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Re AXA Asia Pacific Holdings Ltd [2011] VSC 4

by Martha.Ware 18. April 2011 08:16


The plaintiff applied for orders under s 411(1) of the Corporations Act that a meeting of minority shareholders be convened to consider a proposed scheme of arrangement (“the Share Scheme”), that a meeting of a class of creditors be convened to consider a proposed scheme of arrangement (“the Rights Scheme”) and for associated directions. Matters relevant to the exercise of s 411 of the Act are:

  • Whether the nature and terms of the scheme are such that if it achieves the statutory majority at the members or creditors meeting the court would be likely to approve it on the hearing of an unopposed petition; and
  • Whether the members or creditors are to be properly informed of the scheme before the scheme meeting: [10].

The court must decide if the scheme complies with the Act and if there are reasons why it should not be voted upon. It should not express a view as to whether the scheme should be approved, usurp the shareholder’s decision or intrude its own commercial judgment: [12]. The court must form a view of the reasonableness of the compromise or arrangement and decide if the majority are acting bona fide. The court must consider if the information provided sufficiently discloses the detail and effect of the scheme enabling an informed decision: [14]. At this stage the court does not have to consider s 411(17): [15].


As an independent report determined the Share Scheme and Rights Scheme were in the best interests of the minority shareholders and rights holders the court was satisfied that it would be likely to approve the schemes if the shareholders and rights holders voted in their favour: [19]. The scheme effectively eliminated the risk of non performance or delayed performance with a mechanism for enforcement of the acquiring company’s obligations: [25].


The deeds contained ‘no shop’, ‘no talk’ and ‘no due diligence’ provisions to prevent the plaintiff from soliciting competing proposals during a lock up period. Such clauses must be for no more than a reasonable period, be framed so subject to the overriding obligation not to breach the director’s fiduciary duties or be otherwise unlawful and should be given adequate prominence in the explanatory memorandum: [28].


The exclusivity period was within the range of a reasonable period for acquisition schemes, there was a carve out of the no talk, no due diligence provision in relation to directors duties and it was adequately disclosed: [30]. The warranty provision deeming all shares to be fully paid and free of encumbrances and restrictions was acceptable as it was sufficiently disclosed in the explanatory statement: [32].


The three criteria to providing notice and information under s 412(1) of the Corporations Act are the explanatory statement: 

  • must explain the effect of the compromise or arrangement, state directors material interests and the effect of these interests (if any): [35]
  • must set out prescribed information: [36]; and
  • must set out any other information material to the making of a decision if known to the directors and not previously disclosed: [37].


The court was satisfied as to the adequacy of information. The application was successful.


Relevant paragraphs of Ford

[7.427], [19.140], [22.130], [24.060], [24.071], [24.130], [24.140], [24.150], [24.160], [24.320]


Ford's Principles of Corporations Law


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