Spookfish Limited, in the matter of Spookfish Limited (No 2) [2018] FCA 1966

Nature of the scheme 5 The scheme facilitates the acquisition by EagleView Technologies Inc (EagleView) of all the issued capital of Spookfish that it does not already own by payment of $.09 for each Spookfish share.

Principles 6 The Court should be slow to conclude that a scheme is unreasonable or unfair, provided that the members have been properly informed of matters relevant to the making of their decision, as that would otherwise involve the Court substituting its commercial judgment for that of the body of members: Seven Network Limited, in the matter of Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at [31]-[40] (Jacobson J). 7 The matters the Court must take into account in deciding whether to approve the scheme were summarised in Seven Network Limited (No 3) and David Jones Limited, in the matter of David Jones Limited (No 3) [2014] FCA 753 (Farrell J) and include whether: (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 the Australian Securities and Investments Commission (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 company 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) of the Corporations Act 2001 (Cth) (Act) that the scheme has not been proposed to avoid Ch 6 of the Act (takeovers provisions), or that the company has a statement from ASIC that it has no objection to the scheme.

Evidence relied upon 8 Spookfish relies on the affidavits that were filed in support of the first hearing and also the following: (a) affidavit of Jason Marinko as to his role as chairperson of the shareholders' meeting, the treatment of proxies and voting; (b) affidavit of Shannon Robinson, a director of Spookfish, as to her supervision of Computershare Investor Services Pty Limited (Computershare) including the despatch of the scheme booklet; (c) affidavits of Caitlin Robinson of Computershare as to the despatch of the scheme materials, maintenance of the register of shareholders, website access for shareholders, the number of shares and shareholders as at the cut-off date for eligibility to vote and the number of shareholders attending the shareholders' meeting; (d) affidavits of Mark Paganin, legal adviser to Spookfish, as to the registration of the scheme booklet, notice to ASIC, advertising of the meeting and satisfaction of the conditions precedent and providing a copy letter from ASIC under s 411(17)(b) of the Act; and (e) affidavit of David Silverman of EagleView as to the requisite approval from the Foreign Investment Review Board (FIRB) and the capacity and intention of EagleView to pay the scheme consideration.

Voting majorities 9 Section 411(4) of the Act relevantly provides that an arrangement is binding on the members of a company and the company if, at a meeting convened in accordance with an order of the Court, a resolution in favour of the arrangement is: (a) passed by a majority in number of the members present and voting (either in person or by proxy) (s 411(4)(a)(ii)(A)); and (b) if the body has a share capital - passed by 75% of the votes cast on the resolution (s 411(4)(a)(ii)(B)) and the arrangement is approved by order of the Court. 10 I am satisfied that the requisite majorities were achieved at the shareholders' meeting (the following information is taken from Mr Marinko's affidavit). 11 As at the cut-off date for eligibility to vote (14 November 2018) there were 1,262,879,188 shares on issue held by 2,658 shareholders. 12 Of those shares: (a) 822,344,886 votes were cast at the scheme meeting, being approximately 65.12% of the shares on issue as at the cut-off date; (b) 388 shareholders present and voting (including by proxy) voted in favour of the scheme, being 79.67% on a headcount basis, and 99 voted against; (c) 807,532,534 votes were cast in favour of the resolution at the scheme meeting, being 98.20% of all votes cast; (d) 14,812,352 votes were cast against the resolution at the scheme meeting, being 1.80% of all votes cast. 13 EagleView did not vote at the scheme meeting. Other procedural matters complied with 14 Ms Robinson deposed to various issues with a small number of bounce-back emails and steps taken to provide hard copy service of the scheme documents on the relevant shareholders. Such service was outside the date provided by the terms of the Court orders. However, taking into account the number of shareholders affected, Spookfish submitted that the non-compliance is a procedural irregularity that is automatically validated under s 1322(1)(b)(ii) of the Act. I agree with that proposition. The number of shares concerned was small and the evidence of Ms Robinson established that had the holders of those shares voted, it would not have affected the outcome of the resolutions. Even if those shareholders failed to vote due to late receipt of documents, they will still be entitled to participate in the scheme. In the circumstances, the procedural irregularity is of no real consequence. 15 Having reviewed the evidence, I am satisfied that all of the other procedural requirements of the Act and orders have been met. 16 The orders and scheme booklet were lodged with ASIC. 17 The Court's orders regarding despatch of the notice of meeting, scheme booklet and proxy forms to the members were otherwise complied with. Conditions precedent to the scheme 18 The scheme implementation agreement (as varied) set out a number of conditions precedent to the implementation of the scheme, as did the scheme document. The FIRB approval condition precedent was satisfied on 12 November 2018 (affidavit of Mr Silverman). The scheme shareholder approval condition precedent contained in the scheme implementation agreement (as varied) was satisfied on 16 November 2018 (affidavit of Mr Marinko). 19 All other conditions precedent were satisfied prior to the date of the hearing and Mr Paganin's final affidavit attached the requisite certificates on behalf of Spookfish and EagleView to that effect.

Section 411(17) 20 ASIC has provided its 'no objection' letter under s 411(17) of the Act stating that it has no objection to the scheme. 21 Further, I acknowledge that the directors of Spookfish had a commercially valid reason for proceeding by way of a scheme of arrangement which provided for certainty by 100% ownership by the bidder. I do not consider there is any evidence to support an inference that the scheme was undertaken in order to avoid the requirements of Ch 6 of the Act.

Scheme fair and reasonable and should be approved 22 Spookfish submitted that the Court can be satisfied as to the following matters: (a) full disclosure has been made to shareholders, both as to the benefits and potential benefits of the scheme, and as to its potential disadvantages. Relevantly, the scheme booklet contains a detailed summary of the advantages and disadvantages, details of the break fee payable by Spookfish in certain circumstances, the independent expert's report, the terms of the scheme and the deed poll executed by EagleView; (b) Spookfish included detailed verified information in the scheme booklet to fully inform the shareholders of the scheme before they decided on whether to approve it; (c) the scheme booklet sent to the shareholders complies with the requirements of s 411 and s 412 of the Act; (d) the terms of the scheme implementation agreement are uncontroversial; (e) there is sufficient protection with respect to performance risk and EagleView's obligations under the scheme implementation agreement; (f) in the opinion of the independent expert the scheme is fair and reasonable and in the best interests of shareholders, in the absence of a superior offer; (g) Spookfish has not received any superior offer; (h) Spookfish has complied with the previous order of the Court; and (i) the scheme has been proposed in good faith and is not commercially immoral in any respect. 23 Having carefully considered the evidence, I accept Spookfish's submission. I accept that there has been full and frank disclosure to shareholders and I note in particular the conclusion of the independent expert. Further, the Court generally takes the view that the members are in the best position to judge whether an arrangement is in their commercial interests and will be reluctant to make a decision contrary to the views expressed at the meeting. In the circumstances, I consider the scheme is evidently fair and reasonable.

Conclusion 24 For those reasons, I made orders approving the scheme. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Banks-Smith.