FEDERAL COURT OF AUSTRALIA
Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 3) [2015] FCA 596
IN THE FEDERAL COURT OF AUSTRALIA | |
IN THE MATTER OF AMCOM TELECOMMUNICATIONS LIMITED
ACN 062 046 217
AMCOM TELECOMMUNICATIONS LIMITED ACN 062 046 217 Plaintiff |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
1. Orders 2, 4 and 5 made by McKerracher J on 8 May 2015 be vacated.
2. Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act), the supplementary explanatory statement in a form substantially equivalent to the form that is annexure MAP17 to the seventh affidavit of Mark Anthony Paganin sworn on 25 May 2015, is approved for despatch to each ordinary shareholder of the plaintiff (Shareholder).
3. The supplementary explanatory statement be despatched to each Shareholder in the manner set out in subparagraphs 4(a), 4(b) and 4(c) of the orders in this proceeding on 30 March 2015.
4. Pursuant to s 1319 of the Act the Scheme Meeting be reconvened at 11:00am (AWST) on 15 June 2015 at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia, and that Mr Anthony James Grist or, failing him, Mr Clive Ralph Stein, be the chairperson of that meeting.
5. The notice of meeting issued to Shareholders by Amcom on 2 April 2015 is deemed to still be valid for the purposes of the meeting of members proposed to be held at 11:00am (AWST) on 15 June 2015.
6. The time by which Shareholders must return their proxy forms for the Scheme Meeting is 11:00am (AWST) on 12 June 2015.
7. Valid proxy forms for the Scheme Meeting that have been lodged by Amcom shareholders are deemed to still be valid unless revoked, and members who voted in favour of the Scheme are deemed to have voted in favour of the resolutions to be considered at the Scheme Meeting.
8. The plaintiff is to give notice of the hearing of the application pursuant to s 411(4) of the Act and that notice of the hearing of an application pursuant to s 411(4)(b) of the Act for orders approving the Scheme be published once in "The Australian" newspaper by an advertisement substantially in the form of Annexure A, such advertisement to be published on or before 16 June 2015 and the plaintiff be otherwise exempted from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).
9. The proceeding be adjourned to 23 June 2015 at 11:00am before Justice McKerracher for the hearing of an application to approve the Scheme.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Amcom Telecommunications Limited Notice of Hearing to Approve Scheme of Arrangement pursuant to section 411 of the Corporations Act 2001 (Cth)
To all members of Amcom Telecommunications Limited ACN 062 046 217 (Amcom)
TAKE NOTICE that at 11:00am on 23 June 2015, the Federal Court of Australia at Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth WA 6000 will hear an application by Amcom seeking the approval of the scheme of arrangement between Amcom and its ordinary shareholders, as proposed by a resolution passed by the meeting of ordinary shareholders held at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia 6000 at 11:00am on 15 June 2015.
If you wish to oppose the approval of the above arrangement, you must file and serve on Amcom a notice of appearance, in the prescribed form, together with any affidavit which you wish to rely on at the hearing. The notice of appearance and affidavit must be served on Amcom at its address for service by no later than one day before 22 June 2015.
The address for service of Amcom is c/- Clayton Utz, Level 27, QV.1 Building, 250 St Georges Terrace, Perth WA 6000 (Reference: Cameron Belyea) Facsimile: 08 9481 3095 Email: cbelyea@claytonutz.com.
A copy of the Scheme Booklet is available from the ASX's website at www.asx.com.au.
WESTERN AUSTRALIA DISTRICT REGISTRY | |
GENERAL DIVISION | WAD 54 of 2015 |
IN THE MATTER OF AMCOM TELECOMMUNICATIONS LIMITED
BETWEEN: | AMCOM TELECOMMUNICATIONS LIMITED ACN 062 046 217 Plaintiff |
JUDGE: | MCKERRACHER J |
DATE: | 16 JUNE 2015 |
PLACE: | PERTH |
REASONS FOR JUDGMENT
THE APPLICATION
1 On 26 May 2015, following a contested hearing, I made orders. These are my reasons for doing so.
2 Amcom Telecommunications Limited needs to make further supplementary disclosure to its Shareholders in connection with the scheme discussed in Re Amcom Telecommunications Limited [2015] FCA 341 (Amcom No 1) and Re Amcom Telecommunications Limited (No 2) [2015] FCA 410 (Amcom No 2). It seeks orders for:
(a) the despatch of a supplementary disclosure statement to the Shareholders of ordinary shares in Amcom; and
(b) the adjournment of the second Court hearing pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) listed for 26 May 2015.
3 Amcom relies on several affidavits in support of the application from which the facts discussed in these reasons (taken with the Amcom No 1 and Amcom No 2) are drawn.
ISSUES FOR DETERMINATION
4 The questions for consideration are whether the Court should:
(a) give leave to Amcom to despatch the supplementary disclosure statement to scheme participants in the form produced;
(b) make the proposed orders having regard to Australian Securities and Investments Commission’s (ASIC) position, as described in 60.91-60.93 of Regulatory Guide 60; and
(c) make procedural orders regarding the scheme meeting pursuant to s 1319 of the Act.
