In the matter of Intega Group Limited [2021] NSWSC 1707

Supreme Court of NSW|2021-12-09|Before: Black J

Solicitors: Gilbert & Tobin (Plaintiff) Ashurst (Acquirers) File Number(s): 2021/293195

Judgment

By my judgment delivered on 2 November 2021 (Re Intega Group Ltd [2021] NSWSC 1434), I made orders convening a meeting of shareholders in Intega Group Limited ("Intega") in respect of a proposed scheme of arrangement between Intega and the holders of its ordinary shares, which would effect an acquisition of all of Intega's shares by Kiwa Australia 2 Pty Ltd ("Kiwa Australia"), an indirect wholly-owned subsidiary of Kiwa NV ("Kiwa"). Under the proposed scheme, Kiwa Australia will acquire all of the shares in Intega for all-cash consideration of $0.90 for each Intega share.

Affidavit evidence

Intega relied on the affidavit dated 6 December 2021 of Mr Neville Buch, who is chairman of its board of directors and a non-executive director. Mr Buch referred to the conduct of the virtual scheme meeting held on 6 December 2021, and noted his address to the scheme meeting in accordance with the prepared script for that meeting. His evidence was that no questions were asked by Intega shareholders in the course of that meeting. He gave evidence of the satisfaction of the statutory requirements for passage of the scheme resolution, where some 93% of Intega shareholders present and voting at the scheme meeting in person or by proxy or corporate representative, voted in favour of the relevant resolution and 99.77% of the total number of votes cast were in favour of that resolution. Mr Buch also noted that no notice had been received of any shareholder seeking to appear at the second Court hearing and oppose the scheme and no shareholder appeared at the second Court hearing to do so. Mr Buch's affidavit exhibited a copy of the poll report provided by Computershare Investor Services Pty Ltd ("Computershare") which confirmed the voting in respect of the resolutions at the scheme meeting.
By her affidavit dated 7 December 2021, Ms Jessie Yerma, who is a relationship manager at Computershare, addressed the process undertaken to dispatch scheme materials to shareholders in Intega in electronic or hard copy form as applicable, steps which were taken to dispatch scheme materials to shareholders who entered the register during the relevant period, the receipt and recording of proxy votes and the conduct of the scheme meeting, and confirmed the voting results at the scheme meeting as reported in the poll report.
By his affidavit dated 7 December 2021, Mr Timothy Gordon, who is a partner in the firm of solicitors acting for Intega in the scheme, addressed the registration of the scheme booklet and the publication of an advertisement of the second Court hearing. By his affidavit dated 6 December 2021, Mr Gianluca Kreuze, who is a partner of a law firm in the Netherlands, provided a legal opinion dealing, among other things, with due execution of the scheme implementation deed dated 3 October 2021, the deed poll dated 29 October 2021 and an equity commitment letter dated 29 September 2021.
Intega also tendered certificates confirming the satisfaction of conditions precedent executed by each of Intega and by Kiwa and a letter dated 8 December 2021 from the Australian Securities and Investments Commission ("ASIC") indicating that it had no objection to the proposed scheme of arrangement for the purpose of s 411(17)(b) of the Corporations Act.

