17 June 2024

International Cases

Re Pensana Metals Ltd; ex parte pensana metals limited




Relatively low shareholder turnout does not prevent Court from making orders approving a scheme of arrangement

The Plaintiff, Pensana Metals Ltd (Pensana), applies for orders approving a proposed scheme of arrangement (Scheme). The Scheme meeting was convened and held on 15th, January 2020. At this 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.

The Court has a discretion to approve a scheme under Section 411(4)(b) 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. 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.

Relatively low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement. There was a sufficient turnout at each of the meetings. Present Court do not consider that the low voter turnout, in itself, suggested there had been an error in the dispatch of the scheme booklet, nor that this should prevent the court from making orders under Section 411(4)(b) of Act. There is no evidence that, the shareholders voted for an improper purpose. I am satisfied on the evidence that has been filed by Pensana that the members voted in good faith and for a proper purpose.

The purpose of the proposed Schemes is to re-domicile Pensana, which is a transaction ordinarily approved by courts. It does not involve any novel treatment of rights of shareholders. Rather, current shareholders will receive a proportionate interest in Pensana UK to their existing shareholding.

At the first hearing, based on the evidence before the court, Present Court is satisfied that the proposed re-domicile of Pensana 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. Nothing has occurred since the date of the first hearing to change this view. The shareholders who voted at the meeting overwhelmingly supported the proposed Scheme. No shareholder appeared to oppose the orders sought at the second court hearing. The proposed Scheme is fair and reasonable and is a Scheme that sensible business people might consider to be of benefit to shareholders.

The draft scheme booklet would provide full and fair disclosure to security holders. The additional affidavit evidence filed by Pensana establishes that the scheme booklet dispatched to shareholders was in the form approved for distribution by the court. Nothing has arisen to suggest that there has not been full and fair disclosure of all information that was material to the decision of shareholders prior to them voting on the Scheme. There was no evidence that any minority has been oppressed.

In any event, having regard to the nature of the proposed restructure, it cannot be said that the Scheme was proposed to avoid the operation of chapter 6 of the Corporations Act. There is no evidence before the court that the proposed Scheme offends any aspect of public policy. Given the nature of the proposed Scheme, it could not be sensibly suggested that the Scheme offends public policy. The substantive and procedural requirements under Section 411(1) of the Act had been satisfied and that, present Court should approve the proposed Schemes.

Tags : Scheme Arrangement Approval

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