Lynch Group Holdings Limited, in the matter of Lynch Group Holdings Limited [2025] FCA 1280 (21 October 2025)

1. The Court notes the letter from ASIC to the directors of the plaintiff dated 20 October 2025 tendered at the hearing.

1. Pursuant to sections 411(1) and 1319 of the Corporations Act 2001 (Cth), the plaintiff (Lynch) convene and hold a meeting (Scheme Meeting) of the holders of shares in the plaintiff (Lynch Shareholders):

(a) to consider and, if thought fit, agree to (with or without any modifications, alterations or conditions) the scheme of arrangement (Scheme) proposed to be made between Lynch and Lynch Shareholders, the terms of which are set out in Annexure A to these orders;

(b) to be held in person on 21 November 2025 at the offices of MUFG Pension & Market Services, Liberty Place, Level 41, 161 Castlereagh Street Sydney NSW 2000, commencing at 11.00am (AEDT).

1. The Scheme Meeting be convened by sending on or before 23 October 2025 (to those Lynch Shareholders appearing on Lynch's register of members as at 7.00 pm (AEST) 17 October 2025):

(a) to each Lynch Shareholder who has nominated an electronic address for the purpose of receiving notices of meeting and made an election to receive Scheme Meeting related documents electronically, an email substantially in the form of the template email at Annexure PGC-7 of the affidavit of Peter Graham Clare affirmed 15 October 2025 (Clare Affidavit) which contains a link to a document substantially in the form set out at Annexure PGC-1 of the Clare Affidavit, including the notice of meeting substantially in the form of the notice contained in Annexure D of PGC-1 (Final Scheme Booklet) (subject to registration of the Final Scheme Booklet with ASIC pursuant to s 412(6) of the Act) and instructions to submit their proxy voting instructions online in respect of the resolution proposed at the meeting;

(b) to each Lynch Shareholder who has not nominated an electronic address for the purpose of receiving notices of meeting and proxy forms and has not elected to receive full hard copies of documents that are to be sent for that purpose, by posting to the postal address recorded for that Lynch Shareholder in the register of members, a cover letter substantially in the form of the template letter at Annexure PGC-8 of the Clare Affidavit setting out the electronic address to access the Final Scheme Booklet, a hard copy personalised proxy form in respect of the resolution proposed at the meeting substantially in the form of the draft proxy form at Annexure PGC-9 of the Clare Affidavit and a reply-paid envelope to return that proxy form;

(c) to each Lynch Shareholder who has elected that they receive full hard copies of notices of meeting and proxy forms via post, by posting to the postal address recorded for that Lynch Shareholder in the register of members, a printed copy of the Final Scheme Booklet, a hard copy personalised proxy form in respect of the resolution proposed at the meeting (in the form referred to in sub-paragraph (b)), and a reply-paid envelope to return that proxy form; and

(d) in relation to the communications to Lynch Shareholders who have nominated an electronic address, if Lynch Group receives an automatic, system generated notification that the documents were unable to be delivered to the nominated electronic address of any Lynch Shareholder to whom documents were dispatched, the documents will be dispatched by Lynch Group in accordance with the process for Lynch Shareholders who have not nominated an electronic address and have not elected to receive full hard copies of documents.

1. Subject to these orders, the Scheme Meeting be convened, held and conducted in accordance with the provisions of:

(a) Pt 2G.2 of the Act (save for any replaceable rule that is displaced or modified by Lynch's constitution) that apply to a meeting of Lynch's members; and

(b) Lynch's constitution that apply in relation to meetings of members and that are not inconsistent with Pt 2G.2 of the Act.

1. The Lynch Shareholders who are eligible to vote at the Scheme Meeting will be those whose names are recorded in Lynch's register of members at 7:00pm (AEDT) on 19 November 2025.
2. Voting on the resolution to approve the Scheme is to be conducted by way of a poll.
3. A proxy form in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms by 11:00am (AEDT) on 19 November 2025.
4. Pursuant to rule 3.3(2) of the Federal Court (Corporations) Rules 2000 (Cth) (Rules), notwithstanding s 249Y(3) of the Act, the appointment of a proxy in respect of a Scheme Meeting shall not be revoked or suspended by the appointing Lynch Shareholder (Lynch Appointor) attending and taking part in the Scheme Meeting. However, if the Lynch Appointor votes on a resolution at a Scheme Meeting, the proxy is not entitled to vote as the Lynch Appointor's proxy on that resolution and any such vote must not be counted in the results of the relevant poll.
5. Mr Peter Clare, or failing him, Ms Elizabeth Hallett, be Chair of the Scheme Meeting.
6. The Chair of the Scheme Meeting shall have the power to postpone or adjourn the Scheme Meeting to such time, date and place as they consider appropriate and, in that event, notwithstanding any other part of these orders:

