FEDERAL COURT OF AUSTRALIA Alstom Signalling Solutions Pty Ltd, in the matter of Alstom Signalling Solutions Pty Ltd v Alstom Transport Australia Pty Limited [2016] FCA 838 File number: NSD 680 of 2016 Judge: GLEESON J Date of judgment: 12 July 2016 Catchwords: CORPORATIONS – scheme of arrangement – proposed single member scheme of arrangement – scheme meeting allowed Legislation: Corporations Act 2001 (Cth) Foreign Acquisitions and Takeovers Act 1975 (Cth) Federal Court (Corporations) Rules 2000 (Cth) Cases cited: AGL Energy Services (Queensland) Pty Ltd v AGL Energy Services Pty Ltd [2010] FCA 452 AGL Energy Services (Queensland) Pty Ltd v AGL Energy Services Pty Ltd (No 2) [2010] FCA 453 Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited [2015] FCA 341 Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 Barrick (Lawlers) Pty Ltd v Barrick Mining Company (Australia) Pty Ltd, in the matter of Barrick (Lawlers) Pty Ltd [2015] FCA 1510 Central Pacific Minerals v NL [2002] FCA 239 Equatorial Mining Pty Ltd v Antofagasta Investment Company Ltd [2013] FCA 1452 FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 Re Archaean Gold NL (1997) 23 ACSR 143 Re Crusader Ltd [1996] 1 Qd R 117; (1995) 120 FLR 219 Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349 Re Orion Telecommunications Ltd [2007] FCA 1389 Re Permanent Trustee Company Limited [2002] NSWSC 1177; (2002) 43 ACSR 601 Re Stork ICM; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849; (2006) 25 ACLC 208 Royal Victorian Institute for the Blind Ltd & Ors v RBS.RVIB.VAF Ltd [2004] FCA 735; (2004) 206 ALR 581 SGIC Insurance Ltd v Insurance Australia Ltd [2004] FCA 1492; (2004) 51 ACSR 470 T Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 Date of hearing: 12 July 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 52 Counsel for the Plaintiff: Mr J Giles SC with Mr A Byrne Solicitor for the Plaintiff: Norton Rose Fulbright Australia ORDERS NSD 680 of 2016 IN THE MATTER OF ALSTOM SIGNALLING SOLUTIONS PTY LTD (ACN 084 561 197) AND ALSTOM TRANSPORT AUSTRALIA PTY LIMITED (ACN 165 157 451) BETWEEN: ALSTOM SIGNALLING SOLUTIONS PTY LTD (ACN 084 561 197) Plaintiff AND: ALSTOM TRANSPORT AUSTRALIA PTY LIMITED (ACN 165 157 197) Defendant JUDGE: GLEESON J DATE OF ORDER: 12 JULY 2016 THE COURT ORDERS THAT: 1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) ("Act") there be convened a meeting ("Scheme Meeting") of the sole member of the plaintiff, Alstom Signalling Solutions Pty Ltd ("ASSPL"), being Alstom Transport Australia Pty Limited ("ATAPL"), for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement between ASSPL and ATAPL ("Scheme"). 2. The Scheme Meeting be held on Thursday, 14 July 2016 at 4.00 pm AEDT by telephone conference. 3. The Scheme Meeting can resolve to be adjourned. 4. Mr Paul McIvor or, should he be unable to attend for any reason, Mr Frederic Dufour, is to chair the Scheme Meeting and any adjournment of it. 5. The draft explanatory statement titled "Explanatory Statement for the reconstruction of Alstom Signalling Solutions Pty Ltd", provided to the Court on 12 July 2016 and marked "exhibit 1", be and is hereby approved. 6. The application to be made at the second hearing, on 25 July 2016, be advertised once in The Australian newspaper in the form, or substantially in the form, of the annexure to these orders marked "A", such advertisement to be published not less than 5 days before the date appointed for the hearing. 7. By no later than 13 July 2016, a document in the form, or substantially in the form of the document in paragraph 5 above be delivered by ASSPL to ATAPL, along with a notice of meeting and proxy form, at ATAPL's registered address. 8. ASSPL be dispensed with compliance with: (a) rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth); and (b) the "Replaceable Rules" (within the meaning of s 135 of the Act) which appear in Part 2G.2 of the Act to the extent that a Replaceable Rule in that part is displaced or modified by ASSPL's constitution. 9. An order pursuant to s 411(12) of the Act that ASSPL be exempted from complying with s 411(11) of the Act in relation to these orders and orders made at the second hearing on 25 July 2016. 10. The proceedings be adjourned until 2:15pm on 25 July 2016. 