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Decision: Orders made approving schemes of arrangement

Catchwords: CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving shareholders’ scheme of arrangement and creditors’ scheme of arrangement – Where formal requirements satisfied – Whether schemes of arrangement should be approved

Legislation Cited: Corporations Act 2001 (Cth), s 411

Cases Cited: In the matter of Ansarada Group Ltd [2024] NSWSC 1121
In the matter of Bigtincan Holdings Limited [2025] NSWSC 140
In the matter of Boart Longyear Limited [2021] NSWSC 1272
In the matter of Home Consortium Developments Limited [2021] NSWSC 1708
In the matter of InvoCare Limited (No 2) [2023] NSWSC 1350
In the matter of Mason Stevens Group Limited (No 2) [2025] NSWSC 255
In the matter of WPP AUNZ Limited [2021] NSWSC 520
Re Beadell Resources Ltd (2018) 133 ACSR 600; [2018] WASC 410
Re Central Pacific Minerals NL [2002] FCA 239
Re Ellerston Global Investments Ltd [2020] NSWSC 1108
Re Great Southern Managers Australia Ltd (in liq) [2016] VSC 38
Re Murchison Metals Ltd [2014] NSWSC 951
Re Permanent Trustee Co Ltd (2002) 43 ASCR 601; [2002] NSWSC 1177
Re Saracen Mineral Holdings Ltd (No 2) [2021] WASC 32
Re The Trust Company Ltd [2013] NSWSC 1947

Category: Principal judgment

Parties: Bigtincan Holdings Limited (Plaintiff)

Representation: Counsel:
M Izzo SC w B Ng (Plaintiff)
J Hutton SC (Bidder)
Solicitors:
Gilbert + Tobin (Plaintiff)
Johnson Winter Slattery (Bidder)

File Number(s): 2025/53696

JUDGMENT

1. By Originating Process filed on 10 February 2025, the Plaintiff, Bigtincan Holdings Limited (BTH), has applied for orders under s 411 of the Corporations Act 2001 (Cth) (Act) relating to two separate and concurrent schemes of arrangement and associated orders. The first is a scheme of arrangement between BTH and its shareholders (Share Scheme), and the second is a scheme of arrangement between BTH and those persons who hold options which have been issued by BTH (Option Scheme).

2. By way of background, BTH is a public company limited by shares which is listed on the Australian Securities Exchange (ASX). It operates a software development business focused on the sales enablement market. The proposed Share Scheme provides for Big Wombat Pty Ltd (Vector BidCo) to acquire all of the ordinary shares in BTH for $0.22 per share. The proposed Option Scheme provides for the options which have been issued by BTH to be cancelled or extinguished, in return for the optionholders receiving a cash payment.

3. Vector BidCo is ultimately owned by Vector Capital VI, L.P. (Vector VI), which is a limited liability partnership organised in the Cayman Islands that is managed and advised by Vector Capital Management, L.P. (Vector), a private equity firm based in San Francisco.

4. At the conclusion of the first Court hearing on 27 February 2025, I made orders sought by BTH to convene:

5. a meeting of BTH shareholders for the purposes of considering and, if thought fit, agreeing to (with or without modification) the Share Scheme (the Share Scheme Meeting);

6. two meetings of optionholders – one for those holding “out-of-the-money” options (OTM Optionholders) (Option Scheme Meeting 1) and the other for those holding “in-the-money” options (ITM Optionholders) (Option Scheme Meeting 2) – each of which was for the purposes of considering and, if thought fit, agreeing to (with or without modification) the Option Scheme.

7. The reasons for making those orders are set out in my judgment: In the matter of Bigtincan Holdings Limited [2025] NSWSC 140.

8. On 3 April 2025, the Share Scheme Meeting was held at 10.00am, followed by the Option Scheme Meeting 1 at 11.00am and the Option Scheme Meeting 2 at 12.00pm.

9. At the Share Scheme meeting, the Share Scheme was approved by the requisite majorities of shareholders for the purposes of s 411(4)(a)(ii) of the Act, as follows:

| | No of Votes | % of Votes | No of holders | % of holders | | For | 459,909,986 | 99.34% | 478 | 85.97% | | Against | 3,051,404 | 0.66% | 78 | 14.03% |

8. At the Option Scheme Meeting 1, the Option Scheme was approved by a majority in number of OTM Optionholders present and voting and by more than 75% of the votes cast (where the amount of value of the debt and claim of each OTM Optionholder was the same as the Option Scheme Consideration payable for the options held by that OTM Optionholder under the Option Scheme), as follows:

| | No of Votes | % of Votes | No of holders | % of holders | | For | 49,826 | 99.37% | 23 | 95.83% | | Against | 314 | 0.63% | 1 | 4.17% |

9. At the Option Scheme Meeting 2, the Option Scheme was approved by all of the ITM Optionholders present and voting and by all of the votes cast, as follows:

| | No of Votes | % of Votes | No of holders | % of holders | | For | 121,060 | 100% | 15 | 100% | | Against | 0 | 0% | 0 | 0% |

10. At the second Court hearing, BTH sought orders approving each of the Share Scheme and the Option Scheme.

11. No shareholder or optionholder or any other person indicated an intention to appear, or did appear, at this hearing to oppose the approval of either the Share Scheme or the Option Scheme.

