News Corporation Ltd [2004] FCA 1480

REASONS FOR JUDGMENT 1 On 15 September 2004, I made orders pursuant to Part 5.1 of the Corporations Act 2001 (Cth) ('the Act') convening meetings of classes of members of News Corporation Ltd ('News Corporation') to consider whether to approve a scheme of arrangement between News Corporation, its members, and classes of option holders to consider whether to approve a scheme of arrangement between News Corporation and its option holders. 2 In very broad terms, News Corporation proposed to implement a reorganisation by means of those schemes such that shareholders will exchange their shares in News Corporation for shares in a Delaware incorporated company, News Corporation US, and option holders will receive substituted options in News Corporation US. As part of the proposal, News Corporation US will acquire assets currently owned by persons or companies described in the scheme documents as the Murdoch interests. 3 There are potential benefits and potential disadvantages associated with the proposed reorganisation, which are identified and discussed in the Information Memorandum circulated to shareholders and option holders. An independent expert, Grant Samuel & Associates, has expressed the opinion that the proposal is in their best interests, although the benefits of the proposal primarily relate to the market for News Corporation shares and involve judgments rather than propositions that can be empirically verified. The schemes were approved at the various class meetings as follows (the Murdoch family and their associates did not participate in any of these votes): · Ordinary shareholders 91.28 per cent for, 8.72 per cent against; · Preferred shareholders 96.23 per cent for, 3.77 per cent against; and · Option holders 99.95 per cent for, .05 per cent against. The schemes were approved unanimously at the class meetings of the Murdoch interests. 4 No person has sought to appear in opposition to the approval of the schemes, although I am satisfied that the fact of this hearing has been published in accordance with my earlier orders. I am also satisfied that the class meetings were convened substantially in accordance with the orders which I earlier made, and that the schemes were approved by the requisite majority of shareholders and option holders. 5 Two matters occurred after notice of the scheme meetings was given to members and option holders, which although they did not alter the terms of the scheme, had a bearing on the overall commercial context. First, News Corporation agreed to the inclusion of additional corporate government provisions with respect to News Corporation US. Second, a decision was taken to postpone the post internal restructuring referred to in the Information Memorandum. Shareholders and option holders were notified of these matters, both by advertisement and by a circular published and distributed prior to the meeting of 26 October 2004, and there is no reason to conclude that votes were cast at the class meetings under the influence of any misapprehension in relation to these matters. 6 In my view, this is a classic case in which the members and option holders are the best judges of whether the proposal is in their commercial interests, and they have overwhelmingly endorsed the proposal. News Corporation provided adequate information to members and option holders to enable them to make an informed judgment on the question, and the proposal otherwise complies with the law. The terms and conditions of the schemes are fair, and such as might rationally be seen by shareholders and option holders as advancing their commercial interests. 7 The parties to the Implementation Agreement have provided to the Court a certificate in accordance with cl 3.6 of that agreement confirming that all conditions, other than 3.1(k) have been satisfied or waived (condition 3.1(k) is that the share exchange agreements are completed in accordance with their terms). In accordance with condition 3.1(j) of the Implementation Agreement, the parties to the share exchange agreements have provided certificates to the Court that, subject to a minor exception, all conditions precedent to those agreements have been satisfied or waived, with the exception of conditions which will be satisfied in the event that Court approval is forthcoming, and a condition to the effect that the parties are ready, willing and able to complete those agreements prior to the implementation of the schemes. 8 The minor exception is that certain share transfers described in paragraphs a(ii), b(ii) and c(ii) of the definition of subsidiary share transfer agreements on page 107 of the Information Memorandum have not been completed, but the parties now intend that completion will occur immediately after implementation of the schemes. The parties have waived clause 3.1(k) to the extent to which it relates to those transfers and the clause 3.1(j) certificates do not extend to those transfers. I am satisfied that the conditions precedent in cl 3.1 of the Implementation Agreement have been satisfied. 9 The Australian Securities & Investments Commission ('ASIC') has confirmed, pursuant to s 411(17) of the Act, that it has no objection to the approval of the scheme. Accordingly, I make orders in terms of paragraphs 1, 2 and 3 of the short minutes of order which I have signed and placed with the papers. The effect of those orders is to approve the schemes. I simply note that the amendment to the scheme referred to in those orders is a minor matter designed to overcome the inconvenience of a bank holiday occurring on what would otherwise have been the implementation date. I record that I have been advised by the applicant that this order will be relied upon for the purposes of s 3(a)(10) of the US Securities Act. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.