Federal Court Approves Changes for Scheme of Arrangement Meeting
📌 In brief
The Federal Court approved changes for a scheme of arrangement meeting. The main changes include allowing shareholders who vote directly before the meeting to be counted as present and permitting shareholders to participate virtually during the meeting.
⚖️ Legal holding
A court has the power to make interlocutory orders affecting a members' scheme of arrangement meeting under sections 411 and 1319 of the Corporations Act 2001 (Cth).
📖 What the law says
This section allows the Court to order meetings for a compromise or arrangement between a Part 5.1 body and its creditors or members. It also permits the Court to consolidate meetings when dealing with multiple wholly-owned subsidiaries of a holding company, ensuring efficient consideration of the proposed compromises or arrangements.
Plain-English explanation — does not replace advice from a legal practitioner.
📖 Technical summary
The Court granted four adjustments to orders regulating a scheme of arrangement meeting under the Corporations Act.
📜 Headnote Official document
The Court granted four adjustments to orders regulating a members' scheme of arrangement meeting under the Corporations Act, including allowing direct votes and virtual participation.
📚 Full judgment Official document
OUTCOME: Allowed
Federal Court of Australia
[COMPANY], in the matter of [COMPANY] (Scheme Meeting Orders) [2021] FCA 1163 File number: NSD 271 of 2021
Judgment of: PERRAM J
Date of judgment: 24 September 2021
Catchwords: CORPORATIONS – members' scheme of arrangement – interlocutory application for orders affecting scheme meeting
Legislation: Corporations Act 2001 (Cth) ss 411, 1319
Cases cited: [COMPANY], in the matter of [COMPANY] (First Scheme Hearing) [2021] FCA 948
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 3
Date of hearing: 24 September 2021
Counsel for the Plaintiff: [redacted]
Solicitor for the Plaintiff: [redacted] IN THE MATTER OF [COMPANY] [COMPANY] Plaintiff
order made by: PERRAM J DATE OF ORDER: 24 SEPTEMBER 2021
THE COURT ORDERS THAT:
1. Pursuant to sections 411(4)(a)(ii)(A) and 1319 of the Corporations Act 2001 (Cth) (Act), Scheme Shareholders lodging direct votes prior to the Scheme Meeting scheduled to be held at 10:30 am (AEST) on 6 October 2021 pursuant to Order 1 of the orders made on 4 August 2021 (Convening Orders) are to be counted as "present" at the Scheme Meeting for the purposes of s 411(4)(a)(ii)(A) of the Act.
2. Pursuant to sections 411(1) and 1319 of the Act, the Plaintiff's compliance with Order 3(a)(ii) of the Convening Orders is sufficient notwithstanding that the proxy forms there referred to were not personalised.
3. Pursuant to sections 411(1) and 1319 of the Act, participation of the Scheme Shareholders at the Scheme Meeting is to be conducted in the manner described in the affidavit of [NAME] affirmed on 22 September 2021.
4. Order 11 of the Convening Orders is amended by substituting 8 October 2021 for 16 September 2021.
5. The Plaintiff has liberty to apply upon giving 24 hours' notice to ASIC.
6. Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these orders are entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
PERRAM J: 1 A meeting of the shareholders of [COMPANY] ('Mainstream') is to be held at 10.30 am on 6 October 2021. It has been convened by orders made by this Court on 4 August 2021: [COMPANY], in the matter of [COMPANY] (First Scheme Hearing) [2021] FCA 948. The meeting is to consider a proposed scheme of arrangement under which all the ordinary shares in Mainstream will be acquired by [COMPANY] for $2.80 per share. At the time the Court convened the meeting, it also made extensive directions regulating, broadly speaking, the provision of information to shareholders about the proposal and the conduct of the meeting itself. 2 Mainstream now seeks four adjustments to these orders. First, it seeks an order that would permit shareholders who lodge direct votes prior to the meeting to count as being present at the meeting. Secondly, it seeks to be relieved of the obligation to personalise the proxy forms distributed by email and to leave it instead to each relevant shareholder to complete the entirety of the proxy form on their own. Thirdly, it seeks to adjust the manner in which shareholders may ask questions at the meeting by replacing a regime in which shareholders were only able to type their questions which were then to be displayed and read out by the Chairperson with a new regime whereby shareholders will actually be able to address the virtual meeting (it being noted that this scheme of arrangement has been pursued during the pendency of the COVID-19 pandemic). Fourthly, it seeks to change the date upon which a newspaper advertisement is to be published from 16 September 2021 to 8 October 2021, to correspond with an antecedent change to the date of the scheme meeting. 3 I am satisfied that the Court has the power under ss 411 and 1319 of the Corporations Act 2001 (Cth) to make all of these orders and that they should be made. It was for that reason that I made the orders that I did on 24 September 2021. I certify that the preceding three (3) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.
