Tempo Services Limited (ABN 87 001 827 041), in the matter of Tempo Services Limited (ABN 87 001 827 041) [2005] FCA 410

REASONS FOR JUDGMENT 1 With the benefit of a written outline from counsel I have read the affidavits and considered the material exhibited to those affidavits. 2 I am satisfied that this is an appropriate case to convene the meetings. To this end, in no particular order and without endeavouring to be comprehensive, I have had particular regard to the evidence from the independent directors, the communication from ASIC, the independent experts' reports and the evidence from those associated with the bidder, which is directed to the ability to complete and to rebut any notion that this is a device with the particular purpose of avoiding a take-over scheme. 3 I have also given close consideration to the structure of the scheme and, subject to one matter which I will mention in a moment, it is acceptable and is in a form which has become fairly familiar. Counsel points out that it is not dissimilar to the procedure which takes place in relation to a take-over and compulsory acquisition. There are some aspects of this type of scheme which in the past have been regarded as controversial, in particular, where the scheme structure was regarded as a device to avoid the necessity for a take over scheme. However, the received wisdom now is that the choice of which structure to use is simply a choice between two alternatives unless there is some material which would indicate that it is done for an impermissible purpose. 4 The question of option holders has been a vexed one. I propose to follow the preponderance of authority in that respect and to regard them as creditors. The use of powers of attorney by deed poll has also for some time been regarded as an acceptable mechanism to effect a scheme. 5 The one matter to which I have drawn the attention of counsel is that, as a matter of principle, my view is that the security holders whose securities are divested by virtue of a scheme such as this should not have to bear any credit risk occasioned by the mechanism chosen so far as payment is concerned. The way a scheme of this kind operates is that the transfer takes place effectively without the active intervention of the shareholder or option holder or note holder. Whilst payment by the bidder and receipt of title to the security may be contemporaneous, the security holder does not receive the actual cash at that time. Counsel have defended this procedure, referred to the evidence which indicates that there is a trust involved and to the further evidence that has been tendered which buttresses the argument that, upon the scheme coming back if it is approved, the Court will be satisfied that there is no real credit risk involved. It is said to be comparable to compulsory acquisition in relation to takeovers. 6 The evidence is such that I can safely order the scheme meetings to proceed because it is likely that the question of risk of compliance will be solved as undertakings are to be given. It is not clear to me however, that in schemes of this kind it would not be possible to have the intervention of an independent trustee to fulfil that function but, by saying that, I do not intend to lay down any final ruling. 7 It seems to me that these are appropriate schemes to be put before the shareholders, note holders and option holders for their respective collective commercial judgments. It seems to me that the documents are appropriately framed for that to be done. I am thus prepared to make the orders sought. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.