10 June 2024

International Cases

Re Bardoc Gold Ltd; Ex Parte Bardoc Gold Ltd.




Low shareholder turnout does not prevent the Court from making orders approving a scheme of arrangement

On 1 April 2022, Bardoc Gold Ltd moved for orders approving a scheme of arrangement between Bardoc and its shareholders pursuant to Section 411(4), and if necessary Section 411(6) of the Corporations Act, 2001.

Section 411 of the Corporations Act envisages three steps. First, the court approves the convening of a scheme meeting and the draft explanatory statement to be sent to the scheme members. Secondly, the members vote on the proposed scheme at the scheme meeting. Thirdly, assuming the first two stages have occurred, a further application to the court for approval of the arrangement.

There is no evidence that the Bardoc shareholders voted for an improper purpose. he 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. It is well accepted that, low shareholder turnout does not prevent the court from making orders approving a scheme of arrangement.

Nothing has occurred since the date of the first hearing to change this view. The independent expert report opined that in the absence of an alternate proposal, the scheme is in the best interests of Bardoc shareholders. No alternate proposal emerged. The shareholders of Bardoc who voted at the scheme meeting overwhelmingly supported the proposed scheme and no Bardoc 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 the shareholders of Bardoc.

There was no evidence before the court that any minority has been oppressed. There was 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 of Section 411(4) of the Corporations Act had been satisfied. The proposed scheme has been approved.

Tags : Arrangement Scheme Approval

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