FEDERAL COURT OF AUSTRALIA Atlassian Corporation Pty Limited, in the matter of Atlassian Corporation Pty Limited [2013] FCA 1451 Citation: Atlassian Corporation Pty Limited, in the matter of Atlassian Corporation Pty Limited [2013] FCA 1451 Parties: ATLASSIAN CORPORATION PTY LIMITED File number: NSD 2421 of 2013 Judge: YATES J Date of judgment: 13 December 2013 Catchwords: CORPORATIONS – schemes of arrangement – application for orders that company convene meetings of shareholders and optionholders, and for ancillary orders Legislation: Corporations Act 2001 (Cth) ss 411, 1319 Federal Court (Corporations) Rules 2000 (Cth) rr 3.3(2), 2.15 Cases cited: Investa Properties Limited, in the matter of Investa Properties Limited (2007) 25 ACLC 1,186 Re APN News & Media Ltd (2007) 62 ACSR 400 Re Foundation Healthcare Ltd (2002) 42 ACSR 252 Re MIA Group Ltd (2004) 50 ACSR 29 Re NRMA Ltd (2000) 33 ACSR 595 Re Sino Gold Mining Ltd (2009) 74 ACSR 647 Re Westfield Holdings Ltd (2004) 49 ACSR 741 Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771 Date of hearing: 13 December 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 48 Counsel for the Plaintiff: Mr I Jackman SC Solicitor for the Plaintiff: Herbert Smith Freehills IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2421 of 2013 IN THE MATTER OF ATLASSIAN CORPORATION PTY LIMITED ABN 46 122 325 777 BETWEEN: ATLASSIAN CORPORATION PTY LIMITED Plaintiff JUDGE: YATES J DATE OF ORDER: 13 DECEMBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to subsection 411(1) and section 1319 of the Corporations Act 2001 (Cth) (Corporations Act): (a) the Plaintiff, Atlassian Corporation Pty Limited (Atlassian Australia), convene and hold a meeting (the Class B Ordinary Share Scheme Meeting) of its members holding fully paid class B ordinary shares in Atlassian Australia (Class B Ordinary Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Class B Ordinary Shareholders (Class B Ordinary Share Scheme), the terms of which are contained in Annexure C of the scheme booklet (being the document which is behind tab 3 of Exhibit TSK1 to the affidavit of Thomas Shrieve Kennedy affirmed on 6 December 2013, but amended in the manner indicated by Annexure BDH-1 to the affidavit of Benjamin David Hely affirmed on 12 December 2013) (Scheme Booklet); (b) Atlassian Australia convene and hold a meeting (the Series A Preference Share Scheme Meeting) of its members holding fully paid series A preference shares in Atlassian Australia (Series A Preference Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Series A Preference Shareholders (Series A Preference Share Scheme), the terms of which are contained in Annexure D of the Scheme Booklet; (c) Atlassian Australia convene and hold a meeting (Series B Preference Share Scheme Meeting) of its members holding fully paid series B preference shares in Atlassian Australia (Series B Preference Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Series B Preference Shareholders (Series B Preference Share Scheme), the terms of which are contained in Annexure E of the Scheme Booklet; (d) Atlassian Australia convene and hold a meeting (the Restricted Share Scheme Meeting and, together with the Class B Ordinary Share Scheme Meeting, Series A Preference Share Scheme Meeting and Series B Preference Share Scheme Meeting, Share Schemes Meetings) of its members holding fully paid restricted shares in Atlassian Australia (Restricted Shareholders and, together with the Class B Ordinary Shareholders, Series A Preference Shareholders and Series B Preference Shareholders, Shareholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Restricted Shareholders (Restricted Share Scheme and, together with the Class B Ordinary Share Scheme, Series A Preference Share Scheme and Series B Preference Share Scheme, Share Schemes), the terms of which are contained in Annexure F of the Scheme Booklet; (e) Atlassian Australia convene and hold a meeting (the Class B Ordinary Option Scheme Meeting) of the holders of options over class B ordinary shares in Atlassian Australia (Class B Ordinary Optionholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Class B Ordinary Optionholders (Class B Ordinary Option Scheme), the terms of which are contained in Annexure K of the Scheme Booklet; and (f) Atlassian Australia convene and hold a meeting (the Restricted Option Scheme Meeting and, together with the Class B Ordinary Option Scheme Meeting, Option Schemes Meetings) of the holders of options over restricted shares in Atlassian Australia (Restricted Optionholders and, together with the Class B Ordinary Optionholders, Optionholders) for the purpose of considering and, if thought fit, agreeing to (with or without modification) a scheme of arrangement proposed to be entered into between Atlassian Australia and the Restricted Optionholders (Restricted Option Scheme and, together with the Class B Ordinary Option Scheme, Option Schemes), the terms of which are contained in Annexure L of the Scheme Booklet. 