QMS Media Limited, in the matter of QMS Media Limited (No 2) [2020] FCA 142

O'CALLAGHAN J: 1 These reasons for judgment were delivered ex tempore at the hearing on 10 February 2020 and accompany the orders set out above. 2 On 12 December 2019, I ordered that QMS Media Limited (QMS) convene separate meetings (the Scheme Meetings) of two classes of the holders of its fully-paid ordinary shares (QMS Shareholders) for the purposes of them considering and, if thought fit, agreeing to a proposed scheme of arrangement (the Scheme) between them and QMS. 3 The orders addressed matters relating to the holding of the Scheme Meetings and the despatch of materials to QMS Shareholders in connection with the Scheme Meetings. The orders also provided for the approval hearing to take place in Melbourne before me today. My reasons for making the 12 December orders are contained in Re QMS Media Limited [2019] FCA 2172. These reasons should be read in conjunction with those earlier reasons. 4 In those circumstances, I do not intend to rehearse an overview of the Scheme. 5 The Scheme Meetings were duly held on 6 February 2020 and the Scheme resolutions were passed by the requisite statutory majorities. 6 The Scheme, if implemented, will result in the acquisition of all the ordinary shares in QMS by Shelley BidCo Pty Ltd (BidCo) and the subsequent delisting of QMS. BidCo is a special purpose entity established for the purpose of acquiring all of the QMS shares under the Scheme. It is an indirect, wholly-owned subsidiary of Shelley TopCo Pty Ltd (HoldCo), which is a vehicle set up for investment in QMS by Quadrant Private Equity, an independent private equity firm. 7 QMS now seeks orders approving the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act), and exempting it from compliance with s 411(11) of the Act pursuant to s 411(12). 8 The Scheme Booklet was registered by the Australian Securities and Investments Commission (ASIC) on 13 December 2019. 9 In support of its application for approval of the Scheme, QMS relied on the affidavits listed in Annexure 1 to these reasons. 10 I have had the benefit of detailed written and oral submissions by Mr Ahern of counsel on behalf of QMS. I have considered those submissions, and Mr Ahern has taken me to the relevant parts of the affidavits in support of the orders. 11 The reasons for making the orders approving the Scheme and exempting QMS from compliance with s 411(11) of the Act can thus be stated succinctly. The affidavit material to which I have referred proves the following: (a) the Scheme Meetings were held on 6 February 2020 at the RACV club, Level 2, 501 Bourke Street, Melbourne in Victoria; (b) the General Scheme Meeting commenced at 10.00am Melbourne time and concluded at 10.50am; (c) the Rollover Scheme Meeting commenced at 11.00am Melbourne time, which was immediately following the conclusion of the General Scheme Meeting; (d) each of the General Scheme Meeting and Rollover Scheme Meeting was chaired by Mr Stevenson, the chairman and non-executive director of QMS; (e) there was a quorum present at both Meetings; (f) a poll was taken on the Scheme resolution at the General Scheme Meeting and a poll was taken on the Scheme resolution at the Rollover Scheme Meeting; and (g) pursuant to the 12 December orders, an advertisement of the proposed approval hearing was published in The Australian newspaper on 28 January 2020. 12 At this morning's hearing, counsel for QMS tendered a letter from ASIC under s 411(17)(b) of the Act stating that ASIC has no objection to the Scheme. 13 I am satisfied that the affidavit evidence filed on behalf of QMS in support of the approval orders demonstrates compliance with the 12 December orders. 14 In circumstances where, in my view, no contentious issue arises, it is not necessary, and I do not propose, to rehearse the well-known cases describing the role of the court at an approval hearing such as this. It is sufficient for me to say that, in deciding whether to grant approval of a scheme of this sort, the court will ordinarily have regard to such matters as: (a) whether the orders of the court convening the meeting (or in this case meetings) of members were complied with; (b) whether the meeting (or in this case meetings) so convened approved the scheme with the requisite majority; (c) whether all other relevant statutory requirements have been satisfied; (d) whether the scheme is fair and reasonable so that an honest and intelligent person who is a member of the relevant class or classes, properly informed and acting alone, might approve it; (e) whether there has been full and fair disclosure to members and creditors of all information material the decision whether to vote for or against the scheme; and (f) whether the plaintiff (here QMS) has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's jurisdiction. 15 The requisite majorities for the purpose of s 411(4) of the Act were satisfied. 96.62% of the General Shareholders that were present and voting (in person or by proxy) at the General Scheme Meeting voted in favour of the Scheme resolution. 99.98% of the votes cast (in person or by proxy) at the General Scheme Meeting were cast in favour of the Scheme resolution. 100% of the Rollover Shareholders that were present and voting (in person or by proxy) at the Rollover Scheme Meeting voted in favour of the Scheme resolution. And 100% of the votes cast (in person or by proxy) at the Rollover Scheme Meeting were cast in favour of the Scheme resolution. 16 Section 411(17) of the Act provides that the court must not approve a compromise or arrangement under that section unless 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 of the Act, or there is produced to the court, as occurred in this case, a statement in writing by ASIC stating that it has no objection to the compromise or arrangement. 