In plain speak.
Under the legislation, there are 3 steps to follow for the demerger scheme.
1. Court approval to convene shareholders meeting.
2. Shareholder approval (75% majority) at meeting to
approve scheme;&
3. Final Court approval for scheme.
With today's legal decision, Step 1 above has been followed. It is now up to shareholders to approve the proposed demerger by 75% majority (ie Step 2). If approved by shareholders, it then goes back to court for final approval (ie Step 3). In Step 3, the court essentially checks that procedures for Step 2 were correctly followed to get shareholder approval. Below is an extract from federal court judgement in Central Pacific Minerals NL (2002) that outlines the role of the court in Step 3 above.
Judgement Extract
12 In considering whether to approve an arrangement at the third stage, the Court must first be satisfied that the second stage has been fully completed. It must be satisfied that the resolutions have been passed in accordance with the statutory requirements. Secondly, however, the Court must then consider the exercise of its discretion whether to approve the arrangement. While the primary task of the Court is to see that the procedure whereby the arrangement has been approved by security holders is formally correct, it has the further duty of satisfying itself that the arrangement is fair and equitable between different classes of security holders, and as between security holders and those who will benefit from it.
Disclaimer
Please note that I am not providing advice, information, recommendations or predictions. The above statements are merely my own comments and thoughts as an ordinary shareholder without any special skills or knowledge. I absolutely disclaim any responsibility or liability whatsover for any consequences arising from the use of my comments and thoughts expressed. If you require advice or information, you should seek the services of an appropriately qualified independent expert professional person as well as do your own proper research.
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