(a) the Lynch Shareholders who are eligible to vote at the postponed Scheme Meeting will be those whose names are recorded in Lynch's register of members at 7:00pm (AEDT) on the date that is two calendar days before the date of the postponed Scheme Meeting;

(b) a proxy form in respect of the postponed Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms at least 48 hours before the time scheduled for the postponed Scheme Meeting; and

(c) a reference in these orders to the Scheme Meeting is taken to include a reference to the postponed Scheme Meeting.

1. Pursuant to rule 1.3 of the Rules, compliance with the following rules (and their requirements) is dispensed with:

(a) rule 2.4(1);

(b) rule 2.15; and

(c) rule 3.4 and Form 6.

1. On or before 22 October 2025, Lynch publish on its website and via an ASX Announcement a notice substantially in the form that appears at Annexure PGC-11 of the Clare affidavit.
2. The proceeding be adjourned to 2.15pm (Melbourne time) on 27 November 2025 before Justice Beach for the hearing of any application to approve the Scheme.
3. Lynch shall lodge an office copy of these orders with ASIC as soon as practicable after they are made.
4. Liberty to apply.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

[The authenticated order, which is available on the Commonwealth Courts Portal, attaches a copy of the Scheme of Arrangement]

1. Lynch Group Holdings Limited seeks orders under ss 411(1) and 1319 of the Corporations Act 2001 (Cth) to convene a meeting of its shareholders to consider a scheme of arrangement providing for the acquisition by Darwin Aus Bidco Pty Ltd (Hasfarm Bidco) of all shares in Lynch, including those to be issued upon the exercise of various options.
2. Lynch is an ASX-listed Australian public company which is a vertically integrated wholesaler and grower of flowers and potted plants in Australia and China. Hasfarm Bidco is an Australian proprietary company incorporated on 16 July 2025 specifically for the purpose of holding Lynch shares pursuant to the scheme. Hasfarm Bidco is a wholly-owned subsidiary of Darwin Aus Holdco Pty Ltd, which in turn is a wholly owned subsidiary of Hasfarm Holdings Limited (Hasfarm). Hasfarm is a fully integrated floriculture company engaged in the cultivation, distribution and retail sale of cut flowers, pot plants and related products across Asia. But Hasfarm is incorporated in the British Virgin Islands, presumably for reasons other than the quality or quantity of that location's vibrant bougainvillea or fragrant frangipani.
3. The scheme is a standard share acquisition scheme under which, if implemented, existing Lynch shareholders will receive $2.155 for each Lynch share, and will cease to be a Lynch shareholder. Lynch will be delisted from the ASX and become a wholly-owned subsidiary of Hasfarm Bidco.
4. The contractual obligations of Lynch, Hasfarm and Hasfarm Bidco in relation to the scheme are set out in a scheme implementation agreement dated 20 August 2025 which relevantly includes a break fee of $2,700,000 payable by Lynch if the scheme does not become effective in prescribed circumstances, and a reverse break fee of $2,700,000 payable by Hasfarm Bidco to Lynch if Lynch validly terminates the scheme implementation agreement.
5. The scheme implementation agreement also includes the usual exclusivity provisions and associated obligations with the necessary fiduciary carve-outs. Put shortly, there is no basis not to treat the related restrictions as not involving any dimension that would not warrant a position of neutrality so far as I am concerned.
6. All Lynch directors intend to vote any Lynch shares owned or controlled by them in favour of the scheme.
7. The independent expert appointed by the directors of Lynch, KPMG Financial Advisory Services (Australia) Pty Ltd, has assessed the value of a Lynch share on a controlling interest and ex-dividend basis to be in the range of $1.93 to $2.27 per share. On 18 September 2025, Lynch paid a dividend to those Lynch shareholders on the Lynch share register on 3 September 2025, being a fully franked final dividend of $0.09 per share in respect of Lynch's trading performance for the preceding financial year. This dividend was, as is obvious, not conditional on the scheme.
8. As the value of the scheme consideration of $2.155 per share is towards the high end of the range of the assessed value of a Lynch share, the independent expert has expressed the view that the scheme is fair and, as such, is also reasonable and in the best interests of Lynch shareholders in the absence of a superior alternative proposal. The independent expert's report is to be included in the scheme booklet which constitutes the necessary explanatory statement.
9. If the scheme is approved by Lynch shareholders at the scheme meeting and by the Court, and if all conditions precedent are satisfied or waived, eligible scheme shareholders who are recorded on the Lynch register on the scheme record date, which is expected to be 5.00pm on 2 December 2025, will be entitled to receive the scheme consideration in respect of their Lynch shares on the implementation date, which is expected to be 9 December 2025.
10. Further, Hasfarm and Hasfarm Bidco have executed a deed poll dated 14 October 2025 in favour of scheme shareholders. Subject to the scheme becoming effective, Hasfarm Bidco has undertaken in favour of each scheme shareholder to pay the scheme consideration and undertake all other relevant actions. Hasfarm has pursuant to the deed poll unconditionally and irrevocably guaranteed the performance by Hasfarm Bidco of these obligations. I will address later the question of performance risk given its foreign status.

