Village Roadshow Limited, in the matter of Village Roadshow Limited (No 2) [2020] FCA 1857

INTRODUCTION 1 On 15 December 2020, I made orders in this proceeding. These are the reasons for those orders. 2 In this proceeding, the plaintiff ('VRL') seeks orders pursuant to ss 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth) (the 'Act') approving the Structure A Scheme (as amended), or in the alternative, and pursuant to the same provisions, an order approving the Structure B Scheme (as amended). Both Schemes (before amendment) were described in my earlier decision in Village Roadshow Limited, in the matter of Village Roadshow Limited [2020] FCA 1669 ('Village Roadshow No 1') and I adopt the same terms as in that decision unless otherwise stated. Further relief is sought by VRL with respect to exemption from compliance with s 411(11) of the Act. 3 Both the Structure A Scheme and the Structure B Scheme were approved by the requisite statutory majorities by the members of VRL eligible to vote (in person or by proxy) at the Structure A Scheme Meeting and the Structure B Scheme Meeting respectively. 4 Both meetings were convened pursuant to orders of the Court made on 9 October 2020, as postponed by order of the Court on 25 November 2020, and held on 7 December 2020. 5 As the Structure A Scheme was approved by the requisite majorities, the alternative relief sought by the plaintiff for the Court's approval of the Structure B Scheme would only arise for the Court's consideration if the Structure A Scheme is not approved by the Court. Both Schemes were voted on by VRL shareholders in the knowledge that it was proposed to seek amending orders from the Court at the second court hearing to increase the cash consideration for both Schemes. 6 As I propose to approve the Structure A Scheme, it is upon that Scheme that I will direct most of my attention.

STRUCTURE A SCHEME 7 The effect of the Structure A Scheme, if approved, will be that BGH will acquire, directly or indirectly, 100% of the ordinary shares in VRL. 8 In summary, the Structure A Scheme has two components. The first is that funds controlled by BGH will indirectly acquire approximately 39.91% of the shares in VRL by: (a) acquiring 100% of the shares in Positive, the holding company of VRL's largest shareholder, VRC; and (b) VRC acquiring the VRL shares held directly or indirectly by the VRC Principals. 9 The second component, in relation to the balance of approximately 60.09% of the shares in VRL, is a scheme of arrangement under Part 5.1 of the Act between VRL and the Structure A Scheme Shareholders by which VRC will acquire the remaining VRL shares on issue. VRC is the bidder under the Structure A Scheme. 10 Once the Structure A Scheme is implemented, VRL will become a wholly-owned subsidiary of VRC, with BGH attaining control of VRL through its ownership of Positive. 11 Under the Structure A Scheme, VRL shareholders are entitled to receive either 100% cash consideration, or elect from two alternatives involving scrip consideration, being either 50% shares in HoldCo and 50% cash consideration, or 100% shares in HoldCo.

