Re Western Areas Ltd; Ex Parte Western Areas Ltd. - (10 Jun 2022)

Court has a discretion to approve a scheme under Section 411(4)(b) of the Corporations Act and is not bound to approve a scheme just because the statutory majorities have been achieved

Commercial

The Plaintiff applies for orders approving a proposed scheme of arrangement. The Scheme meeting was convened and held on 1 June 2022. At the meeting, the resolution was passed by the requisite statutory majorities.

The approval of the proposed Scheme pursuant to Section 411(4)(b) of the Corporations Act, 2001, or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meeting. At the second court hearing, the court has two tasks: (a) to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that: (i) the meeting was convened and held in accordance with the court's earlier orders; (ii) the resolutions were passed with the requisite statutory majorities; and (iii) the plaintiff otherwise complied with the court's earlier orders; (b) to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.

The court has a discretion to approve a scheme under Section 411(4)(b) of the Act and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved. Said, the court will usually approach the task on the basis that shareholders are better judges of what is in their commercial interests than the court.

There is no evidence that the Western Areas shareholders voted for an improper purpose. Its members voted in good faith. The proposed Scheme was of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meeting. There was no evidence that any minority has been oppressed. There is no evidence before the court that the proposed Scheme offends any aspect of public policy. Present Court is satisfied the substantive and procedural requirements under Section 411(4) of the Act had been satisfied and present Court approves the proposed Scheme.

Tags : RESOLUTION SCHEME APPROVAL