In the matter of Vocus Group Limited [2021] NSWSC 843

Supreme Court of NSW|2021-06-24|Before: Black J

Solicitors: Allens (Plaintiff) Gilbert & Tobin (Acquirer) File Number(s): 2021/112244

Background and affidavit evidence

By Originating Process filed on 22 April 2021, the Plaintiff, Vocus Group Limited ("Vocus"), sought orders under s 411(4)(b) and, if necessary, section 411(6) of the Corporations Act 2001 (Cth) (the "Act") approving a scheme of arrangement between Vocus and the holders of its ordinary shares. The scheme gives effect to the proposed acquisition by Voyage Australia Pty Limited ("Voyage") of all the scheme shares in Vocus for cash consideration. Voyage is an Australian company and is indirectly owned 50% by Voyage MAIF3 Consortium Pty Limited as trustee of Voyage MAIF3 Consortium Trust (MIRA Acquisition Co) and 50% by Aware Super Pty Limited as trustee of Aware Super (Aware Super). The scheme consideration represents a significant premium to Vocus' recent historical trading prices.

Affidavit and other evidence

Vocus relies on the affidavit dated 22 June 2021 of its Chairman, Mr Robert Mansfield, which refers to the conduct of the scheme meeting held on 22 June 2021, which was conducted virtually using an online meeting platform. Mr Mansfield refers to the manner in which a poll was conducted at that meeting and outlines the result, by which nearly 94% of Vocus shareholders by number and 99.84% of votes cast were in favour of the scheme.
By his affidavit dated 22 June 2021, Mr Wayne Hopkins, who is senior client relationship manager at Computershare Investor Services Pty Ltd outlines the nature of services provided by Computershare to Vocus, refers to the dispatch of scheme materials by email and by post, the additional dispatch of scheme materials to new Vocus shareholders who came onto the share register between 18 May and 10 June 2021, the receipt of proxy forms for the scheme meeting and the conduct of the scheme meeting. Mr Hopkins also refers to the preparation of a poll report as to the result of the scheme meeting and annexes a copy of that report to his affidavit, and indicates that he did not identify any issues concerning the use or operation of the virtual platform in respect of the conduct of that meeting.
By his affidavit dated 23 June 2021, Mr Guy Alexander, who is a solicitor acting for Vocus in relation to the scheme, refers to registration of the scheme booklet by the Australian Securities and Investments Commission ("ASIC") and the publication of an advertisement of the second Court hearing and notes that no notice had been received of any person proposing to appear at the second Court hearing. Not surprisingly, given the level of support for the scheme at the scheme meeting, no shareholder appeared at the second Court hearing to seek to oppose the scheme. Mr Alexander's affidavit also annexed a letter dated 23 June 2021 by which ASIC had advised that it had no objection to the proposed scheme of arrangement for the purposes of s 411(17)(b) of the Act.
Vocus also tendered certificates of satisfaction of conditions precedent in connection with the scheme executed by each of Vocus and Voyage on 24 June 2021.

Vocus' submissions and determination

Mr Jackman rightly points out that s 411(4) of the Act provides that an arrangement is binding on Vocus shareholders and Vocus only if, at a meeting of Vocus shareholders, it is passed by a majority of Vocus 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.
Mr Jackman observes that, where the statutory conditions are met, 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 final approval to a scheme of arrangement, the Court will typically wish to be satisfied that the orders of the Court convening a meeting of members were complied with; the meeting of members so convened 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 Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[24]; Re Permanent Trustee Co Limited (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14]; Re Seven Network (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 is not bound to approve a scheme merely because it has previously made orders for the convening of meetings and the statutory majorities have been achieved, and will have due regard to members' assessment of their interests as manifested in the voting at the scheme meeting, and will recognise that shareholders are generally "the best judges of whether an arrangement is to their commercial advantage", and will therefore "be reluctant to make decisions contrary to the views of security holders expressed at meetings": Re NRMA Ltd (No 2) (2000) 156 FLR 412; [2000] NSWSC 408 at [22]; Re Central Pacific Minerals NL above at [13]; Re Seven Network Ltd above at [31]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5].
Mr Jackman submits, and I accept, that 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. As I noted above, at the meeting of Vocus shareholders on 22 June 2021, the scheme was approved by 99.84% of votes cast and nearly 94% of Vocus shareholders present virtually or by proxy, and the statutory majorities in sections 411(4)(a)(ii)(A) and (B) of the Act have been satisfied.
I am satisfied that 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. Approximately 342 million shares, held by 1,995 Vocus shareholders, were voted on the resolution to approve the Scheme, being a voting participation rate of approximately 11.4% by number of shareholders and 55.1% by shares on issue. The participation rate of approximately 11.4% of Vocus shareholders by number was not particular high. However, I bear in mind that, in Re TriAusMin Ltd (No 2) [2014] FCA 833 at [10]-[12], which I followed in Re Mortgage Choice Ltd [2021] NSWSC 819 at [14], a scheme was approved where 10.94% of shareholders had voted 52.9% of the shares. Farrell J there observed that: "Although the statutory requirement under s 411(4)(a)(ii) has been satisfied, it is the usual practice of the court at the second court hearing to consider the number of shareholders who attended the Scheme Meeting in person or by proxy. Low shareholder turnout may be an indication that some procedural irregularity occurred. It is inappropriate to assume (in the absence of complaint) that shareholders who did not vote either did not have notice of the meeting or were silent in protest of the scheme: Re Professional Investment Holdings Ltd (No 2) [2010] FCA 1336 at [7] and Re Seven Network Ltd (No 3) (2010) 267 ALR 583 (Re Seven Network Ltd) at [61] per Jacobson J; apathy should not be presumed to be antagonism: Re Matine Ltd (1998) 28 ACSR 268 at 295 per Santow J.
In making orders to convene the meeting of Vocus shareholders, I was 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, and Mr Jackman submits, and I accept, that nothing has occurred since the first Court hearing to warrant a departure from that conclusion. Mr Jackman notes that the independent expert's report concluded that the scheme is fair and reasonable and in the best interests of Vocus shareholders, and no competing proposal has been made to acquire Vocus shares at a price equal to or higher than that provided under the scheme. No Vocus shareholder or other person indicated a wish to appear or appeared at the second Court hearing to object to the scheme and Vocus has tendered a letter from ASIC issued pursuant to s 411(17)(b) of the Act stating that ASIC has no objection to the Scheme.
There is no reason to doubt that Vocus 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 requirements in sections 411(3) and 412 of the Act.
I am satisfied that the Court should also make an order exempting Vocus from compliance with s 411(11) of the Act, where the scheme will not amend Vocus' constitution and Vocus will become a wholly owned subsidiary of Voyage upon implementation of the scheme: Re Toll Holdings Ltd (No 2) [2015] VSC 236 at [18]-[19].

Orders

For these reasons, I made the orders sought by Vocus at the conclusion of the second Court hearing.

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: 14 July 2021

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