GLEESON J: Application is made by Cirrus Networks Holdings Ltd (Cirrus) for approval by the Court under s 411(4) of the Corporations Act 2001 (Cth) of a scheme of arrangement between Cirrus and its members.
The scheme is a transfer scheme. The effect of the scheme, upon implementation, will be that all of the fully paid ordinary shares in Cirrus (other than any shares held by Atturra Holdings Pty Ltd (Atturra)) will be transferred by force of the scheme to Atturra, a wholly owned subsidiary of Atturra Limited (ATA). Atturra and ATA, in turn, have agreed to provide the scheme consideration in cash or scrip, or a combination of both, to the several transferors at their election subject to caps on the maximum amount of cash and scrip consideration respectively. The alternative forms of consideration and related payment and transfer mechanisms, as well as other steps necessary to implement the scheme, are provided for in an implementation deed between Cirrus, Atturra and ATA and are backed up by a deed poll executed by Atturra and ATA in favour of scheme participants. The mechanics of the scheme are described in some detail in the judgment of Black J in relation to the first court hearing: In the matter of Cirrus Networks Holdings Pty Ltd [2023] NSWSC 1298.
Pursuant to an order under s 411(1) made on 17 October 2023, a meeting of scheme members was held on 22 November 2023 for the purpose of considering and if thought fit, approving the scheme. The resolution agreeing to the scheme was passed by the requisite majorities referred to in s 411(4)(a) of the Corporations Act. It is not necessary to set out the figures in detail; it is sufficient to record that the scheme was agreed to by 99.99 per cent of votes cast by members representing 95.59 per cent in number of members present and voting, either in person or by proxy. The votes which were cast at the meeting constituted a substantial percentage (some 72 per cent) of the total number of issued shares of Cirrus.
The role of the Court at the second hearing is supervisory. The principles which governs the exercise of the Court's discretion to approve a scheme are well-settled: see, for example, Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 77 ACSR 701 at [31]-[40] (Jacobson J). Counsel for Cirrus has provided detailed written submissions and taken me to the evidence which establishes that all procedural requirements have been met. It is not necessary to recite each of them beyond recording that I am satisfied that all the formalities associated with the registration of the scheme booklet with ASIC, the calling and conduct of the meeting, including the result, together with all the statutory preconditions, the advertising of the second court hearing on the ASX, and the satisfaction (or waiver) of conditions precedent to the scheme becoming effective, have been established. There has been no appearance today by any party to oppose the making of the orders.
ASIC has confirmed that it has no objection to the scheme and has provided a letter to that effect under s 411(17)(b) of the Corporations Act.
Counsel drew my attention to two matters to which brief reference should be made.
Dispatch of scheme meeting materials: The dispatch of the scheme meeting materials to the class of shareholders referred to as "email shareholders" was sent to those shareholders on the register who had elected to receive shareholder communications by email as at 20 October 2023, rather than as at 4:00 pm on 17 October 2023 (being the Register Time) as required by order 5 of the convening orders made at the first court hearing. Affidavit evidence establishes that no Cirrus shareholder changed their communication preference from receiving email communications to receiving physical materials between the Register Time and 20 October 2023.
Nevertheless, given the possibility that an "email shareholder" sold their shares between 17 and 20 October 2023, there might be an error or omission in relation to the dispatch of these materials to "email shareholders". Any such error or omission is procedural and relates to a proceeding under the Corporations Act within s 1322(2). The proceeding, relevantly, the scheme meeting, is not invalidated unless the Court is of the opinion that it has or may cause substantial injustice and declares the proceeding to be invalid. A validation order is unnecessary in this case because validation is brought about by s 1322(2): SGIC Insurance Ltd v Insurance Australia Ltd [2004] FCA 1638 at [12]-[15] (Jacobson J).
Election Time: There is an inconsistency between the time for submission of scheme consideration election forms stipulated in the definition of "Election Time" in the scheme (7:00 pm on the date five business days prior to the scheme meeting, or such other date as agreed in writing by Cirrus and Holdings) and in the scheme booklet dispatched to Cirrus shareholders (5:00 pm (Perth time) on the business day prior to the Record Date).
To remedy this unintended discrepancy between the Election Time recorded in the scheme and the scheme communications sent to Cirrus shareholders, Cirrus and Atturra have agreed in writing, as permitted by the scheme, to 5:00 pm (Perth time) on the business day prior to the Record Date being the Election Time for the purpose of the scheme.
Amendments to the scheme: After the Court drew attention to several cross-referencing errors in the scheme, Cirrus sought alterations to the scheme to correct these cross-references. Senior counsel for Atturra confirmed that Atturra agreed to the proposed amendments to the scheme.
The Court has power to approve the scheme with amendments: s 411(6). Here, the amendments to the scheme are of a formal or minor nature. They do not disadvantage any scheme member and would not have affected the members' approval by the requisite statutory majorities: Re Independent Practitioner Network (No 2) [2008] FCA 1593 at [10]-[25] (Lindgren J). It is appropriate to exercise the Court's discretion to amend the scheme: Re InvestorInfo Ltd [2005] FCA 1848 at [7] (Gyles J).
Exemption under s 411(12): Cirrus seeks an order exempting it from the requirements of s 411(11) of the Corporations Act which requires a copy of the Court's order under s 411(4)(b) to be annexed to the company's constitution issued after the order has been made, unless the Court exempts the company from compliance with that requirement. An exemption order under s 411(12) is appropriate in the present circumstances where the scheme does not amend the constitution of Cirrus, and, upon implementation, Cirrus will become a wholly owned subsidiary of Holdings. There is no utility in requiring compliance with s 411(11): Re Toll Holdings (No 2) [2015] VSC 236 at [18]-[19].
I am satisfied that it is appropriate for the Court to grant approval of the scheme subject to the alterations identified in order (1) below as envisaged by s 411(4)(b) and (6) of the Corporations Act.
[3]
Orders
Accordingly, the Court makes the following orders:
1. Pursuant to s 411(4)(b) and (6) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement (Scheme) between the plaintiff and holders of fully paid ordinary shares in the capital of the plaintiff (other than Atturra Holdings Pty Ltd ACN 132 368 104) the terms of which were set out in Annexure C to the Scheme Booklet marked as Exhibit 1 on 17 October 2023 be approved subject to the following alterations to the Scheme:
1. the references to "clause 6.4" in the definitions in cl 1 of "Cash Consideration", "Election" and "Share Consideration" be amended to refer to "clause 6.6";
2. the reference in clause 6.6(c) to "clause 6.4(j)" be amended to "clause 6.6(j)";
3. the reference in clause 6.6(h) to "clauses 6.4(i) and 6.4(j)" be amended to "clauses 6.6(i) and 6.6(j)";
4. the reference in clause 6.6(j) to "clause 6.4(c)" be amended to "clause 6.6(c)";
5. in clause 6.7(b), add the words "or clause 6.6" after the words "clause 6.5";
6. the reference in clause 6.8(a) to "clause 6.4, 6.5" be amended to "clause 6.4, 6.5, 6.6"; and
7. the reference in clause 6.11(b) to "clause 6.5" be amended to "clause 6.11".
1. Pursuant to s 411(12) of the Act, the plaintiff be exempted from compliance with s 411(11) of the Act in relation to the Scheme.
2. These orders be entered forthwith.
[4]
Amendments
24 November 2023 - Amend typographical error in Order (1).
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Decision last updated: 24 November 2023