Associate: Dated: 24 September 2021
📊 How courts decide similar cases
Among 12 similar decisions in this collection:
- Federal Court of Australia Federal Court Approves Scheme of Arrangement
- Federal Court of Australia Federal Court Allows Sale of Company Property Subject to Security Interests
- Federal Court of Australia Federal Court Grants Extension for Second Creditors' Meeting
- Federal Court of Australia Federal Court Grants Extension for Second Creditors Meeting
- Federal Court of Australia Federal Court Extends Creditor Meeting Adjournment Period
- Supreme Court of New South Wales Supreme Court Approves Scheme Meeting for an Online Retailer
- Federal Court of Australia Federal Court Allows Virtual Meetings and Software Use in Virgin Australia'…
- Federal Court of Australia Respondent Ordered to Pay Claimant’s Costs Following Penalty Hearing
- Federal Court of Australia Federal Court Appoints New Liquidators for Seven Companies
- Federal Court of Australia Federal Court Approves Scheme of Arrangement for SFE Corporation
- Federal Court of Australia Federal Court Allows Substituted Service for Statutory Demand Dispute
- Federal Court of Australia Federal Court: An ASX-listed company fails continuous disclosure obligation…
A snapshot of this collection — not a prediction of your case's outcome.
⚖️ What tends to weigh in cases like this
✅ Tends to be accepted
- The court has the power to make interlocutory orders affecting a members' scheme of arrangement meeting under sections 411 and 1319 of the Corporations Act 2001 (Cth).
- Administrators are justified in holding virtual meetings and using specific software to manage creditor information during the administration process.
- A court may approve an application under s 411 of the Corporations Act to convene a meeting of members to consider a proposed scheme of arrangement if certain requirements are met.
- An administrator may dispose of a company's property under the Corporations Act if it is subject to a security interest, provided certain conditions are met.
- Administrators are entitled to extend the convening period for a second meeting of creditors and secure funding under certain conditions to prevent prejudice to creditors.
Patterns observed in similar cases in this collection — every case is unique.
❓ Frequently asked questions
What did this decision decide?
The court granted four adjustments to orders regulating a members' scheme of arrangement meeting.
Who was involved?
A company seeking changes to the rules for its scheme of arrangement meeting and shareholders affected by these changes.
How did the court decide, and why?
The court decided that it had the power under sections 411 and 1319 of the Corporations Act to make the requested adjustments.
Which laws or rules were applied?
Sections 411 and 1319 of the Corporations Act 2001 (Cth).
What was the argument that mattered most?
The company argued that the court had the power to make interlocutory orders affecting a members' scheme of arrangement meeting.
Was the decision for or against the person who brought the case?
For the person who brought the case.
What does this mean for someone in a similar situation?
Someone seeking changes to their own scheme of arrangement meeting orders may be able to obtain them from the court if they have a valid reason and the court has jurisdiction under relevant legislation.
What evidence or documents mattered?
The affidavit of a person affirmed on 22 September 2021 was important in describing how participation would occur at the meeting.
Can a decision like this be appealed?
Yes, but appeals are costly and time-consuming. It's best to seek legal advice before deciding to appeal.
Is it worth getting a solicitor for a case like this?
It is highly recommended to consult with a qualified solicitor who can provide specific legal advice tailored to your situation.