12. At the conclusion of the second Court hearing, I made the orders sought by BTH. These are my reasons for making those orders. In preparing my reasons for judgment, I have drawn on the helpful submissions of Mr Izzo, who appeared with Ms Ng for BTH.

Affidavit Evidence

13. In addition to the evidence filed at the first hearing, which was summarised in my previous judgment in this matter, BTH relied on a further affidavit of its Managing Director and Chief Executive Officer, Mr David Keane, which was affirmed on 7 April 2025.

14. Mr Keane’s affidavit establishes the following matters:

15. on 28 February 2025, the Scheme Booklet was registered and a copy of the orders made on 27 February 2025 (the Convening Orders) was lodged with the Australian Securities and Investments Commission (ASIC);

16. the Scheme Materials were dispatched to shareholders and optionholders, in accordance with the Convening Orders;

17. on 18 March 2025, BTH announced to the ASX that the TC Adjustment Amount was a negative value, such that there was no adjustment to the Share Scheme Consideration or the Option Scheme Consideration (see previous judgment at [40]);

18. on 24 March 2025, notice of the second Court hearing was published by way of an ASX announcement, in accordance with the Convening Orders; and

19. on 3 April 2025, the Share Scheme Meeting, Option Scheme Meeting 1 and Option Scheme Meeting 2 were held, and the resolutions approving the Share Scheme and Option Scheme were passed at those meetings.

20. Mr Keane confirms that communications with securityholders were conducted in accordance with the inbound or outbound call scripts (as the case may be) which were in evidence at the first Court hearing and which were updated to align with the Scheme Booklet and to take account of the ASX announcement that there was no adjustment to the Share Scheme Consideration or the Option Scheme Consideration.

21. Mr Keane also gives evidence of the voter turnout at the Share Scheme Meeting compared to turnout at the annual general meetings of BTH in 2023 and 2024; and the voter turnout at each of Option Scheme Meetings 1 and 2, compared to the total number of options on issue and the total number of optionholders entitled to vote at each of those meetings. I address this evidence below.

22. Finally, Mr Keane confirms that BTH’s solicitors, Gilbert + Tobin, have not received any notices of appearance from any person in response to the advertisement of the second Court hearing. As noted above, no shareholder or optionholder appeared at the second Court hearing to oppose the approval of either of the Schemes.

23. In addition to reading Mr Keane’s evidence, BTH tendered:

24. conditions precedent certifications from each of BTH and Vector BidCo, establishing satisfaction or waiver of the conditions precedent to the Schemes (other than the condition relating to Court approval); and

25. a letter from ASIC confirming that it has no objection to the Schemes, establishing satisfaction of the requirements of s 411(17) of the Act.

Applicable Principles and Submissions

19. At the second Court hearing, the Court must be satisfied of various matters in order to approve a scheme of arrangement, namely, that:

20. the Plaintiff has complied with the orders of the Court convening the meeting of members (or creditors);

21. the meeting of members (or creditors) so convened has approved the scheme with the requisite majorities;

22. all other statutory requirements have been satisfied;

23. the scheme 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;

24. 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

25. there was full and fair disclosure to members (or creditors) of all information material to the decision whether to vote for or against the applicable scheme.

(Re Permanent Trustee Co Ltd (2002) 43 ASCR 601; [2002] NSWSC 1177 at [8]-[10] (Barrett J); Re Central Pacific Minerals NL [2002] FCA 239 [8]-[14] (Emmett J); Re Ellerston Global Investments Ltd [2020] NSWSC 1108 at [10]-[12]; In the matter of Mason Stevens Group Limited (No 2) [2025] NSWSC 255 at [5] (Black J).)

20. The Court will also have regard to the members’ (or creditors’) assessment of their interests as manifested in the voting results on the scheme resolution in recognising that members (or creditors) are “the best judges of whether an arrangement is to their commercial advantage”: Central Pacific Minerals at [13]; Ellerston at [10]; Mason Stevens at [5].

21. These principles were summarised by Black J in In the matter of InvoCare L**imited (No 2) [2023] NSWSC 1350 at [8]-[9]:

“The general principles which guide the Court’s discretion to approve a scheme at a second Court hearing are well established. The matters of which the Court must be satisfied in approving the scheme at the second Court hearing are whether there was compliance with the orders of the Court convening the scheme meeting or meetings; whether the resolution to approve the scheme was passed by the requisite majority and whether other statutory requirements have been satisfied; and whether all conditions to which the scheme is subject (other than Court approval and lodgement of the Court’s orders with ASIC) have been met or waived: Re ELMO Software Ltd (No 2) [2023] NSWSC 81 (‘ELMO’) at [7].

