FEDERAL COURT OF AUSTRALIA Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 5) [2011] FCA 1275 Citation: Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 5) [2011] FCA 1275 Parties: STRATFORD SUN LIMITED v OM HOLDINGS LIMITED (ARBN 081 028 337); IN THE MATTER OF OM HOLDINGS LIMITED (ARBN 081 028 337) File number: NSD 483 of 2011 Judge: FOSTER J Date of judgment: 10 November 2011 Corrigendum: 11 April 2012 Catchwords: CORPORATIONS – whether a public listed corporation listed on the ASX contravened ASX Listing Rules 7.3.4, 7.3.6 and 7.3.8 and engaged in misleading and deceptive conduct in contravention of s 1041H(1) of the Corporations Act 2001 (Cth) by circulating to its shareholders a Notice of Meeting and accompanying Explanatory Statement which failed to provide sufficient or adequate information to those shareholders in order to enable them to make a sensible and rational judgment about a resolution to be proposed at the upcoming Annual General Meeting for the issue of 345 million new fully paid ordinary shares in the corporation Legislation: Corporations Act 2001 (Cth), ss 9, 761A, 764A, 793C, 795B, 1041H and 1101B Evidence Act 1995 (Cth), s 76(1), s 79(1) Federal Court of Australia Act 1976 (Cth), s 50 Cases cited: Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (2011) 83 ACSR 84 related Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 3) [2011] FCA 513 related Alan Davis Group Pty Ltd v Rivkin Financial Services Ltd (2005) 216 ALR 766; (2005) 53 ACSR 610 cited Bateman v Newhaven Park Stud Ltd (2004) 49 ACSR 454 cited Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94 cited Dasreef Pty Ltd v Hawchar (2011) 277 ALR 611 applied ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626 followed Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 followed La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd (2011) 190 FCR 299 distinguished Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 cited Residues Treatment and Trading Co Ltd v Southern Resources Ltd; sub nom Southern Resources Ltd v Residues Treatment and Trading Co Ltd (1988) 14 ACLR 375 cited Westchester Financial Services Pty Ltd v Acclaim Exploration NL (1999) 32 ACSR 499 cited Date of hearing: 13 May 2011 Date of last submissions: 18 May 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 108 Counsel for the Plaintiff: Mr J Simpkins SC, Mr T Thawley Solicitor for the Plaintiff: Mallesons Stephen Jaques Counsel for the Defendant: Mr F Gleeson SC, Mr J Williams Solicitor for the Defendant: Gilbert + Tobin FEDERAL COURT OF AUSTRALIA Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 5) [2011] FCA 1275 CORRIGENDUM 1. In paragraph 32(a), line 2, replace the words "Stratford Sun" with the word "OMH", so that the second sentence in paragraph 32(a) reads: "By distributing the Notice of Meeting and the Explanatory Statement, OMH is alleged to have engaged in misleading and deceptive conduct in relation to a financial product." I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 11 April 2012 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 483 of 2011 IN THE MATTER OF OM HOLDINGS LIMITED (ARBN 081 028 337) BETWEEN: STRATFORD SUN LIMITED Plaintiff AND: OM HOLDINGS LIMITED (ARBN 081 028 337) Defendant JUDGE: FOSTER J DATE OF ORDER: 10 NOVEMBER 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The proceeding be dismissed. 2. The plaintiff pay the defendant's costs of and incidental to the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 483 of 2011 IN THE MATTER OF OM HOLDINGS LIMITED (ARBN 081 028 337) BETWEEN: STRATFORD SUN LIMITED Plaintiff AND: OM HOLDINGS LIMITED (ARBN 081 028 337) Defendant JUDGE: FOSTER J DATE: 10 NOVEMBER 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 19 April 2011, I delivered Reasons for Judgment in this proceeding ex tempore (Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (2011) 83 ACSR 84). In those Reasons, I explained why I refused the plaintiff's claims for interlocutory injunctive relief in respect of an Annual General Meeting of the defendant which was scheduled to take place at the corporate head office of the defendant in Singapore at 10.30 am on Wednesday, 20 April 2011 (the AGM). In that judgment, I described the parties, the circumstances in which the AGM was to take place and the resolutions which were to be submitted to the AGM as follows: 1 The plaintiff, Stratford Sun Limited (Stratford Sun), is incorporated in the British Virgin Islands. It is an investment vehicle with its only current interest being its shareholding in the defendant, OM Holdings Limited (OMH). Stratford Sun is a wholly owned subsidiary of Consolidated Minerals Limited (CML), a company which is also incorporated in the British Virgin Islands. CML is a global investment company with a focus on steel-related raw materials, in particular manganese, through its interests in Australia and Ghana. It also has interests in chromium, tungsten, vanadium, molybdenum and base metals such as nickel, zinc and copper. 2 OMH is incorporated in Bermuda. It is a public company which is registered in Australia as a foreign company and which is listed on the Australian Stock Exchange. Its corporate head office is in Singapore. It maintains a registered office in Perth and also a share registry in Perth. It is involved in metals trading. Of principal interest to OMH is the sourcing and distribution of manganese ore products. It is also involved in processing ores into ferromanganese intermediate products. The corporate group of which it is a part operates several fully integrated commercial mining operations covering Australia, China and Singapore. OMH controls the Bootu Creek Manganese Mine which is located 110 km north of Tennant Creek in the Northern Territory. That mine is a significant mine for the production of manganese. OMH also has interests in mining corporations which operate in South Africa, Sweden and Norway. 3 Stratford Sun holds approximately 11.4% of the issued capital of OMH. They are competitors in the manganese mining industry. 4 By Notice of Meeting dated 24 March 2011 (the Notice of Meeting) which was despatched to its shareholders on that day, OMH gave notice of its Annual General Meeting proposed to be held at 10.30 am at its corporate head office in Singapore on Wednesday, 20 April 2011. By an announcement made to ASX Limited (the ASX) dated 28 March 2011, the market was informed of the fact that the Notice of Meeting had been issued. The ASX was provided with a copy of the Notice of Meeting at the same time. I shall return to the detail of the Notice of Meeting later in these Reasons. For present purposes it is sufficient to note that, in the Notice of Meeting, OMH informed its shareholders that 11 resolutions would be put to them at the upcoming Annual General Meeting (the AGM). By proposed Resolution 6, which is of central importance in the present proceeding, the shareholders of OMH are being asked to authorise the directors of OMH to issue up to a total of 345,000,000 new fully paid ordinary shares in the capital of OMH at an issue price which is yet to be determined but which will be at a price not less than 80% of the volume weighted average market price of OMH shares trading on the ASX over the last five days on which the sales in OMH shares were recorded before the date on which the offer price is fixed for the purpose of the Global Offering (as defined) and in accordance with the terms and conditions set out in the Explanatory Statement attached to the Notice of Meeting (the Explanatory Statement). The issue of new shares is to be effected in conjunction with the proposed dual listing of OMH on the Hong Kong Stock Exchange (the HKSE). OMH intends to raise new capital of between AUD406,000,000 and AUD498,000,000 by the new issue. Other resolutions concerning a new employee share option plan and amendments to the Bye-Laws of OMH were also proposed. In large part these additional resolutions are dependent upon the passing of the resolution concerning the issue of the additional 345,000,000 shares in OMH. The resolution by which the Bye-Laws of OMH are to be amended must be passed as a special resolution. 2 In these Reasons for Judgment, which determine Stratford Sun's claims on a final basis, I will adopt the acronyms and abbreviations set out at [1]–[4] of my earlier Reasons for Judgment. Those paragraphs are extracted in full at [1] above. Those paragraphs remain an accurate description of the parties and of the circumstances in which the AGM was to take place. 3 The AGM took place on 20 April 2011, as planned. Resolutions 1 to 9 and 11 were declared by the Chairman of that meeting to have been passed by simple majorities. Resolution 10 was not passed. Resolution 10 had to be passed as a special resolution. That was so because it involved the amendment or alteration of several existing Bye-Laws of OMH and the addition of new Bye-Laws 52AA.1A and 52AAA.32A to those Bye-Laws (see Bye-Law 168). The requisite majority in respect of Resolution 10 was not achieved. 4 In the Explanatory Statement, OMH said that it wanted to add Bye-Laws 52AA.1A and 52AAA.32A to its Bye-Laws in order to make those Bye-Laws compliant with the takeover provisions set out in the Codes on Takeovers and Mergers and Share Repurchases in Hong Kong (the Hong Kong Takeover Codes). OMH contended that, if the dual listing proposal went ahead, OMH would have to comply with the Hong Kong Takeover Codes in any event and that the inclusion of additional Bye-Laws 52AA.1A and 52AAA.32A was, strictly speaking, not necessary and had been put forward for more abundant caution. 5 In the end, because Resolution 10 was not passed, Stratford Sun withdrew its challenge to Resolution 10 (Transcript p 8 ll 17–31). 6 Resolutions 1 to 5 concerned the re-election of two directors, the appointment of OMH's auditor, the approval of a final dividend for the year ended 31 December 2010 and the approval of OMH's Financial Statements for that year. Resolution 9 involved the approval of OMH's existing employee share option plan pursuant to ASX Listing Rule 7.2, Exception 9. Resolution 11 concerned the renewal of the proportional takeover provisions contained in Bye-Law 52AA. None of Resolutions 1, 2, 3, 4, 5, 9 and 11 is challenged by Stratford Sun in this proceeding. Stratford Sun accepts that those resolutions were validly passed. 7 Stratford Sun contends that Resolutions 6, 7 and 8 were not validly passed as ordinary resolutions at the AGM. The present proceeding, therefore, concerns the validity of Resolutions 6, 7 and 8 only. Stratford Sun relies upon several grounds when attacking the validity of those three resolutions. Stratford Sun argues that the information and explanations provided by OMH to its shareholders for the purpose of enabling those shareholders to consider how to cast their votes in respect of Resolutions 6, 7 and 8 were inadequate and that, by not providing sufficient information and explanations to those shareholders, OMH breached the Listing Rules of the ASX (the ASX Listing Rules) and the Corporations Act 2001 (Cth) (the Corporations Act) and engaged in misleading and deceptive conduct or conduct that was likely to mislead or deceive in contravention of the Corporations Act. It is also argued that the directors of OMH breached the duties owed by them to OMH as directors by failing to ensure that adequate information was provided to the shareholders of OMH. Finally, Stratford Sun argues that, by not disregarding or excluding certain votes, the Chairman of the AGM (and thus OMH) breached the ASX Listing Rules and the Corporations Act. All of these alleged contraventions are said to render Resolutions 6, 7 and 8 wholly invalid. 8 At the AGM, the Chairman did not disregard any votes in respect of Resolution 6 nor did he exclude any votes in respect of Resolutions 7 and 8. 9 One of the representatives of Stratford Sun who attended the AGM and held proxies from Stratford Sun, sought to have the shareholders' consideration of Resolutions 6, 7 and 8 deferred. That request was refused by the Chairman of the meeting. No complaint about this decision is made in the present proceeding. 10 At the meeting, the Chairman directed all votes, for which he was appointed proxy with direction to vote, in favour of Resolutions 1 to 11. 11 The votes in respect of Resolutions 6, 7 and 8 were cast as follows: (a) Resolution 6: In favour – 272,824,413 Against – 147,169,388 Abstained – 128,498 (b) Resolution 7: In favour – 260,029,344 Against – 160,032,555 Abstained – 61,400 (c) Resolution 8: In favour – 196,742,213 Against – 160,035,475 Abstained – 62,040,540 12 Resolutions 6, 7 and 8 were, therefore, declared to have been passed as ordinary resolutions. Some Matters of History and Context 13 The background to Resolutions 6, 7, 8, 9 and 10 was the decision made by the directors of OMH to pursue a dual listing on the HKSE through a global offering of shares comprising an international placement of shares to institutional and professional investors outside the United States and a public offering of shares to the public in Hong Kong (the global offering). OMH first announced its intention to pursue a listing on the HKSE in November 2007. On 30 May 2008, OMH sought and obtained shareholder approval for a global offering of shares in conjunction with a secondary listing on the HKSE (as distinct from a dual listing which was the 2011 proposal). The notice of meeting and explanatory statement in respect of resolutions to be put at that meeting were relevantly in identical terms to the Notice of Meeting and the Explanatory Statement which are now challenged by Stratford Sun. At the general meeting held on 30 May 2008, the shareholders of OMH approved all resolutions submitted to them. 14 On 1 August 2008, OMH announced that the proposed secondary listing on the HKSE had been deferred. In its announcement, OMH said that the deferral had been brought about by market conditions caused by the global financial crisis, although the company remained committed to a future listing on the HKSE. 15 Stratford Sun acquired its shareholding in OMH after 1 August 2008. It therefore acquired its stake in OMH knowing that OMH was committed to a global offering and a listing on the HKSE, a proposal which had previously been supported by the shareholders of OMH. 16 By an announcement made to the ASX on 5 July 2011, which was made after the hearing of the present proceeding had concluded, OMH informed the market that it had again decided to defer seeking a listing on the HKSE. The principal reasons given by OMH for its decision to defer that listing again were that there had been changes in the relevant market conditions and a recent decline in OMH's share price which made that listing less attractive than it had been when first proposed in early 2011. In that announcement, OMH said that it intended to evaluate a number of alternative strategic approaches in order to ensure that it is well positioned in the future to execute its growth strategy. One proposal that OMH is now considering is a de-merger of its smelting and trading businesses from its existing mining operations. 17 When initially proposed, the public offer in Hong Kong was to be made through a prospectus (global offering prospectus). The proposed listing on the HKSE was subject to the HKSE's approval of the company's listing application. OMH's listing application together with supporting documentation (including a draft of the global offering prospectus) was lodged with the HKSE on 28 February 2011. 18 The Joint Global Co-ordinators for the global offering were to be CITIC Securities Corporate Finance (HK) Limited and Morgan Stanley Asia Limited. The offer price was to be determined through a "book building" process conducted by the Joint Global Co-ordinators in consultation with the directors (a process that would require potential investors to indicate the volumes of shares for which they would be prepared to subscribe at certain prices, after which the Joint Global Co-ordinators would determine the optimal price to achieve a fully subscribed issue). However, consistent with ASX Listing Rule 7.3.3, under the 2011 proposal, the offer price could not be less than 80% of the average market price over the relevant five day period. 19 At the time when the trial took place before me, the global offering had not commenced. The identity of the allottees of shares under the global offering was not then known. Applications to subscribe for shares had not, by then, been made nor had the Joint Global Co-ordinators and the directors of OMH determined how and when shares in OMH would be issued. It was submitted by OMH that these circumstances reflected conventional market practice for securities offerings. 20 It was made clear to Stratford Sun by OMH and its lawyers during the exchange of correspondence which took place between Stratford Sun and OMH and their lawyers in April 2011 that the directors of OMH and parties related to them would not be participating in the proposed share issue. That state of affairs remained until the proposed listing was abandoned. The Notice of Meeting 21 In the Notice of Meeting, proposed Resolutions 6, 7 and 8 are set out in the following terms: RESOLUTION 6 – APPROVAL FOR THE ISSUE OF SECURITIES – HKSE LISTING To consider and if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution: "That, for the purposes of Listing Rule 7.1 and for all other purposes, and in conjunction with the proposed dual listing of the Company on the Main Board of The Stock Exchange of Hong Kong Limited ("HKSE"), the Directors be authorised to issue up to a total of 345,000,000 Shares at an issue price yet to be determined but that will not be less than 80% of the volume weighted average market price of Shares trading on the ASX over the last 5 days on which sales in the Shares were recorded before the date on which the offer price is fixed for the purpose of the Global Offering and in accordance with the terms and conditions as set out in the Explanatory Statement." The Company will disregard any votes cast on Resolution 6 by any person who may participate in the proposed issue and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares if Resolution 6 is passed, or any associate of those persons. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. RESOLUTION 7 – APPROVAL OF NEW EMPLOYEE SHARE OPTION PLAN To consider and if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution: "That, subject to Resolutions 6 and 8 being passed, pursuant to and in accordance with clause 14 of the rules of the Company's employee incentive option scheme for employees and directors known as "OM Holdings Limited Employee Share Option Plan Rules" ("Existing Plan") and for all other purposes, the Company approves the amendments to the Existing Plan as set out in the Explanatory Statement (including Annexure B to the Explanatory Statement) ("New Plan"), becoming effective upon the commencement of trading of the shares of the Company on the HKSE, at which time no further Options shall be offered or granted under the Existing Plan." RESOLUTION 8 – APPROVAL OF NEW EMPLOYEE SHARE OPTION PLAN PURSUANT TO LISTING RULE 7.2, EXCEPTION 9 To consider and if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution: "That, subject to Resolution 7 being passed and New Plan becoming effective in accordance with its terms, pursuant to and in accordance with Listing Rule 7.2, Exception 9 and for all other purposes, the Company approves the issue of securities under the New Plan, the rules of which are the amended rules included in Annexure B to the Explanatory Statement, as an exception to Listing Rule 7.1." The Company will disregard any votes cast on Resolution 8 by a Director of the Company and any person associated with those persons. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. The Explanatory Statement 22 In the Explanatory Statement, the following is said in respect of proposed Resolutions 6, 7, 8 and 9: Resolution 6 – Approval for the Issue of Securities – HKSE Listing Purpose Resolution 6 has been included so that Shareholders may consider and approve pursuant to Listing Rule 7.1 of the ASX Listing Rules ("Listing Rules") the proposed issue of up to a maximum of 345,000,000 Shares ("Offer Shares") in connection with the Company's proposed listing on Main Board of The Stock Exchange of Hong Kong Limited ("HKSE"). The Company presently has on issue 503,085,150 Shares. The maximum issue of the Offer Shares pursuant to this Resolution will represent approximately 40.7% of the expanded issued capital of the Company (on an undiluted basis) and assuming the maximum number of Shares will be issued (including Shares issued pursuant to the exercise of an over-allotment option referred to below). The Company is required to seek Shareholder approval for any issue of securities greater than 15% of its issued capital pursuant to Listing Rule 7.1 of the ASX Listing Rules. Background On 23 November 2010 the Company announced that it would be pursuing a proposed secondary listing on the HKSE. Since that time, the Company has decided to apply for a dual listing of its Shares on the HKSE. The Company has appointed CITIC Securities Corporate Finance (HK) Limited (being a subsidiary of CITIC Securities International Company Limited, "CSI") as its sponsor for the proposed global offering and proposed dual listing which is anticipated to occur no later than early in the 30 September 2011 quarter ("Global Offering"). The Global Offering will comprise an international placing of Offer Shares by the Company outside the United States of America (including to institutional and professional investors and excluding retail investors in Hong Kong) and a public offering of Offer Shares to the public in Hong Kong. The Company may also extend the international placing to the Company's existing institutional and professional investors based in Australia who qualify as professional and/or sophisticated investors under the Australian Corporations Act 2011 [sic]. The Global Offering is expected to be fully underwritten. Offer Shares may also be issued pursuant to the exercise of an over-allotment option that is expected to be granted by the Company to the Joint Global Coordinators (CSI and Morgan Stanley Asia Limited), exercisable by them, on behalf of the international underwriters, which will if granted require the Company to allot and issue up to approximately 15% of the number of Offer Shares initially available under the international placing and Hong Kong public offering pursuant to the Global Offering at the same offer price solely to cover over-allocations in the international placing, (if any)). The Company is in the process of preparing a Global Offering prospectus to be published solely in connection with the Hong Kong public offering, which forms part of the Global Offering. The listing application and other relevant documentation for the Global Offering was lodged with the HKSE on 28 February 2011. Subject to, amongst other things, the approval by the HKSE and registration of the Global Offering prospectus with the Hong Kong regulatory authorities, the Company is expecting to complete the listing no later than early in the 30 September 2011 quarter. HKSE Listing Hong Kong is one of the leading global stock exchanges in the world with an impressive diversified and stable investor base from overseas and local investment communities. The key benefits attributable to OMH pursuing such capital raising initiatives with a dual listing on the HKSE include: • enhanced access to capital markets which have an understanding of the OMH Group's businesses and growth strategies; • gateway exposure to Mainland China; • ability to leverage on Mainland China's continued growth; and • free flow of capital and information. The HKSE is a global exchange and as at February 2011 was the 7th largest exchange in the world by domestic market capitalisation and the 3rd largest exchange in Asia. In 2010 initial public offerings on the HKSE exceeded US$57 billion. The Company considers that the dual listing on HKSE will further broaden the Company's Shareholder base internationally and give the Company access to future capital raising opportunities in the growing Asian market to support its longer term growth strategy. In addition, being strategically positioned in this well established and highly liquid market will be of significant benefit to the Company should it contemplate future international acquisitions and/or growth opportunities. OMH Group's established manganese operation in Australia, combined with its ferro alloy production capability in China and trading operations based in Singapore are considered to be an attractive investment opportunity for the Hong Kong investor market. In addition, the OMH Group's growth strategy remains focussed on developing the Tshipi Project in South Africa and executing its smelting and sintering development and operational plans in Johor Bahru and Sarawak, Malaysia. The Company expects to maintain its listing on ASX and if the dual listing proceeds on the HKSE, the Company's shares may be shunted between ASX and HKSE and tradeable on either exchange. Use of Net Proceeds As at the date of this Notice of Meeting, and subject to finalisation of the Global Offering prospectus to be issued by the Company, the Company expects to use the net proceeds from the Global Offering which may range from A$406 million to A$498 million dependent upon the issue price (yet to be determined) and assuming the 300 million Shares will be issued) as follows: (a) for planned capital expansion works including the OMH Group's share of the capital expenditure requirements associated with the Tshipi Project in South Africa and construction of manganese ore sintering and alloy smelting plants in Johor Bahru, Malaysia and potential project opportunity in Sarawak, Malaysia; (b) fund the identification, evaluation and capture of strategically suitable projects – including suitable mining rights, operating assets or companies holding such rights and/or operating assets; (c) repayment and/or restructuring of the Groups' existing short and long term bank borrowings to reduce business and financial risk and provide improved financial flexibility; and (d) execution of planned exploration programs and the identification, evaluation and capture of strategically suitable exploration opportunities. As outlined above, the Company also intends to offer an over-allotment option to the Joint Global Coordinator (comprising an additional 45 million Shares), the additional proceeds of which, if exercised, will be used towards enhancing the funding for the evaluation and assessment of other international projects and as general working capital for the Company. Information Requirements The information required to be given to Shareholders pursuant to Listing Rule 7.3 of the Listing Rules is set out below: (a) The Company proposes to issue up to 345,000,000 Shares (including the over-allotment option) to persons selected by the Joint Global Coordinators in consultation with the Directors in their absolute discretion and in accordance with the proposed Global Offering prospectus. (b) Any Offer Shares issued pursuant to Resolution 6 will be issued on or before 31 August 2011, pursuant to a waiver given by the ASX in relation to the requirements of Listing Rule 7.3.2 of the Listing Rules. (c) Any Offer Shares issued pursuant to Resolution 6 must be issued at a price that will not be less than 80% of the volume weighted average market price for the Shares over the last 5 days on which sales were recorded before the date the price is fixed and is announced to the market. The actual offer price is expected to be determined by the Company in consultation with the Joint Global Coordinators, on behalf of the underwriters, on the price determination date following a "book-building" process. In determining the offer price, the Directors and the Joint Global Coordinators will take into consideration, among other factors, the demand for the Global Offering, the prevailing market price of the Shares on the ASX on the last trading day before the price determination date and the interest of existing Shareholders. (d) The proposed allottees of the Shares are not known at this stage. The basis of allotment will be determined by the Joint Global Coordinators in consultation with the Directors in their absolute discretion. The proposed allottees will be determined after receiving applications to subscribe for Shares from public and professional investors in Hong Kong and other international investors arising from the Company's offering of Shares in connection with the proposed dual listing of the Company's Shares on the HKSE. (e) Any Offer Shares issued pursuant to Resolution 6 will rank pari passu with the existing Shares on the issue. (f) Subject to the final size of the Global Offering being determined, the intended use of the net proceeds are outlined in the above section titled "Use of Net Proceeds". (g) The Company will seek permission from the ASX Limited for official quotation of the Shares to be issued pursuant to Resolution 6. The Board of Directors unanimously recommend that Shareholders vote to approve Resolution 6. 7. Resolution 7 – Approval of New Employee Share Option Plan Clause 14(c) of the Existing Plan provides that any alterations to the terms and conditions of the rules of the Existing Plan which are of a material nature must be approved by Shareholders at a general meeting. The Existing Plan currently complies with the Listing Rules and contemplates the Company maintaining its stock exchange listing on ASX. The Company's proposed dual listing on the HKSE will require the Existing Plan to be compliant with the HKSE Listing Rules in addition to the Listing Rules. In order to achieve this, changes to the Existing Plan will be required which the Board considers to be of a material nature requiring approval by Shareholders at a general meeting in accordance with clause 14(c) of the Existing Plan. The full terms of the Existing Plan and the New Plan are included in Annexures A and B to this Explanatory Statement. Shareholder approval is sought to amend the terms of the Existing Plan by making the changes as marked-up on the version of the New Plan included in Annexure B to this Explanatory Statement. The main effect of these amendments is to ensure that the New Plan complies with both the Listing Rules and the HKSE Listing Rules. Resolution 7 will only become effective upon the listing of the Company on the HKSE. The amendments to the New Plan will not affect Options previously issued under the Existing Plan which are outstanding. The proposed New Plan is consistent with requirements under the HKSE Listing Rules and some other amendments to re-order certain provisions of the Existing Plan have been made. The key amendments reflecting the requirements of the HKSE Listing Rules are summarised as follows: (a) an absolute cap on the number of options granted has been inserted into the New Plan, such that at any time the Shares to be issued upon exercise of all Options granted under the New Plan and any other scheme does not exceed 30% of the issued share capital of the Company from time to time; (b) a new clause has been inserted which provides that the total number of securities which may be issued upon exercise of all Options to be granted under the New Plan and any other scheme must not in aggregate exceed 10% of the relevant class of securities of OMH on issue as at the date the Company is listed on the HKSE, but such 10% limit may be renewed subject to approval by the Shareholders in general meeting; (c) the maximum number of Shares issued and to be issued upon exercise of the Options granted to each participant under the New Plan (including both exercised and outstanding Options) in any 12 month period must not, when aggregated with any Shares to be issued upon exercise of all Options granted to a participant under any other employee incentive scheme of the Company during such period or following specific prior Shareholder approval, exceed 1% of the issued Shares for the time being. Where any further grant of Options to a participant would result in the Shares issued and to be issued upon exercise of all Options granted and to be granted to such person (including exercised, cancelled and outstanding options) in the 12 month period up to and including the date of such further grant representing in aggregate over 1% of the Shares on issue, such further grant must be separately approved by Shareholders in a general meeting with such a participant and his/her associates abstaining from voting; (d) the Board may from time to time specify performance targets (if any) that must be reached before any Options can be exercised in whole or in part; (e) if consideration is payable for the grant of Options, that consideration must be paid within 7 days after the date of grant; (f) the calculation of the exercise price for an Option will take into account the methods set out in the HKSE Listing Rules, such that the issue price for a Share pursuant to the exercise of an Option must not be less than the higher of (i) weighted average sale price of Shares sold on ASX during the five business days prior to the issue date or such other period as determined by the Board in its discretion (reflecting the requirements under the ASX Listing Rules); and (ii) the closing price of the Shares as stated in the HKSE's daily quotation sheets on the date of grant, which must be a Hong Kong business day; and (iii) the average closing price of the Shares as stated in the HKSE's daily quotation sheets for the five Hong Kong business days immediately preceding the date of grant (reflecting the requirements of the HKSE Listing Rules); (g) the New Plan includes provisions that: (i) the grant of any Options to a substantial shareholder of the Company (which under the HKSE Listing Rules is defined as being a person who is entitled to exercise or control the exercise of 10% or more of the voting power at a general meeting of the Company), or their respective associates, must be approved by the independent non-executive directors of the Company (excluding an independent non-executive director who is the grantee of the Options); and (ii) where any grant of Options to a substantial shareholder, or their respective associates, would result in the securities issued and to be issued upon exercise of all Options already granted and to be granted (including options exercised, cancelled and outstanding) to such person in the 12-month period up to and including the date of such grant: (A) representing in aggregate over 0.1% of the relevant Shares on issue on the issue date; and (B) (where the securities are listed on the HKSE), having an aggregate value, based on the closing price of the securities at the date of each grant, in excess of HK$5 million, such further grant of Options must be approved by Shareholders of the Company and the Company must send a notice of general meeting and/or a circular to Shareholders in compliance with both the ASX Listing Rules and the HKSE Listing Rules. Connected persons of the Company who have an interest must abstain from voting on such resolutions at such a general meeting. (h) a grant of Options may not be made after a price sensitive event has occurred or a price sensitive matter has been the subject of a decision until an announcement of such price sensitive information has been published. In particular, during the period commencing one month immediately preceding the earlier of: (i) the date of the board meeting (as such date is first notified to the HKSE in accordance with the HKSE Listing Rules) for the approval of the listed issuer's results for any year, half-year or any other interim period (whether or not required under the HKSE Listing Rules); and (ii) the deadline for the issuer to publish an announcement of its results for any year or half-year under the HKSE Listing Rules or any other interim period (whether or not required under the HKSE Listing Rules), and ending on the date of the results announcement, no Options may be granted; (i) the New Plan has a term of 10 years commencing on the date of commencement of trading of Shares on the HKSE, after the expiry of which another employee share option plan will need to be re-approved by Shareholders; (j) any amendment to the New Plan to the advantage of participants must be subject to the approval by Shareholders in a general meeting; and (k) a new clause in the terms of the Options which provides that any adjustment to the exercise price and/or number of Shares to be issued upon the exercise of an Option in the event of a pro rata issue, bonus issue, reorganisation of capital (including consolidation of capital, subdivision of capital or return of capital) shall be in compliance with the Listing Rules and the HKSE Listing Rules (to the extent applicable). The Directors decline to make a recommendation in relation to Resolution 7 as they are eligible to be granted Options under the New Plan. 8. Resolutions 8 and 9 – Approval of the New Plan and Existing Plan pursuant to Listing Rule 7.2, Exception 9 The Directors had previously considered that it was desirable to establish an option plan under which employees and Directors of OMH and its associated bodies corporate ("Participants") may be offered the opportunity to subscribe for Options to acquire Shares in the Company in order to increase the range of potential incentives available to them and to strengthen links between the Company and its employees. Accordingly, Shareholders approved the plan known as the "OM Holdings Limited Employee Share Option Plan" on 25 May 2007, which was amended by the Board on 20 April 2008 pursuant to the rules of the Existing Plan. It is proposed that the Existing Plan will be further amended to create the New Plan as outlined above so as to comply with the HKSE Listing Rules as described in the explanatory notes to Resolution 7. The New Plan is designed to provide incentives to the Participants of the Company and to recognise their contributions to the Company's success. Under the Company's current circumstances, the Directors consider that the incentives to employees are a cost effective and efficient incentive for the Company as opposed to alternative forms of incentives such as cash bonuses or increased remuneration. To enable the Company to secure employees and Directors who can assist the Company in achieving its objectives, it is necessary to provide remuneration and incentives to such personnel. The New Plan is designed to achieve this objective, by encouraging continued improvement in performance over time and by encouraging personnel to acquire and retain significant shareholdings in the Company. Prior Shareholder approval will be required before any Director or related party of the Company can participate in the New Plan. Under the New Plan, the Board may offer to Participants the opportunity to subscribe for such number of Options in the Company as the Board may decide and on the terms set out in the rules of the New Plan. Options granted under the New Plan will be offered to Participants on the basis of the Board's view of the contribution of the Participant to the Company. Shareholder approval is required if any issue of options pursuant to an employee incentive option scheme is to fall within the exception to the calculation of the 15% limit imposed by Listing Rule 7.1 on the number of securities which may be issued without Shareholder approval. Accordingly, Shareholder approval is sought for the purposes of Listing Rule 7.2 Exception 9(b) which provides that Listing Rule 7.1 does not apply to an issue of securities under an employee incentive scheme that has been approved by the holders of ordinary securities within three years of the date of issue. Shareholder approval is sought under Resolution 8 for the issue of Options under the terms of the New Plan for the purposes of Listing Rule 7.2, Exception 9, provided that such approval will be of no force or effect unless Resolution 7 is passed and the New Plan becomes effective in accordance with its terms. Upon such time that the New Plan becomes effective, no further grant of Options under the Existing Plan shall be made, However, any Options granted under the Existing Plan shall continue to be exercisable in accordance with their terms of grant and the Board shall continue to administer the Existing Plan in accordance with the rules of the Existing Plan until all Options granted thereunder have been exercised, or have expired. Shareholder approval is also hereby sought under Resolution 9 for the issue of Options under the Existing Plan for the purposes of Listing Rule 7.2, Exception 9 in the event that Resolutions 6 and 7 are not passed. In accordance with the requirements of Listing Rule 7.2 Exception 9(b) the following information is provided: (a) a copy of the Existing Plan, which will continue to have full force and effect if Resolutions 6 and 7 are not passed, is included in Annexure A to this Explanatory Statement. A copy of the New Plan, which will have full force and effect if Resolutions 6, 7 and 8 are passed, is included in Annexure B to this Explanatory Statement; (b) this is the second approval sought under Listing Rule 7.2 Exception 9 with respect to the Existing Plan and the first approval sought under Listing Rule 7.2 Exception 9 with respect to the New Plan. Since the date of the last approval of the Existing Plan by Shareholders on 25 May 2007, the following Options have been issued under the Existing Plan: • 4,620,000 unlisted Options exercisable at A$0.60 each by 31 May 2010*; • 1,620,000 unlisted Options exercisable at A$0.60 each by 31 May 2011*; • 1,000,000 unlisted Options exercisable at A$0.73 each by 30 June 2010*; * Issued prior to the two for one Share split approved by Shareholders on 30 May 2008 • 4,325,000 unlisted options exercisable at A$2.49 each by 1 January 2012; and • 4,325,000 unlisted options exercisable at AS2.49 each by 1 January 2013. As at the date of this Notice no Options have been issued under the Existing Plan to any Directors. (c) a voting exclusion statement has been included in the Notice for the purposes of Resolutions 8 and 9. The Directors decline to make a recommendation in relation to Resolutions 8 and 9 as they are eligible to be granted Options under the Existing Plan (if Resolutions 6 and 7 are not passed) and the New Plan (if Resolutions 6, 7 and 8 are passed). 23 Annexure B to the Explanatory Statement showed the precise terms of the proposed alterations and amendments to OMH's Employee Share Option Plan Rules. Those proposed amendments are adequately described in the Explanatory Statement. It is not necessary to set them out in detail in these Reasons for Judgment. The Claims Made by Stratford Sun 24 The issue by OMH of 345,000,000 ordinary shares, as contemplated by Resolution 6, would be prohibited by ASX Listing Rules 7.1, 7.2 and 7.3, unless either: (a) The approval of the holders of ordinary shares was obtained in accordance with the ASX Listing Rules; or (b) Compliance with the rules was waived by the ASX or compliance with the rules was not required by the ASX in the circumstances of the case. 25 Stratford Sun claims that, as part of the duties owed by the directors of OMH to OMH, those persons had a duty to provide to the shareholders of OMH in the Notice of Meeting and in the Explanatory Statement such information as would fully and fairly inform those shareholders of what was to be considered at the AGM and as would enable those shareholders to make a properly informed judgment on each of the resolutions set out in the Notice of Meeting including: (a) Full and fair disclosure of all matters within the knowledge of the directors which would enable shareholders to make a properly informed judgment as to how they would vote in respect of each resolution; (b) Information that might reasonably have been obtained by the directors which would enable shareholders to make a properly informed judgment as to how they would vote in respect of each resolution; and (c) Generally, material information necessary for the shareholders properly to consider the effect of the Global Offering (as defined in the Notice of Meeting and Explanatory Statement) on OMH and on the interests of the shareholders as shareholders. 26 None of the directors of OMH is a party to the present proceeding. Stratford Sun has taken the view that none of those persons is a necessary party when proper regard is had to the relief sought by it in this proceeding. OMH disagrees with this view. It contends that Stratford Sun's case based upon breaches of directors' duties on the part of the directors of OMH must fail in limine because none of those directors is a party to this proceeding and no relief is sought against any of them personally. 27 Stratford Sun claims that the information provided to the shareholders in the Notice of Meeting and in the Explanatory Statement in respect of Resolution 6 fell well short of what was required in a number of significant respects. These shortcomings are said to constitute breaches of the duties owed to OMH by the directors of OMH. The particular complaints made by Stratford Sun are set out in par 23 of its Statement of Claim as follows: 23 In contravention of the Directors' Duty, the information provided to shareholders of the Defendant in the Meeting Materials in relation to Resolution 6 did not include any, or any adequate, statement as to the following: (a) the quantification of the Defendant's future funding needs and the material facts (including assumptions) upon which any quantification was based; (b) any cost/benefit analysis of the stated intended uses of the additional funding; (c) any advice the Defendant had received in respect of:- (i) the Defendant's future funding needs; (ii) the alternative means of satisfying those needs; (d) why the directors of the Defendant considered that the raising of capital by way of a placement of shares in the form of the "Global Offering"(including its quantum) was necessary or otherwise in the best interests of the Defendant and/or its shareholders; (e) what alternative capital raising structures the directors of the Defendant considered other than the Global Offering in order to satisfy the Defendant's requirements for capital (including the quantum of any such alternatives) or why the proposed Global Offering was chosen as the most appropriate means of capital raising for the Defendant at the time of the Notice; (f) why the directors of the Defendant considered that the Global Offering was in the best interests of the Defendant in view of the significant likelihood of dilution of existing shareholders' current holdings as a result of the Global Offering; (g) the likely effect of the Global Offering on the shareholdings of existing shareholders of the Defendant, particularly in relation to potential dilution of those shareholdings as a result of the Global Offering; (h) the identity of the persons to whom shares in the Defendant may be allotted pursuant to the Global Offering; (i) the basis upon which shares in the Defendant would be allotted as part of the Global Offering, including the basis or bases then being considered by the Defendant, its directors and advisers; (j) the manner in which any discretion to allot would or might be exercised, or any consideration of, or advice as to, the manner in which such discretion would or might be exercised; (k) the views of the directors of the Defendant as to which persons would be likely or potential allottees of shares under the Global Offering; (l) the material terms or proposed material terms of the Global Offering Prospectus; (m) the material terms of the listing application and other relevant documentation for the Global Listing lodged with the HKSE; (n) why the directors of the Defendant considered that the dual listing of the Defendant on HKSE to be in the best interests of the Defendant; (o) the legal or regulatory consequences of the dual listing of the Defendant on the ASX and the HKSE or how such dual listing differed from and was superior to a secondary listing of the Defendant's ordinary shares on the HKSE; (p) an analysis of the regulatory regime applicable to the Defendant once listed on the HKSE, its effect on the operations and business of the Defendant or its shareholders and the desirability of such dual listing having regard to those regulatory requirements; (q) whether there were any potential conflicts between: (i) the Listing Rules and the listing rules applicable to companies listed on the HKSE; or (ii) the laws of Australia, including the Corporations Act, and the codes on Takeovers and Mergers and Share Repurchases in Hong Kong; or how such conflicts might be resolved; (r) material costs that may be incurred by the Defendant in connection with and as a result of a dual listing on the HKSE (including compliance costs in relation to Hong Kong law) or how the directors of the Defendant formed the view that the benefits of the Defendant undertaking such dual listing would outweigh such costs; (s) whether the primary regulators of the Defendant under the proposed dual listing structure would be: (i) HKSE and the relevant Hong Kong regulatory authorities; or (ii) ASX Limited and, the Australian Securities and Investments Commission and other relevant Australian regulatory authorities; (t) such other material matters as were known to or able to reasonably ascertained by the directors of the Defendant but not disclosed. 