17 In my view, this is an appropriate case in which the court should make an order pursuant to s 411(4)(b) approving the Scheme, having regard to the following: (a) the support of QMS Shareholders as reflected in the voting results at the Scheme Meetings, the evidence of which I have summarised above; (b) the opinion of the independent expert (Lonergan Edwards & Associates Limited) that the Scheme is fair and reasonable and therefore in the best interests of QMS shareholders, in the absence of a superior proposal; (c) the position of ASIC that it has no objection to the Scheme; (d) no competing proposal having arisen; (e) the terms and nature of the Scheme; (f) the unanimous recommendation of the board of directors of QMS, which was contained in the Scheme Booklet, that QMS Shareholders vote in favour of the Scheme; (g) the disclosures made in the Scheme Booklet; (h) there being nothing to suggest that the Scheme was proposed other than in good faith; (i) there being nothing to suggest that the General Shareholders or the Rollover Shareholders voted other than in good faith; and (j) there being nothing to suggest that any QMS Shareholder was oppressed. 18 In light of those matters, I am satisfied that the Scheme has been made in good faith and is fair and reasonable so that an honest and intelligent person who is a member of the relevant class or classes, properly informed and acting alone, might approve it. 19 It is accordingly appropriate that the court exercise its jurisdiction to approve the Scheme. 20 Section 411(11) of the Act provides, subject to s 411(12), that a copy of the court's order approving the Scheme be annexed to every copy of the company's constitution issued after the order is made. Section 411(12) allows the court to exempt a body from compliance with this provision or to determine the period during which it shall comply. 21 Such exemption orders are invariably made in schemes of arrangement of this type, where there is no alteration to the constitution, and the company acquired is to become a wholly-owned subsidiary of the bidder. 22 For those reasons, I will make the orders sought as set out above. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan.

Affidavits relied on (1) Affidavit of Michael James Hruby (Investment Director of Quadrant Private Equity) affirmed 3 February 2020 (which addresses whether BidCo has any interest in QMS shares and the constitution and shareholders' deed for HoldCo). (2) Affidavit of Michael Milan Milivojac (Managing Director of Doray Pty Ltd, trading as Minuteman Press Melbourne CBD) affirmed 5 February 2020 (which addresses the printing of 800 copies of the typeset Scheme Booklet for Computershare Limited (Computershare) and the delivery of those Scheme Booklets to Computershare on 18 December 2019). (3) Affidavit of Gregory James McKenzie (a partner of Lander & Rogers, the plaintiff's solicitors) sworn 6 February 2020 (which addresses, among other things, the finalisation of the typeset version of the Scheme Booklet, the finalisation of each of the proxy forms, the email notification and the election form following the first court hearing, registration of the Scheme Booklet with ASIC, the preparation of the typeset Scheme Booklet from the PDF version approved by ASIC, ASX announcements made by QMS, the advertisement of the second court hearing, and the fact that no notice had been received from any person proposing to object to the approval of the Scheme). (4) Affidavit of Peter Renda (Relationship Manager, Computershare) affirmed 6 February 2020 (which addresses the operation of the QMS share register, the postal and email despatch of the Scheme materials to QMS Shareholders on 19 December 2019 (being the despatch date under the order), subsequent shareholder requests for materials to be sent by post or email and referral of other shareholder communications to the shareholder information line, return mail and the return of proxy forms and election forms by the Rollover Shareholders, and two secondary despatches of materials which were conducted by QMS but were not required by the 12 December 2020 orders). (5) Affidavit of Peter Renda affirmed 6 February 2020 (the second of two affidavits affirmed by Mr Renda on that date, which addresses Mr Renda's role as the returning officer for the Scheme Meetings, and the process at those meetings for processing proxy forms, registering attendees, conducting the polls, counting the results, and delivering those results to the chair). (6) Affidavit of Wayne Hugh Stevenson (chairman and non-executive director of QMS, who chaired the Scheme Meetings) sworn 6 February 2020 (which addresses the establishment of a micro-site on the QMS website containing information about the Scheme, the holding of the Scheme Meetings, the passing of the Scheme resolutions at those meetings and the lack of a competing proposal). (7) Affidavit of Ben Noel Horne (Account Director, Georgeson Shareholder Communications Australia Pty Ltd, a subsidiary of Computershare (Georgeson)) affirmed 7 February 2020 (which addresses shareholder communications undertaken by Georgeson comprising the shareholder information line, the retail outbound campaign, the institutional outbound campaign, a proxy adviser campaign and attending to requests for documents). (8) Affidavit of Gregory James McKenzie sworn 10 February 2020 (which addresses (among other matters) the satisfaction of the conditions precedent to the Scheme and whether notice has been received from any person proposing to appear at the second court hearing to object to the approval of the Scheme). (9) Affidavit of Gregory James McKenzie sworn 10 February 2020 (which annexes a letter from ASIC confirming for the purposes of s 411(17)(b) of the Act that ASIC has no objection to the Scheme).