Ruleburst Holdings Ltd, in the matter of Ruleburst Holdings Ltd (No 2) [2008] FCA 2010

REASONS FOR JUDGMENT 1 On 7 November 2008, the Court made orders, pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act), that the plaintiff, Ruleburst Holdings Limited (the Company), convene a meeting of the holders of shares in the Company, a meeting of the holders of convertible notes in the Company and a meeting of the holders of options to subscribe for shares in the Company, for the purpose of respectively considering and, if seen fit, agreeing to schemes of arrangement proposed to be made between the Company and its respective shareholders, note-holders and option-holders. The meetings were held on 8 December 2008. The Company now applies to the Court for approval of the three schemes. 2 In my reasons for making the orders under s 411(1), on 7 November 2008, I set out the brief background to the proposed schemes (see RuleBurst Holdings Limited, in the matter of RuleBurst Holdings Limited [2008] FCA 1901). I have now had regard to further evidence concerning the convening of the meetings and the proposing and passing of resolutions at the meetings. 3 At the meeting of shareholders, 100% of the members present in person or by proxy voted in favour of the resolution. There were 593 shareholders of a total of 776 shareholders present. The shareholders present were the holders of 79,561,643 shares. At the meeting of option-holders, all option-holders present in person or by proxy voted in favour of the resolution. Forty-three option-holders, holding 19,142,000 options, out of the total of 44 option-holders voted. At the meeting of note-holders, all note-holders present in person or proxy voted in favour of the resolution. There were 904 note-holders who voted in person or by proxy of a total of 1,178 note-holders; those who were present hold 6,895,986 notes. Clearly, the resolutions were passed by the requisite majorities, contemplated by s 411. 4 The Company has, consistently with its obligations in relation to an ex parte application such as this, disclosed several matters concerning the convening of the meetings. Because of an error on the part of the mailing house, the scheme booklet, which includes notices of the meetings, was not delivered to 20 security holders with overseas addresses. The 20 overseas security holders consisted of 11 of the total of 776 shareholders, holding a total of 790,664 shares, being 0.88% of the issued shares and 12 of the total 44 option-holders, holding a total of 1,361,250 options, being 7.11% of the issued options. Arrangements were subsequently made for delivery by courier to the 20 overseas security holders between 1 and 5 December 2008. Thus, the overseas security holders received only a few days notice of the meetings. 5 However, proxies in favour of the respective schemes were received from all 12 overseas option-holders and from seven of the 11 overseas shareholders. No proxy was received from four shareholders who together hold 0.58% of the shares in the Company. One of those shareholders, who returned a proxy in favour of the option scheme, indicated his intention to send a proxy in relation with the share scheme, but did not do so. It seems likely, therefore, that the overseas security holders received notice of the meeting and the scheme booklet, in time for a decision to be made. 6 As I have said, the result was that there was unanimous support for the schemes from those security holders who actually voted. The failure to comply strictly with the orders constitutes an error or omission relating to the proceeding, which is a proceeding under the Act. I am satisfied that that error or omission has not, and will not, cause substantial injustice. 7 A further irregularity was also disclosed. The explanatory statement that was before me on the last occasion was lodged with Australian Securities and Investments Commission (the Commission) for registration on 11 November 2008. However, it was not registered by the Commission until 13 November 2008. Nevertheless, the explanatory statement was sent out by pre-paid post to security holders with Australian addresses on 12 November 2008. Section 412(6) of the Act requires that an explanatory statement must not be sent out unless a copy of the statement has been registered by the Commission. There was a contravention of that provision insofar as the explanatory statement was sent out one day prior to its registration. 8 However, the explanatory statement that was dispatched was in the same form as that which was registered by the Commission. Accordingly, there was no prejudice to any party. The failure to comply appears to be an error or omission relating to a proceeding under the Act. I am satisfied that the failure to comply with s 412(6) has not caused, and will not cause, substantial injustice to any person. 9 One further matter that needs to be mentioned is that the schemes that are being put forward for approval vary in a minor respect from the schemes contained in the scheme booklet. In the sale deed, which is an annexure to two of the schemes, Oracle was referred to by a codename; the word "ocean" was used, rather than Oracle. In the proposed sale deed, Oracle will be referred to in that way. Accordingly, the Court has been asked to approve the schemes, subject to those alterations. The Court is authorised to do so, pursuant to s 411(6). 10 I am satisfied, from the evidence that has been read today and the evidence that was before me on the last occasion, that the procedural requirements of the orders made on the last occasion and of the Act's regulations have been complied with, except to the extent that I have indicated. When the matter was called on for hearing today, there was no appearance other than on the part of senior counsel for the Company and senior counsel for Oracle Consolidation Australia Pty Limited, who appeared with leave. 11 By letter of 11 December 2008, the Commission has stated, for the purpose of s 411(17)(b) of the Act, that it has no objection to the schemes of arrangement. The schemes are subject to certain conditions. I have seen evidence that the conditions have either been satisfied or waived. Deed polls have been executed, as contemplated by the schemes. 12 It is clearly inconvenient, having regard to the bulk of the schemes, which attach the sale deed, that copies of the schemes be attached to the constitution of the Company. Accordingly, it is appropriate to exempt the Company from compliance with s 411(11) of the Act in relation to the three schemes. 13 I am satisfied that the members and creditors of the Company who are affected by the schemes have been adequately informed of the effect of the schemes and a substantial proportion of the members and creditors affected have voted in favour of the schemes. As I have said, all of those who have chosen to vote have voted in favour. Accordingly, it is appropriate to accede to the Company's application to approve the three schemes. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.