2. The Share Schemes Meetings and the Option Schemes Meetings be held on 29 January 2014 at Level 34, ANZ Tower, 161 Castlereagh Street, Sydney, New South Wales 2000, Australia as follows: (a) the Class B Ordinary Share Scheme Meeting to commence at 9.00 am; (b) the Series A Preference Share Scheme Meeting to commence at 9.10 am, or immediately following the conclusion or adjournment of the Class B Ordinary Share Scheme Meeting, whichever is later; (c) the Series B Preference Share Scheme Meeting to commence at 9.20 am, or immediately following the conclusion or adjournment of the Series A Preference Share Scheme Meeting, whichever is later; (d) the Restricted Share Scheme Meeting to commence at 9.30 am, or immediately following the conclusion or adjournment of the Series B Preference Share Scheme Meeting, whichever is later; (e) the Class B Ordinary Option Scheme Meeting to commence at 9.40 am, or immediately following the conclusion or adjournment of the Restricted Share Scheme Meeting, whichever is later; and (f) the Restricted Option Scheme Meeting to commence at 9.50 am, or immediately following the conclusion or adjournment of the Class B Ordinary Option Scheme Meeting, whichever is later. 3. Scott Farquhar or, failing him, Michael Cannon-Brookes, be Chairperson of the Share Schemes Meetings and the Option Schemes Meetings. 4. The Chairperson of the Share Schemes Meetings and the Option Schemes Meetings has the power to adjourn each such meeting in his absolute discretion for such time as he considers appropriate. 5. At the: (a) Class B Ordinary Share Scheme Meeting, the Class B Ordinary Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; (b) Series A Preference Share Scheme Meeting, the Series A Preference Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; (c) Series B Preference Share Scheme Meeting, the Series B Preference Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; and (d) Restricted Share Scheme Meeting, the Restricted Shareholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum. 6. At the: (a) Class B Ordinary Option Scheme Meeting, the Class B Ordinary Optionholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum; and (b) Restricted Option Scheme Meeting, the Restricted Optionholders, present and entitled to vote, in person or by proxy or by an attorney under power, shall constitute a quorum. 7. At the: (a) Class B Ordinary Share Scheme Meeting, each Class B Ordinary Shareholder, present and entitled to vote, will be entitled to 10 votes for each fully paid class B ordinary share in the capital of Atlassian Australia that the Class B Ordinary Shareholder is registered as holding at 7.00 pm on 27 January 2014; (b) Series A Preference Share Scheme Meeting, each Series A Preference Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid series A preference share in the capital of Atlassian Australia that the Series A Preference Shareholder is registered as holding at 7.00 pm on 27 January 2014; (c) Series B Preference Share Scheme Meeting, each Series B Preference Shareholder, present and entitled to vote, will be entitled to 10 votes for each fully paid series B preference share in the capital of Atlassian Australia that the Series B Preference Shareholder is registered as holding at 7.00 pm on 27 January 2014; and (d) Restricted Share Scheme Meeting, each Restricted Shareholder, present and entitled to vote, will be entitled to one vote for each fully paid restricted share in the capital of Atlassian Australia that the Restricted Shareholder is registered as holding at 7.00 pm on 27 January 2014. 8. At the: (a) Class B Ordinary Option Scheme Meeting, each Class B Ordinary Optionholder, present and entitled to vote, will be entitled to vote the class B ordinary options they are registered as holding at 7.00 pm on 27 January 2014 according to their value on 27 January 2014 (determined as described in the Scheme Booklet); and (b) Restricted Option Scheme Meeting, each Restricted Optionholder, present and entitled to vote, will be entitled to vote the restricted options they are registered as holding at 7.00 pm on 27 January 2014 according to their value on 27 January 2014 (determined as described in the Scheme Booklet). 9. A poll must be taken to decide the resolutions put to the vote at the Share Schemes Meetings and the Option Schemes Meetings, except for procedural motions. Rule 10.7(c) of the constitution of Atlassian Australia is disregarded for the purposes of the Share Schemes Meetings and Option Schemes Meetings. 10. The Scheme Booklet be approved for distribution to the Shareholders and Optionholders (which Scheme Booklet be and is hereby approved for the purposes only of subsection 411(1) of the Corporations Act). 11. On or before 20 December 2013, there be dispatched to the Shareholders and Optionholders by hand or by pre-paid post or courier addressed to the relevant addresses set out in the register of members and register of optionholders of Atlassian Australia (as the case may be): (a) a document in substantially the form of the Scheme Booklet; and (b) in the case of each Class B Ordinary Shareholder, a proxy form in substantially the form of the document behind tab 4 of Exhibit TSK1; (c) in the case of each Series A Preference Shareholder, a proxy form in substantially the form of the document behind tab 5 of Exhibit TSK1; (d) in the case of each Series B Preference Shareholder, a proxy form in substantially the form of the document behind tab 6 of Exhibit TSK1; (e) in the case of each Restricted Shareholder, a proxy form in substantially the form of the document behind tab 7 in Exhibit TSK1; (f) in the case of each Class B Ordinary Optionholder, a proxy form in substantially the form of the document behind tab 8 of Exhibit TSK1; and (g) in the case of each Restricted Optionholder, a proxy form in substantially the form of the document behind tab 9 of Exhibit TSK1. 12. The time by which proxy forms must be returned be on 27 January 2014 as follows: (a) in the case of the Class B Ordinary Share Scheme Meeting, 9.00 am; (b) in the case of the Series A Preference Share Scheme Meeting, 9.10 am; (c) in the case of the Series B Preference Share Scheme Meeting, 9.20 am; (d) in the case of the Restricted Share Scheme Meeting, 9.30 am; (e) in the case of the Class B Ordinary Option Scheme Meeting, 9.40 am; and (f) in the case of the Restricted Option Scheme Meeting, 9.50 am. 13. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Share Schemes Meetings, except in so far as that Rule applies regulation 5.6.13 of the Corporations Regulations 2001 (Cth) (Corporations Regulations). 14. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Option Schemes Meetings, except in so far as that Rule applies regulations 5.6.13, 5.6.28(1), 5.6.28(2) (but excluding the words "subregulation (3) and to"), 5.6.30 and 5.6.31A of the Corporations Regulations. 15. An office copy of these orders be lodged with the Australian Securities and Investments Commission before 5.00 pm on 16 December 2013. 16. The proceedings be stood over to 9.00 am on 4 February 2014 before Justice Yates for the hearing of any application to approve the Share Schemes and the Option Schemes. 17. There be liberty to apply. 18. These orders be entered forthwith. THE COURT NOTES THAT: 1. Atlassian UK will rely on the Court's approval of the Share Schemes and the Option Schemes for the purposes of qualifying for exemption from the registration requirements of the U.S. Securities Act of 1933, provided for by section 3(a)(10) of that Act, in connection with the implementation of, and the provision of consideration under, the Share Schemes and the Option Schemes. 2. All references to dates and times in these orders are references to the date and time in Sydney, New South Wales. 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 2421 of 2013 IN THE MATTER OF ATLASSIAN CORPORATION PTY LIMITED ABN 46 122 325 777 BETWEEN: ATLASSIAN CORPORATION PTY LIMITED Plaintiff JUDGE: YATES J DATE: 13 january 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application made under s 411(1) and s 1319 of the Corporations Act 2001 (Cth) (the Act) for the convening of meetings in relation to six proposed schemes of arrangement. 2 The schemes of arrangement are proposed to be made between the plaintiff, Atlassian Corporation Pty Limited (Atlassian), and the holders of each of the following, respectively: class B ordinary shares; series A preference shares; series B preference shares; restricted shares; options to subscribe for unissued class B ordinary shares; and options to subscribe for unissued restricted shares, in the capital of Atlassian. 3 The prospective schemes will effect a redomiciliation of the ultimate parent company in the group of companies to which Atlassian and its related bodies corporate belong (the Atlassian group). Atlassian is currently the ultimate parent company of the Atlassian group. The Atlassian group 4 The Atlassian group is a privately-held group of companies. It licenses and sells software products which support the process of planning, building and launching software. More than 30,000 large and small organisations use the Atlassian group's products. 5 The Atlassian group has customers in 134 countries. These customers participate in a diverse range of industries, from technology and banking to non-profit organisations and academia. The Atlassian group sells its products to businesses through the internet, without a traditional, commissioned sales force. 6 Globally, the Atlassian group employs approximately 750 staff. The schemes 7 On 21 November 2013, Atlassian, Atlassian Australia 2 Pty Limited (Atlassian AU Holdco) and Atlassian Corporation plc (Atlassian UK) entered into a scheme implementation deed pursuant to which Atlassian has proposed a corporate restructure which involves: interposing or "top-hatting" Atlassian UK as the new holding company of the Atlassian group (including Atlassian); Atlassian's shareholders exchanging each of their shares in the capital of Atlassian, on a one-for-one basis, for a beneficial ownership interest in one share in the capital of Atlassian UK; and Atlassian's optionholders exchanging each of their options to subscribe for unissued shares in Atlassian, on a one-for-one basis, for one option to subscribe for an unissued share in Atlassian UK. 8 Atlassian UK was incorporated on 14 November 2013 in England and Wales as a public limited company under the Companies Act 2006 (UK). It was incorporated for the purposes of the proposed restructure. Atlassian UK's articles of association are included in the scheme booklet, in the form in which they will substantially be if the schemes are implemented. 9 Atlassian AU Holdco was incorporated on 15 November 2013 under the Act. It was also incorporated for the purposes of the proposed restructure. It will be Atlassian's direct holding company following the proposed restructure. 10 The proposed restructure is to be implemented by means of the schemes. If the schemes are approved and implemented: Atlassian UK will issue to The Bank of New York Mellon Corporation or its nominee (the Depositary) such number of shares in Atlassian UK as equals the number of shares on issue in Atlassian immediately before implementation of the schemes; Atlassian's shareholders as at the Schemes Record Date (currently expected to be 5.00 pm on Wednesday, 5 February 2014) will transfer their shares in Atlassian to Atlassian AU Holdco. Each shareholder will, in respect of each share in Atlassian held at the Schemes Record Date, receive one unregistered depositary share created by the Depositary that evidences the beneficial ownership, by that shareholder, of the shares in Atlassian UK issued to the Depositary. Each shareholder will receive the same number of unregistered depositary shares as held by that person in Atlassian on the Schemes Record Date; Atlassian's optionholders as at the Schemes Record Date will have their options to subscribe for unissued shares in Atlassian cancelled. Each optionholder will, in respect of each option to subscribe for shares in Atlassian held on the Schemes Record Date, be granted one new option to subscribe for shares in Atlassian UK. 11 More specifically: the class B ordinary shareholders will transfer their class B ordinary shares in Atlassian to Atlassian AU Holdco and will, for each such share held on the Schemes Record Date, receive one unregistered depositary share evidencing the beneficial ownership of one Atlassian UK class B ordinary share; the series A preference shareholders will transfer their series A preference shares in Atlassian to Atlassian AU Holdco and will, for each such share held on the Schemes Record Date, receive one unregistered depositary share evidencing the beneficial ownership of one Atlassian UK series A preference share; the series B preference shareholders will transfer their series B preference shares in Atlassian to Atlassian AU Holdco and will, for each such share held on the Schemes Record Date, receive one unregistered depositary share evidencing the beneficial ownership of one Atlassian UK series B preference share; the restricted shareholders will transfer their restricted shares in Atlassian to Atlassian AU Holdco and will, for each such share held on the Schemes Record Date, receive one unregistered depositary share evidencing the beneficial ownership of one Atlassian UK restricted share; the options to subscribe for unissued class B ordinary shares in Atlassian will be cancelled and each class B ordinary optionholder will, for each such option held on the Schemes Record Date, receive one option to subscribe for a class B ordinary share in Atlassian UK with the same exercise price, expiry date and vesting conditions; and the options to subscribe for unissued restricted shares in Atlassian will be cancelled and each restricted optionholder will, for each such option held on the Schemes Record Date, receive one option to subscribe for restricted shares in Atlassian UK with the same exercise price, expiry date and vesting conditions. 12 The schemes are interconditional. If any scheme does not become effective, the proposed restructure will not proceed. 13 The schemes are also subject to the satisfaction or waiver of a number of conditions precedent, including the following: a draft class ruling from the Commissioner of Taxation confirming that Atlassian's shareholders and optionholders will be entitled to choose to obtain scrip-for-scrip rollover in respect of the exchange of Atlassian shares for Atlassian UK depositary shares (in the case of Atlassian's shareholders) and the cancellation of Atlassian options and receipt of Atlassian UK options (in the case of Atlassian's optionholders), and also confirming that a capital gains tax event will not occur in relation to certain actions that may need to be implemented in anticipation of a possible future listing of Atlassian UK, should a decision be made to proceed with a listing; formal written confirmation from Her Majesty's Revenue and Customs as to whether any UK stamp duty or stamp duty reserve tax would arise on the creation of Atlassian UK depositary shares under the proposed restructure, any subsequent transfers of Atlassian UK depositary shares and on a possible future listing of some or all of Atlassian UK securities on the NYSE or NASDAQ; certain approvals by the Foreign Investment Review Board; the Australian Securities and Investments Commission (ASIC) providing all relief, consents and approvals necessary to implement the schemes; and no restraints being imposed by any court or government agency. 14 The securities to be issued pursuant to the schemes will not be registered under the Securities Act of 1933 (US) (the Securities Act). Atlassian UK intends to rely on the exemption provided by s 3(a)(10) thereof in connection with: the issue by Atlassian UK of the Atlassian UK shares to the Depositary; and the delivery of the unregistered depositary shares created by the Depositary to Atlassian's shareholders. 15 As the creation and delivery of the Atlassian UK depositary shares is outside Atlassian UK's control, a condition subsequent has been included in each of the share schemes which provides that, if the Atlassian UK depositary shares are not created and delivered to the scheme shareholders in accordance with the terms of the share schemes on or before 30 June 2014, the share schemes will automatically terminate and be of no further force or effect. I will return to that matter. 16 The Atlassian UK depositary shares will be created and delivered by the Depositary pursuant to four unregistered deposit agreements (the Deposit Agreements). There is a separate Deposit Agreement for each class of Atlassian UK share to be issued to the Depositary. The terms of each Deposit Agreement are substantially the same, except that the Deposit Agreement in respect of Atlassian UK restricted shares contains provisions relating to the delivery of Atlassian UK depositary shares in connection with the exercise of Atlassian UK restricted options. 17 The Deposit Agreement in respect of Atlassian UK restricted shares is included in the scheme booklet. But, due to the relative length of the Deposit Agreements in respect of each of the Atlassian UK class B ordinary shares, the Atlassian UK series A preference shares and the Atlassian UK series B preference shares, and the relatively small number of class B ordinary shareholders, series A preference shareholders and series B preference shareholders (being 5, 11 and 10 respectively), copies of these Deposit Agreements will be sent separately to those Atlassian shareholders. These Deposit Agreements will also be available to those shareholders on request. 18 Atlassian UK and the Depositary have entered into a side letter (the side letter) which sets out the information and fees that need to be provided to the Depositary before it will create and deliver the Atlassian UK depositary shares on the implementation of the share schemes. 19 Atlassian UK and Atlassian AU Holdco have each executed deeds poll relating to the share schemes and option schemes. Copies of the respective deeds poll are included in the scheme booklet. 20 In order to determine the voting entitlements of optionholders at each option scheme meeting, it is currently intended that the debts or claims of each optionholder will be calculated according to the intrinsic value of each option. The scheme booklet gives information as to how the intrinsic value of each option will be calculated. Atlassian's directors have reserved the right to use another method of valuation to determine the voting entitlements of Atlassian's optionholders on a consistent basis, should they consider it necessary in the circumstances existing at the option valuation date. Independent expert 21 KPMG Financial Advisory Services (Australia) Pty Ltd (KPMG Finance) has been engaged by Atlassian to prepare a report for the benefit of Atlassian's shareholders and optionholders setting out whether, in its opinion, the restructure to be implemented through the proposed schemes is in the best interests of shareholders and optionholders as a whole. 22 KPMG Finance's authorised representative, Ian Richard Jedlin, has given evidence that he has had overall responsibility for the preparation of the report, a signed copy of which will be included in the scheme booklet. He has given evidence that the opinions expressed in the report are opinions held by him. 23 After detailing the advantages and disadvantages of the proposed restructure, the report concludes that the proposed share schemes are in the best interests of Atlassian's shareholders and that the proposed option schemes are in the best interests of Atlassian's optionholders. The recommendation of directors 24 Atlassian's directors have unanimously recommended that Atlassian's shareholders and optionholders vote in favour of the schemes relevant to them. Each director has confirmed that, consistently with the recommendation, he intends, in relation to any shares or options held or controlled by him, to vote in favour of the share schemes and in favour of the option schemes, as applicable. 25 The directors are of the view that the proposed restructure will facilitate a possible listing of Atlassian UK on a major US securities exchange in the future, and increase the attractiveness of the Atlassian group to foreign investors. Specific matters 26 A number of aspects of the proposed schemes have been specifically brought to the Court's attention for the purposes of this application. These matters are noted and discussed in written submissions, which I have marked MFI 1. I have already noted some of these matters in my description of the proposed schemes. The following additional matters should be noted. Deposit Agreements 27 I have referred briefly to the Deposit Agreements: see [16] above. If the schemes become effective, each scheme shareholder will be deemed to have agreed and acknowledged that they are bound to the provisions of the relevant Deposit Agreement. Under each Deposit Agreement, certain information must be provided to the Depositary before it will create and deliver the depositary shares. As I have indicated above (see [18]), the side letter provides the information and fees that need to be provided to the Depositary before it will create and deliver the depositary shares on the implementation of the proposed restructure. The condition subsequent 28 The proposed schemes contain safeguards to ensure that there is no performance risk. In particular, no scheme shares will be transferred by the shareholders to Atlassian AU Holdco unless and until the depositary shares are delivered to them. If the depositary shares are not created and delivered to the relevant scheme shareholders in accordance with the terms of the applicable scheme on or before the End Date (30 June 2014), the relevant share scheme will automatically terminate and be of no further force or effect. 29 Ordinarily, schemes qualify for approval only after all conditions are satisfied: Re Westfield Holdings Ltd (2004) 49 ACSR 741 at [9]-[11]. However, a term providing for a scheme to terminate in certain circumstances after Court approval is permissible. In Re NRMA Ltd (2000) 33 ACSR 595 at [61]-[62] and in Appendix A to the reasons (particularly at 646-648), Santow J discussed where this might be permissible. Specifically, a distinction is to be drawn between the use of a condition subsequent to bring about termination of a scheme and a condition subsequent that could lead to variation of the terms of a scheme. Generally speaking, the latter is impermissible as it involves a new decision-making process with the possibility of different results and different eventualities, none of which have been voted on by those who are entitled to vote on the schemes. 30 In the present case, the condition subsequent is directed to termination of the schemes upon the happening of a specific and defined event. In my view, subject to any submissions that might be made at a hearing for confirmation, such a term is permissible. Chairperson of scheme meetings 31 Unless the Court otherwise orders, the procedural provisions in Part 2G.2 of the Act relating to members' meetings, and the provisions in the scheme company's constitution relating to members' meetings (to the extent that they are not inconsistent with Part 2G.2 of the Act), apply to a scheme meeting under Part 5.1 of the Act: r 3.3(2) of the Federal Court (Corporations) Rules 2000 (Cth) (the Corporations Rules). 32 Under Rule 10.5 of Atlassian's constitution, the chairperson of a general meeting must be present at the meeting. For logistical, practical and cost reasons, it is proposed that the chairperson of Atlassian, Douglas Burgum, who is based in the United States of America, will not attend the proposed meetings in person, although it is proposed that he will attend by telephone. This is permitted by Rule 10.6 of Atlassian's constitution, but raises another practical difficulty. On one interpretation of Rule 10.6, the location of the chairperson needs to be recorded in the notice of meeting as one of two or more venues for the meeting, being a venue which members can attend. 33 Accordingly, it has been proposed that Scott Farquhar, the joint Chief Executive Officer of Atlassian, (who is based in Australia) will act as the chairperson of the meetings and attend in person. This outcome is consistent with Rule 10.5 of Atlassian's constitution. Mr Farquhar has consented to act as chairperson. I should also indicate that Michael Cannon-Brookes, Atlassian's other joint Chief Executive Officer, has consented to act as chairperson of the meetings in the event that Mr Farquhar is unable to do so. 34 For these reasons, Atlassian seeks an order, pursuant to r 3.3(2) of the Corporations Rules, that Mr Farquhar act as chairperson of the meetings. Amendments to the Atlassian restricted option plan 35 Under clause 3.3 of the restricted option scheme, each restricted scheme optionholder and Atlassian acknowledge and agree that the modifications to the option plans relating to restricted options, as set out in the scheme booklet, will take effect immediately upon the restricted option scheme becoming effective, without the need for any further act on the part of a restricted scheme optionholder or Atlassian. The scheme booklet sufficiently draws these amendments to the attention of the relevant optionholders. Deemed warranty 36 Under each proposed share scheme, each scheme shareholder is deemed to have warranted to Atlassian, Atlassian AU Holdco and Atlassian UK that the Atlassian shares to be transferred will, at the date of transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties. An equivalent warranty in relation to scheme optionholders is contained in the option schemes. The prevailing view is that such provisions are not objectionable provided that the attention of scheme shareholders and optionholders has been drawn to them: see, for example, Re APN News & Media Ltd (2007) 62 ACSR 400 at [57]-[63]; Re Sino Gold Mining Ltd (2009) 74 ACSR 647 at [29]-[31]; Talent2 International Limited, in the matter of Talent2 International Limited [2012] FCA 771 at [16]. The warranty here has been specifically and clearly drawn to the attention of shareholders and optionholders in the scheme booklet. No encumbrance clause 37 Each share scheme provides that, to the extent permitted by law, the scheme shares will be transferred to Atlassian AU Holdco free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties. Provisions of this kind have been found to be acceptable in other schemes of arrangement: see, for example, the discussion in Investa Properties Limited, in the matter of Investa Properties Limited (2007) 25 ACLC 1,186 at [22]-[30]; Talent2 at [17]. Verification 38 Evidence has been given by Thomas Shrieve Kennedy, Atlassian's company secretary and general counsel, of the steps taken to verify the accuracy of information in the scheme booklet, which Mr Kennedy has characterised as either Atlassian UK information or Atlassian information. 39 Atlassian UK information is information about Atlassian UK, its business, its interests and dealings in Atlassian shares, and its intentions as required to be included in the explanatory statement under the Act, the Corporations Regulations 2001 (Cth) (the Corporations Regulations), the ASX Listing Rules (the Listing Rules) or ASIC Regulatory Guide 60 (the Regulatory Guide). 40 Atlassian information is information about Atlassian, its business and its intentions, which is required to be included in the explanatory statement under the Act, the Corporations Regulations, the Listing Rules or the Regulatory Guide. 41 Mr Kennedy is the officer who has had responsibility for supervising the verification process. In his affidavit, he has expressed his satisfaction that all the statements in the Atlassian UK information and the Atlassian information included in the scheme booklet have been verified (in the manner described in his affidavit), are true and correct, and are not misleading or deceptive. Further, he has expressed his satisfaction that the information does not omit any other information that would be material to Atlassian's shareholders and optionholders in deciding whether or not to vote in favour of the schemes. ASIC 42 Section 411(2)(a) of the Act requires ASIC to be given at least 14 days' notice of the hearing of an application under s 411(1) unless ASIC or the Court permits a shorter period. ASIC has confirmed that this requirement has been satisfied in relation to the present application. 43 Section 411(2)(b) of the Act requires the Court to be satisfied that ASIC has also had a reasonable opportunity to examine the terms of the scheme and the draft explanatory statement, and to make submissions to the Court in relation to the schemes and the draft explanatory statement. ASIC has confirmed that it has had a reasonable opportunity to examine the terms of the schemes and the draft explanatory statement. Prior to the hearing of the present application, ASIC informed the solicitors acting for Atlassian that it did not intend to appear at the present hearing to make submissions or intervene to oppose the schemes. Consideration 44 I am satisfied that Atlassian is a Part 5.1 body and that each proposed scheme is an "arrangement" for the purposes of s 411(1) of the Act: see Re Foundation Healthcare Ltd (2002) 42 ACSR 252 at [39]; Re MIA Group Ltd (2004) 50 ACSR 29 at [2]-[9]; Sino Gold at [4]. 45 I am satisfied that the formal requirements that are preliminary to the Court convening a meeting under s 411(1) of the Act have been satisfied. 46 Further, I am satisfied that the proposed schemes are of such a nature and are cast in such terms that, if each receives the requisite statutory majority, the Court will be likely to approve the schemes on the hearing of an unopposed application: see cases cited in Talent2 at [49]. 47 Atlassian has sought dispensation with compliance with r 2.15 of the Corporations Rules relating to the application of regs 5.6.11 to 5.6.36A of the Corporations Regulations. On the basis of the matters discussed in Atlassian's written submissions, and advanced in oral submissions, I am satisfied that the dispensation sought is appropriate. Disposition 48 Orders, substantially as sought, should be made. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 13 January 2014