In the matter of Peak Rare Earths Limited (No 2) [2025] NSWSC 1227 | Case summary | Zoe

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In the matter of Peak Rare Earths Limited (No 2) [2025] NSWSC 1227 | Case summary | Zoe

By Originating Process filed on 10 July 2025, the Plaintiff, Peak Rare Earths Ltd (“Peak”) applied for orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) that it convene a meeting of the holders of its fully paid ordinary shares (other than Shenghe Resources (Singapore) Pte. Ltd. (“Shenghe”)) to consider and vote upon a scheme of arrangement. By way of background, Peak is an exploration and development company focussed on rare earth resources and is listed on Australian Securities Exchange (“ASX”). Its primary asset is the Ngualla Rare Earth Project located in Tanzania. I made the orders sought by Peak at the conclusion of the hearing on 8 August 2025 for the reasons set out in my judgment in Re Peak Rare Earths Ltd [2025] NSWSC 916.
Shenghe became party to the Scheme Implementation Deed (“SID”) dated 15 May 2025 by an amendment and novation deed dated 24 July 2025 between Ganzhou Chenguang Rare Earths New Material Co. Ltd., Shenghe and Peak. The SID was further amended by an amendment deeds dated 5 August 2025 between Shenghe and Peak and then by a further amendment deed dated 4 September 2025 between Shenghe and Peak, which increased the scheme consideration from $157,992,038 (adopted under the original scheme proposal) to $195,000,000 (“Revised Scheme Proposal”). The consideration payable to Peak Shareholders under the Revised Scheme Proposal would be not less than $0.443 cash per Peak share, increased from $0.359 under the original scheme proposal. On 5 September 2025, Peak also issued two ASX announcements regarding the Revised Scheme Proposal.
The independent expert, whose report was included in the scheme booklet, then issued a supplemental letter confirming that its opinion remains that, in the absence of any other relevant information and/or a superior proposal, the scheme was fair and reasonable to Peak shareholders not associated with Shenghe; Shenghe executed an amended deed poll to give further effect to the increase in the consideration payable under the scheme; and Peak’s Independent Board Committee continued unanimously to recommend that Peak shareholders (other than Shenghe) vote in favour of the scheme in the absence of a superior proposal. These matters were drawn to the Court’s attention but no further orders were required, on the basis that the amended proposal would be put to Peak shareholders at the scheme meeting and Peak would then seek an order under s 411(6) of the Act, at the second Court hearing, varying the scheme to reflect the Revised Scheme Proposal. I was satisfied that no difficulty arose from the fact that shareholders would not have a full 10 days notice of the price increase prior to the scheme meeting, as contemplated the Australian Securities & Investments Commission’s (“ASIC”) regulatory guidance, where the ASX announcements were made eight days prior to the scheme meeting and shareholders would readily understand the impact of an increase in the scheme consideration, as disclosed by those announcements: Re Amcom Telecommunications Ltd (No 2) [2015] FCA 410 at [20].
On 14 September 2025. Peak received an unsolicited letter of intent from a third party, General Innovation Capital Partners (“GICP”), which made a non-binding and indicative “offer” to acquire all of Peak’s fully paid ordinary shares (including those held by Shenghe) for $240 million payable in cash. There were several limitations in that letter, not only that it was non-binding, but also that it was only open for acceptance until 7 am (AEST) on 16 September 2025 (Rundell 17.9.25 [17]; Ex PR-2, 311–314); and it also likely could not be implemented over Shenghe’s opposition. Peak’s Independent Board Committee considered that proposal on 15 September 2025 and decided that Peak would not further engage with GICP in respect of the Letter of Intent (Rundell [18]–[20]; Ex PR-2, 323). On 16 September 2025, Peak released an ASX announcement disclosing receipt of the letter of intent from GICP and confirming that the Peak Independent Board Committee continued unanimously to recommend that Peak shareholders vote in favour of the scheme (Rundell 17.9.25 [21]; Ex PR-2, 324–327). I accept that no further question arose of putting that non-binding “offer” to Peak shareholders for consideration at the scheme meeting, not least because that “offer” was structured so as to expire just before that meeting took place.
The scheme meeting was then held on 16 September 2025 and the scheme was approved by the requisite majorities of Peak shareholders for the purposes of s 411(4)(a)(ii) of the Act. At this second Court hearing, which was deferred by a day to allow satisfaction of a condition precent to the scheme, Peak seeks orders approving the scheme. These are my reasons for making those orders, and I have drawn on the helpful submissions of Mr Wood who appeared for Peak in this judgment.

It is well-established that the Court must be satisfied of several matters in order to approve a scheme of arrangement at the second court hearing, namely 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 InvoCare Ltd (No 2) [2023] NSWSC 1350 at [8]–[9]; Re Bionomics Ltd (No 2) [2024] NSWSC 1666 at [6]; Re Southern Cross Gold Ltd (No 2) [2025] NSWSC 2 at [8]. In exercising its power of approval, the Court has 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. In exercising that residual discretion, the 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.
There is no reason to doubt that Peak’s shareholders were provided with full and fair disclosure in the scheme booklet dispatched to them and in the ASX announcements as to the price increase in respect of the scheme. There is no suggestion that the scheme was proposed other than in good faith and for a proper purpose. The scheme was recommended by Peak’s Independent Board Committee and the independent expert whose report was included in the scheme booklet has expressed the view that the scheme was in the best interests of Peak shareholders in the absence of a superior proposal. There is no reason to doubt that the scheme is fair and reasonable so that an intelligent and honest Peak shareholder, properly informed and acting alone, might approve it, and the resolution to approve the scheme was here passed at the scheme meeting by the requisite statutory majorities. The 204,298,030 votes cast at the Scheme Meeting (in person or by proxy) by 524 Peak Shareholders (other than Shenghe and an associated person), represents approximately 47.45% of all votes able to be cast and approximately 13.3% of the total number of Peak Shareholders eligible to vote (that is, other than Shenghe and Dr Lu), which is higher than the voting participation rates (excluding Shenghe) in Peak’s 2022, 2023 and 2024 annual general meetings (Rundell 17.9.26 [36]–[39]).
The other statutory requirements for the scheme have been satisfied. There is otherwise no reason to doubt that Peak 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. The GICP proposal does not provide reason not to approve the scheme where it was non-binding and open for a very short time period which expired before the scheme meeting. There are some circumstances where it will be appropriate to adjourn a scheme meeting by reason of the receipt of a third party proposal: Re Envestra Ltd (No 2) [2014] FCA 483; Re Asciano Ltd (No 2) (2015) 110 ACSR 127; [2015] NSWSC 1651. I accept this was not such a case, given the non-binding and highly conditional nature of the GICP proposal and the fact that it would expire, on its terms, before it could be exposed to Peak shareholders at the scheme meeting or any adjournment of it.
Peak did not receive notice from any person stating that they intend to object to the approval of the scheme or appear at the second Court hearing and no shareholder appeared at the second Court hearing to contest the approval of the scheme. For all these reasons, I was satisfied that the scheme was appropriate for the Court’s approval.