11. The parties have liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE "A" Notice of hearing to approve compromise or arrangement To all the creditors and the sole member of Alstom Signalling Solutions Pty Ltd (ACN 084 561 197) (Alstom Signalling). TAKE NOTICE that at 2.15pm on 25 July 2016, the Federal Court of Australia, at Law Courts Building, Queens Square, Sydney, NSW, will hear an application by Alstom Signalling seeking the approval of a scheme of arrangement between the above-named company and its sole member as proposed by a resolution passed by the meeting of the sole member of the company held on 14 July 2016. If you wish to oppose the approval of the compromise or arrangement, you must file and serve on the plaintiff a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on the plaintiff at its address for service at least 1 day before the date fixed for the hearing of the application. The address for service of the plaintiff is c/- Norton Rose Fulbright Australia, Level 18. Grosvenor Place, 225 George Street, Sydney, NSW 2000 (Attention: Adrian Ahern). Name of person giving notice or of person's legal practitioner: Adrian Ahern. REASONS FOR JUDGMENT GLEESON J: 1 On 12 July 2016, I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) ("Act") after a first hearing in relation to a proposed single member scheme of arrangement. These are my reasons for making those orders. Background 2 Alstom Signalling Solutions Pty Ltd ("ASSPL") is an Australian company within the global group of companies known as the Alstom Group. All of the shares on issue in ASSPL are held by Alstom Transport Australia Pty Ltd ("ATAPL"), another Australian subsidiary wholly-owned within the Alstom Group. 3 The ultimate owner of ATAPL, through an indirect holding structure, is ALSTOM incorporated in France, registration number 389 058 447 RCS Nanterre. ALSTOM is the ultimate holding company of the Alstom Group and is listed on the Paris stock exchange. 4 ASSPL, formerly known as GE Transportation Systems Pty Ltd, runs a rail-signalling business and has its principal place of business in Western Australia. 5 On 2 November 2015, ATAPL acquired all of the shares in ASSPL from General Electric International (Benelux) BV ("General Electric") as part of a wider global transaction pursuant to which the Alstom Group acquired a rail signalling business, operating across numerous companies, from General Electric and its subsidiaries. 6 In the period since that transaction, the Alstom Group has been taking steps, in countries in which the acquired rail signalling business operates, to merge that business into the Alstom Group's existing corporate structure. Proposed scheme 7 The proposal is that: (1) The assets of ASSPL will be transferred to and vested in ATAPL; (2) The liabilities of ASSPL will be transferred to and become liabilities of ATAPL; (3) The employees of ASSPL will be transferred to ATAPL; and (4) Any legal proceedings pending by or against ASSPL will be continued by or against ATAPL. 8 It is proposed that following the implementation of the scheme ASSPL will be deregistered without winding up, pursuant to s 413(1)(d) of the Act. 9 Thus, the transaction contemplated by the scheme would, in effect, collapse ASSPL into ATAPL, such that: (1) ASSPL's business (including its assets, liabilities and employees) would be transferred to ATAPL; (2) ATAPL would step into the shoes of ASSPL in any legal proceedings involving ASSPL, and (3) ASSPL would be deregistered. 10 The stated purpose of the transaction is, in essence, to remove duplication and create efficiencies within the Alstrom Group's business in Australia. Role of ATAPL in proceeding 11 ATAPL is a party to the proceeding, enlivening the Court's jurisdiction to make an order under s 413 if the requirements for making such an order are otherwise met: cf. Royal Victorian Institute for the Blind Ltd & Ors v RBS.RVIB.VAF Ltd [2004] FCA 735; (2004) 206 ALR 581; SGIC Insurance Ltd v Insurance Australia Ltd [2004] FCA 1492; (2004) 51 ACSR 470; Equatorial Mining Pty Ltd v Antofagasta Investment Company Ltd [2013] FCA 1452 ("Equatorial"). 12 On 1 June 2016, the directors of ATAPL resolved that ATAPL consents to the proposed transfer to it by ASSPL of the property, liabilities and legal proceedings described in the minutes of the meeting and to any Court orders required in order to effect that transfer. 13 ATAPL does not intend to appear at the proposed second court hearing for approval of the scheme. Evidence 14 ASSPL read the following affidavits and tendered the following exhibits in support of the application: (1) Affidavit of Peter Gerard McIvor, a director of both ASSPL and ATAPL, affirmed 1 June 2016 (apart from paras 43 and 44), and the accompanying exhibit "PGM-1"; (2) Affidavit of Mr McIvor affirmed 8 July 2016, and the accompanying exhibit "PGM-2"; (3) Affidavit of Alanna Billington, a human resources executive at ASSPL and ATAPL, sworn 1 June 2016 and the accompanying exhibit "AB-1"; (4) Affidavit of Andrew Matheson Steen, a director of ATAPL, affirmed 1 June 2016 and the accompanying exhibit "AMS-1"; (5) Affidavit of Adrian Gerard Ahern, a partner of Norton Rose Fulbright, the lawyers for ASSPL, sworn 12 July 2016, and the accompanying exhibit "AGA-1". 15 In addition, the plaintiff tendered, as exhibit 1, a copy of the draft explanatory statement to be sent to ATAPL ("explanatory statement"). 16 Mr McIvor gave brief oral evidence verifying that he is satisfied that nothing material to ATAPL's decision to agree to the scheme of arrangement has been omitted from the explanatory statement and that it contains the prescribed information. Relevant Legal framework Jurisdictional requirements 17 There are three stages to an application under s 411. First, the Court approves the convening of a scheme meeting and the explanatory statement. Secondly, members vote on the proposed scheme at the scheme meeting. Thirdly, the Court approves the proposed scheme: Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 at [7] per Keane CJ and Jacobson J; Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited [2015] FCA 341 at [8] ("Amcom Telecommunications"); Central Pacific Minerals v NL [2002] FCA 239 at [6] per Emmett J. 18 The following matters are required to be proved at the first stage (Re Orion Telecommunications Ltd [2007] FCA 1389 at [5]): (1) The plaintiff is a "Part 5.1 body"; (2) The proposed scheme is an "arrangement" within the meaning of s 411 of the Act; (3) The explanatory statement will provide proper disclosure to members; (4) The scheme is bona fide and properly proposed; (5) ASIC has had reasonable opportunity to examine the proposed scheme and explanatory statement, to make submissions and has had 14 days' notice of the proposed hearing date of the first court hearing; and (6) Any other procedural requirements have been met, such as r 3.2 of the Federal Court (Corporations) Rules 2000 (Cth) as to the nomination of a chairperson for the scheme meeting. Standard of review 19 As to the standard of review, in Amcom Telecommunications McKerracher J said relevantly at [10]-[12]: 10. As noted in Re Integra Mining Limited [2012] FCA 1414 (at [11]), the standard of review relevant to the first hearing requires the Court to consider whether the proposed Scheme is not inappropriate and is one that sensible business people might consider is of benefit to its members: Re Sonodyne International Ltd (1994) 15 ACSR 494 per Hayne J (at 499). If the proposed arrangement is one that seems fit for consideration by a meeting of members and is a commercial proposition likely to gain the Court's approval if passed by the necessary majorities, then leave should be given to convene the meeting: Re ACM Gold Ltd; Re Mt Leyshon Gold Mines Ltd (1992) 34 FCR 530 per O'Loughlin J (at 535). The Court does not need to be satisfied that no better scheme could have been devised: Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 per French J, as his Honour then was, (at [44]). … 12. The Court should order the convening of the scheme meeting and approve the Scheme Booklet if it is satisfied of the following matters: The proposed Scheme is an arrangement in respect of which the Court may order a meeting of the members: s 411(1) [of the Act]. That is, the Scheme is an arrangement; Amcom is a Pt 5.1 Body; the Scheme participants are members of Amcom; and the scheme meeting will be convened between members of the same class. ASIC has had a reasonable opportunity to examine the terms of the Scheme and the Scheme Booklet and make submissions to the Court in relation to those matters: s 411(2)(b) [of the Act]. The Scheme Booklet provides adequate disclosure (s 412(1)(a)(i) CA) and contains the prescribed information: s 412(1)(a)(ii) [of the Act], r 5.1.01; Sch 8 cll 8301 - 8310 of the Corporations Regulations 2001 (Cth). The procedural requirements of the Federal Court (Corporations) Rules 2000 (Cth) have been met. There is no apparent reason why the Scheme should not, in due course, receive the Court's approval if the necessary majority of votes are achieved: [Re] Integra Mining [Limited [2012] FCA 1414] (at [12]) and the cases there cited. 20 The approach of the Court at the first court hearing is that "the court will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that, if it receives the statutory majority at the ... meeting the court would be likely to approve it on the hearing of a petition which is unopposed": per Street CJ (with whom Hutley and Samuels JJA agreed) in FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 ("FT Eastment") at 72. The High Court approved this observation in Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 504. The FT Eastment approach has been consistently followed. 21 At the first court hearing the Court exercises its supervisory jurisdiction to review the scheme and the explanatory statement and raise any queries with the plaintiff. In Re Crusader Ltd [1996] 1 Qd R 117; (1995) 120 FLR 219, Thomas J said at 125 that "the courts are concerned with the notion of a fair picture being presented" and went on to embrace the observations of the Full Federal Court (Black CJ, von Doussa and Cooper JJ) in Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 468: 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 confuse. 22 The second court hearing is where the court makes its "final determination", and is the most important hearing if the matter becomes contested, but in practice the first court hearing is where the court intervenes if it has any concerns. One reason for this is that (per Santow J in Re Archaean Gold NL (1997) 23 ACSR 143 at 147): ... court approval to convene the scheme meetings is viewed by the market as giving assurance that the scheme is at least in form and substance such as warranted receiving such preliminary court clearance. It must not be forgotten that trading thereafter takes place on that basis. 23 At both court hearings there is a duty of disclosure which falls on the plaintiff and its counsel, as set out in the dictum of Barrett J in Re Permanent Trustee Company Limited [2002] NSWSC 1177; (2002) 43 ACSR 601 at [7]: The fact that the application is ex parte is not without some significance. The absence of any defendant or contradictor sharpens the duty of the applicant. While a case such as the present is distinguishable from one where an interlocutory injunction is sought in the absence of a defendant (in that there is here no defendant as such) I think it is fair to say that an applicant in this kind of situation, like an applicant ex parte for an injunction, carries the responsibility of bringing to the court's attention all matters that could be considered relevant to the exercise of its discretion. Part 5.1 body 24 The term "Part 5.1 body" is defined in s 9 of the Act to mean, relevantly, a company. "Arrangement" 25 The term "arrangement" is of wide import. In Re NRMA Insurance Ltd (No 1) [2000] NSWSC 82; (2000) 156 FLR 349, Santow J said (at [20]): Generally speaking, unless the arrangement is ultra vires the company or seeks to deal with a matter for which a special procedure is laid down by the Corporations Law or to evade a restriction imposed by the Corporations Law, almost any arrangement otherwise legal which touches or concerns the rights and obligations of the company or its members or creditors, and which is properly proposed, may come under s 411; cf Re International Harvester Co of Australia Pty Ltd [1953] VicLawRp 90; [1953] VLR 669 at 672 per Lowe ACJ. 26 In AGL Energy Services (Queensland) Pty Ltd v AGL Energy Services Pty Ltd [2010] FCA 452 at [13], Emmett J identified a distinction between the compromise or arrangement contemplated by s 411 and a scheme for the reconstruction or amalgamation of bodies as contemplated by s 413. At [15], his Honour said, relevantly: The element of compromise or arrangement that is necessary to satisfy s 411 need not be of any magnitude or significance, so long as what is proposed can fairly be characterised as a compromise or arrangement between a company, on the one hand, and its members, on the other. That will suffice to enliven the Court's powers under s 413, so long as the compromise of arrangement is proposed for the purposes of, or in connection with, a scheme for the reconstruction or amalgamation. 27 In AGL Energy Services (Queensland) Pty Ltd v AGL Energy Services Pty Ltd (No 2) [2010] FCA 453, Emmett J was satisfied that the proposed scheme was a "compromise arrangement between the Company and its only shareholder within the meaning of s 411" where the scheme provided that the sole member of the company "will approve the scheme and consent to the reconstruction or amalgamation, notwithstanding the diminution in the value of its shareholding in the Company and any rights that it may have in connection with the reconstruction or amalgamation at law and waives any rights it may otherwise have as against the Company in connection with the reconstruction or amalgamation". Other matters 28 On behalf of ASSPL, Mr Giles SC made the following submissions, which I accept: (1) a scheme of this character is a members scheme: SGIC Insurance Ltd v Insurance Australia Ltd [2004] FCA 1492; (2004) 51 ACSR 470 ("SGIC Insurance") at [7]-[11]; Re Stork ICM; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849; (2006) 25 ACLC 208 ("Stork") at [69]; Barrick (Lawlers) Pty Ltd v Barrick Mining Company (Australia) Pty Ltd, in the matter of Barrick (Lawlers) Pty Ltd [2015] FCA 1510 ("Barrick") at [28]; (2) the potential effect on creditors, by transfer of the liabilities, does not require a creditors scheme and is an issue of fairness to be dealt with at the second hearing: SGIC Insurance at [10]-[11]; Barrick at [29]; (3) a meeting, for the purposes of ss 411(1) and (4), can be held notwithstanding that the company in question has only one member: SGIC Insurance at [14]; (4) a "compromise" or "arrangement" will arise where a scheme provides that a sole member will approve the scheme notwithstanding diminution in the value of its shareholding in, and loss of rights as against, the company: AGL Energy Services (Queensland) Pty Limited v AGL Energy Services Pty Limited (No 2) [2010] FCA 453 at [2]-[3]; Barrick at [25]-[28]; and (5) a restrictive interpretation should not be applied to the term "reconstruction" in s 413 of Act, and an arrangement pursuant to which the assets and liabilities of one company are transferred to and vest in another is within that term: Stork at [76]-[77]. 29 I was informed from the Bar table that there are approximately 20 creditors of which about 15 or 16 are related entities. ASSPL proposes to inform each of the creditors in writing of the proposed scheme and the second hearing date. Consideration Part 5.1 body 30 The evidence confirms that ASSPL is a Part 5.1 body. Proposed scheme is an "arrangement" 31 The scheme is expressed to be a compromise or arrangement between ASSPL and ATAPL. Clause 7.1 provides: 7.1 The Scheme binds parties (1) The Scheme will bind the Scheme company and Alstom Transport. (2) Alstom Transport approves the Scheme and consents to the Reconstruction or Amalgamation notwithstanding the diminution in the value of its shareholding in the Scheme Company and any rights that it may have in connection with the Reconstruction or Amalgamation at law (including under the Scheme Company's constitution) and waives any rights it may otherwise have as against the Scheme Company in connection with the Reconstruction or Amalgamation. Explanatory statement will provide proper disclosure 32 Mr McIvor has given evidence of the process undertaken for the scheme for the preparation and verification of the explanatory statement. 33 On 1 June 2016, the directors of ASSPL resolved, relevantly, that the explanatory statement (in the form contained in exhibit "PGM-1") be approved. The minutes of the 1 June 2016 meeting record that the directors (comprising Messrs Stammers, Dufour and McIvor): … each noted that he had carefully considered the Scheme and advice received from the Company's professional advisers about the Scheme. The Directors each then indicated that he supported the Scheme and: (1) Believed that the Scheme is fair and reasonable and in the best interests of the Sole Shareholders; and (2) Believed that the Scheme will not adversely affect the interests of the Company's creditors for the reasons for this belief are outlined at paragraph 4 of the Explanatory Statement. 34 Mr McIvor has verified on oath his belief that each material statement in the explanatory statement (in the form contained in exhibit "PGM-1") is true and correct, with the exception of statements that refer to orders sought by ASSPL having been made at the first hearing (in anticipation that such orders will be made). In his 8 July 2016 affidavit, Mr McIvor explained changes made to the explanatory statement since 1 June 2016. These are: (1) Paragraph 2.3 (on p 2) has been amended to reflect the fact that the Treasurer of the Commonwealth of Australia provided confirmation, on 24 June 2016, that he has no objection under the Foreign Acquisitions and Takeovers Act 1975 (Cth) to ATAPL participating in the scheme. A copy of a letter from the Treasurer recording that confirmation is at tab 3 of exhibit PGM-2; (2) The tables containing financial information in relation to ASSPL and ATAPL, under paras 2.1 (p 12) and 3.1 (p 15) have been amended to reflect the audited annual report of ATAPL for the year ended 31 March 2016, including ATAPL's latest audited financial statements. A copy of the audited annual report is at tab 4 of the exhibit PGM-2; and (3) The scheme of arrangement (forming Annexure A to the explanatory statement) has been amended to remove the scheme condition that the Treasurer confirm that he has no objection to ATAPL's participating in the scheme (referred to in (1) above). That condition has been removed because, as noted above, the Treasurer's confirmation has now been received. 35 By letter dated 24 June 2016, a delegate of the Foreign Investment Review Board decided that the Commonwealth of Australia had no objection to the internal reorganisation by ATAPL involving its acquisition of a 100% interest in the assets of ASSPL. 36 On the basis of this evidence, I am satisfied that there is prima facie evidence that the scheme booklet will provide proper disclosure to ATAPL. Scheme is bona fide and properly proposed 37 On 1 June 2016, the directors of ATAPL resolved that ATAPL consents to the proposed transfer to it by ASSPL of the property, liabilities and legal proceedings described in the minutes of the meeting and to any court orders required in order to effect that transfer. 38 Ms Billington's evidence sets out steps taken to consult with employees who will be affected by the scheme, as explained below. 39 I consider that these matters provide prima facie evidence that the scheme is bona fide and has been properly proposed. Position of creditors 40 The explanatory statement states that the directors of ASSPL believe that creditors of ASSPL will not be adversely affected if the proposed scheme is approved and implemented. The explanatory statement stated that ALSTOM Holdings has confirmed its intention to continue to provide financial support to ASSPL and ATAPL and to take all necessary steps to ensure that those entities continue to operate, provided that the Alstom Group retains management control over those entities. Following the implementation of the scheme, such support will continue to be provided to ATAPL. 41 The explanatory statement contains financial information about ASSPL and ATAPL as at 31 March 2016. The information shows that ASSPL had trade creditors of $2,216,000 and a modest surplus of assets over liabilities in ATAPL after the scheme is implemented. 42 The evidence also included the audited financial statements of ATAPL for the financial year ended 31 March 2016, lodged with ASIC on 8 July 2016. The directors report contains the following statement: Subsequent events A decision has been taken to merge the business of Alstom Signalling Solution Pty Ltd with that of ATAPL via a Scheme of Arrangement. The result of this merger will be the consolidation of the transport and signalling business into a single operating entity in Australia, namely ATAPL. The financial consequences of this transaction, being the elimination of the original investment by ATAPL in ASSPL and the associated goodwill impairment, are reflected in the 2015-16 financial statements. This impairment has a one-off adverse impact on the profitability for the reporting period of $11.878m, and the consequential decreases in equity of the parent entity and the Group respectively, through the impairment and the investment elimination. There has not been any other matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 43 The consolidated income statement shows a profit before tax and impairments of $5,382,000, a goodwill impairment of $11,878,000 and an income expense of $1,764,000. 44 The financial statements contain a directors' declaration, made on 6 July 2016, that there are reasonable grounds to believe that the Group, which I take to comprise ATAPL and ASSPL, will be able to pay its debts as and when they become due and payable. Position of employees 45 As at 1 June 2016, ASSPL had 24 full time employees and no casual employees. Ms Billington has met with all but two of ASSPL's employees to discuss the proposed scheme. She explained to them that if the scheme is approved and implemented, then they will become employees of ATAPL. After addressing questions put by the employees about the proposed scheme, Ms Billington believed that they were satisfied with her responses. 46 Ms Billington has sought to communicate with the other two employees in writing about the proposed scheme. For one, she has received a reply that the relevant employee had no objection to the proposed scheme and no questions. Ms Billington has not received a response from the remaining employee, who is currently on maternity leave. Notice to ASIC 47 There is evidence that ASIC has had a reasonable opportunity to examine the proposed scheme and explanatory statement, and to make submissions and it had 14 days' notice of the hearing of the application, initial listing on 7 June 2016. ASIC was thereafter informed of the re-listing on the hearing date for the first court hearing from time to time. 48 By letter dated 6 June 2016, and pursuant to reg 5.1.01(1) of the Corporations Regulations 2001, ASIC waived the requirement for compliance with Pt 3 of Sch 8 of those regulations in relation to the proposed scheme of arrangement. 49 By letter dated 11 July 2016, ASIC informed ASSPL that it had examined the terms of the scheme and the draft explanatory statement in accordance with its policy in Regulatory Guide 60 Schemes of Arrangement. ASIC stated that it did not propose to appear to make submissions, or intervene to oppose the scheme at the first hearing. ASIC did not appear at the first hearing. Other procedural requirements have been met 50 Consents to act as chairman and alternate chairman at the scheme meetings have been obtained. I was satisfied that the various procedural requirements for making the orders sought were met. 51 I was satisfied that there was no order sought which goes beyond current accepted practice. In particular, I am satisfied that the short notice provided for the hearing of the scheme meeting is not unreasonable: cf. Equatorial at [33]. Section 249S of the Act permits a meeting by telephone. 52 Finally, I was satisfied that the proposed scheme is of such a nature and is cast in such terms that, if approved at the scheme meeting, the Court would be likely to approve the scheme on the hearing of an unopposed application. I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 25 July 2016