FEDERAL COURT OF AUSTRALIA

Quickstep Holdings Limited, in the matter of Quickstep Holdings Limited (No 2) [2025] FCA 397

ORDERS

THE COURT NOTES THAT:

A.    There has been produced to the Court a statement in writing by the Australian Securities and Investments Commission (ASIC) in accordance with s 411(17)(b) of the Corporations Act 2001 (Cth) (Corporations Act) that ASIC has no objection to the proposed Scheme of Arrangement between the Plaintiff (Quickstep) and its members referred to in this Order.

THE COURT ORDERS THAT:

1.    Pursuant to s 411(4)(b) of the Corporations Act, the Scheme of Arrangement between Quickstep and its members in the form set out in Annexure A to the Orders of the Court made on 5 March 2025 and agreed to by Quickstep shareholders at the meeting held on 14 April 2025 (Scheme) is hereby approved.

2.    Pursuant to s 411(12) of the Corporations Act, Quickstep be exempted from compliance with s 411(11) of the Corporations Act in respect of the Scheme.

3.    Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these Orders be entered forthwith.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

INTRODUCTION

1    On 5 March 2025, I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) directing the plaintiff (Quickstep) to convene and hold an online meeting on 14 April 2025 (Scheme Meeting) to consider a proposed scheme of arrangement (Scheme). See Re Quickstep Holdings Limited [2025] FCA 317 (First Court Hearing Reasons).

2    At a hearing dated 16 April 2025, Quickstep sought, and I made, orders including for the approval of the Scheme pursuant to s 411(4)(b) of the Act.

3    These are my reasons for doing so.

SUMMARY OF THE SCHEME

4    The details of the Scheme are set out in the First Court Hearing Reasons at [3]–[13].

5    In summary, the commercial purpose of the Scheme is to effect the acquisition of 100% of Quickstep’s ordinary shares on issue by ASDAM Operations Pty Ltd (ASDAM).

6    Upon implementation of the Scheme, Quickstep’s shareholders (the Quickstep Shareholders) will receive a cash price of $0.575 for each Quickstep share held as at the “Scheme Meeting Record Date” of 1:30pm (AET) on 12 April 2025 (being the relevant date at which the Quickstep Shareholders who are eligible to vote at the Scheme Meeting must have been recorded in Quickstep’s register of members) (Scheme Consideration). The Scheme Consideration implies an equity value for Quickstep of $41,242,573.

THE EVIDENCE

7    In support of this application, Quickstep read and relied on the following evidence:

(a)    an affidavit affirmed on 14 April 2025 by Mr Philip Xuan, senior director at Sodali & Co Pty Limited (Sodali), being the company that Quickstep engaged prior to the Scheme Meeting to administer a telephonic information campaign which provided Quickstep Shareholders with information pertaining to the proposed Scheme and the Scheme Meeting;

(b)    an affidavit affirmed on 15 April 2025 by Mr Patrick Largier, non-executive chair of Quickstep and chair of the Scheme Meeting (with modifications to paragraph 25 of the affidavit to reflect the correct voting results contained in paragraph 38 of the plaintiff’s submissions for second court hearing dated 15 April 2025);

(c)    an affidavit affirmed on 15 April 2025 by Mr Glen Rogers, relationship manager of issuer services at Computershare Investor Services Pty Ltd (Computershare), being the company that Quickstep engaged to manage various processes relating to the dispatch of Scheme materials and the conduct of the Scheme Meeting; and

(d)    two affidavits of Mr Ronald Smooker, partner at Maddocks Lawyers (the solicitors for Quickstep), namely:

(i)    an affidavit affirmed on 14 April 2025 (Fifth Smooker Affidavit); and

(ii)    an affidavit affirmed on 16 April 2025 (Sixth Smooker Affidavit).

8    That evidence was consistent with the approach set out in the Federal Court’s “Schemes of Arrangement Practice Note (GPN-SOA)” (Practice Note).

9    Paragraph 3(i) of the Practice Note states that “[t]he Court expects a scheme proponent to lead evidence at the second Court hearing of the dispatch of scheme documents in accordance with the Court’s orders. That evidence may include evidence on information and belief and need not be extensive, but should disclose any issues with compliance with those orders”.

