must be included in an explanatory statement. Schedule A to the proposed form of Order is the proposed scheme booklet which is to be sent to all shareholders of Amcor. The scheme booklet contains:

(a) a covering letter from the Chairman of Amcor;

(b) the explanatory statement;

(c) the Scheme;

(d) an Implementation Deed;

(e) Notices of meeting.

59. In addition to the scheme booklet, the proposed draft form of Order contemplates that Amcor will send to shareholders a further document that which includes another covering letter and appropriate proxy forms.

63. The Demerger Proposal is an "arrangement" within the meaning of s.411 of the Law. The word "arrangement" is of wide import and not in no way limited by the word "compromise": see Re International Harvester Co of Australia Ltd [ [1953] VicLawRp 90; 1953] VLR 669 at 674; Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 50 1. In effect, the jurisdiction conferred by s.411 spares a company the need to secure the unanimous consent of its shareholders to a proposed reconstruction: see Re Guardian Assurance Co [1917] 1 Ch 431 at 449-450.

66. The jurisdiction has been exercised in a wide variety of cases. It has facilitated the transfer of shareholders from one company to a new holding company for the existing company. It has been used to effect a takeover whereby the shares of all shareholders bar one are cancelled and, in return, those shareholders acquire shares in a new company. It has been exercised recently to effect several demergers similar to the proposed demerger proposal in the present instance. In 1995, the Supreme Court of Victoria approved an arrangement whereby the local Australian shareholding in BTR Nylex Ltd was cancelled, leaving it a wholly-owned subsidiary of the English company BTR plc, with the Australian shareholders receiving shares in BTR plc. The jurisdiction was similarly used in the Supreme Court of New South Wales to separate the Australian and Asian operations of Coca-Cola Amatil Ltd from its European operations. In effect, the shareholders in Coca-Cola Amatil Ltd received shares in the European company. A reduction of capital of Coca-Cola Amatil Ltd was satisfied by that company applying the fixed amount reduced in respect of each share to the transfer to the shareholder of a share in the European company.

69. The jurisdiction conferred by s.411 has also been used recently to implement a demerger of operations similar to that contained in the demerger proposal. The Supreme Court of New South Wales has approved an arrangement between Boral td and its members whereby the resources operations of Boral Ltd were, in effect, transferred to a subsidiary named Origin Energy Ltd in which Boral Ltd shareholders received shares as part of the arrangement. Boral Ltd retained its building and construction materials business.

72. The jurisdiction has also been used to effect a takeover. The Supreme Court of New South Wales has recently approved an arrangement between GIO Australia Holdings Ltd ("GIO") and its members whereby GIO became a wholly-owned subsidiary of AMP Ltd. Similarly, the Supreme Court of Victoria approved an arrangement in January 2000 whereby all shareholders but one in Hudson Conway Ltd received, in consideration for the cancellation of their shares in that company, a distribution from it of its shares in Publishing and Broadcasting Ltd.

75. I observe that the proposed Scheme does not contain any provisions that which appear to be unusual.

79. The proposed scheme contains an indemnity. In Re Price Mitchell Pty Ltd [1984] 2 NSWLR 273, McLelland J refused an application to convene meetings where the proposed scheme contained an indemnity in favour of the scheme manager inconsistent with s.237 of the Companies (New South Wales) Code as it then stood. The restriction on the grant of indemnities by a company to its officers was carried over into s.241 of the Law. However, s.241 has since been amended and, further, is to be replaced with effect from March 2000 by a new s.199A introduced by Schedule 1 of the Corporate Law Economic Reform Bill 1999. The proposed indemnity reflects and does not rise higher than that authorized by the new s. 199A.

83. Several authorities describe the nature of the jurisdiction conferred on the Court when exercising its discretion to order meetings to consider a Scheme. In FT Eastment & Sons Pty Ltd v. Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69, Street CJ said (at 72):

"[t]he 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 creditors' meeting, the court would be likely to approve it on the hearing of a petition which is unopposed."

87. In Australian Securities Commission v. Marlborough Gold Mines Ltd (1993) 117 CLR 485, the High Court said (at 504-505):

"The application for leave to summon meetings is in the nature of an interlocutory proceeding and is a preliminary to the final determination which is to be made when the matter comes back to the court for approval after the holding of the meetings which have been directed."

93. The jurisdiction conferred by s.411 is confined to an arrangement between, relevantly, a company and its members. The proposed arrangement imposes obligations not only upon Amcor and its members but also upon PaperlinX. In usual parlance, PaperlinX is referred to as an "outsider" to the arrangement. However, it is very common for arrangements to confer some obligation upon such an outsider. In Re A and C Constructions Pty Ltd [1970] SASR 565, at 573, the involvement of outsiders in arrangements under s.411 was approved. See also Re Glendale Land Development Ltd (In liq) [1982] NSWLR 563. In a document entitled the Implementation Deed, PaperlinX has covenanted to carry out all the obligations which the Scheme imposes upon it.

