SGIC Insurance Ltd v Insurance Australia Limited

REASONS FOR JUDGMENT 1 On 23 August 2007, I made orders convening a meeting of the holders of the ordinary shares in Peplin Limited for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement proposed to be made between that company and its shareholders. I also made orders convening a meeting of the holders of options quoted on the Stock Exchange to subscribe for shares in the company for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement proposed to be made between the company and those option-holders. I gave reasons for those orders (Peplin Limited [2007] FCA 1387). 2 I took the view that the scheme was in a form and the material was such as to justify the matter being put before, respectively, the shareholders and option-holders for their consideration. Those meetings have now been held and the support for the scheme has been overwhelming in each case. The approval percentage at the shareholders' meeting was some 99.12 per cent of all votes cast, representing 94.41 per cent of shareholders in number, were in favour of the motion to approve the scheme. At the option-holders' meeting, 99.98 per cent of all votes cast, representing 96.55 per cent of option-holders in number, were in favour of the motion to approve the scheme. 3 I am satisfied that the formalities associated with the calling of the meetings were complied with, save for one irregularity due to a fault on the part of a mailing house. That led to the result that some 274 shareholders had not been dispatched their documents on Friday, 31 August 2007, but the documents were sent on 3 September 2007. That meant that, so far as those shareholders are concerned, comprising approximately 1.4 per cent of the total number of shareholders, they received the information several days late, but in due time to consider the contents. It is submitted that this was a procedural irregularity which is not invalidated unless the court is of the opinion that it has or may cause substantial injustice and declares the proceeding to be invalid. It is submitted that a validation order is unnecessary in this case because s 1322(2) of the Corporations Act 2001 (Cth) (the Act) effects that purpose (see SGIC Insurance Ltd v Insurance Australia Limited (2004) 51 ACSR 593, [2004] FCA 1638 at [12]-[15] per Jacobson J). I agree with that submission. 4 I am satisfied that advertising of the scheme took place in due time, the conduct of the meetings was in accordance with the relevant requirements. A letter was received from the Australian Securities and Investments Commission pursuant to s 411(17)(b). No notice of intention to appear at this hearing has been received, and there has been no appearance at this hearing to oppose the orders. 5 Evidence has been given as to the satisfaction of conditions precedent. The deeds poll have been executed and are still in force. In my opinion, the company has made out a case for approval of each of the schemes pursuant to s 411(4)(b) of the Act. I am also satisfied that it is appropriate to make an exemption order pursuant to s 411(12), that is, there is no need for a court order approving the scheme to be annexed to every copy of the constitution of the company. 6 I have been asked to note that if the Court grants approval of the schemes, Peplin Incorporated intends to rely upon the Court's approval for the purposes of the exemption under s 3(a)(10) of the Securities Act 1933 of the United States. 7 I make orders in accordance with the draft order which I have initialled and placed with the papers, including an order that the orders be entered forthwith. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.