Idameneo (No 123) Pty Ltd v Symbion Health Limited [2007] FCA 1832

FEDERAL COURT OF AUSTRALIA

Idameneo (No 123) Pty Ltd v Symbion Health Limited [2007] FCA 1832

CORPORATIONS – reduction of capital – whether an equal reduction of capital or a selective reduction of capital – two proposed resolutions, one for the reduction of capital and the other providing specially for payment of the proceeds of sale of transferred shares to overseas shareholders who were not entitled under the law of their countries to take an in specie distribution of shares held by the company in another company – whether the second resolution prevented the first from being an equal reduction of capital to be approved of by an ordinary resolution of shareholders. Held: the proposed reduction of capital was an equal reduction of capital.

CORPORATIONS – directors' duties – merger agreement – directors agreed to the inclusion of a "break fee" provision in the transaction implementation deed (TID) – earlier failed scheme for which the scheme implementation deed had provided for break fees that had not become payable because the scheme had not been supported by the statutory majorities of shareholders – revised proposal – TID provided for sale of particular businesses in return for shares in purchaser company followed by reduction of capital of seller, to be implemented by distribution of shares in specie to its shareholders – TID provided for reciprocal break fees identical in amount – amounts of break fees arrived at by including "sunk costs" on the failed scheme – whether, by reason of this fact, TID had been entered into in breach of the directors' duty to act in good faith in the best interests of the corporation under s 181(1) of the Corporations Act 2001 (Cth). Held: the suggested contravention of s 181(1) of the Corporations Act 2001 (Cth) was not established on the evidence.