28 The allegations made in subpars (e), (l) and (m) of par 23 were withdrawn at the commencement of the final hearing (Transcript p 8 ll 1–10). The remaining allegations were refined in final address. 29 It is also alleged that the voting exclusion statement for Resolution 6 contained in the Notice of Meeting did not identify the persons who might participate in the global offering and therefore did not disclose the identity of the persons who might obtain a benefit from that offering. This is said to be a breach of ASX Listing Rule 7.3 and therefore also a breach of the Corporations Act. 30 In similar vein, Stratford Sun alleges that the information provided in respect of proposed Resolutions 7 and 8 was defective and inadequate in that it did not include any, or any adequate, statement of the likely quantum or timing of any proposed grants of options and issues of shares in OMH pursuant to OMH's employee incentive option scheme under the New Plan (as defined in the Notice of Meeting) nor did it include any, or any adequate statement of the potential diluting effect which shares issued under the New Plan might have on existing shareholders. 31 These latter deficiencies are also said to constitute breaches of the directors' duties owed by the directors of OMH to OMH. 32 These facts and matters are said by Stratford Sun to constitute: (a) Contraventions of s 1041H(1) of the Corporations Act. By distributing the Notice of Meeting and the Explanatory Statement, Stratford Sun is alleged to have engaged in misleading and deceptive conduct in relation to a financial product. Section 1041H(1) is relied upon in respect of a challenge by Stratford Sun to each of Resolutions 6, 7 and 8; (b) Contraventions of Rules 7.3.4, 7.3.6 and 7.3.8 of the ASX Listing Rules so as to engage s 793C and s 1101B(1)(d) of the Corporations Act. It is only Resolution 6 that is attacked on this basis. 33 Stratford Sun seeks the following declaratory relief: 37 A declaration the Meeting Materials contravened the ASX Listing Rules. 38 Further, and alternatively, a declaration that the issue of the Meeting Materials constituted misleading or deceptive conduct or conduct that was likely to mislead or deceive within the meaning of section 1041H of the Corporations Law. 39 A declaration that Resolution 6, Resolution 7 and Resolution 8 ("Subject Resolutions") were not validly passed at the AGM and are (and have been from the time that the chairman of the AGM purported to declare them valid) of no effect. 34 In the Statement of Claim, the "Meeting Materials" are defined as the Notice of Meeting and the Explanatory Statement. 35 Stratford Sun also seeks to restrain OMH from giving effect to any of Resolutions 6, 7 and 8 or from otherwise relying upon any of those resolutions as having been validly passed at the AGM. 36 OMH contends that, in the circumstances of the present case, the Notice of Meeting and Explanatory Statement were more than adequate and that it did not commit any of the contraventions of the Corporations Act, the ASX Listing Rules or the general law alleged by Stratford Sun. The Relevant Legislative Provisions 37 Sections 793C, 1041H(1) and 1101B of the Corporations Act are in the following terms: 793C Enforcement of operating rules (1) If a person who is under an obligation to comply with or enforce any of a licensed market's operating rules fails to meet that obligation, an application to the Court may be made by: (a) ASIC; or (b) the licensee; or (c) the operator of a clearing and settlement facility with which the licensee has clearing and settlement arrangements; or (d) a person aggrieved by the failure. (2) After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to: (a) the person against whom the order is sought; or (b) if that person is a body corporate—the directors of the body corporate; about compliance with, or enforcement of, the operating rules. (3) For the purposes of this section, a body corporate that is, with its acquiescence, included in the official list of a licensed market, or an associate of such a body corporate, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the body corporate or associate. (4) For the purposes of this section, if a disclosing entity that is an undertaking to which interests in a registered scheme relate is, with the responsible entity's acquiescence, included in the official list of a licensed market, the responsible entity, or an associate of the responsible entity, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the responsible entity or associate. (5) For the purposes of this section, if a body corporate fails to comply with or enforce provisions of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the market is taken to be a person aggrieved by the failure. (6) There may be other circumstances in which a person may be aggrieved by a failure for the purposes of this section. … 1041H Misleading or deceptive conduct (civil liability only) (1) A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive. Note 1: Failure to comply with this subsection is not an offence. Note 2: Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4. … 1101B Power of Court to make certain orders Court's power to make orders in relation to certain contraventions (1) The Court may make such order, or orders, as it thinks fit if: (a) on the application of ASIC, it appears to the Court that a person: (i) has contravened a provision of this Chapter, or any other law relating to dealing in financial products or providing financial services; or (ii) has contravened a condition of an Australian market licence, Australian CS facility licence or Australian financial services licence; or (iii) has contravened a provision of the operating rules, or the compensation rules (if any), of a licensed market or of the operating rules of a licensed CS facility; or (v) has contravened a condition on an exemption from the requirement to hold an Australian market licence or an Australian CS facility licence; or (vi) is about to do an act with respect to dealing in financial products or providing a financial service that, if done, would be such a contravention; or (b) on the application of a market licensee, it appears to the Court that a person has contravened the operating rules, or the compensation rules (if any), of a licensed market operated by the licensee; or (c) on the application of a CS facility licensee, it appears to the Court that a person has contravened a provision of the operating rules of a licensed CS facility operated by the licensee; or (d) on the application of a person aggrieved by an alleged contravention by another person of subsection 798H(1) (complying with market integrity rules) or a provision of the operating rules, or the compensation rules (if any), of a licensed market, it appears to the Court that: (i) the other person did contravene the provision; and (ii) the applicant is aggrieved by the contravention. However, the Court can only make such an order if the Court is satisfied that the order would not unfairly prejudice any person. Note: For examples of orders the Court could make, see subsection (4). (2) For the purposes of paragraph (1)(d), if a body corporate contravenes a provision of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the licensed market is taken to be a person aggrieved by the contravention. (3) Subsection (2) does not limit the circumstances in which a person may be aggrieved by a contravention for the purposes of paragraph (1)(d). Examples of orders the Court may make (4) Without limiting subsection (1), some examples of orders the Court may make under subsection (1) include: (a) an order restraining a person from carrying on a business, or doing an act or classes of acts, in relation to financial products or financial services, if the person has persistently contravened, or is continuing to contravene: (i) a provision or provisions of this Chapter; or (ii) a provision or provisions of any other law relating to dealing in financial products or providing financial services; or (iii) a condition on an Australian market licence, Australian CS facility licence or Australian financial services licence; or (v) a condition of an exemption from a requirement to hold an Australian market licence or Australian CS facility licence; or (vi) a provision of the operating rules, or the compensation rules (if any), of a licensed market or of the operating rules of a licensed CS facility; or (b) an order giving directions about complying with the market integrity rules or a provision of the operating rules, or the compensation rules (if any), of a licensed market or of the operating rules of a licensed CS facility to a person (or the directors of the body corporate, if the person is a body corporate) who contravened the provision; and (c) an order requiring a person to disclose to the public or to specified persons, in accordance with the order, specified information that the person to whom the order is directed possesses or to which that person has access, if the person: (i) contravened the market integrity rules or a provision of the operating rules of a licensed market or a condition relating to the disclosure or provision of information; or (ii) was involved in such a contravention; and (d) an order requiring a person to publish advertisements in accordance with the order at that person's expense, if the person: (i) contravened the market integrity rules or a provision of the operating rules of a licensed market, or a condition relating to the disclosure or provision of information; or (ii) was involved in such a contravention; and (e) an order restraining a person from acquiring, disposing of or otherwise dealing with any financial products that are specified in the order; and (f) an order restraining a person from providing any financial services that are specified in the order; and (g) an order appointing a receiver of property (see subsection (9)) of a financial services licensee; and (h) an order declaring a contract relating to financial products or financial services to be void or voidable; and (i) an order directing a person to do or refrain from doing a specified act, if that order is for the purpose of securing compliance with any other order under this section; and (j) any ancillary order considered to be just and reasonable in consequence of the making of an order under any of the preceding provisions of this subsection. Interim orders (5) Before considering an application to the Court under subsection (1), the Court may make an interim order of the kind applied for to apply pending the determination of the application, if in the opinion of the Court it is desirable to do so. (6) However, if ASIC, a market licensee or a CS facility licensee applies for an order under subsection (1), the Court must not require the applicant, or any other person, to give any undertakings as to damages as a condition of making an interim order under subsection (5). Power to give notice of applications (7) Before making an order under subsection (1), the Court may do either or both of the following: (a) direct that notice of the application be given to such persons as it thinks fit; (b) direct that notice of the application be published in such manner as it thinks fit. Powers of receivers appointed under Court orders (8) A person appointed by order of the Court under subsection (1) as a receiver of the property (see subsection (12)) of a financial services licensee: (a) may require the financial services licensee to: (i) deliver to the person any property of which the person has been appointed receiver; or (ii) give to the person all information concerning that property that may reasonably be required; and (b) may acquire and take possession of any property of which the person has been appointed receiver; and (c) may deal with any property that the person has acquired, or of which the person has taken possession, in any way in which the financial services licensee might lawfully have dealt with the property; and (d) has such other powers in respect of the property as the Court specifies in the order. Duty to comply with order (10) A person must not, without reasonable excuse, contravene: (a) an order under this section; or (b) a requirement imposed under paragraph (8)(a) or (8)(d) by a receiver appointed by order of the Court under subsection (1). Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). Power to rescind or vary order (11) The Court may rescind or vary an order made by it under this section or suspend the operation of such an order. (12) In this section: compensation rules has the same meaning as in Part 7.5. property, in relation to a financial services licensee, includes: (a) money; or (b) financial products; or (c) documents of title to financial products; or (d) other property; entrusted to, or received on behalf of, any other person by the financial services licensee or another person in the course of, or in connection with, a financial services business carried on by the financial services licensee. 38 Because it holds shares in OMH and is challenging the validity of Resolutions 6, 7 and 8, Stratford Sun is an "aggrieved person" within the meaning of that expression in s 793C(1)(d) and s 1101B(1)(d) of the Corporations Act (see s 793C(5) and s 1101B(2)). The ASX is a "licensed market" within the meaning of that expression in s 793C(1) and s 1101B(1)(d) of that Act (see the definitions of "licensed market", "financial market" and "Australian market licence" in s 761A and see also s 795B). The ASX Listing Rules are "operating rules" within the meaning of that expression in s 793C and s 1101B of the Corporations Act (see the definition of "operating rules" in s 761A). Section 1101B gives the Court wide powers to remedy a breach of the ASX Listing Rules, subject to the proviso which appears at the end of s 1101B(1). 