Nearmap Ltd, in the matter of Nearmap Ltd (No 2) [2022] FCA 1464 - FCA 2022 case summary — Zoe

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Nearmap Ltd, in the matter of Nearmap Ltd (No 2) [2022] FCA 1464

[2022] FCA 1464

Federal Court of Australia|2022-12-05|Before: Mr P, Cheeseman J

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Source facts

Court

Federal Court of Australia

Decision date

2022-12-05

Before

Mr P, Cheeseman J

Source

Original judgment source is linked above.

Judgment (19 paragraphs)

[1]

THE COURT NOTES THAT: A. There has been produced to the Court a statement in writing by the Australian Securities and Investments Commission (ASIC) in accordance with section 411(17)(b) of the Corporations Act 2001 (Cth) (Act) stating that ASIC has no objection to the Scheme of Arrangement between the plaintiff (Nearmap) and its shareholders (Nearmap Shareholders), which was agreed to by the Nearmap Shareholders at a meeting on 25 November 2022. THE COURT ORDERS THAT:

Pursuant to section 411(4)(b) of the Act, the Scheme of Arrangement between Nearmap and the Nearmap Shareholders agreed to by those shareholders at the meeting held on 25 November 2022 (Scheme) be and is hereby approved.
Pursuant to section 411(12) of the Act, Nearmap be exempted from compliance with section 411(11) of the Act in respect of the Scheme.
Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

[2]

INTRODUCTION 1 These reasons relate to the orders made at the second court hearing approving a scheme of arrangement under s 411(4)(b) of the Corporations Act 2001 (Cth). For the purpose of these reasons, familiarity is assumed with Nearmap Ltd, in the matter of Nearmap Ltd [2022] FCA 1291 (Nearmap (No 1)). Defined terms used within have the same meaning as in Nearmap (No 1). 2 At the first court hearing on 20 October 2022, the Court made convening orders requiring Nearmap to convene and hold a Scheme Meeting to consider the proposed Scheme. The Scheme Meeting was held on 25 November 2022, and the resolution to agree to the Scheme was passed by the requisite statutory majorities. Implementation of the Scheme is expected to occur on 15 December 2022, subject to Court approval and the Scheme becoming effective.

[5]

ROLE OF THE COURT 5 I gratefully adopt the recent summary of the applicable principles in respect of approving a scheme of arrangement by O'Callaghan J in Re PayGroup Limited (No 2) [2022] FCA 1350 at [29] to [30]: 29 The role of the court in approving a scheme of arrangement is supervisory. The court is not bound to approve it merely because it previously made orders for the convening of a meeting or because the statutory majorities were achieved. That said, as Jacobson J observed in Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at 588 [32], "the court will usually approach the task upon the basis that the members are better judges of what is in their commercial interests than the court". 30 The cases establish that the following matters should be taken into account, namely that: (a) the orders of the court convening the scheme meeting were complied with; (b) the resolution to approve the scheme was passed by the requisite majority, and whether other statutory requirements have been satisfied; (c) all conditions to which the scheme is subject (other than court approval and lodgement of the court's orders with ASIC) have been met or waived; (d) the scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it; (e) there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme; (f) 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 (g) the court is satisfied under s 411(17) that the scheme has not been proposed to avoid Chapter 6 of the Act, or that the plaintiff has a statement from ASIC that it has no objection to the scheme. 6 In considering the approval given at the Scheme Meeting, it is relevant to consider whether in passing the resolution at the Scheme Meeting (Scheme Resolution), shareholders acted in good faith and for proper purposes, and whether there is any evidence of oppression of the minority. 7 The considerations relevant to the exercise of the Court's discretion are well established. For present purposes, it suffices to extract the following passage in which Beach J described the Court's role as follows (Re Amcor (No 2) [2019] FCA 842 (at [7] and [11])): 7 …In essence, my role at the second court hearing is to assess the Scheme taking into account whether the Scheme is sufficiently fair and reasonable such that an intelligent and honest shareholder properly informed and acting alone might approve it. Of course, I can only approve a scheme of arrangement if the requisite majority of shareholders vote in favour of it, but I am not bound to approve the Scheme simply because I previously made orders for the convening of a Scheme meeting and subsequently the requisite majority agreed to it. But I accept that shareholders voting collectively at the Scheme meeting are better judges than I of what is to their commercial advantage and in their interests and accordingly, absent good reason, I should give effect to their intentions. … 11 Now as I have said, my task is to consider whether the Scheme is fair and reasonable with the test of fairness and reasonableness including a consideration of whether "an intelligent and honest [shareholder], properly informed, acting alone, might approve [the scheme]" (Fowler v Lindholm (2009) 178 FCR 563 at [79] per Emmett, Gordon and Jagot JJ). But the Scheme shareholders' vote in favour of the Scheme is evidence of its inherent fairness. Put another way, if a majority of the Scheme shareholders have approved the Scheme, it is unlikely that the Scheme would be unreasonable. Further, I do not have to be satisfied that no better Scheme could have been devised.

[7]

Dispatch of Scheme materials 9 Based on the evidence led by Nearmap at the second court hearing, I was satisfied that the scheme materials were dispatched to Scheme Shareholders, including Email Shareholders (Scheme Shareholders who nominated an electronic address to receive documents from Nearmap), Hardcopy Shareholders (Scheme Shareholders who elected to receive documents from Nearmap in physical form) and Postal Shareholders (Scheme Shareholders who are not Email Shareholders or Hardcopy Shareholders), as required by, and within the time required by, the convening orders. 10 Nearmap raised for the Court's attention one minor matter in this respect. Pursuant to the convening orders, Nearmap was required to send Postal Shareholders and Hardcopy Shareholders a letter detailing the method of access to the Scheme Booklet in accordance with the form provided in evidence to the Court at the first court hearing. Postal Shareholders were sent a letter in that format in compliance with the convening orders. However, the wording of the letter sent to Hardcopy Shareholders was altered in a minor way to reflect the fact that a physical copy of the Scheme Booklet was enclosed in accordance with the preferences of the Hardcopy Shareholders. 11 I was satisfied that the letter sent to Hardcopy Shareholders was "substantially in the form of" the letter as required by the convening orders. The changes made were necessary and appropriate, given the fact that the letter to Hardcopy Shareholders enclosed a hard copy of the Scheme Booklet. The change did not interfere with the Court-approved "message" to Hardcopy Shareholders by way of unilateral supplementation or involve advocacy as to how shareholders should vote. To the extent that the alteration could be characterised as technical non-compliance with the convening orders, I was satisfied that the variation in the wording of the letter sent to the Hardcopy Shareholders was a procedural irregularity that did not cause any substantial injustice within the meaning of s 1322(2) of the Act. 12 As required by r 3.5(b) of the Corporations Rules, an office copy of the convening orders was lodged with the Australian Securities and Investments Commission (ASIC) on 21 October 2022.

[10]

Conduct of Scheme Meeting and voting results 15 The written submissions provided by Nearmap in advance of the second court hearing addressed in detail the requirements of the convening orders in relation to the conduct of the Scheme Meeting and the evidence led demonstrated that the Scheme Meeting was held at the required time and place on the required date, and in the required manner. 16 In accordance with s 411(4)(a)(ii) of the Act, the Scheme Resolution was passed by a majority in number of members present and voting (either in person or by proxy) at the Scheme Meeting, and by 75% of the votes cast on the Scheme Resolution. The evidence establishes that the Scheme Resolution was passed by 78.47% of the votes cast and by 77.28% of shareholders present and voting (in each case, in person or by proxy). 17 The number of shares voted at the Scheme Meeting as a percentage of Nearmap's total issued share capital was approximately 64.92%, and the number of shareholders who voted as a percentage of the total number of Nearmap's shareholders was approximately 16.35%. 18 Nearmap submitted that although the level of shareholder turnout (by number of shareholders) was relatively low, there was no suggestion in the evidence that shareholders were deterred from attending the Scheme Meeting or did not have notice of the Scheme Meeting: Re TriAusMin Ltd (No 2) [2014] FCA 833 at [10]-[12]; Re Amcor at [18]-[20]. 19 Except for the minor irregularity in the letter sent to Hardcopy Shareholders, which I have addressed above, there is nothing to suggest that there was any irregularity in the manner of dispatch of material to the shareholders. The evidence demonstrates that Scheme Shareholders were provided with notice of the Scheme Meeting. There is no evidence of any issue that would have deterred Scheme Shareholders from voting at or from attending the Scheme Meeting. Finally, it is significant that those shareholders who did vote, voted in favour of the Scheme such that the requisite statutory majority was achieved and the number of shares voted as a percentage of Nearmap's total issued share capital was high, being 64.92%.