Supreme Court: Expecting a Minor to Respond to a Public Court Notice is ‘Perverse’  ||  SC: Order 23 Rule 1 CPC Applies to S. 11 Arbitration Act, Barring Fresh Arbiration After Abandonment  ||  SC: Later Sanction Requirement Won’t Invalidate Cognizance Taken When No Prior Bar Existed  ||  SC: Documents Not Admitted by an Employee in an Enquiry Must be Proved Through Witnesses  ||  Delhi HC: MHA Has Authority to Initiate Disciplinary Proceedings Against AGMUT IAS Officers  ||  MP HC: Financial Hardship or Mere Allegations of Lawyer’s Negligence Cannot Excuse Delayed Appeal  ||  Patna HC: Blanket Approach of Denying Public Employment to Individuals Named in an FIR is Unfair  ||  Kerala HC: Repeated Possession of Even Small Quantities of Narcotic Drugs Can Invoke KAAPA  ||  Calcutta HC: Employers May Deduct Penal Rent From Gratuity of Employees Refusing to Vacate Quarters  ||  Calcutta High Court: ECI Not Singling Out Bengal, More Transfers in Other Poll-Bound States    

Piedmont Lithium Ltd. Ex Parte - (22 Mar 2021)

A scheme of arrangement is used to re-organise a Company in a manner which will be binding on its members

Civil

The Plaintiff, Piedmont Lithium Limited (Piedmont), is an Australian public company listed on the official list of the Australian Securities Exchange (ASX). On 9 December 2020, Piedmont announced that, it had entered into a scheme implementation deed (SID) with Piedmont Lithium Incorporated (Piedmont US) (Scheme). Under the Scheme, it is proposed that Piedmont will become a wholly owned subsidiary of Piedmont US and will be subsequently delisted from the ASX. Each shareholder will receive one Piedmont US CHESS Depositary Interest (CDI) for every fully paid ordinary share in Piedmont. By originating process dated 11 February 2021, Piedmont sought orders under Section 411 of the Corporations Act, 2001 in relation to the proposed Scheme.

Pursuant to Section 411 of the Act, a scheme of arrangement can be used to re-organise a Company in a manner which will be binding on its members, provided that: (a) the arrangement is agreed by the requisite majorities as prescribed by Section 411(4)(a) of the Act, namely 75% of shareholders by value and 50% by number; and (b) the Court approves the arrangement pursuant to Section 411(4)(b) of the Act.

The formal matters that Piedmont had to prove are satisfied. The proposed Scheme constitutes an 'arrangement'. This type of 'top-hat' and re-domicile scheme has been approved by courts as an arrangement on numerous occasions. Piedmont filed the affidavit required by Rule 3.2 of the Corporations Rules, 2004 regarding the persons who have been nominated to be the chairperson and alternate chairperson for the Scheme Meeting. By letter dated 1 March 2021, ASIC confirmed that it had been given 14 days' notice of the hearing and had a reasonable opportunity to examine the terms of the Scheme and the draft explanatory statement or Scheme booklet. ASIC also gave notice tha, it did not propose to appear at the first hearing to make submissions or intervene to oppose the Scheme. There was nothing to suggest that, the Scheme was not properly proposed. The constitution of Piedmont does not prevent the Scheme. No class issue arose in relation to the Scheme.

The treatment of the Ineligible Foreign Shareholders is commonplace and is not class creating. All Piedmont Shareholders are being treated equally, and as a result, constitute a single class. The nature and terms of the proposed Scheme are such that, the shareholders are adequately protected against the risk that, they will not receive the Scheme consideration and have no capacity to sue Piedmont US to recover their shares or damages.

The Court must examine whether a benefit exists for one shareholder in particular, so as to bring into question the overall fairness of the Scheme. To determine whether there is a collateral benefit, the court considers the 'net benefits' test, to ensure that there is no overall disparity in favour of the party to the non-Scheme transaction. If no net benefit is present, then, prima facie, the equality principle under Section 602(c) of the Act is satisfied. The substantive and procedural requirements had been satisfied and that the proposed Scheme was fit for consideration by Piedmont's members.

Tags : SCHEME   APPROVAL   PROVISIONS  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved