Federal Court of Australia

Symbio Holdings Limited, in the matter of Symbio Holdings Limited (No 3) [2024] FCA 118

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to ss 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the plaintiff and its shareholders, the terms of which are set out in the marked-up document that is Annexure A to these orders, be approved.

2.    The plaintiff lodge with the Australian Securities and Investments Commission a copy of the approved Scheme of Arrangement at the time of lodging an office copy of these orders under s 411(10) of the Act.

3.    Pursuant to s 411(12) of the Act, the plaintiff be exempted from compliance with s 411(11) of the Act in relation to Order 1 above.

4.    Pursuant to r 39.34 of the Federal Court Rules 2001 (Cth), these orders be entered forthwith.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Schedule

No: NSD1331/2023

Federal Court of Australia

District Registry: New South Wales

Division: General

Annexure A

REASONS FOR JUDGMENT

YATES J:

1    On 22 December 2023, I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) that the plaintiff, Symbio Holdings Limited (Symbio), convene a meeting of its shareholders for the purpose of considering and if thought fit approving (with or without modification) a scheme of arrangement proposed to be made between Symbio and the shareholders: Symbio Holdings Limited, in the matter of Symbio Holdings Limited [2023] FCA 1676.

2    The meeting was held on 7 February 2024 and the shareholders approved the scheme. Symbio now seeks the Court’s approval of the scheme pursuant to s 411(4)(b) of the Act subject to certain alterations: see s 411(6) of the Act. I am satisfied that the Court’s approval should be given.

3    The following affidavits have been read in support of the present application:

(a)    Anne Dorothy Fraser Ward, made 14 February 2024;

(b)    Kirsten Marie O’Hara, made 15 February 2024;

(c)    Paul Schroder, made 15 February 2024;

(d)    Steven Fulton made 15 February 2024;

(e)    Thomas Charles Harrison, made 29 January 2024;

(f)    Rene Sugo, made 16 February 2024 ; and

(g)    Brian Maher, made 16 February 2024.

4    The evidence shows that, subject to two matters, the scheme meeting was convened in accordance with the orders made on 22 December 2023.

5    The first matter is that the orders required that notice of the meeting and certain materials (or access to certain materials), including the Scheme Booklet, be given on or before 28 December 2023 to each shareholder whose name was recorded on Symbio’s register of members as at the date of the Scheme Booklet (22 December 2023). Inadvertently, those who undertook that task used a copy of Symbio’s register as at 15 December 2023. When this error was discovered, it was found that 42 shareholders (whose names appeared on Symbio’s register of members as at 22 December 2023), holding 14,280 shares (or 0.02% of Symbio’s issued shares), were affected. As it happens, these shareholders were employees of Symbio. All of them had elected to receive shareholder communications by electronic means (referred to in the orders as Electronic Preferred Shareholders). These shareholders were provided with the materials described in Order 4(a) made on 22 December 2023 (pertaining to Electronic Preferred Shareholders) on 24 January 2024. The votes of these shareholders could not have affected the outcome of the voting at the meeting.

6    The second matter is that 15 Electronic Preferred Shareholders had not provided email addresses for the receipt of communications. These shareholders were sent the materials in accordance with Order 4(c) made on 22 December 2023 (pertaining to those shareholders who had not made an election as to how to receive shareholder communications).

7    Neither of these matters is a reason why the Court should not approve the scheme.

8    The meeting was held on 7 February 2024 in accordance with Order 2 made on 22 December 2023. The scheme resolution was passed by 92.37% of the shareholders attending the meeting with 97.81% of the votes cast in favour of the scheme. The majorities referred to in s 411(4)(a)(ii) of the Act were therefore attained.

9    I note the following additional matters in that regard. First, the shares held indirectly by Mr Sugo (Symbio’s Group Chief Executive Officer), which were voted at the meeting in favour of the scheme, were tagged (Mr Sugo did not hold any shares directly at the relevant time). This was done in case it became necessary to address the consequences, if any, of Mr Sugo’s entitlement to, and receipt of, certain awards upon the scheme becoming effective, and certain payments upon the scheme being implemented. No issues in that regard have arisen but I note that, in any event, the voting of these shares did not have any material effect on the outcome of the voting at the meeting.

10    Secondly, 71.76% of Symbio’s shares by number were voted at the scheme meeting. This voting compares favourably to the voting participation at Symbio’s annual general meeting in 2022 (between 37.90% and 60.09% depending on the resolution) and at Symbio’s annual general meeting in 2023 (between 37.02% and 51.43% depending on the resolution).