The supplementary material
5 As previously discussed, Amcom entered into a Scheme Implementation Agreement (SIA) with Vocus Communications Limited under which it is proposed that Vocus will acquire all of the shares in Amcom by way of a Scheme. Under the proposed Scheme, Shareholders would receive 0.4614 new Vocus shares for each Amcom share they hold. Orders were made:
(a) on 30 March 2015 convening a Scheme Meeting for 6 May 2015;
(b) on 21 April 2015 approving the despatch of supplementary material;
(c) on 8 May 2015 adjourning the second scheme hearing to 26 May 2015; and
(d) on 22 May 2015 standing over the application concerned to 26 May 2015.
6 The proposed Scheme is also the subject of an Independent Expert's Report prepared by PriceWaterhouseCoopers Securities Limited (PwCS).
7 On 15 May 2015, with Amcom's consent under the SIA, Vocus announced to the market that it had terminated and settled the equity swap transaction between Vocus and the Commonwealth Bank of Australia dated 24 October 2014 and had disposed of its interest in up to 26,639,915 ordinary shares in Amcom (Vocus Divestment).
8 Amcom wishes to bring to the attention of its Shareholders information regarding this transaction by way of supplementary disclosure to Scheme participants. The information is to be posted on Amcom’s Australian Securities Exchange (ASX) platform and would be the subject of the supplementary disclosure statement.
9 There is no change in the decision of the Amcom directors to support the Scheme. The independent expert's report and independent limited assurance report will not be affected by the Vocus Divestment.
10 The independent expert has confirmed that Vocus held its stake in Amcom via a physically-settled equity swap and was not reflected in the statement of financial position in the Scheme Booklet, the Vocus Divestment will have no material impact on the net debt position of Vocus on a standalone basis relative to that presented in the Scheme Booklet.
11 As stated in the supplementary disclosure statement, the pro forma realised gain from the Vocus Divestment is expected to be $6 million as compared to the unrealised gain expected on physical settlement of the equity derivative of $26.9 million as disclosed in the Scheme Booklet. This reflects the difference between the actual sale price achieved and Amcom's share price as at 31 December 2014.
12 As a result of the Vocus Divestment:
(a) a total of 124,483,020 new Vocus shares are expected to be issued to Amcom Shareholders as consideration under the Scheme; and
(b) a total of 229,911,635 Vocus shares are expected to be on issue following implementation of the Scheme.
13 The Independent Expert has approved statements made in the supplementary disclosure statement relevant to its opinion.
The Court's power
14 As previously noted in Amcom No 2, the Court has power pursuant to s 1319 of the Act to:
(a) vacate or vary orders made under s 411 in relation to a Scheme Meeting;
(b) authorise the despatch of further explanatory material in relation to a scheme of arrangement; and
(c) make orders as to the validity of proxies lodged in relation to a Scheme Meeting:
CMPS & F Pty Ltd v Crooks Mitchell Ltd (1997) 76 FCR 366; Re Australian Gas Light Company (2006) 57 ACSR 67; Re Lend Lease Primelife Pty Ltd [2009] NSWSC 1340; Re Cellestis Ltd (No 2) [2011] VSC 329; Re Nexus Energy Ltd [2014] FCA 558; Re David Jones Ltd (No 2) (2014) 101 ACSR 381; and Amcom No 2.
15 As Amcom submits that where a meeting has been convened under s 411 of the Act, only information approved by the Court for despatch to shareholders should be provided to members: Re Coates Hire Limited (No 2) [2007] FCA 2105; Re Associated Advisory Practices Ltd (No 2) [2013] FCA 979 per Farrell J (at [8]); Re Horizon Oil Limited [2014] FCA 733 per Farrell J (at [39]).
16 I also accept, as Amcom submits, that the supervisory jurisdiction of the Court under s 411 of the Act enables the Court to order the despatch of supplementary material arising after the original hearing and before the second hearing date: Cleary v Australian Co-operative Foods Ltd (No 3) (1999) 32 ACSR 701 (at 746); Amcom No 2 (at [12]).
ASIC does not object
17 ASIC has informed Amcom that it has had an opportunity to consider the supplementary materials, and that ASIC has no comments in relation to the documents and does not intend to appear before the Court.
Support for the Scheme
18 The Amcom board maintains its recommendation to Scheme participants to approve the Scheme.
19 PwCS maintains its opinion that the Scheme is in the best interests of Shareholders and does not consider the Vocus Divestment has any material impact on the Vocus financial position nor that it affects the PwCS opinion set out in the Scheme.
20 The purpose in sending supplementary material to Scheme participants is to update Shareholders as to transactions announced in the market.
Disclosure
21 On 15 May 2015, Amcom and Vocus both announced to the market the Vocus Divestment described in the supplementary disclosure statement. Amcom has undertaken to announce the supplementary disclosure letter on its ASX platform on approval from ASIC and the Court.
22 Amcom has provided evidence to support its belief that scheme participants will receive the supplementary disclosure statements at least 10 days before the adjourned Scheme Meeting.