39 A share in a corporation is a "security" for the purposes of Chapter 7 – Financial Services and Markets of the Corporations Act (see the definition of "security" in s 761A), unless it is an "excluded security". The shares in OMH are not "excluded securities" (see the definition in s 9). Excluded securities relate to retirement villages. For the purposes of Ch 7, therefore, a "security" is a "financial product" and a share in OMH is such a product (see s 764A(1)(a)). 40 Section 1041H(2)(b)(ii) of the Corporations Act provides that the reference in s 1041H(1) to "engaging in conduct in relation to a financial product" includes but is not limited to publishing a notice in relation to a financial product. 41 Here, Stratford Sun contends that, by distributing the Notice of Meeting and the Explanatory Statement, OMH published a notice in relation to a financial product (viz shares in OMH) and thus engaged in conduct in relation to a financial product (viz shares in OMH). This contention is correct. The Notice of Meeting and the Explanatory Statement were published in Australia and thus were published "within the jurisdiction" for the purposes of s 1041H(1). Therefore, at this point, all of the constituent elements of a contravention of s 1041H(1) have been established by Stratford Sun in the present case, with the exception of the requirement that the impugned conduct be misleading or deceptive or likely to mislead or deceive. 42 Accordingly, as far as the alleged contravention of s 1041H(1) is concerned, the only matter in issue in the present proceeding is whether the distribution of the Notice of Meeting and the Explanatory Statement constituted conduct that had the necessary deceptive qualities. 43 I will address this question later in these Reasons. The Relevant ASX Listing Rules 44 Under ASX Listing Rule 7.1, without the approval of the holders of ordinary securities, a listed entity must not issue or agree to issue more securities than would represent 15% of its issued capital calculated by reference to the formula set out in Rule 7.1. It is common ground in the present case that the share issue contemplated by Resolution 6 would be an issue of the type and magnitude covered by Rule 7.1 with the consequence that the approval of the holders of ordinary shares in OMH of that issue was required. 45 ASX Listing Rule 7.2 sets out 15 exceptions to the requirements of ASX Listing Rule 7.1. Only Exception 14 is presently relevant. That exception provides: Exception 14 An issue made with the approval of holders of ordinary securities under listing rule 10.11. The notice of meeting must state that if approval is given under listing rule 10.11, approval is not required under listing rule 7.1. Introduced 1/7/2000. Cross reference: rule 10.13. 46 ASX Listing Rule 10.11 provides that, unless one of the exceptions in Rule 10.12 applies, a listed entity must not issue or agree to issue securities to any of the following persons without the approval of holders of ordinary securities, namely: a related party; or a person whose relationship with the entity or a related party is, in the ASX's opinion, such that approval should be obtained. 47 Rules 10.14 and 10.15 deal with the issue of securities to employees of a listed entity under an employee incentive scheme. The approval of the holders of ordinary securities is required and the notice of meeting where such approval is to be sought must comply with the requirements of Rule 10.15. The notice of meeting must include a voting exclusion statement. 48 Rule 7.3 of the ASX Listing Rules is in the following terms: Notice requirements for approval under rule 7.1 and 7.1.5 (a) 7.3 For the holders of ordinary securities to approve an issue or agreement to issue, the notice of meeting must include each of the following. 7.3.1 The maximum number of securities the entity is to issue (if known) or the formula for calculating the number of securities the entity is to issue. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(i). Amended 1/7/2000. 7.3.2 The date by which the entity will issue the securities. The date must be no later than 3 months after the date of the meeting. However, if court approval of a reorganisation of capital (in the case of a trust, interests) is required before the issue, the date must be no later than 3 months after the date of court approval. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(ii).Cross reference: chapter 10. If the issue requires approval under chapter 10, the time limit under that chapter for issue of the securities must be complied with. 7.3.3 The issue price of the securities, which must be either: • a fixed price; or Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(iii)a. • a minimum price. The minimum price may be fixed or a stated percentage that is at least 80% of the average market price for securities in that class. The average is calculated over the last 5 days on which sales in the securities were recorded before the day on which the issue was made or, if there is a prospectus, Product Disclosure Statement or offer information statement relating to the issue, over the last 5 days on which sales in the securities were recorded before the date the prospectus, Product Disclosure Statement or offer information statement is signed. Introduced 1/7/96. Origin: Listing Rule 3E(6)(e)(iii)b. Amended 1/7/97, 13/3/2000, 11/3/2002. 7.3.4 The names of the allottees (if known) or the basis upon which allottees will be identified or selected. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(iv). Amended 30/9/2001. 7.3.5 The terms of the securities. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(v). 7.3.6 The intended use of the funds raised. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(vi). 7.3.7 The dates of allotment or a statement that allotment will occur progressively. Introduced: 1/7/96. Origin: Listing Rule 3E(6)(e)(vii). 7.3.8 A voting exclusion statement. This does not apply if security holders are to receive a priority entitlement as part of a public offer and the notice of meeting states each of the following. (a) The priority entitlement is at least 10% of the offer or in another way, in ASX's opinion, that is fair in all the circumstances. (b) The entity will limit the number of securities it issues to a holder of ordinary securities to the higher of 5% of all the securities being offered under the priority entitlement and the number the holder would be entitled to under a pro rata issue of all those securities. Introduced 1/7196. Origin; Listing Rule 3E(6)(e)(viii). Amended 31/3/2004. 7.3.9 In the case of an agreement for the allotment of securities which is part of a public offer, a voting exclusion statement in relation to a party to the agreement, and an adequate summary of the agreement. Introduced 1/7/96. Origin; Listing Rule 3E(6)(e)(viii). 49 ASX Listing Rule 14.1 provides that, if a listing rule requires a notice of meeting to include information, that information may be set out in the notice itself or may accompany the notice. The approval of security holders is not effective for the purposes of the listing rules unless the notice of meeting includes everything that the relevant rule requires it to include (ASX Listing Rule 14.6). 50 ASX Listing Rules 14.9 and 14.11 provide: Approval usually means ordinary resolution 14.9 A requirement in the listing rules for approval by security holders means approval by ordinary resolution at a general meeting of the holders of ordinary securities unless otherwise specified. Introduced 1/7/96. Voting exclusion statement 14.11 If a rule requires a notice of meeting to include a voting exclusion statement, the notice of meeting must contain a statement to the following effect. The entity will disregard any votes cast on a resolution by: • the (named) person (or class of persons) excluded from voting; and • an associate of that person (or those persons). However, the entity need not disregard a vote if: • it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or • it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. Introduced 1/7/96. Note: The relevant interpretation of "associate" for the purposes of this rule is the interpretation in section 11 and sections 13 to 17 of the Corporations Act. Section 13 is to be applied as if it was not confined to associate references occurring in Chapter 7. Cross reference: listing rule 14.2.3. 14.11.1 The person excluded from voting must be named in the notice of meeting. The persons who must be named are the following. Rule Disregard votes cast by: … 7.1 A person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed. Introduced 1/7/96. Origin: Listing Rule 3E(6)(c)(viii). Amended 1/7/97, 30/9/2001. 7.2 a director of the entity – in the case of a trust, the responsible entity – (except one who is ineligible to participate in any employee incentive scheme in relation to the entity) Exception 9 Introduced 1/7/96. Origin: Listing Rule 3E(6)(c)(viii)b.iii. Amended 1/10/96, 1/7/98, 24/10/2005. … in all cases A person whose votes, in ASX's opinion, should be disregarded. Introduced 1/7/96. Example: ASX may require the votes of a person who might obtain a benefit if the resolution is passed, except a benefit solely in the capacity of a holder of ordinary securities, to be disregarded. If ASX does so before the notice of meeting is sent out, that person must be named in the notice. 14.11.2 ASX may identify a person whose votes, in its opinion, should be disregarded despite the notice of meeting having been sent out. If so, the votes of that person must also be disregarded. The provisions of rules 14.6 and 14.7 apply (with necessary adaptation). Introduced 1/7/96. Note: This rule does not require a further notice of meeting with the name of the person identified by ASX to be sent out. 51 ASX Listing Rule 19.12 in Chapter 19, Interpretation and Definitions, defines "voting exclusion statement" as "a statement referred to in rule 14.1". The Evidence of Mr Paatsch 52 Stratford Sun called Dean Anthony Paatsch to give evidence at the trial. Mr Paatsch was said to be experienced and expert in the area of advising institutional investors on corporate governance aspects of resolutions put forward for the consideration of such investors at meetings of ASX-listed public companies and on the delivery and mechanics of the casting of proxy votes by such investors at such meetings. Mr Paatsch's expertise and the relevance of his expertise (if any) were challenged by OMH. A number of objections to Mr Paatsch's Expert Report dated 5 May 2011 (Mr Paatsch's Report) were taken by OMH. OMH did not object to the whole of that report. 53 At the trial, after some argument, I admitted the whole of Mr Paatsch's Report subject to objection and subject to relevance. I also granted leave to the parties to file additional Written Submissions after the conclusion of the hearing directed to the admissibility of Mr Paatsch's Report. Both parties availed themselves of that leave and filed Written Submissions on that topic, the last of which was filed on 18 May 2011. 54 As indicated at the trial, I propose to rule in these Reasons for Judgment on all of the objections to Mr Paatsch's Report made by OMH. I have set out in Attachment "A" to these Reasons the objections to Mr Paatsch's Report made by OMH (including the grounds of objection) as well as my precise rulings in relation to those objections. I will explain my rulings (to the extent that it is necessary to do so) in the balance of this section of my Reasons. 55 Section 76(1) and s 79(1) of the Evidence Act 1995 (Cth) provide: 76 The opinion rule (1) Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. … 79 Exception: opinions based on specialised knowledge (1) If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. … 56 As the majority of the Justices of the High Court said in Dasreef Pty Ltd v Hawchar (2011) 277 ALR 611, when a court is considering the operation of s 79(1), it is necessary to identify why the evidence is relevant (at [31]) (p 620)). Then, according to their Honours, the evidence that is tendered must satisfy two criteria. At [32] (p 620), their Honours said: … The first [criterion] is that the witness who gives the evidence "has specialised knowledge based on the person's training, study or experience"; the second [criterion] is that the opinion expressed in evidence by the witness "is wholly or substantially based on that knowledge". 57 Ordinarily, the expert's evidence must explain how the field of "specialised knowledge" relied upon applies to the facts assumed or observed so as to produce the opinion propounded (at [37] (p 622) of Dasreef, where their Honours cited with approval the remarks of Heydon JA (as he then was) in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85] (p 744)). A failure to demonstrate that an opinion of an expert witness is based upon that witness's identified specialised knowledge goes to the admissibility of the opinion, not its weight (at [42] (p 623) of Dasreef). 58 As s 79(1) itself makes clear, the relevant specialised knowledge may be based upon experience alone. It is not necessary that there be some formal educational qualifications. 59 In the present case, OMH has accepted that: (a) Mr Paatsch has the specialised knowledge described at [52] above; (b) To some extent, his report explained how his specialised knowledge applied to relevant facts in the present case; and (c) To some extent, his opinions are relevant to the issues in the case. 60 These concessions follow from the fact that OMH did not object to the whole of Mr Paatsch's Report but rather confined itself to taking particular objections to particular parts of that report. 61 I have reached the following conclusions about the matters of principle raised by OMH in taking the objections which it has taken to Mr Paatsch's Report: (a) Mr Paatsch's expertise is confined to corporate governance matters. As submitted by OMH, when, in his report, he strays beyond corporate governance aspects and purports to express views on what information shareholders would need in respect of proposed resolutions or how shareholders would vote on proposed resolutions in order to give effect to substantive commercial decisions, he is not qualified to express opinions about such matters. (b) Mr Paatsch is not qualified to render admissible generalised statements of fact. He purports to give expert evidence, not lay evidence. He is not qualified to make generalised statements of fact in order to provide a foundation for his expert opinions. The circumstances of the present case are very different from those which obtained in La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd (2011) 190 FCR 299. In La Trobe Capital, evidence of fact was permitted to be given in a general form by one of the parties' senior managers who had direct knowledge of the matters asserted. (c) Those parts of Mr Paatsch's Report which are not relevant to the pleaded case will be rejected for that reason. The most significant part of Mr Paatsch's Report which travelled beyond the pleaded case is that section on pp 22–23 of the report which appears under the heading "Representations about the requirement to amend the Plan Rules". That material was attempted to be led in support of an argument that the meeting materials should have made clear that there was no need to change the rules of the employees' share option plans in force as at the date of the AGM merely in order to comply with the HKSE Listing Rules. The argument was that the existing plan already complied with those Listing Rules. In order for Stratford Sun to run this argument, it was necessary for it to amend its Statement of Claim. Leave to amend was refused at the trial (see Stratford Sun Limited v OM Holdings Limited; In the Matter of OM Holdings Limited (No 3) [2011] FCA 513). 