1. The relevant principles are not in doubt. As I have explained in Re Amcor Ltd [2019] FCA 346 at [47]:

My function on an application to order the convening of a meeting is supervisory. At this stage I should generally confine myself to ensuring that certain procedural and substantive requirements have been met including dealing with adequate disclosure, with limited consideration of issues of fairness. But having said that, it is appropriate to consider the merits or fairness of a proposed scheme at the convening hearing if the issue is such as would unquestionably lead to a refusal to approve a proposed scheme at the approval hearing, that is, the proposed scheme appears now to be on its face "so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further" (Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 at [44] per French J). But in the present case, in my view there is no issue arising from the Scheme which would unquestionably lead to a refusal to approve the Scheme at the approval hearing. It cannot be said that the Scheme on its face is "so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further". Put another way, the Scheme is not of such a nature and cast in such terms that if it receives the support of the statutory majorities at the meeting, nevertheless I would not be likely to approve it at the second court hearing.

1. And as Anderson J recently said in Re Viridian Financial Group Ltd [2025] FCA 997 at [30]:

It is well established that the question of whether or not to accept particular consideration for shares is quintessentially a commercial matter for the members to assess, and they ought not be prevented from having the opportunity to do so, provided that the Court can be satisfied that they are acting on sufficient information and with time to consider what they are voting on: See Re AWA Mutual Limited [2023] FCA 1551 at [54]; Re Newcrest Mining Limited [2023] FCA 1080 at [30]; Re Oz Minerals Limited [2023] FCA 197 at [15]; Re Carbon Revolution Limited [2023] FCA 1081 at [22].

1. I would also endorse recent similar statements on this topic including by Neskovcin J (Re PSC Insurance Group Limited [2024] FCA 946 at [23] to [27]), Cheeseman J (Re Platinum Asia Investments Ltd [2025] FCA 746 at [68] to [72]), Bennett J (Re PointsBet Holdings Limited [2025] FCA 463 at [15] and [30]), Button J (Re Probiotic Limited [2024] FCA 298 at [27] to [29]), Moshinsky J (Re Carbon Revolution Ltd [2023] FCA 1081 at [21] to [23]) and O'Bryan J (Re Rex Minerals Limited [2024] FCA 1051 at [24] to [27]).
2. To these authorities may be added, as O'Callaghan J has pointed out (see for example Re QMS Media limited [2019] FCA 2172 at [28]), Re CSR Limited [2010] FCAFC 34; (2010) 183 FCR 358 where the plurality at [12] endorsed Emmett J's analysis in Re Central Pacific Minerals NL [2002] FCA 239 at [8] to [11], and Finkelstein J made separate observations at [72] to [76] including one qualification that is not presently relevant to French J's observations in Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 at 265, the latter's analysis being the fountain-head that I have consistently used although it could easily have been Emmett J's analysis as I said in Re Capitol Health Limited [2024] FCA 1120 at [50].
3. Further, I would make one other point which is relevant to the context of how these principles are to be treated. I am here concerned with a scheme which involves the shareholders receiving solely a cash consideration in exchange for their shares. I am not concerned with a fully or partially scrip for scrip bid. But if I had been so concerned, the context for the application of these supervisory principles and indeed shareholders' commercial judgments in terms of assessing the value of the relevant scheme consideration may have required adopting a perspective resonating more closely with W S Gilbert's less well-known but more universal theme from HMS Pinafore: things are seldom what they seem, skimmed milk masquerades as cream.
4. In summary, the Court's role is not to usurp the shareholders' decision by interposing its own commercial judgment. But it is concerned with whether there is adequate disclosure to the shareholders in the explanatory statement, whether the relevant statutory requirements have otherwise been complied with and whether the scheme, on its face, is one that is not so blatantly unfair or otherwise inappropriate to be put to shareholders.
5. Now in the present case the relevant statutory requirements have been satisfied, as Dr Oren Bigos KC for Lynch correctly pointed out and which I do not need to detail, such that my power has been enlivened to make the necessary convening and ancillary orders under ss 411(1) and 1319. But should I do so?

1. There are two main topics to deal with being, first, whether the scheme is fit for consideration by the shareholders and, second, whether the shareholders are to be properly informed as to the nature of the scheme.

1. In my view in the present context, the terms of the scheme and the scheme implementation agreement are in a form commonly found in acquisition schemes for cash, and none of their terms gives rise to the potential to cause prejudice or unfairness to shareholders in connection with their consideration of the scheme or its implementation.
2. Now particular matters were raised by Lynch for my consideration, some of which I should say something about.
3. Let me first address the issue of performance risk, which potentially arises because although the scheme requires Hasfarm and Hasfarm Bidco to provide the scheme consideration, those companies are not parties to the scheme and are not directly bound by it. In my view the scheme effectively eliminates any performance risk by adopting the following safeguards.
4. First, one day before the implementation date, the aggregate of the scheme consideration is to be deposited into a trust account under the scheme. The transfer of the shares is subject to the scheme consideration being provided in the manner set out in the scheme. So, the terms of the scheme ensure that there is no risk that shareholders will be required to transfer their shares without receiving the promised consideration. This effectively eliminates any performance risk in so far as the transfer of the scheme shares is concerned.
5. Second, the scheme implementation agreement requires each of Hasfarm Bidco and Hasfarm to enter into a deed poll in favour of scheme participants, which binds them to perform the actions attributed to them under the scheme, including the provision of the scheme consideration. As I have said, that deed poll has now been executed and delivered.
6. Third, in relation to Hasfarm, which as I have said is incorporated in the British Virgin Islands, the enforceability of the deed poll against Hasfarm raises no material issues. The deed poll is governed by the laws of Victoria, and Hasfarm has agreed to irrevocably submit to the non-exclusive jurisdiction of courts exercising jurisdiction in Victoria. Generally, in circumstances where a deed is executed by a foreign company but governed by the law of an Australian jurisdiction and contains a submission to the jurisdiction of Australian courts, there is no requirement to adduce evidence of due execution and foreign enforceability as Jackman J pellucidly explained in Re Blackmores Ltd [2023] FCA 624 at [17] to [22]. Further, such a jurisdiction clause need not be exclusive. Further and as I have already said, the structure of the scheme in relation to the trust account addresses performance risk by preventing the transfer of any scheme shares before the consideration has been provided in full by the bidder. So, as Jackman J pointed out at [19] in similar circumstances, there will be no circumstance under which Lynch shareholders will need to sue on the deed poll to recover payment for shares already transferred under the scheme and in that respect no performance risk arising from the possibility that the deed poll was not validly executed.
7. Let me now turn to the class creation question and briefly address three potential dimensions that have been identified in that context.
8. The applicable principles are not in doubt. As I said in Re Healthscope Ltd [2019] FCA 542; (2019) 139 ACSR 608 at [106], [107] and [118]:

The well-established test for identifying a class for the purposes of a scheme of arrangement is that expressed by Bowen LJ in Sovereign Life Assurance Co v Dodd [1892] UKLawRpKQB 162; [1892] 2 QB 573 at 583. Sovereign Life Assurance concerned a creditors' scheme of arrangement, but the test enunciated by Bowen LJ has been adopted ever since in members' schemes (Re Foster's Group Limited [2011] VSC 93 at [15] per Ferguson J). Bowen LJ expressed the class test in the following terms:

...The word "class" is vague, and to find out what is meant by it we must look at the scope of the section, which is a section enabling the Court to order a meeting of a class of creditors to be called. It seems plain that we must give such a meaning to the term "class" as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest...