Adjournment of the Scheme Meeting
23 On 6 May 2015 the Scheme Meeting convened pursuant to the orders made 30 March 2015 was adjourned by the chairperson, Anthony Grist, exercising the power conferred on him by order 1(d) of the orders made on 30 March 2015, to 18 May 2015 at 11:00am (AWST) at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia.
24 On 18 May 2015, the Scheme Meeting was further adjourned by the chairperson, Mr Stein, to a future date, time and place, to be announced in due course.
The Court’s power to reconvene Scheme Meeting
25 As the Scheme Meeting has been adjourned to a time, date and location to be determined, Amcom seeks an order that the Scheme Meeting be reconvened pursuant to s 1319 of the Act at 11:00am (AWST) on 15 June 2015, and that Mr Anthony James Grist or, failing him, Mr Clive Ralph Stein be chairperson, consistent with the orders made on 30 March 2015.
26 I accept the submission of Amcom that s 1319 of the Act gives the Court a broad discretion to give directions with respect to the convening, holding or conduct of a meeting ordered by the Court. The Court has exercised this power to postpone, adjourn or cancel shareholder meetings in previous cases: see Re Associated Advisory Practices (No 2); CMPS & F Pty Ltd; Re Australian Gas Light Company; Re Anzon Energy Ltd (No 2) (2008) 66 ACSR 355; Re Cellestis Ltd (No 2).
27 In Re Lend Lease Primelife Ltd, Austin J in approving CMPS & F Pty Ltd stated (at [16]):
… [i]f… [section 1319] authorises the court to revoke its earlier order for the convening of a scheme meeting, and consequently to cancel the meeting, on the ground that these are consequential directions in relation to the meeting, that it must also be the case that s 1319 authorises the court to adjourn the meeting, in circumstances where an adjournment is called for by events that have happened after the meeting was convened. Such events make an order having the effect of postponing the meeting a "consequential" direction under the section. Moreover, an order for the adjournment of the meeting seems to me to fall directly within the earlier part of s 1319, which speaks about giving directions with respect to, inter alia, the "holding" of the meeting. I therefore conclude that the court has the power to make an order adjourning or otherwise having the effect of postponing a scheme meeting convened under previous orders of the court.
28 I respectfully agree with Austin J that the Court's powers under s 1319 extend to the Court being able to order that a Scheme Meeting which has been adjourned in the absolute discretion of the chairperson be reconvened. Such an order would be classified as one in relation to both the ‘convening’ and ‘holding’ of the Scheme Meeting.
Adjournment of the hearing to approve the Scheme
29 A hearing listed for 26 May 2015, as adjourned pursuant to the orders made 8 May 2015, was contemplated to be the ‘second hearing’, at which the Court would exercise its discretion as to whether to approve the Scheme pursuant to s 411(4)(b) of the Act. By reason of the adjournment of the Scheme Meeting to allow Shareholders more time to consider the Scheme in light of Vocus' sale of its Shares, Amcom needs orders to further adjourn the second hearing.
30 Those orders are necessary as:
(a) the Shareholders have not voted on a resolution to approve the proposed Scheme as is required by s 411(4)(a) of the Act; and
(b) the Court usually provides its final determination as to whether or not the Scheme is approved after the matter comes back to the Court after the holding of the Scheme Meeting:
Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 112 ALR 627 (at 639).
31 Some of the orders made on 8 May 2015 require vacating on the basis that they are incapable of performance due to the delays in the Scheme process (and alternative timetabling orders be made in their place), namely the orders which formerly required:
(a) Shareholders of Amcom return their proxy forms by 15 May 2015 at 11:00am;
(b) Amcom to give notice of the second hearing in The Australian newspaper by 19 May 2015; and
(c) the proceeding be adjourned to 26 May 2015 at 10:15am.
Prima facie validity of notice of meeting
32 Prima facie r 3.3(2) of the Federal Court (Corporations) Rules 2000 (Cth) provides that:
[u]nless the Court otherwise orders, a meeting of members ordered under section 411 of the Corporations Act must be convened, held and conducted in accordance with:
(a) the provisions of Part 2G.2 of the Corporations Act that apply to the members of a company; and
(b) the provisions of the plaintiff's constitution that apply in relation to meetings of members and are not inconsistent with Part 2G.2 of the Corporations Act.
33 Clause 46.1 of Amcom's Constitution provides: ‘[w]here a meeting is adjourned, new notice of the resumed meeting must be given if the meeting is adjourned for one month or more.’
34 Clause 38.1 of Amcom's Constitution provides: ‘[a]t least 28 days' notice of a general meeting must be given in writing to those persons who are entitled to receive notices from the Company unless the Act provides for a shorter minimum period of notice, in which case notice need be given for that period only.’
35 The Scheme Meeting has been adjourned for more than one month. The effect of r 3.3(2) of the Corporations Rules and cl 46 of Amcom's Constitution is that Amcom is required to issue a new notice of meeting to Shareholders with at least 28 days notice of the adjourned meeting: see Re Equigold NL (No 2) [2008] FCA 826; Re Professional Golfers Association of Australia Limited [2007] FCA 1571.
