Supreme Court New South Wales Medium Neutral Citation: In the matter of GBST Holdings Limited [2019] NSWSC 1503 Hearing dates: 18 October 2019 Date of orders: 18 October 2019 Decision date: 04 November 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Orders made approving the scheme of arrangement. Catchwords: CORPORATIONS – scheme of arrangement – application for orders approving scheme of arrangement – where scheme of arrangement involves shareholders in target company transferring their shares to acquirer – where votes cast satisfy statutory majorities – whether scheme of arrangement should be approved. Legislation Cited: - Corporations Act 2001 (Cth) ss 411(1), 411(3), 411(4), 411(4)(a)(ii)(A), 411(4)(a)(ii)(B), 411(4)(b), 411(6), 411(11), 411(12), 411(17)(b), 412 Cases Cited: - Re Central Pacific Minerals NL [2002] FCA 239 - Re GBST Holdings Limited [2019] NSWSC 1280 - Re Medical Australia Ltd (No 2) [2017] FCA 1429 - Re Seven Network Ltd (No 3) (2010) 77 ACSR 701 - Re Toll Holdings Ltd (No 2) [2015] VSC 236 Category: Principal judgment Parties: GBST Holdings Limited (Plaintiff) FNZ (Australia) Bidco Pty Limited (Interested Party) Representation: Counsel: D F C Thomas SC (Plaintiff) J R Williams (Interested Party) Solicitors: Allens (Plaintiff) Herbert Smith Freehills (Interested Party) File Number(s): 2019/260871 Judgment 1. By Originating Process filed on 21 August 2019, the Plaintiff, GBST Holdings Limited ("GBST"), seeks orders in respect of a scheme of arrangement with the holders of its ordinary shares. Broadly, the scheme provides for the acquisition by FNZ (Australia) Bidco Pty Limited ("FNZ Sub"), a wholly owned subsidiary of Kiwi Holdco Cayce, Ltd ("FNZ") of all of the shares in GBST for cash consideration of $3.50 (comprising $3.85 less a $0.35 special dividend) per share, paid by FNZ Sub or FNZ into an account with the Commonwealth Bank of Australia in Australia. In addition, shareholders receive a special dividend of $0.35 per share held by them on the special dividend record date (as defined), conditional on the scheme becoming effective. The total cash consideration payable to shareholders who hold shares on both of the scheme record date (as defined) and the special dividend record date is $3.85 per share. 2. On 11 September 2019, I made orders convening a meeting of GBST's shareholders pursuant to s 411(1) of the Act in relation to a proposed scheme of arrangement and approving a scheme booklet to be distributed to shareholders in connection with the scheme. I set out my reasons for doing so in a subsequent judgment: Re GBST Holdings Limited [2019] NSWSC 1280. At a meeting of GBST's shareholders on 14 October 2019 convened pursuant to those orders, the scheme was approved by 99.88% of votes cast and 97.73% of shareholders present in person or by proxy. 3. At the second Court hearing on 18 October 2019, GBST sought orders under s 411(4)(b) of the Act approving the scheme and an order under s 411(12) exempting it from compliance with s 411(11) of the Act in relation to the scheme. I made the orders sought at the second Court hearing. These are my reasons for doing so. Affidavit evidence 1. GBST relied on the affidavit dated 16 October 2019 of Ms Hwee Li Teo, who is a client relationship manager at Link Market Services Limited ("Link"). Ms Teo set out the nature of the services provided by Link to GBST, including the maintenance of a share register; referred to the dispatch of the scheme booklet and proxy forms, by post, airmail and email, and to a further reminder sent to shareholders, as authorised by an order made by the Court on 1 October 2019; to the receipt and recording of proxy votes and to the provision of a proxy report to the company secretary and general counsel of GBST. 2. GBST also relied on the affidavit dated 17 October 2019 of Mr Michael Buttigieg, who is the general manager of Link Digicom Pty Ltd, which was engaged by Link to provide for dispatch of communications to shareholders in connection with the scheme meeting. Mr Buttigieg addressed the data used to dispatch the scheme booklet and proxy forms, the dispatch of that booklet and proxy forms, a second dispatch of the scheme booklet and proxy forms to a small number of shareholders, and the dispatch of the reminder email to which I have referred above. 3. By an affidavit dated 16 October 2019, Ms Debbie Austin, who is the national manager, Link Convene at Link addressed the process adopted for registration of attendees at the scheme meeting and for voting at the scheme meeting and referred to a copy of the poll report prepared in respect of voting on the scheme resolution, which recorded that 560 shareholders representing 55,677,773 votes had voted in favour of the resolution to approve the scheme; 13 holders representing 65,915 votes had voted against the scheme; and two holders representing 4,917 votes had abstained, with the result that 97.73% of holders and 99.88% of votes cast had supported the scheme. The number of votes cast at the meeting amounted to 80.9% of the issued capital of GBST, representing a relatively high attendance rate at the scheme meeting. 4. GBST also relied on the affidavit dated 15 October 2019 of its non-executive director and deputy chair, Ms Christine Bartlett, who referred to the conduct of the scheme meeting and the results of the scheme meeting, as noted above. 