NIB Health Funds Limited ACN 000 124 381 No 2 [2007] FCA 1311

FEDERAL COURT OF AUSTRALIA

NIB Health Funds Limited ACN 000 124 381 No 2 [2007] FCA 1311

NIB HEALTH FUNDS LIMITED ACN 000 124 381, IN THE MATTER OF NIB HEALTH FUNDS LIMITED ACN 000 124 381 NSD859 OF 2007

EMMETT J

10 JULY 2007

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD859 OF 2007

IN THE MATTER OF NIB HEALTH FUNDS LIMITED ACN 000 124 381 NIB HEALTH FUNDS LIMITED

Plaintiff

JUDGE: EMMETT J

DATE: 10 JULY 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 6 June 2007, the Court made orders pursuant to s 411 of the Corporations Act 2001 (Cth) (the Act) for the convening of meetings of the members of NIB and a class of creditors of NIB, consisting of policyholders. As I indicated in my reasons of 6 June 2007, one of the conditions of the schemes is the approval by the Public Health Insurance Administration Council (the Council) of NIB being registered as a for profit insurer. 2 In connection with NIB's application for that approval, the Council indicated some concern about the proposed priority allocation of shares referred to in the Scheme Booklet. It is proposed that, in due course, shares in the new holding company will be listed for quotation on the Australian Securities Exchange Limited (ASX). The Scheme Booklet indicated that employees and company members would be offered a priority allocation, whereby they would have the opportunity to purchase additional shares prior to listing. If the listing does not go ahead, then that priority would be of no consequence. 3 However, the Council has taken the view that the priority allocation may fall within s 126-42(5)(b), which relevantly provides that the Council need not approve an application unless it is satisfied that the conversion scheme would not result in a financial benefit to any person who is not a policyholder of, or another person insured through, a health benefits fund conducted by the insurer. The Council has intimated that it is not satisfied as to that matter because of the proposed priority allocation. The Council therefore requested NIB to undertake that there would be no priority allocation of shares to company members and that the meetings convened by the Court be informed of that change. NIB has given the undertaking requested by the Council and has provided to the Court the form of written communication that NIB intends to send to company members, informing them of the change. 4 NIB's solicitors have also written to the Commission indicating the proposed change. The Commission has replied by email of 10 July 2007, indicating that, on the understanding that NIB will approach the Court today to propose that the change will be disclosed at the scheme meetings and that company members will be informed of the change as soon as practicable by letter, the Commission does not have any comments on the proposed change and does intend to appear in Court this afternoon. 5 The matter is brought to the attention to the Court pursuant to the general supervisory jurisdiction of the Court in relation to the conduct of meetings concerning a scheme of arrangement. In the circumstances, there is nothing further for the Court to do. I see no reason why the proposed notification outlined above would have any bearing on the decision of the Court to convene meetings of members and creditors. Whether the change has an effect on the members' decision whether to agree to the scheme will be a matter for them. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.