36 However and as noted, s 1319 of the Act gives the Court a broad discretion to give directions with respect to the convening, holding or conduct of a meeting ordered by the Court, which includes making orders that would otherwise contravene the company’s Constitution. The Scheme Meeting is a ‘Court-ordered meeting’ convened pursuant to s 411 and is not, for the purposes now under consideration, a meeting provided for by Amcom's Constitution.
37 Amcom seeks an order that the notice of the Scheme Meeting contained in the Scheme Booklet remains valid, despite the provisions of cl 38.1 and cl 46.1 of Amcom's Constitution. As will be seen, this was contested.
Validity of proxies
38 The discretion conferred on the Court by s 1319 is also sufficiently wide to authorise the court to give directions as to the return of proxies: Re Amcor Limited (2000) 345 ACSR 199 (at [30]); Re Australian Consolidated Press Limited (1994) 14 ACSR 639 (at 641).
39 There is no amendment to the proposed Scheme as a consequence of the Vocus Divestment. Accordingly, there is presently no reason to doubt that all proxy forms submitted by Shareholders are deemed to still be valid: Amcom No 2 (at [16]).
40 Accordingly, Amcom seeks an order that proxy forms for the Scheme Meeting that have been lodged by Shareholders are deemed to still be valid unless revoked. An important expression in the orders sought is ‘unless revoked’.
Opposition raised to the orders sought
41 For the reasons set out above, I intended to make the orders sought by Amcom at the return date of its application on Friday, 22 May 2015 in Brisbane. At the hearing on that return date, I was informed by senior counsel for Amcom that communication had been received from Mr Vrisakis, a solicitor engaged by TPG Telecom Limited, asking to be heard on behalf of TPG in relation to the orders sought.
42 I adjourned the application to the following Tuesday, 26 May 2015 in Perth. On the listing of the adjourned application, Mr Davies SC, senior counsel for Blue Call Pty Limited, a subsidiary of TPG and itself the holder and beneficial owner of shares in Amcom, sought leave to appear and oppose the orders sought on grounds reflected in submissions filed very shortly before the hearing of the application. Mr Donaldson SC also sought leave to appear on behalf of Vocus to support Amcom’s orders and to oppose the resistance advanced by Blue Call.
43 In each instance, leave to appear and to make submissions was granted.
Arguments advanced by Blue Call
44 To place the submissions of Blue Call in context, I have repeated the following relevant events.
45 Since the Court approved the despatch of the scheme booklet and convened a meeting to take place on 6 May 2015:
(a) Amcom adjourned the 6 May 2015 meeting to 18 May 2015;
(b) on 14 May 2015, Vocus, the acquiring company in the Scheme, divested its 10% interest in the target, Amcom, to third parties who, unlike Vocus, may vote at the Scheme Meeting, according to the release to the ASX, this had been done ‘to give the merger the best chance of success’;
(c) on 18 May 2015, Amcom again adjourned the meeting, this time to a date to be announced;
(d) on 20 May 2015, Amcom's current application before the Court was filed; and importantly,
(e) since the Scheme was announced, TPG, which opposes the Scheme, has acquired some 19.9% of the shares in Amcom.
46 Blue Call raises the following topics of concern about the orders sought:
(a) the need to ‘tag’ (i.e. identify separately) the votes of:
(i) Mr Tony Grist;
(ii) the parties to whom Vocus has divested its interest in Amcom;
(iii) shareholders of Amcom who are also shareholders of Vocus;
(iv) Commonwealth Bank of Australia (and related bodies);
(b) the proposal that online votes and proxies that have already been received stand unless the shareholder takes the positive step of changing their vote or proxy;
(c) the proposed change to the date for eligibility to vote for the Scheme Meeting, in circumstances where:
(i) online voting has already occurred;
(ii) proxies have been received; and
(iii) the share register has changed since the scheme booklet was dispatched, and since the first supplementary disclosure was dispatched.
47 Blue Call point out that there is a high likelihood that any vote at the Scheme Meeting, if it passes at all, may only pass the statutory thresholds by a slim margin. For this reason, the conduct of the poll and the receipt, counting, recording and collation of votes are important.
Tagging of votes
48 Blue Call suggest that a number of Shareholders or classes of Shareholders will or may receive benefits from the approval of the proposed Scheme additional to the scheme consideration which are not available to all of the Shareholders, and which would provide an exclusive incentive for them to vote in favour of the Scheme or make it impossible for them to consult together as a class at a meeting. In those circumstances, Blue Call submits that it is desirable to tag those shareholdings so that the significance of such votes can be considered at the second court hearing.
49 The Shareholders or classes of Shareholders whose shares should be tagged, according to Blue Call, are the following:
(a) Mr Grist (or related entities). Mr Grist holds 3.19% of Amcom shares, holds positions as chairman and director of Amcom, a role as chairperson of the meeting, and has been promised an appointment post-merger to Vocus' board as deputy chairman for an unspecified and undisclosed remuneration.
(b) the entities to whom Vocus has divested its 10% interest. It is evident that Vocus has divested its 10% interest in Amcom ‘in order to allow those shares to be voted on the Scheme’. But for the divestiture, those shares would not be voted by reason of the content of the Scheme. In the announcement to the ASX, Vocus stated that ‘the divestiture of its shares to third parties would give the merger the best chance of success’. Blue Call argues that it may be inferred from this that Vocus believes that the third parties to whom the shares were sold are likely to vote in favour of the Scheme. Therefore, it is said, these shares should be tagged so that, if issues arise as to the circumstances of the divestiture and/or the voting of these shares by the third parties, the effect of the voting of these shares can be assessed at the second court hearing.
(c) Shareholders of Amcom who are also shareholders of Vocus. Vocus has announced to its shareholders that, if the Scheme is successful, it will pay a special dividend which will not be paid if the Scheme is unsuccessful. This means that Amcom Shareholders who are also shareholders in Vocus will get an additional benefit to Amcom Shareholders generally if the Scheme is approved. Accordingly, the tagging of these shares is necessary, Blue Call says, so that the effect of the voting of these shares can be assessed at the second court hearing.
(d) Commonwealth Bank (or its related bodies corporate). Blue Call contends that it appears that Commonwealth Bank or its related bodies hold 3.76% of Amcom shares and 6.06% of Vocus. Accordingly, the Commonwealth Bank falls into (c) above. Further, as a lender to Vocus the bank stands to receive additional benefits in the form of:
(i) early repayment of Vocus debt facilities in the order of $142,768,000; and
(ii) Amcom's assets being further security for Vocus debt after the merger.
Positive step of changing a vote or proxy
50 Blue Call also raise a concern about the fact that those Shareholders who now wish to change their vote need to take a positive step to do so. (Amcom wishes to proceed on the basis that, notwithstanding the events that have occurred since despatch of the Scheme Booklet and notwithstanding the supplementary disclosure, votes both in favour of the Scheme made online and proxies that have been received to date are to be treated as valid unless the Shareholder takes the positive step of changing their vote or changing or revoking their proxy.)
51 Blue Call argues that in light of the events that have occurred, Shareholders should vote again and proxies should be submitted again. Insofar as online voting is concerned, Blue Call argues that Amcom should not be permitted to, in effect, take advantage of an assumption that if a Shareholder does not take a positive step of changing their vote that they are in favour of the Scheme when circumstances have changed. Insofar as proxies are concerned, Blue Call submits that the situation is the same. And, further, as a matter of law, open proxies are grants of general authority to an agent based upon a particular substratum of fact and accompanied by an implied limitation that the authority will fail if the substratum on which it is based is removed: Cleary per Austin J (at 740).
Date for eligibility to vote
52 Blue Call also objects to the fact that Amcom seeks to change the date for eligibility to vote at the Scheme Meeting from 4 May 2015 to a later date without seeking to amend the notice of meeting dated 30 March 2015 or to issue a new notice of meeting for 15 June 2015. The manner in which Amcom seeks to change the date for eligibility to vote is by referring to it in the supplementary disclosure letter.
53 Blue Call says that the date for eligibility to vote should not be changed for the following reasons:
(a) in the Scheme as originally formulated and approved for meetings to be convened, the date for eligibility to vote was 4 May 2015;
(b) Amcom has twice obtained orders in terms that proxy forms that have been lodged by Amcom Shareholders are deemed to remain valid unless revoked and members who have already voted in favour of the scheme are deemed to have voted in favour of the resolutions to be considered at the Scheme Meeting; and
(c) it is entirely unclear what information has been sent to Shareholders who have come on the register since the meetings were originally convened, if information has been sent when that occurred in respect of any such Shareholders and how long any such Shareholders have had to consider the material; and the problems are exacerbated in that not only does this submission apply to the scheme booklet, but also to the despatch of supplementary disclosure.
54 I will assume for the sake of the argument and as a reasonable reference that since 4 May 2015 there have been changes to the share register.
55 Blue Call contends that the Scheme Meeting must be convened, held and conducted in accordance with Pt 2G.2 of the Act (see, relevantly, Corporations Regulations 2001 (Cth) reg 7.11.37). Where a meeting has been adjourned after it has commenced, the adjourned meeting is not a new meeting but a continuation of the original meeting, so the same cut-off time (determining which members are eligible to vote) applies. While a revised proxy deadline can apply under s 250B(2) of the Act, the date for eligibility to vote cannot change: Re Re1 Limited and Re2 Limited as responsible entities for Westfield Retail Trust 1 and Retail Trust 2 (No 3) (2014) 103 ACSR 262 per Brereton J (at [20]).
56 Blue Call also foreshadowed various other complaints about the process adopted by Amcom, but say that these will be pursued at the second scheme hearing (if any).
