CORPORATIONS — arrangements and reconstructions — schemes of arrangement or compromise — application under s 411 of the Corporations Act 2001 (Cth) for orders convening meeting of members to consider and, if thought fit, to agree to proposed scheme of arrangement — whether requirements to order scheme meeting are satisfied
Quick Take
1At the first court hearing, the Court will convene a scheme meeting if satisfied that the plaintiff is a Pt 5.1 body, that the scheme is an 'arrangement' and is bona fide and properly proposed, that ASIC has had a reasonable opportunity to examine it with 14 days' notice, and that the procedural rules have been met. The Court must also be satisfied that there is no apparent reason why the scheme would not be approved if the statutory majorities are achieved.
2Where the bidder is a special purpose vehicle dependent on financial support, the Court gives particular attention to funding. On the facts, legally binding equity and debt commitment letters, a funding commitment from a consortium party, a deed poll, and a requirement that the consideration be deposited into a trust account before implementation sufficiently addressed performance risk.
3Exclusivity provisions, a break fee of approximately 1% of equity value, a deemed encumbrance-free warranty, and accelerated vesting of executive incentives are unobjectionable at the first hearing if they are in customary form and adequately disclosed. Employees receiving incentive benefits do not, of itself, make them a separate class, and outbound shareholder call logs are to be reviewed at the second hearing.