Distribution of Further Material to U.S. Resident Shareholders

97. Part H of the explanatory statement is headed "Taxation Implications for Amcor Shareholders". Paragraph 6.1 describes the taxation consequences of the capital reduction and the scheme in the United States. The paragraph refers to an analysis of the United States taxation position being undertaken by Amcor's U.S. tax advisers. When it is complete, Amcor wishes to make further information about it available to shareholders with registered addresses in the United States and to provide that information to other shareholders who ask for it and place it on Amcor's website. In Chief Commissioner of Payroll Tax v Group Four Industries Pty Ltd [1984] 1 NSWLR 680, McLelland J (at 686) cautioned companies against sending documents to shareholders in respect of Court-ordered meetings which had not been approved by the Court. Consequently, Amcor seeks directions authorizing its making available to shareholders the results of its analysis of the U.S. tax position when it is complete. Amcor is content to make its proposed communication available to ASIC for its consideration. If ASIC raises no objection to the material, Amcor seeks a direction that it be authorized to make that material available as outlined above. If ASIC raises an objection, Amcor would seek further directions from the Court before making the material available.

101. In past years, controversy often arose as to who was entitled to vote at the general meeting of a company. The Law now contains what are known as "snap-shot" provisions which permit a company, when convening a meeting, to take a "snap-shot" of its register and thereafter questions of entitlement to vote are determined by reference to that snap-shot. (See s.1109N of the Law). However, the terms of s.1109N of the Law do not seem to apply to a meeting convened by the Court. Nevertheless, recent orders made in the Supreme Court of New South Wales direct the use of a procedure analogous to that provided in s.1109N in the case of Schemes. This procedure has been incorporated into the proposed form of Order. I consider it appropriate to do so.

105. The order which Amcor seeks in relation to proxies requires proxies for the Court ordered meetings to be returned by 3.00 p.m. on Saturday 8 April 2000. The time has been selected because it is within 48 hours of the meetings, for salient reasons. The same provision is proposed to be made with respect to the general meeting to approve the reduction of capital. The Court has power to give directions to this effect under s.1319 of the Law. Section 1319 provides:

"Where, under this Law, the Court orders a meeting to be convened, the Court may, subject to this Law, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit."

109. Section 250B of the Law provides that the appointment of a proxy for a meeting of a company's members must be received at least 48 hours before the meeting in order to be effective, unless the company's constitution or the notice of meeting reduce the period. The minimum period is intended to enable the Chairman of the meeting to inform the meeting, before a vote is taken, how the proxy votes are to be cast, as required by s.250J(1A).

112. Regulation 5.6.36 of the Corporations Regulations (which, unless the court dispenses with compliance, is applied in relation to a court-ordered meeting by virtue of r.2.15 of the Corporations Law Rules) prohibits a person named in a notice of meeting as the person to receive proxies from requiring proxies to be received more than 48 hours before the meeting. In other words, the regulation demands that the period in s.250B be treated as a maximum, rather than minimum, for the return of proxies. It was held in Re Huon Valley Springs Ltd [1986] TASSC 45; (1986) 10 ACLR 883 that the court had no power under s.411 (or its predecessor) to restrict the right to vote by proxy by limiting the time within which instruments of proxy are to be delivered. However, McLelland J held in Re ACP Ltd (1994) 14 ACSR 639 that this conclusion overlooked the predecessor to s.1319 of the Law, which is sufficiently wide to authorise the court to give directions as to the return of proxies. I consider that the court has power pursuant to s.1319 to make the orders sought relating to proxies. The purpose of selecting 3.00 p.m. on the Saturday preceding the meeting is to enable the Amcor share registry to process the proxy forms over the weekend before the meeting. The approach achieves a balance between the interests of those members wishing to vote by proxy and the requirements of efficient management of the meeting. It is, moreover, an approach which conforms with regulation 5.6.36. Furthermore, I observe that since the decisions referred to above, courts have approved schemes of arrangement under s.411 whereby under which proxies have been required to be returned by a date before the meeting (generally 48 hours). Examples include the schemes in relation to other major corporations such as Hudson Conway, GIO, Boral and Coca-Cola Amatil.