The Court also has, in exercising its power of approval, a residual discretion whether to approve a scheme and is not bound to approve it merely because it has made orders for the convening of meetings or because the statutory majorities have been achieved: Re Seven Network Ltd (No 3) (2010) 267 ALR 583 (‘Seven Network’) at [31]; Re Staging Connections Group Ltd (No 2) [2015] FCA 1102 at [12]. In exercising that residual discretion, the (non-exhaustive) matters the Court will take into account include whether the scheme is fair and reasonable so that an intelligent and honest member of the relevant class, properly informed and acting alone, might approve it; whether there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme; and 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: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at [8]; Seven Network at [35]-[40]; Re Pendal Group Ltd (No 3) [2023] NSWSC 14 at [10]; ELMO at [8].”

Determination

22. Subject to one matter, there is evidence that BTH complied with the Convening Orders in respect of the distribution of Scheme documents to shareholders and optionholders.

23. The qualification relates to 533 optionholders who had an email address recorded against their holding. Mr Keane deposed that the email which was initially sent to these optionholders by Computershare only contained a unique personalised URL for proxy voting and did not contain personalised login details in order to facilitate access to the Online Scheme Meeting platform and participation in the Option Scheme meetings.

24. After this issue was identified, Computershare sent a further email to each of these persons, on 19 March 2025, which contained their personalised login details to access the Online Scheme Meeting platform, a hyperlink to the Online Scheme Meeting Platform, and a hyperlink to the online user guide for that platform. In addition, on 21 March 2025, BTH sent an email to all employees (including those who are optionholders) attaching a copy of the Scheme Booklet and the inbound call script in relation to the Schemes; and on 25 March 2025, an email was sent to all 462 optionholders with an active Shareworks account reminding them of the Scheme Meetings to be held on 3 April 2025 and confirming that Computershare had sent emails to their registered addresses which contained more information about the Option Schemes.

25. I accept BTH’s submission that the omission of certain personalised login details from the initial email sent by Computershare is not a reason for the Court not to approve the Option Scheme, having regard to the following matters:

26. by the initial email, the recipients were provided with access to the Scheme Booklet, details of the time and place for the Option Scheme Meetings, and a personalised proxy form;

27. the inadvertent omission of personalised login details for the Online Scheme Meeting platform was rectified more than two weeks before the Option Meetings were held on 3 April 2025; and

28. BTH has not received any complaint from any optionholder of being unable to access the Option Scheme Meeting platform or being unable to submit a vote on the Option Scheme.

29. Mr Izzo drew the Court’s attention to the fact that two of the communications referred to above – being the emails of 21 and 25 March 2025 (see paragraph [24] above) – were additional to the proposed communications to securityholders which were before the Court at the first Court hearing. The Court’s role at the second Court hearing involves an assessment as to whether any such communications compromised the integrity of the voting process at the scheme meetings or the adequacy of the disclosure in respect of the schemes: In the matter of Ansarada Group Ltd [2024] NSWSC 1121 at [17] (Black J). A degree of advocacy in respect of a scheme is permissible so long as it is fair and honest: ibid. Mr Izzo directed the Court’s attention to the content of those two emails. One referred to the scheme and alerted securityholders to the fact that correspondence had been sent to them, which they should read; and the other provided the Scheme Booklet and responses to frequently asked questions (being the inbound call script which was before the Court at the first hearing), together with a link to a video which referred to the Scheme, the process being undertaken, and included a statement that “all of our top shareholders” had indicated that they were “very supportive of the deal”. Having regard to their content, those communications do not give rise to any concern regarding the integrity of the voting process or the adequacy of disclosure.

30. At the Share Scheme Meeting, the shareholders of BTH voted in favour of the Share Scheme by the requisite statutory majorities. Some 99.34% of the votes cast were in favour of the proposed Share Scheme (excluding shareholders who abstained) and 85.97% of shareholders who cast votes were in favour of the proposed Share Scheme (again excluding shareholders who abstained).

31. The optionholders also voted in favour of the Option Scheme by the requisite statutory majorities at each of the Option Scheme Meetings:

32. at Option Scheme Meeting 1, some 99.37% of the votes cast were in favour of the proposed Option Scheme and 95.83% of OTM Optionholders who cast votes were in favour of the proposed scheme; and

33. at Option Scheme Meeting 2, 100% of the votes cast were in favour of the proposed Option Scheme and 100% of ITM Optionholders who cast votes were in favour of the proposed scheme.