EARLIER INTERLOCUTORY HEARING 12 Under the Structure A Scheme, the cash consideration was initially $2.20 per share. This was subject to various uplifts, including the Theme Parks Uplift of $0.12 per share, as well as the Border Uplift and Cinema Uplift. 13 Under the Structure B Scheme, the cash consideration was initially $2.10 per share, subject to the same uplifts that applied to the Structure A Scheme. 14 On 9 November 2020, the parties to the Implementation Agreement entered into a Second Amending Deed to amend the Implementation Agreement ('Second Amending Deed'). These amendments provided that the cash consideration under both the Structure A Scheme and the Structure B Scheme would increase by $0.12 per share as if the Theme Parks Uplift was triggered. Under the Second Amending Deed, all references to the uplifts were otherwise deleted. This information was released via the ASX Announcements platform on 9 November 2020 at approximately 10.02am. 15 A further amendment was made to the definition of 'VRC Principals' in the Implementation Agreement so that it now includes Mr Robert Kirby, Mr Graham Burke and Mr John Kirby as well as certain specified closely related parties. This was done to ensure that family members of Mr Robert Kirby, Mr Burke and Mr John Kirby who are not parties to the VRC Principals Share Sale Agreements, but are VRL shareholders, would not be excluded from voting on the Structure A Scheme, or from participating in the Structure A Scheme if it is approved. 16 In these reasons, I will use the term 'VRC Principals' to refer to Mr Robert Kirby, Mr Graham Burke, Mr John Kirby and their closely related parties as specified in the Implementation Agreement. I will also use the term 'Structure A Excluded Shareholders' to refer to VRC and the VRC Principals. 17 On 22 November 2020, the parties to the Implementation Agreement entered into a Third Amending Deed to further amend the Implementation Agreement. These amendments further increased the cash consideration under the Structure A Scheme from $2.32 per share to $3.00 per share. Cash consideration under the Structure B Scheme was increased from $2.22 to $2.95 per share. This information was released via the ASX Announcements platform on 23 November 2020 at approximately 10.23am. 18 On 24 November 2020, VRL filed an interlocutory application seeking orders: (a) postponing the Structure A Scheme Meeting and the Structure B Scheme Meeting to 7 December 2020; and (b) approving the dispatch of a supplementary disclosure document. 19 Aside from a number of procedural matters (involving postponement of the Scheme Meetings, extensions to the Election Dates for the respective Schemes, and the deadline for proxy forms to be lodged, or to be varied or revoked by the appointing shareholder), relevant matters arising from the proposed supplementary disclosure document were: (a) the increase in cash consideration under the Structure A Scheme and Structure B Scheme to $3.00 and $2.95 per VRL share respectively; and (b) drawing the attention of VRL shareholders to an amendment to the definition of 'VRC Principals' as outlined above. 20 At the hearing, I relied upon a number of authorities, including the decision of Yates J in Re Billabong International Limited (No 2) [2018] FCA 496 and Farrell J in Re OneVue Holdings Limited (No 2) [2020] FCA 1427 to adopt the procedure whereby the shareholders of VRL would vote on the Proposed Schemes in their unamended form, but in the knowledge that the cash consideration had been increased and that at the second court hearing the Court would be asked to approve one of the Proposed Schemes in its amended form pursuant to ss 411(4)(b) and 411(6) of the Act. 21 I note also that Markovic J in Re Onevue Holdings Ltd (No 3) [2020] FCA 1584 made orders approving the scheme before the Court in its amended form pursuant to ss 411(4)(b) and 411(6) of the Act, while also including a notation that, for the purposes of s 411(6) of the Act, the approved form of the scheme included an amendment increasing the scheme consideration. 22 In my view, the Court under s 411(6) of the Act has the power to approve the Structure A Scheme with the amendments to the Scheme consideration and other modifications I have referred to above, and it is appropriate to do so.

EVIDENCE 23 At the second court hearing, VRL relied on the following affidavits: (a) the affidavit of Wayne Albert Hopkins affirmed on 11 December 2020; ('Hopkins Affidavit') (b) the affidavit of Peter Charles Tonagh sworn on 11 December 2020; (c) the affidavit of Simon Thomas Phillipson sworn on 11 December 2020; (d) the affidavit of Haroula Nicolaou Morfis affirmed on 11 December 2020; and (e) the affidavits of Bernard Frederic Oude-Vrielink sworn on 11 December 2020 and 15 December 2020 (respectively, the 'Sixth Oude-Vrielink Affidavit' and the 'Seventh Oude-Vrielink Affidavit'). 24 VRL also relied on the evidence given at the first court hearing and the earlier interlocutory hearing being: (a) the affidavits of Mr Oude-Vrielink sworn on 3 September 2020, 7 October 2020, 9 October 2020, 24 November 2020 and 25 November 2020; (b) the affidavit of Craig Ronald Henderson affirmed 7 October 2020; (c) the affidavit of Haroula Nicolaou Morfis affirmed on 7 October 2020; (d) the affidavit of Reginald Stephen Cooper sworn on 7 October 2020; (e) the affidavit of Peter Charles Tonagh sworn on 7 October 2020 (the 'Tonagh Affidavit'); (f) the affidavit of Simon Thomas Phillipson sworn on 7 October 2020; and (g) the affidavit of Kamran Jamshidi affirmed on 25 November 2020. 25 The Seventh Oude-Vrielink Affidavit annexed a letter from ASIC stating that it has no objection to either the Structure A Scheme or the Structure B Scheme, in satisfaction of s 411(17)(b) of the Act. 26 The Seventh Oude-Vrielink Affidavit also annexed certificates executed by the parties to the Implementation Agreement confirming that the conditions precedent have been satisfied in respect of the Structure A Scheme and the Structure B Scheme in accordance with the terms of the Schemes and the Implementation Agreement.

LEGAL PRINCIPLES REGARDING THE ROLE OF THE COURT AT THE SECOND HEARING 27 In Re APN Outdoor Group Ltd (No 2) [2018] FCA 1633, Markovic J observed (at [4]): The role of the Court in approving a scheme of arrangement is supervisory. The Court has a discretion whether to approve a scheme pursuant to s 411(4)(b) of the Act.It is not bound to approve it merely because it previously made orders for the convening of a meeting or because the statutory majorities have been achieved. However, the Court will usually approach its task on the basis that members are better judges of what is in their own commercial interests than the Court: see Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583; [2010] FCA 400 (Re Seven Network) at [31]-[32] (per Jacobson J). 28 In Re Opus Group Limited (No 2) [2018] FCA 1413, Banks-Smith J stated the following principles that apply to the role of the Court in approving a scheme of arrangement under s 411(4)(b) of the Act: [6] The considerations relevant to the Court's decision to approve a scheme pursuant to s 411(4)(b) of the Act are well established. Where a majority of members have approved a scheme, the Court is not bound to approve it, however 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: Re 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 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 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 plaintiff] 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) that the scheme has not been proposed to avoid Chapter 6 of the Act, or that [the plaintiff] has a statement from ASIC that it has no objection to the scheme: Seven Network Limited (No 3); Re David Jones Limited (No 3) [2014] FCA 753 (Farrell J).

COMPLIANCE WITH CONVENING ORDERS AND INTERLOCUTORY ORDERS 29 As noted above, the Structure A Scheme Meeting and the Structure B Scheme Meeting were convened by orders of the Court on 9 October 2020 (the 'Convening Orders') and subsequently postponed by order of the Court on 25 November 2020 (the 'Interlocutory Orders') to 7 December 2020.

