In the matter of Mason Stevens Group Limited (No 2)

Jurisdiction: Equity - Corporations List

Before: Black J

Decision: Orders made approving a scheme 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 scheme of arrangement – Where formal requirements satisfied – Whether scheme of arrangement should be approved.

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

Cases Cited: - Re Central Pacific Minerals NL [2002] FCA 239
- Re Coca-Cola Amatil Ltd [2021] NSWSC 489
- Re Ellerston Global Investments Ltd [2020] NSWSC 1108
- Re Invocare Ltd (No 2) [2023] NSWSC 1350
- Re Mason Stevens Group Ltd [2025] NSWSC 84
- Re Murchison Metals Ltd [2014] NSWSC 951
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177
- Re Seven Network Ltd (No 3) (2010) 267 ALR 583; [2010] FCA 400
- Re Southern Cross Gold Limited (No 2) [2025] NSWSC 2
- Re The Trust Company Ltd [2013] NSWSC 1947

Category: Principal judgment

Parties: Mason Stevens Group Limited (Plaintiff)

Representation: Counsel:
Mr I Ahmed SC (Plaintiff)
Ms TL Wong SC (Bidder)
Solicitors:
Mallesons Stephen Jaques (Plaintiff)
Herbert Smith Freehills (Bidder)

File Number(s): 2024/474636

JUDGMENT

Nature of the application

1. By Originating Process filed on 20 December 2024, the Plaintiff, Mason Stevens Group Limited (“MSG”) applied for orders under s 411 of the Corporations Act 2001 (Cth) (“Act”) relating to a proposed scheme of arrangement and associated orders. MSG is an unlisted public company limited by shares which conducts business as a specialist wealth management platform provider with a focus on managed discretionary accounts. The proposed scheme provides for the bidder, Green Bidco Pty Ltd, to acquire all of the ordinary fully paid shares in MSG for cash consideration of $2.2293 per share. Under cl 4.3 of the Scheme Implementation Deed, MSG is also permitted to pay a dividend to its shareholders prior to implementation of the scheme, subject to the satisfaction of certain criteria. I made the orders sought by MSG to convene the scheme meeting at the conclusion of the hearing on 13 February 2025 for the reasons set out in my judgment in Re Mason Stevens Group Ltd [2025] NSWSC 84. The scheme meeting was held on 18 March 2025 and the scheme was then approved by the requisite majorities of shareholders for the purposes of s 411(4)(a)(ii) of the Ac**t.

2. At this second Court hearing, MSG seeks orders approving the scheme. In support of that application, MSG reads the affidavit dated 12 February 2025 of Mr Laurent Toussaint (which was also read at the first Court hearing) and the second affidavit dated 19 March 2025 of Mr Toussaint. Mr Toussaint is the Chief Financial Officer and Company Secretary of MSG and, in his second affidavit, he gives evidence of the dispatch of scheme documents to MSG shareholders and holders of beneficial interests in those shares through a custodian (“MSG Beneficiaries”), communications with MSG shareholders, the conduct and result of the scheme meeting and voter turnout at that meeting.

3. MSG also tendered a certificate certifying that each of the conditions precedent to the scheme has been satisfied or waived at this hearing, and ASIC has provided a letter in common form indicating that it has no objection to the scheme under s 411(17)(b) of the Act, which is sufficient to satisfy the requirements of s 411(17). On 14 March 2025, MSG published an announcement on its website providing notice of the second Court hearing on 20 March 2025, and of the right of persons to appear at that hearing. No MSG shareholder or other person indicated an intention to appear at this hearing or appeared to oppose the approval of the scheme.

4. I made the orders sought by MSG at the conclusion of this hearing. These are my reasons for making those orders, and I have drawn on the helpful submissions of Mr Ahmed who appears for MSG in this judgment.

Applicable principles and submissions

5. In order to approve a scheme of arrangement at the second Court hearing, the Court must be satisfied that the plaintiff has complied with the orders of the Court convening the meeting of members; the meeting of members so convened has approved the scheme with the requisite majorities; all other statutory requirements have been satisfied; 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; 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 Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 (“Central Pacific Minerals”) at [8]-[14]; Re Seven Network (No 3) Ltd (2010) 267 ALR 583; [2010] FCA 400 at [35]-[39]; Re Ellerston Global Investments Ltd [2020] NSWSC 1108 (“Ellerston”) at [10]-[12]; Re Coca-Cola Amatil Ltd [2021] NSWSC 489 at [9]. The Court will also have regard to shareholders’ assessment of their interests as manifested in the voting results on the scheme resolution in recognising that shareholders are “the best judges of whether an arrangement is to their commercial advantage”: Central Pacific Minerals at [13]; Ellerston at [10]. I have drawn on Mr Ahmed’s submissions and my judgments in Re Invocare Ltd (No 2) [2023] NSWSC 1350 at [8]-[9] and Re Southern Cross Gold Limited (No 2) [2025] NSWSC 2 for this summary.