115. On the basis of the submissions on 25 February 2000 I ordered the applicant to summon and convene meetings substantially in the following terms:

"The Applicant shall summon and convene the following meetings:

(a) a meeting of all the holders of the partly paid ordinary shares of Amcor Limited ('the Company') ('the First Court-ordered Meeting'); and

(b) a meeting of all the holders of the fully paid ordinary shares of the Company ('the Second Court-ordered Meeting');

for the purpose of considering and, if thought fit, resolving (with or without modification) to approve the scheme of arrangement proposed to be made between the Company and its members, the terms of which are set forth on pages {page numbers inserted} of the document annexed hereto marked 'Schedule A' ('the Scheme'). The meetings specified in paragraph 1 ('the Court-ordered Meetings') shall be held on 10 April 2000, and further:

(a) the First Court-ordered Meeting shall be held at the Regent Theatre, 191 Collins Street, Melbourne, in the State of Victoria, Australia and shall commence at 9.30 a.m.; and

(b) the Second Court-ordered Meeting be held at the Regent Theatre, 191 Collins Street, Melbourne, in the State of Victoria, Australia and shall commence at 10.00 a.m.

The Court-ordered Meetings shall be convened by sending by ordinary pre-paid post on or before 9 March 2000 a copy of the document attached hereto marked "Schedule A", which document contains amongst other things:

(a) Notice of Meeting for the First Court-ordered Meeting, set forth at page of Schedule A; and

(b) Notice of Meeting for the Second Court-ordered Meeting, set forth at page {page numbers inserted} of Schedule A.

Each copy of Schedule A sent to convene the Court-ordered Meetings shall be accompanied by:

(a) in the case of each Court-ordered Meeting, a copy of a letter dated 7 March 2000 from Mr S.D.M. Wallis, the Chairman of the Company, in the form set forth in the documents annexed hereto marked 'Schedule B1' and 'Schedule B2';

(b) in the case of the First Court-ordered meeting, a proxy form in respect of that meeting and in respect of the extraordinary general meeting of the Company to be held at the same venue as the Second Court-ordered Meeting on 10 April 2000 at 10.30 a.m. or so soon thereafter as the Second Court-ordered Meeting is adjourned or concluded, in the form set forth in the document annexed hereto marked 'Schedule B2';

(c) in the case of the Second Court-ordered meeting, a proxy form in respect of that meeting and in respect of the extraordinary general meeting of the Company to be held at the same venue on 10 April 2000 at 10.30 a.m. or so soon thereafter as the Second Court-ordered Meeting is adjourned or concluded, in the form set forth in the document annexed hereto marked 'Schedule B2'; and

(d) a pre-addressed envelope for return of the proxy form.

Each of the proxy forms referred to in paragraph 4(b) and 4(c) respectively shall be engrossed with the name and address of the relevant member of the Company as they appear in the relevant register as soon as expedient after notification to the registry of settlements effected through the Clearing House Electronic Subregister System on 1 March 2000 and shall be bar-coded to enable electronic identification of the member. The Company may, with the prior consent of the Australian Securities and Investments Commission, provide to its shareholders with registered addresses in the United States the results of an analysis of the taxation implications of the Scheme for such shareholders. Pursuant to s.411 of the Corporations Law and all other enabling powers, for the purposes of the Court-ordered Meetings all ordinary shares in the Company shall be taken to be held by the persons who held them as registered shareholders at 3.00 p.m. on 8 April 2000. Unless the meeting chooses to elect some other person as Chairman, Mr S.D.M. Wallis or failing him Mr D.C.K. Allen is to act as Chairman of each Court-ordered Meeting. A form of proxy referred to in paragraph 4(b) or paragraph 4(c) hereof in respect of a Court-ordered Meeting shall be valid and effective if and only if delivered:

(a) to the Company's share registry at Level 12, 565 Bourke Street, Melbourne, Victoria, Australia;

(b) by using the pre-addressed envelope for return of the proxy form or mailing it to GPO Box 4547SS, Melbourne, Victoria 3001, Australia;

(c) to facsimile number 1800-331-599 (freecall) or (613) 96115710; or

(d) to the Company's registered office located at 679 Victoria Street, Abbotsford, Victoria 3067, Australia,

not later than 3.00 p.m. (Melbourne time) on Saturday 8 April 2000. Except as otherwise provided in this Order, the Court-ordered Meetings shall be convened and conducted in accordance with the Constitution of the Company except that:

(a) in the case of the First Court-ordered Meeting, a reference in the Constitution to a shareholder shall be deemed a reference to a holder of one or more partly paid ordinary shares; and

(b) in the case of the Second Court-ordered Meeting, a reference in the Constitution to a shareholder shall be deemed a reference to a holder of one or more fully paid ordinary shares.

Pursuant to s.411(1) of the Corporations Law, the explanatory statement for the Scheme, a copy of which is the document annexed hereto marked 'Schedule A', is approved. Compliance with:

(a) rule 2.3(a);

(b) rule 2.15;

(c) rule 3.2(d); and

(d) rule 3.4

of the Corporations Law Rules is dispensed with. Notice of the Court-ordered meetings and of the application for orders approving the Scheme is to be advertised once in The Age in the form or to the effect of Schedule 'C' to this order not later than 6 April 2000. Any interlocutory process under rule 16.6(1) of the Corporations Law Rules for an inquiry by a Master be fixed for hearing before Master Evans at 2.15 p.m. on 10 April 2000. Any interlocutory process for an order under s.411(4) and (6) of the Corporations Law be fixed for hearing before a Judge in the Corporations List at 10.30 a.m.on 11 April 2000."