Convening Orders and Interlocutory Orders 30 The Convening Orders at order 2 (and adopting the terms defined in those orders) required the Scheme Meetings to be convened by sending on or before 21 October 2020: (a) in the case of VRL Shareholders who are Email Shareholders, an email substantially in the form at Annexure 'PCT39' to the Tonagh Affidavit, which included access by an embedded link to the following documents: (i) an electronic copy of a document substantially in the form of the Scheme Booklet, which contains, among other things, the Notice of Structure A Scheme Meeting and Notice of Structure B Scheme Meeting; and (ii) for Structure A VRL Shareholders: (A) a personalised Structure A Proxy Form; and (B) a personalised Structure A Election Form; (iii) for Structure B VRL Shareholders: (A) a personalised Structure B Proxy Form; and (B) a personalised Structure B Election Form; (iv) an online portal or website that is accessible by the Email Shareholder and which enables the Email Shareholder to lodge their proxy for the Scheme Meetings and voting instructions online; and (v) an email address to which Email Shareholders can return their Structure A Election Forms and Structure B Election Forms by email; (b) in the case of VRL Shareholders who are Postal Shareholders and whose registered address is in Australia, the following documents by prepaid post addressed to the relevant addresses recorded in VRL's register: (i) a Postal Shareholder Letter, which contains the address of a website which enables Postal Shareholders to access the Scheme Booklet, an online portal or website that is accessible by the Postal Shareholder and which enables the Postal Shareholder to lodge their proxy for the Scheme Meetings and voting instructions online, access their personalised Structure A Election Form and Structure B Election Form and an email address to which Postal Shareholders can return their Structure A Election Forms and Structure B Election Forms by email; (ii) an extract of the Scheme Booklet comprising of the Letter from the Chairman of the IBC; (iii) for Structure A VRL Shareholders: (A) a personalised Structure A Proxy Form; and (B) a personalised Structure A Election Form; (iv) for Structure B VRL Shareholders: (A) a personalised Structure B Proxy Form; and (B) a personalised Structure B Election Form; (v) two reply paid envelopes for the return of that VRL Shareholder's: (A) Structure A Proxy Form and Structure B Proxy Form; and (B) Structure A Election Form and Structure B Election Form; (c) in the case of Postal Shareholders whose registered address is outside Australia, the following documents by prepaid airmail post addressed to the relevant addresses recorded in VRL's register: (i) a Postal Shareholder Letter; (ii) the Letter from the Chairman of the IBC; (iii) for Structure A VRL Shareholders: (A) a personalised Structure A Proxy Form; and (B) a personalised Structure A Election Form; (iv) for Structure B VRL Shareholders: (A) a personalised Structure B Proxy Form; and (B) a personalised Structure B Election Form; (v) two self-addressed envelopes for the return of that VRL Shareholder's: (A) Structure A Proxy Form and Structure B Proxy Form; and (B) Structure A Election Form and Structure B Election Form; (d) in the case of VRL Shareholders who are Email Shareholders and who VRC or BidCo (as applicable) consider or reasonably believe are Relevant Foreign Resident Email Shareholders, an email substantially in the form at Annexure 'PCT41' to the Tonagh Affidavit, which includes access by an embedded link to the following documents: (i) the documents specified in 30 above; (ii) for Structure A VRL Shareholders, a personalised Structure A Foreign Resident Declaration Form; (iii) for Structure B VRL Shareholders, a personalised Structure B Foreign Resident Declaration Form; (e) in the case of VRL Shareholders who are Postal Shareholders and who VRC or BidCo (as applicable) considers or reasonably believes are Relevant Foreign Resident Postal Shareholders, a letter substantially in the form of Annexure 'PCT42' to the Tonagh Affidavit, and the following documents by prepaid airmail post addressed to the relevant addresses recorded in VRL's register: (i) the documents specified in 30 or 30 (as applicable) above; (ii) for Structure A VRL Shareholders, a personalised Structure A Foreign Resident Declaration Form; (iii) for Structure B VRL Shareholders, a personalised Structure B Foreign Resident Declaration Form; and (iv) a reply paid or self-addressed envelope (as applicable) for the return of that Relevant Foreign Resident Postal Shareholder's Structure A Foreign Resident Declaration Form and Structure B Foreign Resident Declaration Form. 31 The Convening Orders at order 4(b) required that the Scheme Meetings were to be held and conducted electronically, without any physical meeting of VRL shareholders being held. Order 4(c) provided that VRL shareholders were to be permitted to submit questions via the website, subject to the function and powers of the Chair under VRL's Constitution and the general law. 32 The Convening Orders at order 6 required voting on both resolutions to approve the Structure A Scheme and the Structure B Scheme to be conducted by way of a poll. 33 The Convening Orders at order 11 required VRL to publish in The Australian newspaper once on or before 27 November 2020 a notice of hearing substantially in the form of Annexure C to the Convening Orders. 34 Following the interlocutory hearing on 25 November 2020, the Court made the Interlocutory Orders ordering, among other things, VRL to dispatch a supplementary disclosure document, including a Notice of Postponed Structure A Scheme Meeting and a Notice of Postponed Structure B Scheme Meeting ('Supplementary Disclosure Document'), to shareholders on or before 26 November 2020. 35 Order 7 of the Interlocutory Orders required VRL to publish in The Australian newspaper once on or before 7 December 2020 a notice of hearing substantially in the form of Annexure A to the Interlocutory Orders.

