Macmillan Inc v Bishopgate Investment Trust plc

BARKER J: 1 On 23 March 2016, the Court made orders approving a scheme of arrangement (scheme) between the plaintiff and its members under s 411(4)(b) of the Corporations Act 2001 (Cth), exempting compliance with the requirements of s 411(11), and requiring lodgement of the orders with the Australian Securities and Investments Commission (ASIC) as soon as practicable. 2 These are, briefly stated, the reasons for the making of those orders. 3 The Court made the orders primarily on the basis of the plaintiff's outline of submissions filed 22 March 2016, signed by counsel for the plaintiff, together with an accompanying "aide" which was received at the second hearing on 23 March 2016 and has been marked "MFI1". 4 Having regard to those submissions, the affidavit material upon which the Court relied in making orders at the first hearing on 16 February 2016, and the further affidavit material of Edmund Babington, Shane Turner, Wayne Edwards and Rodney Foster, the Court was satisfied that there had been compliance with the procedural requirements governing the appeal of the scheme under the Act. 5 In doing so, the Court noted evidence that ASIC had provided a "no objection" letter on 23 March 2016. 6 The Court was further satisfied that there was full and frank disclosure of matters that should be brought to the Court's attention. This included submissions concerning the ability of the scheme to bind and validly transfer all shares and operate against all members of the plaintiff, as a registered foreign company and Part 5.1 body under the Act. This in turn depended on the proper law that regulated the validity of the transfer of the shares, being the lex situs. 7 What constitutes the lex situs remains the subject of some controversy in private international law, as between where the register on which the shares exist is kept; the place where the shares are situated where they could most effectively be dealt with having regard to business practice; and where the shareholders in question would be likely to choose a market and place of transfer when desiring to deal with the shares. See Newcrest Mining (WA) Limited and Another v The Commonwealth of Australia (1997) 190 CLR 513 at 602 (Gummow J); [1997] HCA 38; Macmillan Inc v Bishopgate Investment Trust plc (No 3) [1996] 1 All ER 58; and Davies M, Bell AS, Brereton PLG, Nygh's Conflict of Laws in Australia (9th ed, LexisNexis, 2014) pp 741-743. 8 At the time of the first hearing on 16 February 2016, the plaintiff's register was kept only in Australia under s 601CM(1) of the Act, was held and managed by Link Market Services Ltd, and related to shares which were all listed for trading on the Australian Securities Exchange (ASX). In order to remedy apparent default of s 68(4) of the Companies Act 1997 (PNG), the plaintiff caused a copy of its register to be held with its registered office in Papua New Guinea. Consequently, at the time of the second hearing on 23 March 2016, the plaintiff held duplicate registers in Papua New Guinea and Australia. 9 In this case, the plaintiff had been a listed public company in Australia for almost two decades, utilised the Clearing House Electronic Subregister System (CHESS) through the ASX with an integrated sub-register managed by Link and, as at 14 December 2015, had 601 of 625 shareholders (approximately 96% of its shareholder base) with addresses in Australia, who held approximately 94% of all issued shares. The Court accepted the submission made by counsel that, in those circumstances, despite registers being located in Papua New Guinea and Australia, the lex situs, under the two tests identified at [7] above and enunciated by Gummow J in Newcrest at 602, was Australia. 10 This conclusion was further affirmed by the oral submissions of counsel concerning the interaction of s 601CN of the Act and s 65 of the Companies Act 1997 (PNG). 11 Section 601CN(3) of the Act required a foreign company to register a transaction in its register in the same way, and at the same charge, as it would have registered the transaction in the register the foreign company keeps in its place of origin. In the case of the plaintiff, a foreign company with its origins in Papua New Guinea, this enlivened the transfer protocol contained in s 65 of the Companies Act 1997 (PNG). Companies listed on the AXS were exempted from this protocol by reason of the exemption gazetted by the Registrar of Companies in Papua New Guinea on 18 June 1998. In essence, that exemption allowed such companies to keep their registers through the CHESS sub-register and an ASX issuer-sponsored sub-register such as Link, and effect transfers of shares through the ASX process. In the result, while Australian law contemplated a procedure for the transfer of shares under Papua New Guinean law, the Papua New Guinean procedure in turn contemplated deferral to the ASX procedure. In those circumstances, the Court was satisfied that in both places in which the registers of the plaintiff were kept, the valid transfer of shares in the plaintiff was governed by Australian law. 12 For those reasons, the Court accepted the submission of counsel that, under all three tests identified at [7] above, the approval order made by this Court on 23 March 2016 pursuant to s 411(4)(b) of the Act, rendered the compulsory transfer of all shares in the plaintiff to Northern Manganese Limited under cl 8.5 of the scheme, binding. 13 In summary, the Court accepted the plaintiff's submissions that: (1) the Court's directions of 16 February 2016 and the statutory requirements had been complied with, including the absence of an objection from ASIC; and (2) the scheme was fair in a general sense, and there was no reason for the Court to exercise its discretion against approval of the scheme. 14 For those reasons, the Court was satisfied that it should exercise its discretion to approve the scheme. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.