10    Paragraph 3(j) of the Practice Note also states that “[i]n addition to evidence that the scheme was approved by the requisite statutory majorities, the Court expects a scheme proponent to lead evidence at the second Court hearing as to voter turnout at the scheme meeting(s), being the number or percentage of members who attended the scheme meeting, in person or by proxy, as compared to the total number of members of the scheme company”.

11    Mr Xuan’s affidavit addressed the steps taken by Sodali prior to the Scheme Meeting to operate an “information line” for the Quickstep Shareholders (Shareholder Information Line) and to make outbound calls to various retail Quickstep Shareholders regarding the proposed Scheme.

12    Mr Largier’s affidavit addressed the conduct of the Scheme Meeting and the voting at that meeting.

13    Mr Rogers’ affidavit addressed Computershare’s maintenance of Quickstep’s register of members, its dispatch of materials concerning the proposed Scheme to the Quickstep Shareholders, its processing of proxy forms and its conducting of the Scheme Meeting online.

14    The Fifth Smooker Affidavit addressed the lodgment of the Scheme documents with ASIC, the changes that were made to the proxy form and notice of access, Australian Securities Exchange (ASX) announcements and communications with the Quickstep Shareholders, the convening and conduct of the Scheme Meeting, and the outcome of the Scheme Meeting.

15    The Sixth Smooker Affidavit addressed the conditions precedent certificate which the parties executed on 16 April 2025, the fact that no notices of appearance had been received from the Quickstep Shareholders in respect of the second court hearing, and the letter from the Australian Securities and Investments Commission (ASIC) to the directors of Quickstep dated 16 April 2025 stating that, pursuant to s 411(17)(b) of the Act, ASIC has no objection to the Scheme.

ROLE OF THE COURT

16    Section 411(4)(a) of the Act provides that a scheme of arrangement is binding if, at a meeting of members, it is passed by a majority of members present and voting (in person or by proxy) and by 75% of votes cast, and it is subsequently approved by order of the court.

17    On an application to approve a scheme, the court must ensure that all statutory and procedural requirements in relation to the convening and conduct of the meeting have been observed. This requires the court to conclude that the meeting was properly convened and held in accordance with the convening orders, that the resolution to agree to the scheme was duly passed, and that all relevant requirements of the Act and the Federal Court (Corporations) Rules 2000 (Cth) (the Rules) have been complied with. Once satisfied of these matters, the court has a discretion to approve the scheme pursuant to s 411(4)(b) of the Act.

18    The principles relevant to the exercise of the court’s power to approve a scheme of arrangement are well understood. See, by way of example only, Re Crown Resorts Limited (No 2) [2022] FCA 710 at [10]–[14] (Anderson J).

19    In making an order pursuant to s 411(4)(b) of the Act (approving a scheme of arrangement), the role of the court is supervisory. The court is not bound to approve a scheme merely because it previously made orders convening a meeting or because statutory majorities were achieved. However, as Jacobson J observed in Re Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at 588 [32], “the court will usually approach the task upon the basis that the members are better judges of what is in their commercial interests than the court”. See also Re Huon Aquaculture Group Limited (No 2) [2021] FCA 1385 at [10].

20    The cases establish that the court should take into account 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 lodgment 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)    under s 411(17) of the Act, the court is satisfied that the scheme has not been proposed to avoid Chapter 6 of the Act or the plaintiff has a statement from ASIC that it has no objection to the scheme.

See, by way of example only, Re PayGroup Limited (No 2) [2022] FCA 1350.

STATUTORY AND PROCEDURAL REQUIREMENTS

21    I had the benefit of detailed submissions by Ms K A Brazenor of counsel. Those submissions noted the following relevant matters. Ms R T Zambelli appeared for ASDAM and supported the making of the orders.

Dispatch of scheme materials

22    Order 2 of the orders dated 5 March 2025 provided that the Scheme Meeting be convened by sending, on or before 14 March 2025, specified documents and information to the Quickstep Shareholders via the methods specified in that order.

23    A scheme booklet dated 5 March 2025 (the Scheme Booklet) and associated materials were dispatched to the Quickstep Shareholders on 14 March 2025 in accordance with the orders dated 5 March 2025.

24    Materials were also dispatched on behalf of Quickstep prior to the Scheme Meeting, as follows:

(a)    materials were sent by Computershare to 24 new Quickstep Shareholders (being shareholders who were added to the register of Quickstep Shareholders after the first court hearing); and

(b)    materials were sent by Computershare to 24 Quickstep Shareholders who requested further copies of materials relating to the proposed Scheme.