34. Some 56.24% of available votes were cast at the Share Scheme meeting, although only 4.49% of BTH shareholders by number cast their votes (excluding abstentions). This is consistent with the voting participation rates at BTH’s most recent annual general meeting in 2023 (58.4% of shares voted, representing 3.18% of shareholders) and in 2024 (49.82% of shares voted, representing 2.55% of shareholders).

35. The turnout in respect of each Option Scheme Meeting was objectively low:

36. as regards Option Scheme Meeting 1, some 5.68% of the total OTM Options on issue voted on the Option Scheme resolution (where the amount of each OTM Optionholder’s debt and claim was the same as the Option Scheme Consideration payable for their OTM Options), representing some 4.55% of OTM Optionholders by number who were entitled to vote; and

37. as regards Option Scheme Meeting 2, some 9.01% of the total ITM Options on issue voted on the Option Scheme resolution (where the amount of each ITM Optionholder’s debt and claim was the same as the Option Scheme Consideration payable for their ITM Options), representing some 5.79% of ITM Optionholders by number who were entitled to vote.

38. There is, of course, no comparative information available regarding the voting of optionholders at other meetings convened by BTH (as there is for shareholders).

39. A relatively low turnout in number does not prevent the Court from making orders approving a scheme of arrangement: In the matter of WPP AUNZ Limited [2021] NSWSC 520 at [9] (Black J); In the matter of Boart Longyear Limited [2021] NSWSC 1272 at [7] (Black J); In the matter of Home Consortium Developments Limited [2021] NSWSC 1708 at [11] (Black J). A low turnout percentage might suggest some issue in respect of the convening procedure which warrants further consideration: Re Great Southern Managers Australia Ltd (in liq*)* [2016] VSC 38 at [37] (Croft J). However, it would be inappropriate to assume, in the absence of complaint, that a low turnout was due to some error in the dispatch of the notice of meeting and Scheme Booklet: Home Consortium Developments [11]; Re Saracen Mineral Holdings Ltd (No 2) [2021] WASC 32 at [46] to [47] (Hill J).

40. For the reasons set out above, I do not consider that the absence of personalised login details from the initial email sent to a number of optionholders was a significant issue, in circumstances where those details were provided well in advance of the Option Meetings. BTH has not received any complaint from any optionholder about not being aware of the Option Scheme or the Option Scheme Meetings, or not being able to access the Option Scheme Meeting platform.

41. For those reasons, I do not consider that the low turnout provides a reason not to approve the Schemes.

42. Each of the Share Scheme and the Option Scheme was recommended by BTH’s directors and the Independent Expert whose report was included in the Scheme Booklet. The Independent Expert has concluded that the Share Scheme is fair and reasonable, and therefore in the best interests of shareholders; and has concluded that the Option Scheme, although “not fair”, is reasonable and is therefore in the best interests of optionholders in the absence of a superior proposal. I explained the basis for the Independent Expert’s views in respect of the Option Scheme in my previous judgment in this proceeding (at [30]-[37]). Where the conclusion of the Independent Expert in relation to the Option Scheme and the basis for his conclusion were sufficiently disclosed to BTH optionholders, the fact that the Independent Expert had expressed an opinion that the Option Scheme was not fair, but was reasonable, does not prevent approval of the scheme at the second Court hearing: Re Beadell Resources Ltd (2018) 133 ACSR 600; [2018] WASC 410 at [62]-[63] (Vaughan J).

43. There is no reason to doubt that the Share Scheme is fair and reasonable so that an intelligent and honest BTH shareholder, properly informed and acting alone, might approve it; or that the Option Scheme, although not fair, is reasonable so that an intelligent and honest optionholder, properly informed and acting alone, might approve it. There is otherwise no reason to doubt that BTH has brought to the Court’s attention all matters that could be considered relevant to the exercise of the Court’s discretion or that there was full and fair disclosure to shareholders and optionholders of all information material to the decision whether to vote for or against the Share Scheme or the Option Scheme. I am therefore satisfied that each of the Share Scheme and the Option Scheme is appropriate for the Court’s approval.

Exemption under s 411(12) of the Act

37. BTH also seeks an exemption pursuant to s 411(12) of the Act from compliance with s 411(11) such that it is not required that a copy of the Court order approving the Schemes be annexed to any copy of BTH’s constitution that may be issued in the future. I accept that an order of this kind is appropriate where, as here, the Schemes do not involve any modification to any rights of shareholders or of creditors: Re The Trust Company Ltd [2013] NSWSC 1947 [19] (Black J); Re Murchison Metals Ltd [2014] NSWSC 951 at [10]-[11] (Brereton J); cited with approval in Mason Stevens at [11].

Orders

38. For the above reasons, I made the orders sought by BTH at the conclusion of the second Court hearing on 8 April 2025.

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Amendments

10 April 2025

Typographical amendment to judgment title