Compliance with Convening Orders and Interlocutory Orders 36 Evidence of the dispatch of relevant material for the Proposed Schemes is given in the Hopkins Affidavit and establishes that, in accordance with Court orders, various documents (including the Supplementary Disclosure Document) were dispatched to the VRL shareholders. 37 I am satisfied that the required documents for the Proposed Schemes, including Notices of the Scheme Meetings, Proxy Forms and Election Forms, were dispatched to all registered VRL shareholders. I also observe that: (a) the Scheme Booklet and the Supplementary Disclosure Document were released on the ASX Announcements platform and via the 'ASX Announcements' section of VRL's website; (b) VRL published in The Australian newspaper on 7 December 2020 a notice of hearing substantially in the form of Annexure A to the Interlocutory Orders. 38 In respect of conduct of the Scheme Meetings, as noted above, order 4(b) of the Convening Orders required the Scheme Meetings to be held and conducted electronically, without any physical meeting of VRL shareholders being held ('Virtual Meeting Orders'). 39 I am satisfied that VRL complied with the Virtual Meeting Orders and the other Court orders relating to the conduct of the Scheme Meetings.

PROCEDURAL IRREGULARITIES 40 VRL's directors and auditor were given the Notice of the Structure A Scheme Meeting and the Notice of Structure B Scheme Meeting at least 28 days' in advance of the Scheme Meetings. However, VRL's directors and auditor were only given a copy of the Supplementary Disclosure Document including the Notice of Postponed Structure A Scheme Meeting and Postponed Structure B Scheme Meeting on 1 December 2020. Although this was not within the time required by ss 249J(1) and 249K(1) of the Act, in circumstances where the Interlocutory Orders were made on 25 November 2020 and the Scheme Meetings were convened to be held on 7 December 2020, compliance with ss 249J(1) and 249K(1) of the Act was therefore not possible. 41 A failure to give 28 days' notice of a members' meeting is a procedural irregularity within the meaning of s 1322(1)(b)(ii) of the Act: see Re Metals Exploration Ltd [2007] FCA 84 at [12] (Siopis J). I do not consider that the late notice for the postponed Scheme Meetings has caused any substantial injustice. It follows that, in accordance with s 1322(2) of the Act, the meeting is not invalidated by reason of these procedural irregularities.

PASSING OF APPROVAL RESOLUTIONS FOR THE STRUCTURE A SCHEME 42 With respect to the Structure A Scheme, as at 11.00am on 5 December 2020, there were 5,739 VRL shareholders (other than the 'Structure A Excluded Shareholders'), holding 117,360,257 VRL Shares, who were eligible to vote on the Scheme resolution. The results of the proxy voting on the Structure A Scheme Meeting are detailed in the Hopkins Affidavit.

Results of voting 43 The number of shareholders who voted on the resolution, either in person or by proxy, was 1,254 (21.85% of the total eligible holders), holding 87,695,263 shares (74.72% of the total shares). 44 Of those shareholders, 950 (75.76% of shareholders present and voting in person or by proxy) voted in favour of the resolution; and 304 shareholders (24.24% of those present and voting in person or by proxy) voted against the resolution. Accordingly, the voting majority required by s 411(4)(a)(ii)(A) of the Act was satisfied. 45 The number of shares voted in favour of the resolution was 73,410,907 (83.71% of the total number of shares voted). The number of shares voted against the resolution was 14,284,356 (16.29% of the total number of shares voted). Accordingly, the voting majority required by s 411(4)(a)(ii)(B) of the Act was satisfied.

