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[2008] FCA 82
Federal Court of Australia
2008-02-08
Finn J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The plaintiff, Flinders Ports Pty Limited, seeks an order that it convene a general meeting of all of its shareholders pursuant to s 411(1) of the Corporations Act 2001 (Cth). The object of the order is to consider and vote on a proposed scheme of arrangement to be undertaken interdependently with a selective capital reduction. The aim of the scheme is for Flinders Ports to become a wholly-owned subsidiary of Flinders Port Holdings Pty Ltd ("Flinders Holdings") with the shareholders of Flinders Ports, other than Flinders Holdings, having shares issued to them by Flinders Ports Holdings in the same proportions as in Flinders Ports. 2 I would note in passing that each shareholder in Flinders Ports, apart from Flinders Holdings, already holds the same percentage of shares in Flinders Holdings as they do in Flinders Ports, and the directors of the two companies are identical. At this stage of the application, there are a number of procedural and substantive matters of which I should be satisfied before ordering a meeting pursuant to s 411(1). These are: (1) that proper disclosure has been made in the draft explanatory statement, or Scheme Booklet, as defined in s 411(3) of the Act;
(2) that the scheme can properly be described as "an arrangement" for present purposes so as to come within s 411;
(4) that the scheme has been properly proposed; and
(5) that the Australian Securities and Investments Commission has had a reasonable opportunity to examine the terms of the scheme and make submissions to the court. 3 It is not my function at this stage to determine the business or commercial efficacy of the proposed arrangement. That remains for another day, assuming that the shareholders vote in favour of the scheme. In relation to the s 411(3) requirement that the draft explanatory statement explain the effect of the scheme and set out the information that is material to the making of a decision by a shareholder, and that it contain the "prescribed information" which is set out in Sch 8 Pt 3 of the Corporations Regulations 2001, I am satisfied, having read the documentation, that both of these matters have been complied with. In particular, the "prescribed information" is set out in detail in Pt 2, section 12 of the draft Scheme Booklet. 4 The courts have observed on occasion that s 411 should be construed liberally and this, in particular, in relation to the meaning of the term "arrangement". I am satisfied that the proposed scheme here between a company and its members clearly constitutes an arrangement for the purposes of the Act. Equally Flinders Ports is a Pt 5.1 body, being a proprietary company. The scheme is one which I consider the Court, prima facie, would approve, should the requisite majorities vote in its favour, and I am satisfied that on its face there is no impediment which would disincline me from approving the explanatory documentation. 5 The Australian Securities and Investments Commission was notified of the plaintiff's application for orders convening the scheme meeting and has provided a letter in which it states that it does not propose to intervene to oppose the proposed scheme at this hearing. 6 Accordingly, I am prepared to make orders in terms of the draft minutes of orders that have been annexed to the submissions provided by counsel for Flinders Ports, the one alteration to that being that the proceedings be stood over to 13 March 2008 at 9.00 am. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.
Associate: Dated: 18 February 2008 Counsel for the Applicant: Mr M Hoffmann QC