Registration of Scheme Booklet and lodgment of orders with ASIC

25    On 5 March 2025, the Scheme Booklet was registered by ASIC as required by s 412(6) of the Act and a copy of the orders dated 5 March 2025 was lodged with ASIC as required by r 3.5(b) of the Rules.

Results of Scheme Meeting

26    In accordance with the orders dated 5 March 2025, the Scheme Meeting was conducted online at 1:30 pm (AET) on 14 April 2025. It was conducted using the Computershare meeting platform. Computershare also provided registration and vote counting services at, and in respect of, the Scheme Meeting.

27    At the Scheme Meeting, the resolution to agree to the Scheme was passed by the requisite statutory majorities of eligible Quickstep Shareholders, with 96.99% of the votes cast and 81.90% of shareholders present and voting (including by proxy) being in favour of the Scheme.

Voter turnout

28    As at the Scheme Meeting Record Date, there were 3,615 Quickstep Shareholders (holding a total of 71,726,214 Quickstep shares) who were entitled to vote at the Scheme Meeting.

29    The number of Quickstep Shareholders present and voting (including by proxy) constituted 11.92% of the total number of eligible Quickstep Shareholders, and the number of shares that were voted (including by proxy) constituted 54.89% of the total number of shares eligible to be voted.

30    The levels of voter turnout here do not give rise to any concern that shareholders were deterred from attending the Scheme Meeting or did not have notice of it, because:

(a)    there is nothing to suggest that there was any irregularity in the manner of dispatch of material to the Quickstep Shareholders;

(b)    eligible Quickstep Shareholders were provided with notice of the Scheme Meeting;

(c)    there is no evidence of any issue that would have deterred Quickstep Shareholders from voting at, or from attending, the Scheme Meeting;

(d)    the percentage of Quickstep Shareholders who voted at the Scheme Meeting was greater than the percentage of Quickstep Shareholders who voted at each of Quickstep’s three previous annual general meetings;

(e)    the percentage of Quickstep shares that were voted at the Scheme Meeting was greater than the percentage of Quickstep shares that were voted at each of Quickstep’s three previous annual general meetings; and

(f)    those Quickstep Shareholders who did vote voted overwhelmingly in favour of the Scheme.

Notice of second court hearing

31    Order 10 of the orders dated 5 March 2025 required Quickstep, on or before 11 April 2025, to publish on its website and via an ASX announcement a notice substantially in the form that appeared at pages 163–164 of exhibit RS-4 to the affidavit of Mr Smooker affirmed on 28 February 2025, in order to give notice to the Quickstep Shareholders of the second court hearing.

32    On 10 April 2025, Quickstep made an announcement to the ASX and published a notice on its website substantially in the form approved by the orders dated 5 March 2025. The only differences between the notice published on 10 April 2025 and the version I had previously approved were minor changes to font and formatting, and the correction of an error in the contact telephone number that was given in the notice for accessing the Shareholder Information Line.

33    I accept Quickstep’s submission that the notice published was nonetheless substantially in the form of the version previously approved and that order 10 had been complied with.

Conditions precedent

34    The proposed Scheme is subject to the satisfaction (or waiver) of a number of conditions precedent. In addition to shareholder approval of the Scheme by the requisite majorities under the Act and court approval, the conditions precedent include, for example, various warranties being true and correct in all material respects and the independent expert not changing their conclusion that the Scheme is in the best interests of the Quickstep Shareholders prior to 8:00am (AET) on the date of the second court hearing. See cl 3.1 of the scheme implementation deed dated 20 December 2024 and cl 3.1 of the scheme of arrangement contained in Annexure A to the orders dated 5 March 2025. See also section 9.4.1 of the Scheme Booklet.

35    A conditions precedent certificate, which was dated 16 April 2025 and signed in counterparts by Quickstep and ASDAM, was exhibited to the Sixth Smooker Affidavit. This certificate confirmed that all relevant conditions precedent to the scheme had been satisfied (or waived).

SECTION 411(17)

36    The court’s power to approve a members’ scheme is restricted by s 411(17) of the Act. At the approval stage, the court must be satisfied there is no proscribed purpose as described in s 411(17)(a), or there must be provided to the court a statement in writing by ASIC that it has no objection to the arrangement (s 411(17)(b)).