CONSIDERATION
57 Section 1319 gives the Court a broad power to make directions with respect to the convening, holding or conduct of a meeting ordered by the Court, including making orders that would otherwise contravene a corporation’s Constitution. The meeting has been ordered by the Court. In Re Australian Consolidated Press Limited, McLelland CJ in Equity said (at 640):
[t]he power of the court under s 411 is limited by the terms of that section, and the constitutional source of the power of any meeting convened under that section is the section itself, activated by the court. … [A scheme meeting] is a meeting which is convened for a specific statutory purpose and which is subject to provisions different from those to which a general meeting of the company convened under its articles of association is subject. The court can, pursuant to s 1319 of the Corporations Law, give procedural directions in relation to such a meeting which may not correspond with the procedural requirements of a general meeting of the company convened under its articles of association.
58 Further, Warren J (as his Honour then was) stated in Re Amcor Limited (at [6]):
[a]ny meeting ordered to be held under s 411 is referred to as a "Court ordered meeting". It is not a meeting provided for by the constitution of the company. This proposition has several implications: … (c) the Court has power under s 1319 … to give such directions with respect to the convening, holding or conduct of the meeting, and ancillary or consequential directions in relation to the meeting, as it thinks fit.
59 In Re Strategic Energy Resources Ltd (No 2) [2012] VSC 75, Davies J said (at [7]):
… [t]he Court is empowered by [sections 411 and 1319] to give procedural directions for the convening of the meeting which may not correspond with the procedural requirements of Part 2G.2 of the Act and the company's constitution (which would otherwise govern the meeting).
60 In Re Equigold NL (No 2), the company's constitution had a 28-day notice period similar to cl 38.1 of Amcom's Constitution. Emmett J ordered a reduction of the notice period in circumstances where the company's share registrar and mailing house that were responsible for the despatch of scheme materials were unable to complete the despatch in time to allow the relevant notice. His Honour also noted (at [7]) that:
… [i]f there were opposition to the Scheme at the second hearing, the fact that less than the statutory period of notice had been given may be a matter that could be taken into account by the Court.
61 The Court has power to make the orders sought by Amcom.
62 Amcom submits that, in light of the authorities referred to previously, the Scheme Meeting is not a meeting convened pursuant to Amcom's Constitution. Rather, it is a meeting convened by the Court pursuant to s 411 of the Act for a specific statutory purpose.
63 In Re Professional Golfers, Lindgren J stated (at [26]):
[i]t is important to note that s 411 (1) of the Act speaks of a compromise or arrangement between a Pt 5.1 body on the one hand and, relevantly, its members on the other. The decision on the company's part to enter into the scheme is taken by its directors in the usual way. When para (a)(ii) of s 411(4) speaks of the resolution in favour of the compromise or arrangement being passed by "a majority in number of the members ... present and voting (either in person or by proxy)", it is not referring to a resolution passed at a general meeting of the company, but to a resolution passed at a Court-ordered meeting of, relevantly, "the members" – those with whom the company proposes to enter into the scheme.
Validity of notice of meeting
64 In relation to cl 46.1 of Amcom's Constitution, Amcom submits that, as there is no change to the proposed Scheme as a result of the Vocus Divestment, there is no requirement to issue a new notice of meeting. In Re Associated Advisory Practices Ltd (No 2), a new notice of meeting together with supplementary scheme booklets and new proxy forms were issued on the basis that although the scheme consideration remained the same, a revised independent expert's report had assessed those shares at a lower value.
65 As to whether Amcom is required to comply with cl 38.1 of its constitution, in Re Equigold NL (No 2), in which Emmett J allowed a reduction of the 28-day notice period in the company's constitution, his Honour stated (at [6]):
The rationale for the requirement in the Act for 28 days notice to be given is that the period of 21 days that was previously provided in earlier legislation could be inadequate for non-resident shareholders. A copy of the proposed documents containing the notice of the meeting was lodged with ASX today. The number of non-resident shareholders does not constitute a substantial proportion either of the number of shareholders or number of shares held. …
66 As at 23 March 2015, there were 261 ineligible overseas Shareholders of Amcom of the total 8,634 Shareholders. The number of non-resident Shareholders does not constitute a substantial proportion of the number of Shareholders.
67 In Re Associated Advisory Practices Ltd (No 2), Farrell J (at [19]-[20]) considered that a notice period of 10 days was appropriate on the basis that, amongst other things:
(a) ASIC's Regulatory Guide at RG 60.93 states it is generally appropriate for scheme participants to be given at least 10 days to consider any supplementary documentation;
(b) the independent expert's opinion remained that the scheme was fair and reasonable;
(c) the scheme consideration remained the same number of shares; and
(d) ASIC had provided letters which advised that it had reviewed the supplementary scheme booklets and did not propose to appear.
68 Both Amcom and Vocus announced the Vocus Divestment to the market on 15 May 2015. Amcom has given evidence of its belief that Scheme participants will be provided with the supplementary material at least 10 days prior to the adjourned Scheme Meeting.
69 ASIC has also had an opportunity to consider the supplementary materials, and informed Amcom that ASIC has no comments in relation to the documents and does not intend to appear.