11    I note that, in compliance with s 412(6) of the Act, Symbio lodged a copy of the Scheme Booklet with the Australian Securities and Investments Commission (ASIC) for registration on 22 December 2023, with a copy of the Court’s orders made on that date.

12    I note that, in accordance with Order 9 of the orders made on 22 December 2023, Symbio published an announcement on the ASX Market Announcements Platform in respect of the holding of the second court hearing for approval. I note that no person has come forward to oppose the scheme being approved by the Court.

13    I note that all conditions precedent to the scheme set out in clause 3.1 of the scheme document have been satisfied.

14    I note that, by letter dated 15 February 2024 to Symbio’s directors, ASIC has advised that it has no objection to the scheme. This letter stands as a statement in writing satisfying the requirement of s 411(17)(b) of the Act.

15    Symbio has drawn attention to the fact that, through inadvertence, its auditors were not provided with 28 days’ notice of the scheme meeting or of the materials required to be provided in respect of the meeting: see the operation of ss 249K and 249HA of the Act. However, a copy of the Scheme Booklet and notice of the scheme meeting were provided to them on 6 February 2024. Notwithstanding the late notice, the lead audit partner for Symbio attended the scheme meeting. I am satisfied that the failure to give notice to Symbio’s auditors within the prescribed time was an irregularity automatically validated by the operation of either or both ss 1322(2) and 1322(3) of the Act.

16    Finally, as I have noted, Symbio seeks approval of the scheme subject to certain alterations. The background to this part of its application is as follows.

17    Subsequent to the first court hearing, and in the course of undertaking further work to examine how the scheme, if approved, would operate in practice, a potential issue was identified arising from the operation of clause 6.1(b)(i) of the scheme document which, in its then form, imposed a cap on the total cash consideration payable by Aussie Broadband Limited (Aussie Broadband). It was realised that if the scheme were to operate in accordance with its then proposed terms, there would be an inconsistency between the total amount of cash consideration required to be paid to the shareholders and the total cash consideration required to be paid by Aussie Broadband.

18    In order to remove this inconsistency, Symbio and Aussie Broadband entered into a further deed to amend the Scheme Implementation Agreement to replace clause 6.1(b)(i) of the scheme document and to make a consequential amendment to the definition of Available Cash Consideration in clause 1.1.

19    On 30 January 2024, Goodman J made orders providing for the publication, on or before 31 January 2024, of an announcement on the ASX market announcements platform of the agreed change: Symbio Holdings Limited, in the matter of Symbio Holdings Limited (No 2) [2024] FCA 40. The announcement made clear that the shareholders would be asked to vote on the unamended form of the scheme at the scheme meeting but that, at the second court hearing, the Court would be asked to approve the scheme subject to the agreed amendment being made.

20    The orders made by Goodman J also gave Symbio the option of sending the announcement to its shareholders, which Symbio did in the manner described in Mr Schroeder’s affidavit.

21    At the scheme meeting, Ms Ward, who acted as chairperson, informed the meeting, prior to the voting on the scheme resolution, that:

On 30 January, Symbio announced that it had agreed with ABB to make technical amendments to clauses 1.1 (definition of “Available Cash Consideration”) and 6.1(b)(i) of the Scheme. The purpose of these amendments was to rectify a technical issue in the Scheme identified following release of the Scheme Booklet and ensure that (if the Scheme becomes Effective) ABB will pay the total amount of Cash Consideration payable to all Scheme Participants, based on their Elections and the outcome of the Scaleback Arrangements.

The ASX announcement detailing the two amendments was despatched to Symbio shareholders on 31 January 2024.

If the Scheme is approved at today’s Scheme Meeting, Symbio intends to seek orders from the Court at the Second Court Hearing varying the Scheme to reflect the two amendments I just mentioned, and then approving the Scheme as varied.

22    Having regard to the nature of the amendment, the reason for making that amendment, and the fact that the shareholders voted with prior knowledge of the amendment and with prior knowledge that the Court would be asked to approve the scheme subject to that amendment, I am satisfied that the scheme should be so approved.

23    I have previously expressed my satisfaction that the proposed scheme is of such a nature and cast in such terms that, if it received the requisite statutory majorities at the scheme meeting, it would be likely that, on an unopposed application, the Court would approve it. On the evidence before me, there is no reason for me to deviate from that view, save to acknowledge that the amendments now sought should be made.

24    Symbio seeks an order pursuant to s 411(12) of the Act that it be exempted from compliance with s 411(11). It is appropriate that that order also be made.

Associate:

Dated:    22 February 2024