62 I have made the rulings set out in Attachment "A" with the observations which I have made at [61] above in mind. In my view, it is not necessary for me to provide more detailed reasons for the rulings which I have made. The Written Submissions made by the parties in respect of Mr Paatsch's Report have been filed and will remain with the file. 63 Mr Paatsch was cross-examined at the trial. I shall address the substance of his evidence to the extent that it may be necessary to do so when I come to consider the issues in the case. Stratford Sun's Arguments Resolution 6 64 The submissions made on behalf of Stratford Sun may be summarised as follows: (a) The Court may make orders pursuant to s 1101B of the Corporations Act if a body corporate contravenes the operating rules of a licensed market. The ASX Listing Rules are "operating rules of a licensed market" and Stratford Sun is an "aggrieved person" within the meaning of that expression in s 1101B. Therefore, if OMH breached the ASX Listing Rules as alleged, the Court should grant to Stratford Sun the relief which it claims. (b) OMH was obliged to place before its shareholders in the meeting materials sufficient information, having regard to the nature of the particular transaction in contemplation and the circumstances in which it was to be undertaken, in order for those shareholders to make an informed judgment on the matters in question (Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94 at 96–98; Residues Treatment and Trading Co Ltd v Southern Resources Ltd; sub nom Southern Resources Ltd v Residues Treatment and Trading Co Ltd (1988) 14 ACLR 375; ENT Pty Ltd v Sunraysia Television Ltd (2007) 61 ACSR 626 at [14]–[23] (pp 630–632) and at [35] (p 636); Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 465; and Westchester Financial Services Pty Ltd v Acclaim Exploration NL (1999) 32 ACSR 499 at [18] (p 502–503)). (c) Section 1041H of the Corporations Act prohibits a person from engaging in conduct in Australia in relation to a financial product or financial service that is misleading or deceptive or is likely to mislead or deceive. In the present case, OMH engaged in such conduct by failing to furnish adequate information to its shareholders in the meeting materials in respect of Resolution 6. (d) The policy underlying Rule 7.1 of the ASX Listing Rules is to provide security holders (in this case, shareholders) protection against dilution of their interests. The proposed issue has to be submitted to the shareholders for their approval. The notice of meeting must set out the matters specified in Rule 7.3. (e) Rule 7.3 of the ASX Listing Rules should be read in conjunction with Rule 14.11 which provides that a notice of meeting which is required to contain a voting exclusion statement must contain a statement to the effect set out in Rule 14.11. Persons who are excluded by the voting exclusion are not entitled to vote (Alan Davis Group Pty Ltd v Rivkin Financial Services Ltd (2005) 216 ALR 766 at [71] (p 777); (2005) 53 ACSR 610 at [71] (p 621)). Here, the description of the class of excluded persons was ambiguous. In any event, all existing shareholders present at the AGM or represented at the meeting through a proxy had their votes counted. No-one had their votes excluded. Because the description of the class of excluded persons was unclear, shareholders could not determine who could and who could not vote in favour of Resolution 6. Alternatively, the description of the class of excluded persons was clear. Those persons who were excluded are those falling into the category of existing institutional and professional investors based in Australia who qualify as professional and/or sophisticated investors under the Corporations Act. Whether the voting exclusion is regarded as clear in the sense described above or ambiguous and unclear in the sense described above, Rule 7.3 was contravened in the present case. (f) Rule 7.3.4 requires that the notice of meeting must include "the names of the allottees (if known) or the basis upon which the allottees will be identified or selected". In the present case, the identity of the allottees was not known when the Notice of Meeting and the Explanatory Statement were sent out and neither of these documents specified the basis upon which the allottees would be identified or selected in due course. The selection was left to the unfettered discretion of the directors. In this sense, there is no "basis" for the allocation contemplated by the resolution. (g) The Notice of Meeting and the Explanatory Statement were misleading or deceptive or likely to mislead or deceive in the following respects: (i) The materials contained a statement to the effect that the voting exclusion would be applied yet those materials failed to explain how the exclusion would be applied and were ambiguous as to which shareholders would be invited to participate in the proposed issue and which votes would be accepted and which votes would be disregarded in respect of the resolution. (ii) The materials contained a representation to the effect that OMH might extend the placement to institutional, professional and sophisticated investors in Australia which representation was not true. (iii) There was inadequate disclosure of the fact that existing shareholders faced the very certain prospect of dilution of their shareholdings. (iv) There is no statement in either the Notice of Meeting or the Explanatory Statement of any risks or disadvantages or potential risks or disadvantages of the proposed listing of OMH on the HKSE. (v) There was inadequate disclosure in the meeting materials of the impact of the potential or actual involvement of a strategic investor seeking to gain control of OMH. In support of this submission, Senior Counsel for Stratford Sun referred to a number of documents which he submitted tended to suggest that, not only was the involvement of a strategic investor potentially on the table, but the involvement of such a person was in the actual contemplation of the Board of Directors of OMH. (vi) The use of the proceeds was not adequately spelt out in the meeting materials. In respect of each of the identified uses to which the proceeds might be put, it was necessary, so it was submitted, for the meeting materials to specify what portion of the funds raised would be allocated to each of those uses. The meeting materials failed to do so. Resolutions 7 and 8 (h) Resolutions 7 and 8 are dependent upon the validity of Resolution 6. Therefore, for the reasons explained in subpars (a)–(g) above, relief should also be granted in respect of these Resolutions. (i) In any event, in respect of Resolutions 7 and 8, the meeting materials were misleading. Inadequate disclosure was provided to non-sophisticated investors in relation to the maximum number of options that may be issued under the new ESOP and the diluted effect of such an issue. 65 Some of the submissions made on behalf of Stratford Sun were supported by reference to the evidence of Mr Paatsch. Reliance was also placed upon various documents which were used to support a submission that some of the matters which were not addressed at all in the meeting materials had, in fact, been under consideration by the Board of Directors of OMH in the relevant period. Most, if not all, of the documents relied upon are confidential to OMH and are protected by current confidentiality orders made by me at the trial and subsequently pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth). 66 The confidential nature of these documents must be respected as far as possible. When considering Stratford Sun's submissions later in these Reasons, I will endeavour to protect that confidentiality. The Defence mounted by OMH Resolution 6 67 The submissions advanced by Senior Counsel on behalf of OMH may be summarised as follows: (a) The complaints made by Stratford Sun ring hollow, coming, as they do, from a sophisticated investor which was plainly not itself misled. Stratford Sun had no difficulty understanding the nature of the resolutions now challenged and, immediately before the AGM, engaged in substantial correspondence with OMH concerning those resolutions. In particular, Stratford Sun itself voted on Resolution 6, having sought an indication from OMH that it would be offered a pro rata allocation in the global offering and that this would be a relevant factor for it in deciding how to vote on the resolution. (b) The allegations made by Stratford Sun in par 23 of its Statement of Claim all concern omissions in the meeting materials or non-disclosure in the meeting materials. The long list of complaints set out in par 23 need not be addressed one by one since Stratford Sun has narrowed its complaints to those which I have summarised at [64] above. (c) Mr Paatsch concluded in his report that the disclosure in the Notice of Meeting about the following matters was adequate: (i) There was sufficient information for shareholders to understand and quantify the impact of dilution (p 15.8); (ii) Shareholders were given sufficient information about when the proposed issue would occur (p 15.9–16.1); (iii) Shareholders were given sufficient information about the pricing of the proposed issue (p 16.5); and (iv) The absence of an express statement that directors and senior management would not participate in the offer was not material to shareholders (p 23.7). (d) The only deficiencies identified by Mr Paatsch in his report, on which Stratford Sun now relies, are: (i) It was ambiguous as to which shareholders would be invited to participate in the global offering and thus unclear as to which votes would be excluded; (ii) The information about the use of proceeds did not include express information about the quantum of the planned expenditures and potential debt repayments; (iii) There was insufficient disclosure of the risk of a large strategic investor emerging in the proposed issue; and (iv) There was insufficient disclosure of the impacts of dual listing including: (A) The impact of the HKSE Listing Rules; (B) The impact of the Hong Kong Takeover Codes; and (C) The impact of trading volatility and liquidity. (e) When confronted with the terms of a placement by Galaxy Mining, Mr Paatsch conceded that it was common in a placement such as that with which I am presently concerned that the identity of allottees of shares will be determined by the issuing corporation or by that corporation in conjunction with its advisors. He argued, however, that it was quite uncommon for the class of allottees to be identified by reference to their residence in Hong Kong. In the end, so it was submitted, Mr Paatsch did not make anything of the fact that the class was identified by reference to the potential allottees' residence in Hong Kong. (f) Mr Paatsch was also challenged about his proposition that the meeting materials were deficient because there was no reference in them to the impacts of the proposed listing and allotments on trading volatility or market liquidity. It was put to him that he could not bring forward in order to support his proposition any market example where this was done. Mr Paatsch also conceded that he was not qualified to comment on the materiality of such a matter. (g) Mr Paatsch conceded that it was not an omission from the meeting materials for there to be no mention of the impact of the Hong Kong Takeover Codes on the transaction. (h) In cross-examination, Mr Paatsch withdrew from his report the proposition that the information provided to OMH shareholders was deficient in respect of the use of proceeds. At Transcript p 28 l 24–Transcript p 29 l 27, the following questions were asked and answers given by Mr Paatsch: Could you please repeat the question? Well, your experience arises relevantly from advising on corporate governance matters for large institutions doesn't it?---Yes, it does. Okay. And you don't claim to have any relevant experience advising shareholders on substantive commercial transactions and whether they should vote for or against those transactions do you?---Yes, I do, but can I explain? Well, you don't say anywhere in your report when you set out your relevant qualifications and experience that you put yourself forward as an expert who is one who advises on substantive corporate transactions do you?--- No, I don't, but can I explain? All right. What would you like to say?---Only to the extent that it may impact on your – those transactions may impact on your extant shareholder rights or governance issues. So, yes. So your focus is corporate governance?---Yes. Yes. Thank you. Now, if you look at page 16 of the report, section 5.2.4, dealing with the topic of User Proceeds, one of the criticisms you make of the notice of meeting and supporting material is that, although the intended purposes were identified, a particular dollar amount wasn't allocated to each intended purpose. That was the criticism you make?---It was a statement of fact. Yes. Yes. Okay. So you are not suggesting it is a criticism, because when I read 5.2.4, can we just be clear, it doesn't actually, in that section of the report, assert that you consider the notice was insufficient does it?--- No, it doesn't. Right. And so you are not suggesting that that lack of dollar figure was a deficiency in the notice do you? Please don't look ahead, Mr Paatsch?---I will try not to. No, I'm not. I expressed no view on it. Okay. And one of the reasons you are not able to express any view on that is you yourself are not qualified to express a view on whether or not the capital raising would be accretive to shareholder value or not are you?---That's correct. Okay. And it would follow that you couldn't express any opinion about the materiality of information as to the particular dollar amounts that might be attached to particular purposes for fundraising can you?---Yes. I apologise if I have expressed that view but I specifically sought to excise that from my report. Thank you. So that we can then clear up this point, could you then please go over to page 19 of the report, and I think this is what you might wishing to seek to excise. Do you see the bottom of page 19, the last paragraph "In my view"?---Yes. "... there were clear additional deficiencies." The first dot point uses the words "use of proceeds." I take it from your answers then that you wish to withdraw that from your report?