Voter turnout 46 Even where the statutory majorities are achieved, it is not uncommon for the Court at the second court hearing to consider the number of shareholders who attended the scheme meeting in person or voted by proxy, as low shareholder turnout may be an indication that some procedural irregularity occurred: Re TriAusMin Ltd (No 2) [2014] FCA 833 per Farrell J at [10]-[12]. See also Re Sienna Cancer Diagnostics Limited (No 2) [2020] FCA 1088 per Moshinsky J at [32]-[35]; Re SRG Limited (No 2) [2018] FCA 1424 per Banks-Smith J at [16]-[17]; and Re Gindalbie Metals Ltd (No 2) [2019] FCA 1066 per Colvin J at [5]-[8]. 47 With respect to the Structure A Scheme Meeting, voter turnout was 21.85% of the total eligible holders, holding 74.72% of the total shares able to be voted at that meeting. 48 I do not consider that the issue of low voter turnout is of concern, and make the following observations: (a) although the turnout was approximately 20% for both Scheme Meetings, in each case those shareholders held a significant number of VRL's shares, being approximately 75% and 85% of the shares able to be voted on the resolutions to approve the Structure A Scheme and the Structure B Scheme respectively; (b) voter turnout numbers at the Scheme Meetings were approximately three times higher than average turnout for VRL's Annual General Meeting in each of the past three years; (c) there is no evidence before the Court of any procedural irregularity (other than in respect of certain notices to VRL's directors and auditor as noted above), or lack of notice to members, or that the vote was not representative of the membership as a whole, or that there was any deterrence from attending the Scheme Meetings; (d) VRL conducted a shareholder engagement campaign to alert shareholders to the Proposed Schemes, and operated a 'Shareholder Information Line' (described in further detail below); (e) VRL engaged shareholders again by telephone with respect to the Supplementary Disclosure Document; (f) the shareholders who did vote in person or by proxy voted to approve both the Structure A Scheme and the Structure B Scheme in significant numbers; and (g) as I have noted above, the Court's orders for convening of the Scheme Meetings and dispatch of the Scheme Booklet and the Supplementary Disclosure Document to shareholders were complied with.