Accordingly, the question for present purposes is whether the rights of NWH AssetCo (or its affiliates) are so dissimilar from the rights of the other Healthscope shareholders as to make it impossible for them to consult together with a view to their common interest. Or put another way, do the differences in rights between NWH AssetCo (or its affiliates) and the other Healthscope shareholders mean that any community of interest between them has been displaced for the purposes of them considering and voting upon the proposed Scheme, where such consideration would include the merits of the Scheme, whether there are any other potential proposals which might be more advantageous to shareholders and whether there are prospects of Healthscope delivering greater benefits to shareholders in the longer term by staying a listed company and pursuing its own proposed sale and leaseback proposal?

...

Ultimately one has to be careful of stipulating rigid categories or hard and fast rules, although some cases may be clear one way or the other in terms of the necessity for separate delineation. This is because the "impossible...to consult together with a view to their common interest" criterion requires a commercial evaluative judgment to be made of the transactions, circumstances and consequences said to justify the delineation, in the context of the particular scheme and its effect overall. Moreover, if the asserted discriminating feature can be dealt with at the second court hearing, there is less of a need to be definitive at the first court hearing in terms of class definition except in a clear class. Moreover one should be cautious about stipulating separate classes. It can easily and wrongly empower a minority view; I can of course easily deal with excessive or oppressive majority influences at the second stage as Finkelstein J has pointed out relating to the Opes Prime creditors scheme. If the minority view against a scheme has been put into a separate class, you may have unnecessarily created a power of veto if for the particular scheme all classes need to achieve the requisite statutory majorities for the thing to work. Further, if the minority view against a scheme has been left with the general body but you have put in a separate class a shareholder who would have voted in favour, then you have relatively increased the voting power of the minority in the general body making it easier to defeat the scheme. As I say, all of this suggests that one should be cautious in separating classes except in a clear case. And as Finkelstein J rightly said in effect in Re Opes Prime Stockbroking Ltd (No 2) [2009] FCA 813; (2009) 179 FCR 20 at [66] one should not be too enthusiastic in taking a salamied approach. A "practical business-like approach" must be adopted. Otherwise you are locking in unnecessary downside, particularly when you do not need to given the second stage approval scrutiny that can take place.