---Yes. I will. (i) The relevant principles are found in the judgment of Austin J in ENT Pty Ltd at [14]–[22] (pp 630–632). (j) In addition to the criticisms of Mr Paatsch, as far as the proposition advanced by Stratford Sun that the materials were ambiguous as to which shareholders would be invited to participate in the global offering and thus unclear as to which votes would be excluded, the following answers may be given: (i) There was no ambiguity. The Explanatory Statement made it perfectly plain that it would be a matter for the Joint Global Co-ordinators in conjunction with the Directors of OMH to determine the allottees in their absolute discretion. Shareholders knew that there was no guarantee they would be able to participate in the offering and for shareholders who are not institutional or professional investors and not resident in Hong Kong, it was a certainty that they could not participate. Shareholders voted on that basis. (ii) A statement to the effect that the allottees are to be determined by the Directors or the underwriter to the issue in their absolute discretion is a clear and accurate statement of the basis upon which allottees will be identified or selected, as required by ASX Listing Rule 7.3.4. It is also standard market practice in a notice of meeting for an approval under ASX Listing Rule 7.1 in connection with a general share placement or offering. These latter propositions are supported by a plethora of evidentiary material tendered by OMH. In circumstances where the offering has yet to take place and applications have not yet been received, there is nothing more that can sensibly be said as to the identity of the proposed allottees. (iii) To the extent that Mr Paatsch's complaint and thus Stratford Sun's proposition depends upon the assumption that the Joint Global Co-ordinators and the Directors had already determined not to issue any shares in the Global Offering to any existing shareholder, that assumption has not been made good by evidence and is not correct. It is not supported by any evidence whatsoever. It does not follow that, because no votes were excluded in respect of Resolution 6 at the AGM, a decision had been made not to allow any existing shareholders to participate in the Global Offering. The voting exclusion statement was in the terms prescribed by the Listing Rules. It was required to be included in those terms. OMH was bound to include them without modification. Where the allottees are known and identified, the application of the prescribed words presents no problem. However, where the proposed issue is a general offer to apply for shares open to the public or a section of the public, a question arises as to the meaning of the words "a person who may participate in the proposed issue". In the exclusion statement and thus the ASX Listing Rules, the word "may", when used in respect of potential participation in the proposed issue, is used in the sense of a prediction based on more than speculation or mere possibility that the person will participate in the proposed issue. Otherwise, no shareholders could ever vote on such an issue. This interpretation is consistent with market practice. The evidence before the Court supported this last proposition. The ASX interprets the relevant Listing Rule in this way. It is not open to Stratford Sun, asserting that it is an aggrieved person, to require a court to insist on a strict or literal reading of the Listing Rules in contradistinction to the interpretation commonly undertaken by the ASX (see Bateman v Newhaven Park Stud Ltd (2004) 49 ACSR 454 at [6]–[14]). (iv) The interpretation advanced by OMH does not render the purpose of the voting exclusion statement otiose or defeat its policy. Where it is known that a shareholder will participate in the placement, its vote must be excluded because it may be influenced by the benefit which it will obtain from the approval of the placement. But where, as here, it is not known who will be participating in the issue, shareholders must consider the proposal on the basis that they may or may not get a benefit and that it is possible that their shareholding will be diluted. All shareholders face that same prospect of dilution and must vote accordingly. There is no reason to exclude their votes. This reasoning destroys the underlying rationale of Mr Paatsch's complaint in respect of the voting exclusion statement. (v) In any event, Mr Paatsch's reasoning is entirely circular. He seems to say that, in order to determine how they will vote on the proposal, it was material for shareholders to know whether they could participate in the Global Offering. The premise appeared to be that a shareholder might be inclined to vote in favour of the resolution if it thought that it might be able to participate in the offering. But, as Mr Paatsch assumed, if the consequence of submitting a valid vote which is not excluded is that the shareholder is ineligible to participate in the Global Offering, the shareholder obtains no benefit from supporting the resolution. The logic is self-defeating. (k) The complaints concerning the lack of information about the possibility of an involvement of a strategic investor go nowhere. The possibility of an involvement of such an investor, up to the limit permitted by the relevant takeover legislation, was obvious. The material relied upon by Stratford Sun to support the proposition that OMH actually contemplated allotting the entire placement or a significant portion thereof to a single investor is not supported by the evidence. In any event, the Bye-Laws of OMH do not permit the directors to allot shares representing more than 20% to any one party without the need for a takeover offer. Resolutions 7 and 8 (l) The only pleaded complaint about these resolutions (apart from their connection to the fate of Resolution 6) is that the meeting materials were inadequate because they failed to disclose the likely quantum or timing of proposed grants of options or shares under the New Plan and the resulting diluting effect on existing shareholders. At the trial, Mr Paatsch abandoned his support for this assertion. Consideration Resolution 6 68 Stratford Sun alleges that Resolution 6 is invalid, or should be declared to be invalid, because, by propounding that resolution in the meeting materials, OMH engaged in misleading and deceptive conduct or conduct that was likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act and that the Court should grant appropriate relief in respect of such conduct. Stratford Sun also alleges that OMH contravened ASX Listing Rules 7.3.4, 7.3.6 and 7.3.8 and that the Court should declare Resolution 6 invalid pursuant to s 793C and s 1101B(1)(d) of the Corporations Act. 69 I shall deal with the case based upon contraventions of the ASX Listing Rules first. I have set out or referred to the relevant ASX Listing Rules at [44]–[51] above. 70 There was no dispute between the parties that the provisions of ASX Listing Rule 7.1 were engaged. For that reason, OMH was required to comply with ASX Listing Rule 7.3. 71 Stratford Sun claimed that the material provided by OMH in the Explanatory Statement in purported compliance with Rule 7.3.4 did not satisfy the requirements of that rule. It submitted that, in the present case, given that the names of the proposed allottees were not known as at the date that the meeting materials were circulated, OMH was obliged to specify in those materials the basis upon which allottees would be identified or selected in the future. Stratford Sun submitted that the information provided in par (d) on p 5 of the Explanatory Statement failed to specify such a basis because the decision as to the identity or selection of the allottees was left entirely to the discretion of the Directors of OMH in consultation with the Joint Global Co-ordinators without any indication of the process which would be undertaken by those persons in making that selection or the criteria which would be applied by those persons in making that selection. The absence of specific objective criteria was said to render the information non-compliant with the requirements of Rule 7.3.4. 72 I do not agree with this submission. 73 As a matter of interpretation of Rule 7.3.4, I think that the statement made in par (d) on p 5 of the Explanatory Statement sufficiently meets the exigencies of Rule 7.3.4. The statement makes perfectly clear to the shareholders of OMH that the identification or selection of allottees at some time in the future has been left to the discretion of the Directors of OMH in consultation with the Joint Global Co-ordinators. It also makes perfectly clear that the basis upon which that decision might be made has also been left entirely to those persons. The statement made in the Explanatory Statement constitutes a "basis" within the meaning of Rule 7.3.4. 74 Stratford Sun then submitted that the information provided as to the intended use of the net proceeds raised by the proposed issue (ie the material set out under the heading "Use of Net Proceeds" on p 4 of the Explanatory Statement read with par (f) on p 5 of that statement), did not satisfy the requirements of ASX Listing Rule 7.3.6 because it did not inform the reader of the specific amount or percentage of the net proceeds that would be laid out on each of the specified uses. 75 In my view, there is nothing in the language of Rule 7.3.6 that requires a corporation in the position of OMH to provide the breakdown which Stratford Sun claimed should have been provided in the present case. 76 The final aspect of the ASX Listing Rules raised by Stratford Sun concerned the interpretation of Rule 7.3.8 and Rule 14.11. 77 Rule 7.3.8 requires a corporation in the position of OMH to include within its meeting materials a voting exclusion statement. The ASX Listing Rules themselves prescribe in some detail the form that such a voting exclusion statement must take (see Rule 14.11). In the present case, the voting exclusion statement included in the Notice of Meeting repeated the language used in Rule 14.11 as faithfully as the circumstances allowed. OMH, therefore, complied with Listing Rule 7.3.8 and Listing Rule 14.11. 78 The difficulty that has arisen between the parties is: What does the voting exclusion statement included in the Notice of Meeting mean? Does it allow a shareholder to form a rational view as to whether it is entitled to vote on Resolution 6 and, if so, whether it should do so? Does it make clear to all concerned whose votes will be counted and whose votes will be disregarded? 79 The difficulty of interpretation thrown up by the language deployed in the voting exclusion statement included in the Notice of Meeting essentially concerns the meaning of the words "may" and "might" in the first two lines of the voting exclusion statement. 80 At [64(e)] and at [67(j)] above, I have set out the competing contentions advanced by the parties on this point. Stratford Sun favoured a strictly literal approach to the meaning of those words whereas OMH advanced a less literal but nonetheless textually satisfying interpretation of those words. 81 I prefer the interpretation favoured by OMH essentially for the reasons advanced by OMH. 82 The interpretation of the voting exclusion statement which I have concluded is the correct interpretation feeds into other complaints made by Stratford Sun about the meeting materials. 83 For the reasons which I have set out at [70]–[82] above, Stratford Sun has failed to establish that OMH contravened any of the ASX Listing Rules. It has therefore failed to establish any entitlement to relief pursuant to s 793C or s 1101B(1)(d) of the Corporations Act. 84 The second broad basis of attack mounted by Stratford Sun to Resolution 6 is that which is based upon allegations to the effect that important information was omitted from the meeting materials which should have been disclosed to the shareholders of OMH thus rendering Resolution 6 amenable to attack upon the basis that OMH was guilty of misleading and deceptive conduct or conduct that was likely to mislead or deceive in contravention of s 1041H(1) of the Corporations Act. 85 The principles governing the general duty of disclosure imposed upon the directors of a corporation in respect of meeting materials circulated to the shareholders of that corporation for their consideration have been helpfully and comprehensively exposed by Austin J in ENT Pty Ltd at [14]–[23] (pp 630–633). In that case, at those paragraphs, his Honour said: (i) The directors' duty of disclosure 14 Section 249L(1)(b) requires that a notice of a meeting of a company's members must state the general nature of the meeting's business. The plaintiff does not contend that the notice in the present case fails to comply with this statutory provision in a formal sense, but it argues that the disclosure in the explanatory materials is inadequate. 15 The plaintiff contends that the court should interfere with the meeting process, by injunction, because the directors of Sunraysia have not discharged the duty they owe to the shareholders of the company to provide such material as will fully and fairly inform the shareholders of what is to be considered at the meeting and enable them to make a properly informed judgment on the matters in question, including an assessment of the financial effect of the sale proposal on the company and on their interest in the company. The duty they invoke is sometimes called "the Bulfin v Bebarfald's duty", identifying the leading judgment by Long Innes CJ in Eq, Bulfin v Bebarfalds Ltd (1938) 38 SR (NSW) 423: generally, see RP Austin, HAJ Ford and IM Ramsay, Company Directors: Principles of Law and Corporate Governance, LexisNexis, Sydney, 2005 at [12.16]–[12.18]. 16 Although the plaintiff contends that the directors of Sunraysia have not discharged their duty, the directors have not been joined as parties to the proceeding. Senior counsel for both parties informed me that their clients do not raise any issue as to the absence of joinder of the defendants. I infer that senior counsel for the defendant made that statement to the court with the authority of the board of directors of Sunraysia. Even so, in the absence of separate representation of the directors, it would not be appropriate for me to decide that any breach of the directors' duty has already occurred. It is enough, for the purposes of the present case, to consider and determine whether there would be a breach of the directors' duty if the shareholders' meeting proceeded with no more information than has been provided. I shall proceed in that manner. 17 The plaintiff places particular reliance on the decision McLelland J in Chequepoint Securities Ltd v Claremont Petroleum NL (1986) 11 ACLR 94. Like the present case, that case involved a meeting of shareholders to approve a sale of assets by their company, though on that occasion the shareholders were also asked to give effect to a reduction of capital, subject to confirmation by the court as required by the law of that time. Unlike the present case, there the application was for an interlocutory injunction, and so the plaintiff had only to establish an arguable case and show that the balance of convenience favoured the making of the order. 18 After finding that the directors of the company had complied with the company's constitution by giving a notice that disclosed the general nature of the business of the meeting, his Honour turned to consider the fiduciary obligation of the directors, and said (at 96): Where directors take it upon themselves to urge or recommend or advise members to exercise their powers in general meeting in a particular way, they are in general required to make a full and fair disclosure of all matters within their knowledge which would enable the members to make a properly informed judgment on the matters in question: (citing Bulfin v Bebarfald's and Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956). 19 The obligation to make full and fair disclosure does not oblige the directors to give shareholders every piece of information that might conceivably affect their voting. The adequacy of the information provided in documentation is to be assessed in a practical, realistic way having regard to the complexity of the proposal: Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; 127 ALR 543; 15 ACSR 590. Speaking of the statutory obligation to avoid misleading or deceptive conduct, while relying on cases concerning the directors' duty of disclosure, the Full Federal Court said in Fraser v NRMA Holdings (at FCR 468; ALR 556; ACSR 603): The need for an applicant to establish materiality is of particular importance in a case like the present one where the proposal is complex, and involves difficult questions of commercial judgment and matters of degree and conjecture as to the future about which there is room for a range of honestly and reasonably held opinions. If every possible formulation of the commercial objective of the proposal, and arguments for and against every theoretical possibility, were set forth the total package of information to members would be likely to confuse rather than to illuminate the issue for decision, even for people having a familiarity with corporate law and commerce. The need to make full and fair disclosure must be tempered by the need to present a document that is intelligible to reasonable members of the class to whom it is directed, and is likely to assist rather than to confuse: see Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956 at 959; Re Dorman Long & Co Ltd [1934] 1 Ch 635 at 665-66. 20 The question is not whether the explanatory documents provided to the shareholders could have been drafted differently, but what effect the documents will have on "the ordinary shareholder who scans or reads the document quickly, not as a lawyer, but as an ordinary man or woman in commerce or as an ordinary investor": Devereaux Holdings at 958. If a deficiency is identified, the court considers whether there is any reasonable ground for supposing that the deficiency would cause shareholders to vote, or abstain from voting, under a serious misapprehension of the position: Devereux Holdings at 958–9 per Young J, citing Re Imperial Chemical Industries Ltd [1936] Ch 587 at 618 per Clauson J. 21 The Full Federal Court's decision in Fraser v NRMA Holdings Ltd is authority for the proposition (stated at FCR 466; ALR 554; ACSR 602) that "A proper discharge of the duty may require that the directors take reasonable steps to ascertain relevant information for communication to members if that information is not known to the board". That, in turn, is qualified by the proposition that in considering whether the directors should seek out additional information, it is relevant to take into account the time and cost of acquiring and preparing such information, and the delay involved in doing so: Cleary v Australian Co-operative Foods Ltd (Nos 2 and 3) (1999) 32 ACSR 701 at 719; [1999] NSWSC 991. But I do not agree with the suggestion in the defendant's submissions that the duty to take steps to ascertain additional information is confined to cases where additional information is required to give a proper explanation of a change of circumstances or to ensure that members are not misled by information already provided. 22 The application of the principle by McLelland J in the Chequepoint case is also of assistance in the present case because of the similarity of the facts. While the directors' explanatory letter in Chequepoint drew the shareholders' attention to the benefits they would derive from the transaction, which would permit them to deal with their gold and oil interests separately, McLelland J held that the letter did not deal adequately with the effect of the transaction in financial terms. He found that the directors had in fact carried out a calculation of the financial effect of the transaction, but no reference was made to this in the material sent to the shareholders. (ii) Misleading or deceptive conduct 23 There is a close relationship between the operation of the directors' fiduciary duty of disclosure, and the application of s 52 of the Trade Practices Act. In Fraser v NRMA Holdings, the Full Federal Court made the following points (at FCR 465–7; ALR 554; ACSR 601): • the fiduciary and other duties of directors under the general law, including the directors' duty of disclosure, may assist in determining whether in the circumstances of the case s 52 is contravened by a failure to give information, or by the provision of information only to a limited extent; • s 52 does not give rise to a duty to provide information, but when information is in fact given in purported discharge of the directors' fiduciary duty, s 52 requires that the information that is given is not misleading or deceptive or likely to mislead or deceive; • the section also requires that if the directors withhold information, that conduct must not be misleading or deceptive or likely to mislead or deceive; • there is an overlap between the fiduciary duty of disclosure and the operation of s 52, in that a failure properly to discharge the fiduciary duty may itself constitute a contravention of s 52; and • in the specific context of disclosure of information to shareholders for the purposes of a meeting, if the information given is not full and fair disclosure of all material facts to enable the members to make a properly informed decision, "the combination of what is said and what is left unsaid may, depending on the full circumstances, be likely to mislead or deceive the membership". 86 At [23], his Honour related those general principles to the concepts of misleading and deceptive conduct or conduct that is likely to mislead or deceive. 87 Stratford Sun relied upon a number of identified deficiencies in support of the overall proposition that the meeting materials were inadequate and misleading. 88 First, Stratford Sun submitted that the meeting materials were ambiguous and did not allow shareholders to determine who could and who could not vote in favour of Resolution 6. This allegation is dependent upon the proposition that the voting exclusion statement included in the Notice of Meeting should be interpreted in the manner advocated by Stratford Sun or that that statement was, at least, ambiguous and thus misleading. I have already held that the meaning of the voting exclusion statement was clear enough and did not create the difficulty about which Stratford Sun complained. 89 The second matter about which complaint is made in this context is that the information supplied about the use of the net proceeds of the share issue in the Explanatory Statement did not include express information about the quantum of the planned expenditures and potential debt repayments. This contention was largely based upon the evidence of Mr Paatsch who, as submitted by OMH and noted by me at [67(h)] above, recanted and withdrew his support for it. It was also based, in part, upon certain confidential documents which suggested that, at one time, OMH had been in a position to allocate particular amounts or percentages to particular uses and had gone so far as to do so. One such document was the Listing Application furnished by OMH to HKSE and another was a Draft Notice of Meeting tendered in evidence. 90 I do not think that the mere fact that such an allocation appeared in the documents to which I have referred is a sufficient basis for concluding that the absence of such an allocation in the meeting materials rendered those materials inadequate or misleading. The document relied upon which was submitted to the HKSE was prepared for a very different purpose. It was prepared in order to initiate the listing application and was required to be in a form mandated by the Listing Rules of HKSE. Entirely different considerations were in play when the meeting materials under consideration in this case were prepared. 91 Further, the final amount to be raised could vary by as much as $98 million. 92 There was no evidence to support the proposition that firm and final decisions had been made by OMH as to the particular allocation of funds to the particular uses specified in the Explanatory Statement. Had the evidence supported a conclusion that such a firm and final position had been reached, it may have been appropriate for the particular allocations to be specified. However, my present inclination is that it would not be required, even in that event. 93 The next area of complaint concerned Stratford Sun's allegation that the meeting materials failed to mention the risks and disadvantages of the proposed issue. In support of the need to mention such matters, Stratford Sun relied upon various confidential documents (including the HKSE listing materials) which suggested that OMH had considered various risks and disadvantages of the proposal before bringing it forward. 94 There were risks identified in some of the material to which I was taken. However, those risks were expressed in very general terms and, viewed in that way, would have been very obvious to any shareholder who had the skills and information of the hypothetical shareholder called upon to consider Resolution 6 according to the relevant principles laid down in the authorities. I do not think that these general statements needed to be spelled out in the meeting materials. 95 The next matter concerned the omission of any mention of the impact that the involvement of a strategic investor might have on the proposal. As was the case in respect of risks and disadvantages, it was suggested that OMH, in fact, had in mind locating and courting a strategic investor that would take a significant slice of the proposed issue. 96 The evidence relied upon to support this last factual proposition fell well short of doing so. Minutes of a meeting of Directors held on 23 November 2010 and on 22 February 2011 and a memorandum from an executive of OMH were relied upon. However, it became apparent that each of these documents related to a slightly different transaction from that which is presently under consideration. The thinking which manifested itself in those documents would not be apt to be applied to the present transaction. 97 The potential for a strategic investor to become involved in the proposed allotment would have been very obvious to any sensible shareholder. It did not need to be spelled out in terms. 98 The last group of matters about which Stratford Sun complained comprises those grouped under the general heading of insufficient disclosure of the impacts of dual listing. The impact of the HKSE Listing Rules and the impact of the Hong Kong Takeover Codes were subject matters which would have been alive in the minds of the sensible shareholder. There was nothing which Stratford Sun could identify within those two broad topics which truly required specific mention and information in the meeting materials. This complaint was not supported by Mr Paatsch. 99 The impact of trading volatility and liquidity went nowhere. It was not something about which Mr Paatsch could give relevant evidence (and he conceded as much). The proposition was not otherwise self-evident. Of course, at a very general level, there was potential for the transaction to impact in the future on the share price of OMH but this was a matter, in my view, about which nothing specific needed to be said because, at a general level, it was an obvious matter for consideration. 100 In the end, I am satisfied that the alleged deficiencies in the meeting materials did not render them inadequate for the purposes of the general law or misleading and deceptive or likely to mislead or deceive within the meaning of s 1041H(1) of the Corporations Act. 101 All of the challenges to Resolution 6 fail. Resolutions 7 and 8 102 The only matter calling for consideration in respect of these two resolutions, given the decision to which I have come in respect of Resolution 6 is whether the meeting materials were inadequate because they failed to disclose the likely quantum or timing of proposed grants of options or shares under the New Plan and the resulting diluting effect on existing shareholders. That proposition was not supported by Mr Paatsch. It is not otherwise self-evident. I reject it. 103 The challenge to Resolutions 7 and 8 must also fail. Discretion 104 As mentioned at [16] above, OMH deferred the proposal reflected in the Notice of Meeting and the Explanatory Statement on 5 July 2011. That deferral took place for the reasons to which I have referred at [16] above and in circumstances where proposed Resolution 10 had not been passed at the AGM. Subpar (b) set out under the heading "Information requirements" on p 4 of the Explanatory Statement, contained the following statement: (b) Any Offer Shares issued pursuant to Resolution 6 will be issued on or before 31 August 2011, pursuant to a waiver given by the ASX in relation to the requirements of Listing Rule 7.3.2 of the Listing Rules. 105 It is thus apparent that the authority given to OMH by its shareholders at the AGM in respect of the proposed issue covered by Resolution 6 is no longer in effect. If any issue of a similar nature is proposed in the future, that proposal will need to be resubmitted to the shareholders of OMH. 106 These factors would militate against any relief being granted to Stratford Sun, in the present case, even if it had been able to satisfy me that it was otherwise entitled to such relief. There would seem to be little point in making a declaration and granting ancillary injunctive relief in respect of a proposed issue which, according to its terms, cannot now proceed. 107 Notwithstanding these discretionary considerations, I have proceeded to decide the case because I was asked by the parties to do so and, in my view, it was appropriate to do so. In my view, even after 5 July 2011, there remained a controversy which needed to be quelled. Conclusions 108 For all of the above reasons, I would dismiss the proceeding with costs. There will be orders accordingly. I certify that the preceding one hundred and eight (108) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 10 November 2011 ATTACHMENT "A" Objections Made by the Defendant (OMH) to the Expert Witness Report of Dean Anthony Paatsch dated 5 May 2011 (A True Copy of which is annexed to the Affidavit of Mr Paatsch sworn on 5 May 2011 and filed on 6 May 2011 and marked with the Letter "B" and Rulings thereon Objection No Page Part Objection Court's Ruling Page 9 2 paras under heading "Custodian bank systems" Not a matter of expert opinion; Makita objection; Conclusion. Rejected Page 9 2 paras under heading "Critical dates for the provision of information to OMH shareholders" Not a matter of expert opinion; Makita objection; Speculation. Rejected Page 10 Last 3 paras No relevant expertise; Matter of law. Allowed as submission only Page 11 1st para No relevant expertise; Submission. Allowed as submission only Page 11 3rd para, 2nd sentence No relevant expertise; Matter of law. Allowed as submission only Page 12 2nd last para No relevant expertise; Matter of law. Allowed as submission only Page 13 2nd last para Purports to make findings of other persons' state of mind; No relevant expertise; Speculation; Matter of law. Rejected Pages 13–14 Para commencing "If the Company never intended ..." Not a matter of expert opinion; Makita objection; Submission. Allowed as submission only Page 14.4 Para commencing "This information was clearly material ..." Not a matter of expert opinion; Makita objection; Matter of law (ability of shareholders to change their proxy votes). Rejected Page 14 2 paras under heading "Impact of the information deficiency identified in Section 5.1" No relevant expertise; Speculation; Makita objection. Rejected Page 16 Whole of section 5.2.4 No relevant expertise; Makita objection; s 135 (refusal to provide material on which expert states he has relied in forming his opinion). Rejected Page 17.5 Para commencing "The Company is based in Bermuda ..." No relevant expertise; Matter of law. Rejected Page 17.6 Para commencing "Minority shareholders are ..." No relevant expertise; Makita objection. Rejected Page 17.7 Para commencing "In my view ..." Makita objection; s 135 (refusal to provide material on which expert states he has relied in forming his opinion). Allowed as submission only Page 17 2nd last para No relevant expertise; Makita objection; s 135 (refusal to provide material on which expert states he has relied in forming his opinion). Rejected Page 18.5 Para commencing "However given the widespread existence ..." Not a matter of expert opinion; Speculation. Rejected Page 18 3rd last para No relevant expertise; Makita objection; s 135 (refusal to provide material on which expert states he has relied in forming his opinion). Rejected Page 19 1st and 3rd paras No relevant expertise; Makita objection; s 135 (refusal to provide material on which expert states he has relied in forming his opinion). Rejected Pages 21–22 Para commencing "In my view only sophisticated ..." and sub-paras (a) and (b) thereunder No relevant expertise. Rejected Pages 22–23 Whole of section headed "Representations about the requirement to amend the Plan rules" Not a matter of expert opinion; Submission. Rejected Page 23 Last para and bullet point thereunder Not a matter of expert opinion; Submission. Allowed as submission only Page 24.5 Para commencing "My earlier comments …" No relevant expertise. Rejected Page 25 First 2 paras Not a matter of expert opinion; No relevant expertise; Submission. Allowed as submission only