70 There is no amendment to the proposed Scheme as a result of the Vocus Divestment. PwCS remains of the opinion that the Scheme is in the best interests of Shareholders in the absence of a superior proposal and concluded that there is no material change to its evaluation of the scheme consideration.
71 There is no prejudice to scheme participants if the provisions of cl 38.1 and cl 46.1 of Amcom's constitution are not complied with. In any event, the fact that no new notice of meeting is issued, or that less than the period of notice required by the constitution has been given, is a matter for the Court's discretion at the second hearing: see Re Equigold NL (No 2) (at [7]).
Hearing need not be adjourned
72 The question of despatch of supplementary material is a matter for Amcom, the independent expert, ASIC, and the Court. ASIC Regulatory Guide 60 acknowledges that a target company may wish to provide supplementary information to Shareholders. A target company must provide relevant information to shareholders which arises after the initial explanatory statement has been despatched: see Amcom No 2 (at [19]).
73 Amcom has determined that the Vocus Divestment is relevant information to be provided to Shareholders. The independent expert holds to his view of the proposed Scheme.
74 ASIC has had an opportunity to review the document and did not appear at the 26 May 2015 Court hearing.
Tagging the votes
75 As Blue Call and Amcom note, the tagging of votes of board members of the target company who are also Shareholders may be appropriate where those shareholders have a potential additional commercial interest in the outcome of the scheme. Examples include:
(a) where the target company owes money to directors (or their associates) for the payment of outstanding directors feed and loans: see Re Simavita Holdings Limited [2013] FCA 1274;
(b) where a director holds an interest in a third party transaction dependent on the outcome of the proposed scheme: see Re Texon Petroleum Limited (No 2) [2013] FCA 147; and
(c) where a director holds shares in both the acquiring company and the target company: see Re Choiseul Investments Limited [2010] FCA 1189 and Re Invictus Gold Limited [2013] FCA 1132.
76 Mr Grist will join the board of the combined group as non-executive deputy Chairman. As at the date of the Scheme Booklet, Mr Grist holds 8,483,902 shares in Amcom, representing a holding of 3.19%. Mr Grist has previously stated that he will vote in favour of the proposed Scheme. Mr Grist has no extraneous commercial interest in the outcome of the proposed Scheme. His shareholding, voting intention and position in the combined group has been fully disclosed to Amcom Shareholders.
77 Despite these factors, Mr Grist has given an undertaking to the Court in his capacity as Chairman to tag his own votes and identify them to the Court at the second hearing. This does no more than confirm the disclosure made in the Scheme Booklet. ASIC was aware of these matters from the Scheme Booklet.
78 As to the tagging of the other votes sought by way of a competing minute relied upon by Blue Call at the 26 May 2015 hearing, I am not persuaded that orders for such tagging should be made. No authority has been cited to support such contention. The Bank’s interest as a lender falls well outside the conventionally recognised category for the purpose of vote tagging. There are also obvious difficulties with ongoing share transfers in relation to the other categories. I would not make orders as sought which, together with the other opposition raised, would have the practical effect of putting off yet again a vote which is long overdue in going to the Shareholders. Amcom has heard Blue Call’s tagging arguments and can (and has indicated it will) consider in arguments for the purposes of the voting and in anticipation of arguments which may be advanced at the second hearing (if any).
Material Non-Disclosure by Vocus
79 There is no evidence to suggest that Vocus has improperly stated the nature of the sell down of its holding in Amcom in its ‘Form 605 - Notice of Ceasing to be a Substantial Shareholder’ dated 19 May 2015. The suspicion about some voting intention attaching to the sale of Vocus’ shares is no more than that. It may be that the transferees do vote in favour of the Scheme, but there is no, or certainly not sufficient, evidence at this stage which would justify such a finding. After sale, there would, in theory, be a chance they would be voted favourably. Any such chance would tend to justify the announcement to the ASX relied upon by Vocus as supporting its suspicion. But the main point is that there is presently insufficient evidence to warrant a finding as to the transferees’ intention.
80 As noted, ASIC has had an opportunity to consider the Vocus Divestment and the manner of disclosure to Amcom Shareholders. ASIC did not intervene at the 26 May 2015 hearing.
Validity of proxies
81 On the face of it, there appears to be no material change to the Scheme or the Scheme consideration as a consequence of the Vocus Divestment. (Although evidence on this issue may be desirable at the second hearing.) Accordingly, there is at present no, or little, reason to doubt that all proxy forms submitted by Shareholders are deemed to still be valid: Amcom No 2 (at [16]).
82 Shareholders who have already submitted a proxy form are still able to revoke and resubmit their proxies if the information contained in the supplementary materials affects the way in which they wish to vote.
83 The Scheme Booklet provides clearly that a Shareholder who has deposited a proxy form may revoke it prior to its use. The supplementary disclosure statement also informs Shareholders clearly that if they have already voted and wish to change their vote, they may request a new proxy form which will be taken to revoke any existing proxy.
84 As there is no requirement for a new notice of meeting, there is no automatic requirement for new proxy forms.
85 The suggestion that Amcom should, in effect, start again on this voting issue with Shareholders by requiring new proxy forms to replace existing voted proxies would have the unusual and, on the present state of the evidence, unnecessary result of requiring all those Shareholders who have already voted one way to vote again even though they may have no intention of changing their vote.