Submissions and determination

6. There is evidence that MSG has, in substance, complied with the Court’s orders in respect of the distribution of scheme documents to its shareholders and the conduct of the scheme meeting. Mr Ahmed points out that, subsequent to the dispatch of the scheme documents, reminder communications were sent to MSG shareholders. The form of reminder sent differed from that which was identified at the first Court hearing, correcting errors in the original form of reminder email. Those corrections were appropriate and provide no reason not to approve the scheme. Those reminder communication were sent to all shareholders who had provided an email address, and shareholders were advised they could ignore the reminder if a proxy had already been submitted, although it had been foreshadowed at the first Court hearing that they would be sent only to shareholders who had not yet provided a proxy. A similar process was followed in relation to the MSG Beneficiaries, where a reminder was also sent to all beneficiaries with an email address, rather than only those who had not submitted a voting instruction form. That matter also gives rise to no reason not to approve the scheme.

7. Unusually, at the scheme meeting on 18 March 2025, all of the votes cast were in favour of the proposed scheme and no shareholders abstained; and all of the shareholders who cast votes were in favour of the proposed scheme (and no shareholders abstained). In these circumstances, MSG did not need to seek a dispensation from the headcount test, which it had previously foreshadowed might be sought. Votes in respect of shares held by several of MSG’s employees of Mason Stevens were tagged, as contemplated at the first Court hearing, where they had agreed to reinvest certain proceeds of their incentive rights into Green Hold Co Pty Ltd (“Green Hold Co”), the bidder’s holding company, and each of them voted in favour of the Scheme. Votes cast by 14 other employees who had the opportunity but not the obligation to invest their incentive amounts in Green Hold Co were also tagged. As Mr Ahmed rightly recognises, the result in respect of the scheme meeting would not have been different if those votes were excluded, where all shareholders voted in favour of the scheme and all shares were voted in favour of the scheme at the scheme meeting. The level of shareholder participation at the scheme meeting was higher than is ordinarily seen and higher than that achieved at MSG’s recent annual general meetings. There is no suggestion of any defect in the notice of the scheme given to MSG shareholders.

8. The scheme was recommended by MSG’s directors and the independent expert whose report was included in the scheme booklet expressed the view that the scheme was fair and reasonable and in the best interests of MSG shareholders in the absence of a superior proposal. As I noted above, no MSG shareholder or other person indicated an intention to appear at the second Court hearing to oppose the scheme and there was no such appearance. I am satisfied that there is no reason to doubt that the scheme is fair and reasonable so that an intelligent and honest MSG shareholder, properly informed and acting alone, might approve it, as MSG shareholders have done.

9. Mr Ahmed drew attention to the fact that the Court had, in other proceedings, made a freezing order in respect of the shares of one shareholder in MSG and the plaintiff in those proceedings indicated, shortly before the scheme meeting, that it would also seek to bring a claim against MSG and another party, although it would seek to defer a determination of that claim until after its existing claims against that shareholder were determined in those proceedings. MSG led detailed evidence as to these matters, consistent with its duty of ex parte disclosure, and Mr Ahmed made detailed submissions about them. It is possible for me to address these matters briefly, since it is plain they have no impact on whether the scheme should be approved. First, the foreshadowed claim against MSG, even if successful, does not appear to be material to MSG’s financial position; there is no reason to think it would adversely affect shareholders’ decision to support the scheme; and it was rightly drawn to MSG shareholders’ attention at the scheme meeting, promptly after it was foreshadowed. Second, there is no reason to think that the implementation of the scheme will put the relevant shareholder in breach of the freezing order, where it did not vote at the scheme meeting and its shares will be acquired by force of law, following the Court’s approval of the scheme, rather than by reason of any voluntary act of that shareholder. Third, it appears that the scheme proceeds in respect of that shareholder will be paid into a bank account that is already the subject of the freezing order, giving rise to no apparent disadvantage to the plaintiff in those proceedings; MSG has communicated fairly and transparently with that plaintiff’s solicitors in respect of the scheme and its implementation; and the plaintiff in those proceedings did not appear and seek to be heard in opposition to the scheme. Finally, although it is not necessary to express a concluded view in this case, I am inclined to think that a freezing order made against one shareholder in a company would not prevent the approval of a scheme of arrangement in any event, where the Court’s statutory power to approve that scheme will be exercised by reference to the interests of shareholders as a whole. It is not apparent why all shareholders in a company should be deprived of the benefit of a scheme by reason of litigation involving a single shareholder or an order affecting a single shareholder made in such litigation.

10. There is otherwise no reason to doubt that MSG 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 of all information material to the decision whether to vote for or against the scheme. I am therefore satisfied that the scheme is appropriate for the Court’s approval.

Exemption under s 411(12) of the Act

11. MSG also seeks an exemption pursuant to s 411(12) of the Act from compliance with s 411(11) so that a copy of the Court order approving the scheme does not need to be annexed to any copy of MSG’s constitution that may be issued in the future. An order of this kind is properly made where the rights of MSG’s shareholders are not modified by the scheme: Re Murchison Metals Ltd [2014] NSWSC 951 at [10]-[11]; Re The Trust Company Ltd [2013] NSWSC 1947 at [19].

Determination and orders

12. For these reasons, I made the orders sought by MSG at the conclusion of the second Court hearing on 20 March 2025.

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