Submissions and determination

I have drawn on the helpful submissions of Mr Williams, with whom Mr O'Brien appeared, and my judgment in Re Isentia Group Ltd [2021] NSWSC 1069 for the summary of the applicable principles which follows. Section 411(4) of the Act provides that an arrangement is binding on Intega shareholders and Intega only if, at a meeting of Intega shareholders, it is passed by a majority of the shareholders present and voting and by 75% of votes cast and it is approved by order of the Court. Section 411(6) of the Act provides that the Court may grant approval subject to such alterations or conditions as it thinks just.
Intega must satisfy the Court at the second Court hearing that the resolutions have been passed in accordance with the statutory requirements and the procedural requirements have been satisfied. Where those matters are established, the Court has a supervisory discretion and will consider whether the scheme involves oppression and whether the arrangement is capable of being accepted: Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213 at 247. In deciding whether to give approval to the scheme, the Court will typically wish to be satisfied that the Court's orders convening the shareholders meeting were complied with; that meeting has approved the scheme with the requisite majority; all other statutory requirements have been satisfied; the scheme is fair and reasonable so that an intelligent and honest man or woman who was a member of the relevant class, properly informed and acting alone, might approve it; 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 there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme: Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14]; Re Permanent Trustee Co Limited (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[24]; Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400 at [35]-[39]; Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Aveo Group Ltd [2019] NSWSC 1679 at [15].
The Court will have regard to the assessment by members of their interests as manifested in the voting at the meeting, and is not bound to approve a scheme merely because it has previously made orders for the convening of meeting of the members and the statutory majorities have been achieved: Re Central Pacific Minerals NL above at [12]; Re NRMA Ltd (No 2) (2000) 156 FLR 412; (2000) 34 ACSR 261; [2000] NSWSC 408 at [22]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5]; Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) above at [7]; Re Aveo Group Ltd above at [15].
The affidavit evidence establishes that the Court's orders in respect of the dispatch of the scheme booklet and the scheme meeting were complied with. Mr Williams points out that, where a deed poll is executed by a foreign company (here, Kiwa) it is customary that an affidavit be provided from an appropriately qualified lawyer in the foreign jurisdiction as to the deed poll's enforceability: Re Staging Connections Group [2015] FCA 1012 at [44]-[48]; Re Veda Group Ltd [2015] FCA 1506 at [30]-[33]; Re rhipe Ltd [2021] NSWSC 1170 at [6] and [14]; Re Afterpay Ltd [2021] NSWSC 1435 at [46]. Mr Williams also submits that, where, as here, that deed poll is governed by the law of an Australian jurisdiction and the parties have agreed to submit to the jurisdiction of an Australian court, it will generally be sufficient for there to be evidence as to the due execution of the deed poll: Re 3P Learning Ltd [2020] NSWSC 1573 at [14]. I accept that Mr Kreuze's affidavit provides such evidence.
As I noted above, the scheme was approved by the requisite majorities of votes cast and by number of Intega shareholders present at the scheme meeting and the statutory majorities in sections 411(4)(a)(ii)(A) and (B) of the Act have been satisfied. Mr Williams submits that an indirect interest of the chairman of the scheme meeting, Mr Buch, in the scheme was brought to the Court's attention at the first Court hearing, and I there accepted that his indirect interest in the scheme did not raise a realistic concern that he could or would not impartially preside at the scheme meeting and recognised that the conduct of the scheme meeting would be considered by the Court at the second Court hearing: Re Intega Group Ltd above at [23]. I accept that no issues as to the proper conduct of the scheme meeting have arisen which warrant any concern as to that matter.
Mr Williams submits, and I accept, that the procedural requirements in respect of the scheme have been satisfied. There is no reason to doubt that Intega has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion, or to doubt that there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme. The factual information contained in the scheme booklet was verified in the usual way and the scheme booklet otherwise satisfies the relevant statutory requirements. The independent expert has concluded that the scheme is fair and reasonable and in the best interests of Intega's shareholders, in the absence of a superior proposal, and the Intega shareholders have approved the scheme. In making orders to convene the meeting of Intega shareholders, I was previously satisfied that the scheme was of such a nature and cast in such terms that, if it received the statutory majority at the meeting, the Court would be likely to approve it on the hearing of an application that was unopposed. No Intega shareholder or other person indicated a wish to appear or appeared at the second Court hearing to object to the scheme and, as I noted above, ASIC has no objection to the scheme stated pursuant to s 411(17)(b) of the Act. As I noted above, Intega tendered certificates under cl 3.2 of the scheme stating that all of the relevant conditions precedent have been satisfied or waived, other than the conditions relating to Court approval of the scheme.
I am satisfied that the Court should also make an order exempting Intega from compliance with s 411(11) of the Act, where the scheme will not modify any rights of shareholders or of creditors or of persons dealing with Intega: Re Equinox Resources Ltd (2004) 49 ACSR 692; [2004] WASC 143 at [22]; Re Toll Holdings Ltd (No 2) [2015] VSC 236 at [18]-[19].

Orders

For these reasons, I made the orders sought by Intega at the conclusion of the second Court hearing in respect of the scheme.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 December 2021

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