CONCLUSION
86 If I thought it unlikely that the Court would finally approve the Scheme, so that making orders of the nature now sought would be futile, it would be an inappropriate exercise of discretion to make the orders sought: Re CSR Ltd (2010) 183 FCR 358 per Keane CJ and Jacobson J (at [64]). I am unable to conclude that the Scheme, as proposed by reason of the orders presently sought or otherwise, is unlikely to be finally approved by the Court at the second court hearing in the event that the members vote in favour of the Scheme. As noted by Keane CJ and Jacobson J in CSR Ltd (at [59]), the first court hearing is not intended to resolve difficult questions on which reasonable minds may differ. Further, as noted by Barratt J in Re Australand Holdings Ltd (2005) 219 ALR 728 (at [29]), the Court should not decline to convene the meeting if there are matters that are ‘arguable’, but which do not represent ‘clear inhibitions’. It has been repeatedly observed that the proper forum for resolution of matters of that kind is the second court hearing, where there could be adequately developed argument inter partes, assuming any person wishes to do so. This approach has been taken, even though issues may be ‘of potentially great significance’: see Re Centro Properties Ltd (2011) 87 ACSR 131 per Barratt J (at [63]-[66]).
87 While the opposition to the orders sought may not necessarily have the effect of terminating the Scheme, as Blue Call has quite rightly pointed out, the Scheme was implemented some six months ago and, while it has induced a deal of substantial commercial activity, it might be said that it is long overdue that the matter be put to the Shareholders of the company to decide one way or another as to whether they wish to approve the Scheme. It is not presently apparent to me that any of the suggested impediments raised by Blue Call prevent the desirability of matters moving forward in that fashion. For those reasons, I made the following orders:
1. Orders 2, 4 and 5 that I made on 8 May 2015 be vacated.
2. Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (Act), the supplementary explanatory statement in a form substantially equivalent to the form that is annexure MAP17 to the seventh affidavit of Mark Anthony Paganin sworn on 25 May 2015, is approved for despatch to each ordinary shareholder of the plaintiff (Shareholder).
3. The supplementary explanatory statement be despatched to each Shareholder in the manner set out in subparagraphs 4(a), 4(b) and 4(c) of the orders in this proceeding on 30 March 2015.
4. Pursuant to s 1319 of the Act the Scheme Meeting be reconvened at 11:00am (AWST) on 15 June 2015 at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia, and that Mr Anthony James Grist or, failing him, Mr Clive Ralph Stein, be the chairperson of that meeting.
5. The notice of meeting issued to Shareholders by Amcom on 2 April 2015 is deemed to still be valid for the purposes of the meeting of members proposed to be held at 11:00am (AWST) on 15 June 2015.
6. The time by which Shareholders must return their proxy forms for the Scheme Meeting is 11:00am (AWST) on 12 June 2015.
7. Valid proxy forms for the Scheme Meeting that have been lodged by Amcom shareholders are deemed to still be valid unless revoked, and members who voted in favour of the Scheme are deemed to have voted in favour of the resolutions to be considered at the Scheme Meeting.
8. The plaintiff is to give notice of the hearing of the application pursuant to s 411(4) of the Act and that notice of the hearing of an application pursuant to s 411(4)(b) of the Act for orders approving the Scheme be published once in "The Australian" newspaper by an advertisement substantially in the form of Annexure A, such advertisement to be published on or before 16 June 2015 and the plaintiff be otherwise exempted from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).
9. The proceeding be adjourned to 23 June 2015 at 11:00am before me for the hearing of an application to approve the Scheme.
I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. |
Associate:
ANNEXURE A
Amcom Telecommunications Limited Notice of Hearing to Approve Scheme of Arrangement pursuant to section 411 of the Corporations Act 2001 (Cth)
To all members of Amcom Telecommunications Limited ACN 062 046 217 (Amcom)
TAKE NOTICE that at 11:00am on 23 June 2015, the Federal Court of Australia at Peter Durack Commonwealth Law Courts Building, 1 Victoria Avenue, Perth WA 6000 will hear an application by Amcom seeking the approval of the scheme of arrangement between Amcom and its ordinary shareholders, as proposed by a resolution passed by the meeting of ordinary shareholders held at the Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia 6000 at 11:00am on 15 June 2015.
If you wish to oppose the approval of the above arrangement, you must file and serve on Amcom a notice of appearance, in the prescribed form, together with any affidavit which you wish to rely on at the hearing. The notice of appearance and affidavit must be served on Amcom at its address for service by no later than one day before 22 June 2015.
The address for service of Amcom is c/- Clayton Utz, Level 27, QV.1 Building, 250 St Georges Terrace, Perth WA 6000 (Reference: Cameron Belyea) Facsimile: 08 9481 3095 Email: cbelyea@claytonutz.com.
A copy of the Scheme Booklet is available from the ASX's website at www.asx.com.au.