1. Let me address the first potential dimension concerning the question of voting by substantial shareholders, and in that context note that the following Lynch shareholders, who collectively hold or control approximately 38.50% of Lynch shares, have confirmed their intention to vote in favour of the scheme resolution, in the absence of a superior proposal and subject to the independent expert continuing to conclude that the scheme is in the best interests of Lynch shareholders: (a) Next Capital III, LP acting through its general partner Next Capital III Management Partners, LP acting through its general partner Next Capital III GP Pty Ltd; (b) Next Capital Services IIID Pty Limited as trustee for the Next Capital Trust IIID; (c) Izzac Pty Ltd as trustee for the Cazzie Trust; and (d) Bridge International Holding Limited. But it is not in doubt that a voting intention statement is not of itself class-creating without more. I need say nothing more.
2. Let me turn to the second potential dimension concerning the call option deeds.
3. As part of the transaction involving the scheme, Hasfarm Bidco has entered into call option deeds with Next Capital III, LP, Next Capital Services IIID Pty Limited and MA Asset Management Ltd which provide Hasfarm Bidco the right, but not the obligation, to call for the delivery of, and restrict the disposal of, 24,291,156 Lynch shares in aggregate, which represents voting power in Lynch of 19.9%.
4. The call options under each of the deeds may be exercised by Hasfarm Bidco only where there has been a public announcement of a competing proposal or an intention to undertake or propose a competing proposal. The exercise period for the options expires at 11.59pm on 30 June 2026 and the exercise price is equal to the scheme consideration. Prior to their exercise, the call options do not allow Hasfarm Bidco to have any direct influence on voting on the scheme by reason of those options alone. The call option deeds provide that nothing contained therein restricts the relevant shareholders who granted the options from exercising their rights to vote for or against the relevant resolution at the scheme meeting.
5. In my view the call option deeds are not class creating in circumstances where the options' exercise price is equal to the scheme consideration, and nor are they a basis to refuse to convene the scheme meeting. But clearly the call option deeds may influence a shareholder voting at the scheme meeting, particularly given that the options can be exercised out to 30 June 2026 and there is a low trigger for "competing proposal" which has a threshold at or above 15%. A shareholder voting at the meeting and considering whether to vote against the resolution because he perceives that the scheme consideration is not sufficient may well see the existence of these call option deeds as some disincentive to voting against the resolution. But after discussion with Mr Darrell Barnett SC for Hasfarm Bidco and Hasfarm I am satisfied that proper disclosure has been made of such matters in the scheme booklet, and so each shareholder can attribute such significance as they see fit to the call option deeds. Moreover, and as I have said, this scenario is not class creating and nor is it a basis for declining to make the convening orders (Re MyDeal.com.au Limited [2022] NSWSC 1094 at [24] and [25] per Black J).
6. Let me turn to the third potential dimension concerning director interests and benefits. Such interests and benefits in relation to a scheme usually raise two issues for consideration being, first, whether there is a need for separate classes and, second, the appropriateness of any director who might receive a benefit making a recommendation to shareholders in relation to the proposed scheme.
7. Now a question may arise as to whether directors with interests or benefits relating to a scheme and who are also shareholders of the scheme company should form a separate class from those shareholders who do not have such interests or benefits. But in the present case, the interests and benefits are not of the kind which would require separate classes. All Lynch shareholders will participate in the scheme on the same basis and receive the same consideration as all other shareholders, and it is accordingly, not impossible for them to consult together with a view to their common interest.
8. Further, even where certain shareholders may have extraneous interests in the outcome of a scheme, this in itself is not a reason for placing those members in a separate class for voting purposes, as senior counsel for Lynch pointed out.
9. In the present case, no such concerns arise. In the first place, none of the Lynch directors could properly be said to have extraneous or divergent interests in the outcome of the scheme, with the exception of Mr Hugh Toll who is the chief executive officer and a director of Lynch. Let me identify his benefits. First, Mr Toll will receive a one-off bonus cash payment of $50,000 for his work in relation to the scheme that is not conditional on the scheme being implemented. Second, he may receive a discretionary cash bonus of up to $105,732 under Lynch's short term incentive plan, which the Lynch board only intends to pay if the scheme becomes effective. Third, he will have the vesting of options for Lynch shares accelerated and converted into Lynch shares.
10. Further, Mr Toll's interests and benefits do not impact on his ability to recommend the scheme to shareholders. These interests and benefits are prominently disclosed in the scheme booklet so that shareholders may have regard to them when considering the directors' recommendation that shareholders vote in favour of the scheme.
11. Now the one-off cash bonus of $50,000 is not dependent on whether the scheme will go ahead. Such a bonus is not class creating and nor does it prevent Mr Toll from recommending the scheme.
12. Further, the discretionary bonus of $105,732 that may be paid if the scheme proceeds under Lynch's short term incentive plan is not class creating, and nor does it prevent Mr Toll from recommending the scheme.
13. Further, Mr Toll has a series of options in relation to Lynch shares as set out in the scheme booklet. Now of Mr Toll's options, only the following options will be exercised and converted to Lynch shares before the scheme is implemented: (a) 772,649 options exercisable at $1.84 and expiring 30 June 2029 will be exercised and converted into 112,939 Lynch shares; and (b) 1,576,955 options exercisable at $1.41 and expiring 30 June 2030 will be exercised and converted into 545,165 Lynch shares. As to these options and as is obviously the case, the vesting of these options will be accelerated under the scheme provided that Mr Toll remains engaged with Lynch on the effective date, and he exercises the options. And if Mr Toll exercises the accelerated options, then the resulting shares will be acquired by Hasfarm Bidco in accordance with the scheme for the scheme consideration. Accordingly, assuming Mr Toll intends to exercise the accelerated options, he will obtain a benefit that he may not have received if the scheme did not proceed. But in my view the accelerated or early vesting of director stock options is not class creating and does not preclude Mr Toll from recommending the scheme, particularly as all of this is fully disclosed in the scheme booklet.
14. Let me turn to the break fee and reverse break fee detailed in the scheme implementation agreement. The break fee payable by Lynch of $2,700,000 represents just under 1% of the total equity value of Lynch, being $280,000,000 as at the date of the scheme implementation agreement and the ASX announcement, consistent with the Takeovers Panel's guideline. The equity value is the aggregate of the value of all classes of equity securities issued by Lynch having regard to the value of the bid consideration when announced. Further, the break fee is not framed so as to coerce shareholders into agreeing to the scheme, and is not payable by reason of Lynch shareholders failing to approve the scheme. As to the reverse break fee of $2,700,000, given that it is in Lynch's favour nothing further need be said. Moreover, its symmetry concerning the amount also fortifies my position concerning the break fee.
15. Further and as I have already said, the exclusivity provisions in the scheme implementation agreement are in a conventional form and contain the usual fiduciary carve-outs and matching-rights provisions.

