On 28 May 2024, Gleeson J made orders in these proceedings for the Plaintiff, TASK Group Holdings Ltd ("TASK") to convene a meeting of its members for the purpose of considering a proposed scheme of arrangement, and associated orders. Those orders contemplated that a scheme meeting would take place on 28 June 2024, and that meeting was adjourned for the reasons that I will note below.
TASK has now relisted the matter to seek orders approving a supplementary disclosure by way of an announcement to Australian Securities Exchange Limited ("ASX"). The circumstances leading to the matter being restored are addressed in the affidavit dated 29 June 2024 of Mr Anthony Boogert, a solicitor acting for TASK in respect of the scheme, and in submissions made by Mr Ahmed, who appears for TASK in the application. Mr Boogert refers to the making of orders by Gleeson J at the first Court hearing in respect of convening the scheme. He then notes that, on 31 May 2024, TASK published an Appendix 4E and annual report for the financial year ended 31 March 2024 to ASX, which it included its financial report for the financial year ended 31 March 2024. On same day, TASK published a media release on ASX, an investor presentation and held an investor conference call. Those communications generally expressed the view that the financial report result was a strong result and also referred to the recommendation made by TASK's directors in respect of the scheme.
As TASK fairly accepts in this application, those communications had two potential difficulties. The first is that, whatever the position would have been had they only related to TASK's financial results, they also potentially affected the information conveyed by the scheme booklet and likely required the Court's approval: Re Centro Retail Ltd [2011] NSWSC 1321 at [11] ; Re Investa Listed Funds Management Ltd (as responsible entity for the Armstrong Jones Office Fund and the Prime Credit Property Trust) [2018] NSWSC 1369; Re Redflex Holdings Ltd (No 2) [2021] FCA 474; Re ResApp Health Ltd [2022] NSWSC 1090 to make them. The second is that, while it was relevant for TASK to draw attention to the directors' recommendation in respect of the scheme, where TASK shareholders might well wonder whether the financial report and TASK's results affected that recommendation, the reference to that recommendation did not then draw attention to the fuller outline of the scheme and its advantages and disadvantages contained in the scheme booklet.
Mr Boogert fairly notes that TASK had provided him and solicitors working with him with information relating to the documents that were released to ASX and that he was aware of the proposed release of that information before it occurred, and he explains why the issues I have noted above were not recognised until 26 June 2024. Mr Boogert also refers, for completeness, to two further announcements published by TASK, on 12 and 26 June 2024, but they do not seem to me to be material for present purposes.
After the difficulties I have noted above were recognised on 26 June 2024, prior to the scheme meeting and prior to the second Court hearing, TASK then promptly prepared proposed supplementary disclosure to TASK shareholders, for which it now seeks the Court's approval; appropriately, adjourned the scheme meeting, to allow these issues to be addressed before shareholders voted upon the scheme; and, also appropriately, has drawn these matters to the attention of the Australian Securities and Investments Commission ("ASIC"). ASIC has in turn indicated, in effect, that it understands the matters which have been drawn to its attention, and it has not sought to appear on this application and has neither supported nor opposed the application.
Mr Boogert in turn draws attention to the proposed form of supplementary disclosure to be published on ASX, which discloses the time, date and location for the adjourned scheme meeting, which it is now proposed would take place on 4 July 2024, in three days' time; discloses that the independent expert who had expressed a view in respect of the scheme has reviewed TASK's financial results and confirmed that they do not change the opinions expressed in the independent expert's report contained in the scheme booklet; emphasises that TASK shareholders should read the information and statements recently released by TASK in the context of the disclosure in the scheme booklet; and draws attention to TASK's intention to reopen proxy voting, for a little more than a day, to allow TASK shareholders to change their vote if they wish to do so in light of the supplementary disclosure. That proposal, as I understand it, recognises the possibility that shareholders, might change their votes in response to TASK's financial results, although the independent expert has not changed its view. It is appropriate for TASK to recognise that possibility, although this perhaps is not the most likely case for that to occur.
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Submissions and determination
Mr Ahmed, in submissions, draws attention to these matters and puts several submissions in support of the orders for supplementary disclosure that are sought. First, he points out, and it is uncontroversial, that the Court has power to approve a supplementary disclosure to shareholders under s 1319 of the Corporations Act 2001 (Cth). The existence of that power is, of course, a corollary of the Court's expectation that supplementary disclosures which impact on the information contained in the scheme documents approved by the Court, will be made available for the Court's approval.
Mr Ahmed also submits, and I accept, that the circumstances giving rise to the need for supplementary disclosure here are similar to those which I addressed, in respect of a second Court hearing, in Re MyDeal.com.au [2022] NSWSC 1317 ("MyDeal"). In that case, after the Court had made orders convening a scheme meeting, a scheme company published its financial results to ASX and similarly made statements in relation to the scheme, without Court approval and in a manner that did not refer to the advantages and disadvantages of the scheme or the disclosure concerning it in the scheme booklet. In that case, it appears that orders approving supplementary disclosure were made in Chambers, without the need for a Court hearing. The effect of that supplementary disclosure was subsequently considered at the second Court hearing, and the scheme was approved. TASK has here modelled the form of disclosure which it proposes on the form of the supplementary disclosure made in the similar circumstances in MyDeal.
Mr Ahmed submits, and I accept, that it is appropriate for TASK's proposed supplementary disclosure to be made by an ASX announcement, rather than requiring that it be dispatched by email or mail to TASK shareholders. I accept that is appropriate here, first, because the scheme booklet contemplates the possibility of further announcements to ASX; second, because the financial results and other communications which have required the further disclosure were themselves disclosed to ASX; and third, as Mr Ahmed points out in another context, scheme shareholders would likely wish to minimise any delay and receive the scheme consideration sooner rather than later, if the scheme is approved at the scheme meeting.
Mr Ahmed also refers to TASK's proposal to allow shareholders what he rightly describes as a "short period of time" to alter their votes. I have noted above that it seems to me that it is appropriate that TASK allow shareholders the opportunity to alter their proxy votes, by reopening proxy voting. On balance, although the period to be allowed for shareholders to alter their proxy votes is indeed a short period, by reference to both the time between TASK's proposed supplementary announcement and the re-opening of proxy voting, and then the period for which proxy voting is re-opened, it seems to me that that is justifiable in the circumstances. As Mr Ahmed points out, the information which is at issue here is not, in truth, new information, but the information as to TASK's financial results that was previously announced to ASX. Those shareholders who wish to take those results into account in respect of the scheme would likely have already had regard to TASK's earlier announcement of those results; and, the information itself is not particularly complex, nor would any decision to change a vote to be made on the basis of it require lengthy thought by a shareholder.
I also accept that three other matters are relevant here. The first is that, as I have noted above, shareholders likely share TASK's wish to minimise any delay to the scheme, if it is approved at the second Court hearing. Second, Mr Ahmed points to the fact that a substantial majority of TASK shareholders, by number of shareholders and by number of shares, have voted by proxy in favour of the scheme; while that does not exclude the possibility that some shareholders may now change their mind, it suggests that this matter is very different from one where, for example, the likely result of the scheme meeting was presently finely balanced. Third, ASIC has had notice of the application, and has not opposed it, and that suggests that ASIC has not formed any adverse view as to the time allowed to TASK shareholders to change their proxy votes in the particular circumstances.
In these circumstances, I am satisfied that the Court should approve the supplementary disclosure which TASK proposes to make. Mr Ahmed rightly accepts that, notwithstanding the Court's approval for that supplementary disclosure, the question of any impact of these matters on the ultimate approval of the scheme is a matter for the second Court hearing, again adopting the approach taken in Mydeal.
For these reasons, I make orders in accordance with the form of orders initialled by me and placed on the file.
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Decision last updated: 04 July 2024