THE STRUCTURE A SCHEME IS FAIR AND REASONABLE 49 Prior to the increase in the cash consideration under both Proposed Schemes, the Independent Expert opined that each of the Proposed Schemes was fair and reasonable, and was in the best interests of shareholders of VRL as a whole in the absence of a superior proposal. 50 The Independent Expert was subsequently provided with additional material released by Mittleman to the market on 25 November 2020. This material made the same assertions as are in the letter dated 9 October 2020 referred to at [120] of my reasons in Village Roadshow No 1 (the 'October Mittleman Letter'). The Independent Expert opined that there was nothing in that material that would cause the Independent Expert to revise its opinion in relation to the Proposed Schemes. 51 In the October Mittleman Letter, Mittleman contended that the Proposed Schemes were prejudicial to VRL shareholders, unfair and oppressive. As to the Structure A Scheme, Mittleman argued that because the Structure A Excluded Shareholders (defined in the October Mittleman Letter as the 'VRC Related Shareholders') were entitled to vote on the Structure B Scheme, and since the Structure B Scheme had lower consideration and restructure rights, other VRL shareholders would be "compelled" to vote in favour of the Structure A Scheme to avoid a worse financial outcome under the Structure B Scheme, which is coercive and contrary to the purposes of s 602 of the Act. 52 I note that for both the Structure A Scheme and the Structure B Scheme, approximately a third of the shares held by or on behalf of interests held by Mittleman were voted in favour of the resolutions, being 10,465,400 shares for each of the Proposed Schemes. 53 Mittleman did not seek leave to appear at the second court hearing to oppose approval of either Scheme. It is not clear whether Mittleman continues to press its objections in light of the amendments to the Proposed Schemes that reduce the difference in cash consideration per VRL share between the Proposed Schemes to 0.05c. 54 However, it is appropriate I consider whether there are plausible grounds for the Court not to approve the Structure A Scheme, taking into account the relevant matters raised by Mittleman, namely fairness, coercion and fair disclosure. 55 As to the issue of fairness, Beach J said in Re Amcor Ltd (No 2) [2019] FCA 842 (at [11]): Now as I have said, my task is to consider whether the Scheme is fair and reasonable with the test of fairness and reasonableness including a consideration of whether "an intelligent and honest [shareholder], properly informed, acting alone, might approve [the scheme]" (Fowler v Lindholm (2009) 178 FCR 563 at [79] per Emmett, Gordon and Jagot JJ). But the Scheme shareholders' vote in favour of the Scheme is evidence of its inherent fairness. Put another way, if a majority of the Scheme shareholders have approved the Scheme, it is unlikely that the Scheme would be unreasonable. Further, I do not have to be satisfied that no better Scheme could have been devised. 56 The vote by VRL shareholders (other than the Structure A Excluded Shareholders) to approve the Structure A Scheme is strong evidence of its inherent fairness, and I see no basis not to regard the Structure A Scheme as fair and reasonable. 57 As the issue of coercion with respect to the Structure A Scheme, a court would not approve a scheme of arrangement that unreasonably coerces shareholders so as to compel shareholders to vote for the Scheme. 58 The October Mittleman Letter suggests that the fact that shareholders are faced with two concurrent but alternative schemes of arrangement, with higher cash consideration available under the first one, is by its nature coercive. I do not accept this characterisation. 59 Coercion can exist when a majority overrides the will of the minority. In the leading case of In re Alabama, New Orleans, Texas & Pacific Junction Railway Co [1891] 1 Ch 213, Lindley LJ said (at 238-239): ...what the Court has to do is to see, first of all, that the provisions of that statute have been complied with; and, secondly, that the majority has been acting bona fide. The Court also has to see that the minority is not being overridden by a majority having interests of its own clashing with those of the minority whom they seek to coerce. Further than that, the Court has to look at the scheme and see whether it is one as to which persons acting honestly, and viewing the scheme laid before them in the interests of those whom they represent, take a view which can be reasonably taken by business men. The Court must look at the scheme, and see whether the Act has been complied with, whether the majority are acting bona fide, and whether they are coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and then see whether the scheme is a reasonable one or whether there is any reasonable objection to it, or such an objection to it as that any reasonable man might say that he could not approve of it. 60 Since the Structure A Excluded Shareholders did not vote on the Structure A Scheme, and only have approximately 40% of the votes on the Structure B Scheme, the fate of both Schemes rested with the balance of VRL shareholders, and there is no reason why those shareholders would have been impaired from a free consideration of the merits of each Scheme irrespective of what the Structure A Excluded Shareholders may do. While the Structure A Excluded Shareholders could use their voting power to veto the Structure B Scheme, they did not have the voting power to carry the Structure B Scheme against the opposition of all other shareholders. Conversely, the shareholders other than the Structure A Excluded Shareholders could have chosen to vote against either Scheme and if they did so in sufficient numbers, the resolution in favour would not be carried regardless of how the Structure A Excluded Shareholders may have voted. 61 As to disclosure, in Village Roadshow No 1, I took the view at [119] that the Scheme Booklet provided sufficient information and proper and fair disclosure to inform a VRL shareholder's decision whether or not to vote for either of the Proposed Schemes. I still hold that view. 62 In addition, as I have referred to above, VRL operated a 'Shareholder Information Line' between 22 October 2020 and 7 December 2020, Monday to Friday between 8:30am and 5:30pm, for any VRL shareholders who had questions or complaints about either of the Proposed Schemes, the Scheme Booklet, or the Supplementary Disclosure Document. 63 In conclusion, I am satisfied that Structure A Scheme is fair and reasonable such that an intelligent and honest shareholder, properly informed and acting alone, would approve it.