5. An affidavit dated 17 October 2019 of Mr Richard Kriedemann, a solicitor acting for GBST in respect of the scheme, referred to the registration of the scheme booklet by the Australian Securities and Investments Commission ("ASIC"); the publication of an advertisement as to the second Court hearing and the fact that no notice was received of any person seeking to appear to oppose the scheme; GBST's announcement of a special dividend payable by GBST to the Australian securities Exchange ("ASX"); and a statement provided by ASIC in common form under s 411(17)(b) of the Act. There was no appearance by any person seeking to oppose the scheme at the second Court hearing. 6. Mr Kriedemann also confirmed, as had been foreshadowed at the first Court hearing, that the consideration payable by FNZ Sub in respect of the scheme was paid into a bank account of an authorised deposit-taking institution in Australia. GBST also tendered and relied on a certificate indicating satisfaction of conditions precedent in respect of the scheme, other than the condition precedent relating to Court approval of the scheme which is, of course, addressed by this judgment. Submissions and determination 1. Mr Thomas, who appears for GBST, points out that s 411(4) of the Act provides that an arrangement is binding on shareholders and GBST only if, at a meeting of shareholders, it is passed by a majority of shareholders present and voting (in person or by proxy) and by 75% of votes cast, and it is approved by order of the Court. Section 411(6) provides that the Court may grant approval subject to such alterations or conditions as it thinks just. 2. Mr Thomas rightly submits that the Court has a supervisory jurisdiction at the second Court hearing and, in deciding whether to give final approval to a scheme of arrangement, the Court will typically wish to be satisfied as to whether the Court's orders convening a meeting of members were complied with; whether that meeting of members has approved the scheme with the requisite majorities; all other statutory requirements have been satisfied; the scheme 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; 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; and there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme: Re Central Pacific Minerals NL [2002] FCA 239 at [8]–[14]; Re Seven Network Ltd (No 3) (2010) 77 ACSR 701 at [35]–[39]; Re Medical Australia Ltd (No 2) [2017] FCA 1429. 3. Mr Thomas submits, and I accept, that the affidavit evidence to which I referred above establishes that full compliance has been made with the Court's orders in respect of the convening and conduct of the scheme meeting. That evidence also indicates that the statutory majorities in ss 411(4)(a)(ii)(A) and (B) of the Act were satisfied at the scheme meeting. As I noted above, ASIC has also provided a letter under s 411(17)(b) of the Act stating that it has no objection to the scheme. All statutory pre-conditions to the Court's approval of the scheme are therefore satisfied. 4. Mr Thomas points out that, when it made orders convening the meeting of shareholders, the Court was satisfied that the scheme was 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 an application that is unopposed: Re GBST Holdings Limited above at [16]. He submits, and I accept, that no matters have arisen since the first Court hearing to affect that conclusion. No GBST shareholder has sought to oppose approval of the scheme by the Court, and there is no suggestion of any oppression in the conduct of the scheme meeting. As I noted above, GBST has led evidence of the satisfaction or waiver of the conditions precedent to the scheme, other than Court approval which is addressed by this judgment. 5. Mr Thomas submits, and I accept, that the Court can be satisfied there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme, by reason of the evidence led at the first Court hearing addressing verification of the scheme booklet. I am satisfied that the scheme booklet otherwise satisfies the requirements in ss 411(3) and 412 of the Act. I have also referred above to the evidence that, after the scheme booklet was dispatched to shareholders, GBST provided further information as to the declaration of the special dividend and the satisfaction of the Foreign Investment Review Board – related condition precedent by announcements made to the ASX. 6. Mr Thomas submits that the Court may be satisfied that all necessary matters have been brought to its attention, where GBST drew the Court's attention to matters of that character at the first Court hearing and I addressed them in the earlier judgment. Mr Thomas submits, and I accept, that none of those matters would warrant refusing to approve the scheme at the second Court hearing. I am also satisfied that the Court may properly make an order exempting GBST from compliance with s 411(11) of the Act, where the scheme will not amend its constitution, and GBST will be a wholly owned subsidiary of FNZ Sub after the scheme is implemented: Re Toll Holdings Ltd (No 2) [2015] VSC 236 at [18]–[19]. 7. For these reasons, I made orders in the form sought by GBST at the conclusion of the second Court hearing. ********** 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: 05 November 2019