Supreme Court New South Wales Medium Neutral Citation: In the matter of Beyond International Limited (No 2) [2022] NSWSC 1787 Hearing dates: 15 December 2022 Date of orders: 15 December 2022 Decision date: 27 December 2022 Jurisdiction: Equity - Corporations List Before: Black J Decision: Scheme of arrangement approved. Catchwords: CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement – where formal requirements satisfied – whether scheme of arrangement should be approved. Legislation Cited: - Corporations Act 2001 (Cth), s 411 Cases Cited: - Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 - Re Atlas Iron Ltd (No 2) [2016] FCA 481 - Re Aveo Group Ltd [2019] NSWSC 1679 - Re Beyond International Ltd [2022] NSWSC 1649 - Re Central Pacific Minerals NL [2002] FCA 239 - Re David Jones Ltd (No 3) [2014] FCA 753 - Re Equinox Resources Ltd (2004) 41 ACSR 692 - Re NRMA Ltd (No 2) (2000) 156 FLR 412 - Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 - Re Seven Network Ltd (2010) 77 ACSR 701; [2010] FCA 400 Category: Principal judgment Parties: Beyond International Limited (Plaintiff) Representation: Counsel: R A Dick SC (Plaintiff) J R Williams SC (Bidder) Solicitors: Herbert Smith Freehills (Plaintiff) Corrs Chambers Westgarth (Bidder) File Number(s): 2022/321389 Judgment Background 1. On 10 November 2022, I made orders in respect of a meeting of holders of fully paid ordinary shares in Beyond International Limited ("Beyond") to consider a proposed scheme of arrangement and approving an explanatory statement to be distributed to scheme participants. I published my reasons for making those orders in my judgment delivered on 5 December 2022 (Re Beyond International Ltd [2022] NSWSC 1649). The scheme meeting was held on 12 December 2022 and scheme participants there approved the scheme by both a majority in number present and voting by more than 75% of the votes cast, with approximately 99.96% of shares by value and approximately 93.59% of scheme participants by number voting in favour of the scheme. 2. Beyond now seeks orders under s 411(4) of the Corporations Act 2001 (Cth) approving this scheme of arrangement. I made those orders at the second Court hearing on 15 December 2022 and these are my reasons for doing so. I have drawn on the helpful submissions of Mr Dick, who appeared for Beyond in the application, in this judgment. Affidavit evidence 1. Beyond relied on the affidavit dated 13 December 2022 of Mr Ian Ingram, a non-executive director and chair of Beyond, who also acted as the chair of the scheme meeting. Mr Ingram referred to the conduct of the scheme meeting, which he addressed in accordance with a prepared script which had been released to Australian Securities Exchange ("ASX") after the scheme meeting, and to the way in which questions could be submitted to that meeting. He was asked one question whether any other bidder had emerged in respect of Beyond, and he noted that, in the event, no other bidder had emerged. Mr Ingram referred to the vote on the scheme resolution and to the results of that resolution, which I noted above. Mr Ingram noted that no communications were received during the scheme meeting which indicated that any shareholder intended to appear at the Court hearing to oppose the approval of the scheme, and none did so, and he confirmed that Beyond had not received any Superior Proposal (as defined) for the acquisition of its shares after the scheme was first announced. 2. By a second affidavit dated 14 December 2022, Mr Ingram addressed two communications with shareholders in respect of the scheme, shortly after the dispatch of scheme materials on or about 11 November 2022. The first of those conversations was with his wife, who was one of the top twenty shareholders in Beyond, who had not then received the scheme materials, and he left her to take steps to obtain them. The second was with an acquaintance in Hong Kong, who managed the shareholders of three nominee companies which were also in the top twenty shareholders of Beyond. Mr Ingram suggested that he register for email communications from Beyond and suggested that those shareholders should vote in respect of the scheme. I accept Mr Dick's submission that these communications can fairly be treated as in the nature of reminders to vote and they raise no difficulty for approval of the scheme. 3. By his affidavit dated 13 December 2022, Mr Glen Rogers, a relationship manager employed by Computershare Investor Services Pty Ltd ("Computershare") outlined the scope of the services provided by Computershare to Beyond, and set out the steps taken for the dispatch of scheme materials to shareholders in hard copy and electronic form as appropriate, the process for the receipt of proxies for the scheme meeting and registration for attendees at that meeting. He also addressed voting at the scheme meeting and confirmed the votes cast at that meeting, to which I referred above. Mr Rogers' evidence was that the voting participation rate at that meeting, by number of shares, was 95.24% of Beyond shares and the participation rate by number of shareholders, approximately 18.24%, substantially exceeded the percentage of holders who voted at Beyond's last two annual general meetings. 4. By her affidavit dated 13 December 2022, Ms Nicole Pedler, who is a partner in the form of solicitors acting for Beyond in the application, addressed the registration of the final scheme booklet with ASIC, the steps taken to provide the final scheme booklet to scheme participants and notice of the second Court hearing and identified two questions received from Beyond shareholders by Computershare in relation to the scheme and the answers which had been given. She confirmed that the solicitors had not received any notice of any person wishing to appear at the second Court hearing. 5. Beyond also tendered a conditions precedent certificate executed by Beyond and the acquiring entity and its parent company, Banijay Entertainment SAS and Screentime Pty Ltd, and a letter dated 14 December 2022 from the Australian Securities and Investments Commission ("ASIC") which indicated that it had no objection to the scheme for the purposes of s 411(17)(b) of the Act. Role of the Court in approving a scheme of arrangement at the second Court hearing and determination 1. Mr Dick submits, in familiar terms, that the Court will wish to be satisfied at the second Court hearing that the procedural requirements in respect of the scheme have been satisfied and will then exercise its discretion as to whether or not to approve the scheme: Re Central Pacific Minerals NL [2002] FCA 239 at [12]; Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Aveo Group Ltd [2019] NSWSC 1679 at [15]. He rightly recognises that the Court is not bound to approve a scheme merely because it has previously made orders for the convening of meetings and the statutory majorities have been achieved, but that it will have due regard to the assessment by members of their interests, as manifested in the voting at the meeting: Re NRMA Ltd (No 2) (2000) 156 FLR 412 at [22]; Re Central Pacific Minerals NL above at [13]; Re Seven Network Ltd (2010) 77 ACSR 701; [2010] FCA 400 at [34]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5]. Mr Dick rightly also points out that there is no exhaustive statement of the matters as to which the Court must be satisfied before exercising its discretion to approve a scheme, but relevant matters include whether the scheme members have voted in good faith and not for an improper purpose; whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone might approve it; whether the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; whether there has been full and fair disclosure of all information material to the decision; whether minority shareholders would be oppressed by the scheme; whether the scheme offends public policy; and whether the interests of other groups who are not parties to, but are affected by, the scheme are dealt with appropriately: Re Seven Network Ltd above at [35]-[40]; Re David Jones Ltd (No 3) [2014] FCA 753 at [3]; Re Aveo Group above at [15]. 2. As I have noted above, Beyond has led evidence as to the despatch of the scheme booklet, the conduct of and voting at the scheme meeting and that the scheme was approved by scheme participants at the scheme meeting by the requisite majorities for the purposes of s 411(4)(a)(ii) of the Act, and as to attendance rates at that meeting. Beyond published a notice of the Court hearing for approval of the scheme in a national newspaper on 7 December 2022 and no shareholders appeared at the second Court hearing to oppose approval of the scheme. As I noted above, ASIC has confirmed that it has no objection to the scheme for the purposes of s 411(17)(b) of the Act. While the implementation of the scheme was conditional on a number of conditions precedent being satisfied or waived, Beyond has also tendered a certificate in accordance with its obligation under clause 3.2 of the scheme implementation deed stating that all of the relevant conditions precedent have been satisfied or waived, other than the condition relating to Court approval of the scheme. 3. I am satisfied that the applicable procedural requirements in respect of the scheme have been satisfied. As Mr Dick points out, the independent expert has concluded that the scheme is fair and reasonable and in the best interests of Beyond shareholders in the absence of a Superior Proposal (as defined) and the scheme participants have agreed to the Scheme. Mr Dick submits and I accept that it would be an appropriate exercise of the Court's discretion to approve the scheme under 411(4)(b) of the Act. 4. I am also satisfied that there is no utility having the Court order annexing the scheme annexed to the company's constitution, where that order does not effect any change to Beyond's constitution and the Court should exempt Beyond from that requirement: Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at 240 [65]; Re Equinox Resources Ltd (2004) 41 ACSR 692. Orders 1. For these reasons, I made the orders sought by Beyond at the second Court hearing on 15 December 2022. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 December 2022