NO OBJECTION STATEMENT 64 There was at some stage an issue that certain of the Structure A Excluded Shareholders may have been acting in concert with BGH and should therefore be considered 'associates' of BGH. 65 Aside from a shared goal or purpose, there is no evidence to suggest that the interactions between BGH and the Structure A Excluded Shareholders provide any reason not to approve the Structure A Scheme. 66 This issue was raised, but was not seen as a basis of objection by ASIC, in the letter from ASIC to the directors of VRL dated 14 December 2020, which is before the Court in accordance with s 411(17)(b) of the Act: Dear Directors VILLAGE ROADSHOW LIMITED ACN 010 672 054 - SCHEMES OF ARRANGEMENT No objection under paragraph 411(17)(b) of the Corporations Act 2001 We refer to the proposed schemes of arrangement (Scheme) under Part 5.1 of the Corporations Act 2001 (Act) between Village Roadshow Limited ACN 010 672 054 (VRL) and its members. ASIC's position We advise that, under paragraph 411(17)(b) of the Act, ASIC does not object to the Scheme. This advice is given having regard to ASIC's criteria for providing a statement in writing that it has no objection, as set out in ASIC Regulatory Guide 60 Schemes of arrangement, and taking into account the matters set out below. Matters previously raised by ASIC In the course of previous discussions and correspondence regarding the Scheme, ASIC raised a concern that the circumstances leading to the making of the statement by Spheria Asset Management Pty Ltd (Spheria) dated 22 November 2020, and the increase in the Scheme consideration by BGH Capital Pty Limited (and/or entities under its control) (the BGH Entities), evinced an overall agreement, arrangement or understanding regarding the voting of Spheria's holding in VRL. ASIC's concern was that this agreement was sufficient to result in the BGH Entities acquiring a relevant interest in Spheria's holding under the broad concept of power or control over voting set out in s608(1) and (2) of the Act which, given the aggregate holdings of the BGH Entities, would be prohibited under s606(1) of the Act. Further details regarding our concerns are set out in our letter of 25 November 2020 which we provided in connection with VRL's application, inter alia, for orders to approve the dispatch of a supplementary explanatory statement for the Scheme. At the time ASIC raised this matter with VRL, it was acknowledged that in the event ASIC's concerns were not alleviated ASIC's most likely course, in so far as the Scheme was concerned, would be to invite the Court to consider disregarding any votes cast by or on behalf of Spheria in determining whether to approve the Scheme at the second court hearing. In the event that the Scheme resolutions were passed by a sufficient margin that it could be demonstrated that the Scheme would have met the statutory approval thresholds irrespective of any votes cast by or on behalf of Spheria, ASIC's view in the present circumstances is that it would be unlikely to have any objection to the Scheme. Given this possibility, ASIC did not object to the Scheme being put to a vote provided that VRL agreed to tag any votes cast by or on behalf of Spheria in order to enable any remaining concerns to be considered at the time the Court was asked to consider whether to approve the Scheme. For this reason, ASIC did not seek to be heard at previous hearings in relation to the Scheme, but for completeness foreshadowed in its correspondence that it may seek to raise the issues at the second court hearing. On the basis of the affidavit material provided, ASIC understands that the Scheme was approved by VRL members on 7 December 2020, with 83.71% and 84.95% of the total votes cast being in favour of each Scheme. ASIC understands that if the votes cast by or on behalf of Spheria were excluded from this figure, then the Scheme would nonetheless have passed the statutory vote threshold with a vote of 80.26% and 83.43% in favour respectively. Accordingly, ASIC confirms that it does not object to the Scheme notwithstanding the concerns previously raised. 67 I am satisfied that this issue does not give rise to any reason not to approve the Structure A Scheme.

EXEMPTION FROM S 411(11) OF THE ACT 68 VRL also seeks an order pursuant to s 411(12) of the Act that it be exempted from compliance with s 411(11) of the Act. 69 Section 411(11) of the Act requires, subject to s 411(12), that a copy of the Court's order approving a scheme of arrangement 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. 70 The Structure A Scheme does not amend VRL's Constitution. When the Structure A Scheme is implemented, VRL will become a wholly-owned subsidiary of VRC. In these circumstances it is appropriate for the Court to make an order under s 411(12). I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Middleton.