148. In accordance with the terms of the orders made on 25 February 2000 the meetings and the matter came back before a Master of this court on 10 April 2000. It was apparent before the Master that there were minor irregularities in relation to compliance with the orders made by the court on 25 February 2000. Ultimately, the Master ordered on 10 April 2000 that subject to the irregularities that had been noted the court ordered meetings were duly convened and held and the resolution considered at each meeting was duly passed. The matter returned before me on 11 April 2000. On that occasion Amcor sought orders:

(a) approving the scheme of arrangement in the proceeding; and

(b) dispensing Amcor from compliance with s.411(11) of the Corporations Law.

154. Amcor seeks an order approving the Scheme pursuant to section 411(4)(b) of the Corporations Law. The Court has a discretion to approve the Scheme but the jurisdiction is supervisory. It amounts to a requirement that the Court be satisfied that there has been an absence of oppression and that the Scheme is one capable of being accepted by the shareholders: see, for example, Re Sonodyne International Ltd (1994) 15 ACSR 494, Hayne J at 499 citing Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213, Bowen U at 243. Especially where, as here, there is no opposition to the order for approval, the Court should regard the shareholders as the best judges of what is to their commercial advantage: see Re Hudson Conway Ltd [2000] VSC 21; (2000) 33 ACSR 657, Beach J at 662, 665, 667; Re Chevron (Sydney) Ltd [1963] VicRp 39; [1963] VR 249, Adam J at 255. The Scheme is one of a kind which the Courts have often approved.

(a) affidavit of Christopher Staniforth Ricketson sworn 6 April 2000 - Mr Ricketson is the Assistant Company Secretary of Amcor and deposes to the making of corrections to the Scheme booklet and the organization of the convening of the meetings; and

(b) fourth affidavit of Bert Guy sworn 10 April 2000 - Mr Guy is the Company Secretary of Amcor. He deposes to the conduct of the General Meeting (at which the resolution approving a reduction of capital was passed as required by a condition precedent in the Scheme) and also to certain dealings with ASIC since the making of the Order.

163. Section 411(11) requires, subject to s.411(12), a copy of the Court's order approving the Scheme to be annexed to every copy of Amcor's constitution issued after the order is made. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which it shall comply. It was submitted that exemption from compliance with s.411 (11) is appropriate where the corporation in question is a large public company listed on the Australian Stock Exchange. Shareholders and potential shareholders are amply informed of the Scheme through the ordinary channels for distribution of information regarding listed companies. Such an order was made, for example, in Re Hudson Conway Ltd, Beach J at 668.

166. The authorities are to the effect that I must be satisfied as to three matters. Firstly, whether the orders made by the court on 23 February 2000 have been complied with. Secondly, whether the court considers that the resolutions have attained majorities as stipulated in the Corporations Law. Thirdly, whether the proposed scheme is capable of being approved by the members. Mr J. Santamaria QC who appeared with Mr S. McLeish for Amcor put the matter this way, that if I was satisfied of each of the aforesaid three matters then there was no basis for my not exercising the discretion under the section. The affidavit material, together with the orders of the Master, show that the members attending the meetings have passed the resolution approving the Scheme by the majorities specified in s.411(4)(a)(ii). In the circumstances, there is no reason to withhold the Court's approval for the Scheme. I am so satisfied and accordingly orders will be made as sought.

169. Before doing so, there are remaining matters to be considered. ASIC has not appeared but informed Amcor in writing that it does not oppose orders being made. A copy of a letter from ASIC to that effect was produced to the court and will be placed on the court file. The remaining matter is whether or not the court is satisfied under s.411(17) of the Corporations Law.

"411(17) [Takeovers legislation] The Court shall not approve a compromise or arrangement under this section unless:

(a) it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or

(b) there is produced to the Court a statement in writing by the Commission stating that the Commission has no objection to the compromise or arrangement;

but the Court need not approve a compromise or arrangement merely because a statement by the Commission stating that the Commission has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b)."

180. On the basis of the material before me and in light of the nature of the scheme contemplated together with the statement provided by ASIC I am satisfied that each of the requirements of s.411(17)(a) and (b) have been met and accordingly the orders will be made as sought approving the scheme.

1. The Scheme of Arrangement in this proceeding, a copy of which is set out in the Schedule to this Order, be and is hereby approved.

2. Amcor Limited be dispensed from compliance with section 411(11) of the Corporations Law in relation to the Scheme of Arrangement.