1. As to the disclosure requirements of s 412(1) and associated subordinate legislation, in Re Amcor Ltd I observed the following (at [91]):

There are three aspects to the requirements of s 412(1):

(a) First, the explanatory statement must explain the effect of the compromise or arrangement, and in particular state any material interest of the directors and the effect on those interests of the compromise or arrangement so far as it is different from the effect on the like interests of other persons. Now these matters are addressed in the draft Scheme Booklet. And the information in it makes it clear that the effect of the arrangement on the directors' interests is the same as on the like interests of others.

(b) Second, the explanatory statement must set out the prescribed information. That prescription is in reg 5.1.01 and Schedule 8 (part 3) of the Regulations. Now a helpful table has been provided to me showing the specific requirements of the Act and the Regulations and the location in the draft Scheme Booklet of the statements by which those requirements are complied with. I am satisfied as to both its accuracy and its comprehensiveness.

(c) Third, the explanatory statement must set out any other information that is material to the making of a decision whether to agree with the compromise or arrangement, being information which is within the knowledge of the directors and has not previously been disclosed. In my view the draft Scheme Booklet on its face seems to satisfy that requirement.

1. As senior counsel for Lynch has demonstrated and as appears from the draft scheme booklet including the explanatory statement, in my view the relevant disclosure requirements in the three aspects that I mentioned have been adequately met and the relevant information contained therein verified by appropriate procedures.

1. Now the Court's power to approve a scheme is constrained by s 411(17), which provides:

The Court must not approve a compromise or arrangement under this section unless:

(a) it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6; or

(b) there is produced to the Court a statement in writing by ASIC stating that ASIC has no objection to the compromise or arrangement;

but the Court need not approve a compromise or arrangement merely because a statement by ASIC stating that ASIC has no objection to the compromise or arrangement has been produced to the Court as mentioned in paragraph (b).

1. Schemes of arrangement which effect an acquisition of all of the shares in a company will usually raise a question whether the arrangement has been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6, including s 602. So, Lynch has requested that ASIC provide a statement in writing that ASIC has no objection to the compromise or arrangement for the purposes of s 411(17)(b).
2. Now s 411(17) does not present a bar to a meeting being convened at the first court hearing. This is a matter which affects the discretion to approve a scheme, rather than the making of an order to convene a scheme meeting. ASIC does not oppose the application for convening the meeting and I have proceeded on the basis that ASIC will in due course provide a statement for the purpose of s 411(17)(b). This has been confirmed by ASIC's letter to Lynch's directors dated 20 October 2025 that was tendered this morning.

1. Section 411(1) provides that, if the Court has made an order convening a meeting of members or creditors, the Court "may approve the explanatory statement required by s 412(1)(a) to accompany notices of the meeting", which in this case is in the form of the scheme booklet.
2. Now the practice of judges of this Court has varied in this respect, but my practice is not to make an order approving the explanatory statement. As I explained in Re RXP Services Limited [2021] FCA 38 at [70]:

Now s 411(1) provides that if I have made an order convening a meeting of members, I may approve the explanatory statement. But I do not propose to formally do so. In view of the requirement for registration by ASIC and the criteria that ASIC must apply, it is more appropriate that the explanatory statement for a members' scheme be dealt with in that fashion. But I should stress that not to so formally approve should not be seen as casting any doubt on the accuracy or adequacy of the Scheme Booklet which comprises the explanatory statement or that it is not suitable for registration by ASIC.

1. For the foregoing reasons, this morning I made the necessary convening and ancillary orders.

I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach.