Supreme Court New South Wales Medium Neutral Citation: In the matter of Prospa Group Limited [2024] NSWSC 860 Hearing dates: 8 July 2024 Date of orders: 8 July 2024 Decision date: 08 July 2024 Jurisdiction: Equity - Corporations List Before: Black J Decision: Orders made in respect of supplementary disclosure. Catchwords: CORPORATIONS — where plaintiff sought order for supplementary disclosure to scheme shareholders – whether orders sought should be made. Legislation Cited: - Corporations Act 2001 (Cth), s 1319 Cases Cited: - Re Centro Retail Ltd [2011] NSWSC 1921 - Re Investa Listed Funds Management Ltd [2016] NSWSC 344 - Re Prime Media Group Ltd [2019] NSWSC 1888 - Re Trust Company Ltd [2013] NSWSC 1946 Category: Principal judgment Parties: Prospa Group Limited (Plaintiff) Representation: Counsel: J Williams SC (Plaintiff) M Izzo SC (Bidder) Solicitors: Herbert Smith Freehills (Plaintiff) Clayton Utz (Bidder) File Number(s): 2024/199539 Judgment – ex tempore (Revised 11 July 2024) 1. The Plaintiff in these proceedings, Prospa Group Ltd ("Prospa"), seeks an order under s 1319 of the Corporations Act 2001 (Cth), that it be directed to make supplementary disclosure to scheme shareholders by publishing an announcement in the form of Exhibit A, no later than today, on the Australian Securities Exchange's Announcement's Platform and on its website. 2. The proposed announcement provides a business update in respect of Prospa, in the first part of the document, referring to updates in respect of its financial position. The publication of that aspect of the announcement may not have required the Court's approval. However, the announcement also provides a scheme update which impacts directly on the matters disclosed in the scheme booklet. That scheme update refers to a change in the proposed ownership arrangements for Prospa following implementation of the scheme, that has been agreed between Prospa and members of the bidding consortium. Broadly, that change is that one of the consortium members may retain its shares in Prospa rather than, as the scheme booklet had previously foreshadowed, all consortium members transferring their shares in Prospa to Salkbridge Pty Ltd ("BidCo") in exchange for the issue of shares in PGL HoldCo Ltd ("Holdco"). I note that shares in Holdco would also be issued to those shareholders who are eligible to take up, and take up, a scrip election under the scheme. 3. The update also describes the commercial context of the arrangement and notes certain undertakings which were given by that member of the consortium, with a view to seeking to preserve the economic equivalence of its treatment with that of consortium members, and indeed scheme shareholders who make a scrip election, and take up shares in Holdco. The disclosure rightly draws attention to the fact that the consortium member who continues to hold Prospa shares may have legal rights attached to the ownership of those shares. The language "may have" is a proper qualification, both because those rights may be confined by the arrangements between consortium members, to which I have referred above, and because a question would arise as to the existence of such rights in any event. 4. The disclosure also properly draws attention to a commercial consequence of the suggested change in structure, namely that the future tax profile of the Prospa group would not change, irrespective of the number of shareholders who elect to receive Holdco shares as consideration under the scheme. I recognise that that preserves, rather than alters, the tax position contemplated by the scheme booklet. 5. The need for the orders which are sought, in respect of the proposed approval of the additional disclosure arises from the general principle that, where the Court has ordered the convening of a scheme meeting and an approved explanatory statement, its approval should be sought before additional explanatory material is despatched or, here, an additional document is despatched which directly impacts on the content of the scheme booklet. That requirement is generally attributed to the decision of Barrett J in Re Centro Retail Ltd [2011] NSWSC 1921 and has been applied in many subsequent decisions of this and other courts: for example, Re Trust Company Ltd [2013] NSWSC 1946 at [6]; Re Investa Listed Funds Management Ltd [2016] NSWSC 344 at [4]; Re Prime Media Group Ltd [2019] NSWSC 1888 at [5]. The Court will have regard, in respect of additional explanatory material, to the time available to shareholders to digest the material, and the nature of the amendments made, but the matters here disclosed seem to me to be relatively straightforward and any question as to the time available to shareholders to digest them is ultimately for a second Court hearing. 6. I will make the orders that are sought by Prospa in this application. I am satisfied that, in the relevant circumstances, the disclosure raises no areas that should concern the Court, and the matters that are disclosed are properly drawn to Prospa shareholder's attention, so far as they affect the disclosure that was made in the previous scheme booklet. I accept that, as Mr Williams points out, these matters do not directly affect the rights of scheme shareholders, since the scheme consideration payable to them or the scrip that would be issued to them is unchanged. These matters also do not raise any class issue, because the consortium members are "Excluded Shareholders" for the purposes of the scheme; their shares in Prospa will not be acquired under the scheme; and that they will not be voting on the scheme in any event. 7. For these reasons I make orders in accordance with the Short Minutes of Order initialled by me and placed in the file. ********** 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: 16 July 2024