37    The “no objection” letter from ASIC to the directors of Quickstep dated 16 April 2025 satisfies the requirements of s 411(17)(b), and consequently, the bar under s 411(17) to approval of the Scheme was removed.

EXERCISE OF THE DISCRETION

38    Quickstep submitted, and I agree, that the following matters are relevant in considering whether the Scheme is fair and reasonable so that an intelligent and honest shareholder, properly informed and acting alone, might approve it:

(a)    the proposed Scheme is a typical example of a change of control scheme of arrangement, and the court has regularly approved such schemes facilitating an appropriate change of control of a company;

(b)    the proposed Scheme contains performance risk protection measures for Quickstep Shareholders;

(c)    all Quickstep directors recommended that the Quickstep Shareholders vote in favour of the proposed Scheme and also stated their intention to vote their own Quickstep shares in favour of the proposed Scheme;

(d)    the independent expert concluded that the proposed Scheme is fair and reasonable and in the best interests of the Quickstep Shareholders, and in this regard there has been no change in the opinion or recommendation of the independent expert since the independent expert report was prepared for inclusion in the Scheme Booklet;

(e)    there has been full and fair disclosure to the Quickstep Shareholders of all information (including the potential advantages, disadvantages and risks of the proposed Scheme) that is material to their decision about whether to vote for or against the proposed Scheme, and the Quickstep Shareholders were given adequate time to consider properly the materials regarding the proposed Scheme prior to the Scheme Meeting held on 14 April 2025;

(f)    the Quickstep Shareholders present and voting at the Scheme Meeting voted in favour of the proposed Scheme, thereby satisfying all relevant statutory voting majorities (specified in s 411(4)(a) of the Act);

(g)    all relevant statutory and procedural requirements have been satisfied;

(h)    as certified by Quickstep and ASDAM, all conditions precedent to which the proposed Scheme is subject (excluding court approval and lodgment of the court’s approval orders with ASIC) have been satisfied or waived;

(i)    Quickstep did not receive a notice that any Quickstep Shareholder intended to oppose the application for approval of the proposed Scheme at the second court hearing;

(j)    no competing proposal has been received;

(k)    all matters of potential relevance to the approval of the proposed Scheme have been disclosed to the court;

(l)    ASIC has provided a “no objection” statement pursuant to s 411(17)(b) of the Act;

(m)    there is no suggestion of any bad faith motivation or improper purpose in relation to the proposed Scheme, concerning how it has been either propounded or voted on; and

(n)    to the extent that such considerations are relevant, this proposed Scheme raises no questions of public policy or commercial morality.

EXEMPTION FROM S 411(11)

39    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.

40    Section 411(12) relevantly allows the court to exempt a body from compliance with s 411(11).

41    In Re Equinox Resources Ltd [2004] WASC 143; (2004) 49 ACSR 692 at 696 [22], EM Heenan J explained that the purpose of s 411(11) is:

to ensure that any modification of the rights of shareholders of the company which is the subject of the scheme or any other provision in the scheme which may affect the interests of persons dealing with the company, such as prospective creditors or purchasers of shares, will be sure to have the opportunity of seeing what the exact rights of shareholders in the company or of its creditors are, as modified, if at all, by the scheme which has been approved.

See also Re Hostworks Group Limited (No 2) [2008] FCA 248 at [36] (Mansfield J).

42    Quickstep submitted, and I agree, that exemption from compliance with s 411(11) is appropriate in the circumstances, given that:

(a)    the proposed Scheme will not alter the constitution of Quickstep, or the rights of shareholders, creditors or other persons dealing with it;

(b)    the current Quickstep Shareholders are fully informed of the proposed Scheme and (to the extent this has not already been done) will be informed of the court’s approval of the proposed Scheme; and

(c)    no ongoing purpose would be served by requiring the orders approving the Scheme to be annexed to Quickstep’s constitution because, upon implementation of the proposed Scheme, Quickstep will be delisted from the ASX and will become a wholly-owned subsidiary of ASDAM (which is part of the broader ASDAM group).

CONCLUSION

43    For the foregoing reasons, I made the orders set out above.

Associate:

Dated:    23 April 2025