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In the field of takeovers, company mergers and other corporate reconstructions, schemes of arrangement are playing an ever-increasing role. In the takeover sphere, schemes have often been used in recent times as an alternative to using the takeover provisions in Chapter 6 of the Corporations Act 2001 (Cth). This subject will address what a scheme of arrangement is and the role that schemes play in these fields of commercial activity, particularly in the area of takeovers. The role played by the court and the Australian Securities and Investments Commission (ASIC) at each relevant stage of the scheme process, as well as practical considerations and guidance in connection with obtaining court approval to a scheme, are among the topics that will be addressed in this subject. The lecturers are both commercial barristers at the Victorian Bar whose areas of practice include schemes of arrangement.
Principal topics include:
- What a scheme of arrangement is and the role schemes play in the field of takeovers, company mergers and other corporate reconstructions
- The statutory framework applicable to schemes of arrangement
- Statutory and other requirements governing schemes of arrangement and their approval by shareholders and the court
- The role of the court at each of the first court hearing (the ‘meeting hearing’) and the second court hearing (the ‘approval hearing’)
- The role of ASIC
- The approach adopted by the Takeovers Panel to schemes of arrangement
- Practical considerations and guidance – including potential pitfalls – in connection with the process of obtaining both shareholder and court approval
- Issues arising in connection with the obtaining of shareholder and court approval. Topics to be drawn from matters such as:
- Notice requirements
- The scheme booklet: Content and approval
- Meetings of shareholders: How, what, when and why
- Classification of schemes and classes of members
- The role of the independent expert
- Break fees and exclusivity provisions
- Warranties and performance risk
- Treatment of Overseas shareholders
- Dealing with options and performance rights
- The role of directors when considering schemes including fetters or restraints on the exercise of their statutory and fiduciary duties
- How to deal with circumstances that change during the period between the first and second court hearings
- Chapter 6 avoidance, ASIC position and Section 411(17) of the Corporations Act 2001 (Cth)
- Forum consideration and differing judicial approaches
- Opposition at court hearings and the court’s ‘approval’ discretion
- The ancillary function performed by section 413 in facilitating reconstructions and amalgamations of companies which are the subject of a scheme of arrangement
- Current issues, recent developments and reform issues.
- This subject does not address schemes of arrangement in the insolvency context.
Intended learning outcomes
A student who has successfully completed this subject should:
- Understand the role and purpose of schemes of arrangement in the field of takeovers, company mergers and other corporate reconstructions
- Understand the role of the court at each stage of the court approval process
- Understand what is required in order to obtain shareholder and court approval of a proposed scheme of arrangement, including knowledge of the primary matters to be considered and addressed at each stage of the approval process
- Understand the role played by the Australian Securities and Investments Commission (ASIC) in connection with proposed schemes of arrangement
- Understand the practical considerations and steps to seeking and obtaining court approval
- Appreciate and understand the issues that have influenced debate regarding reform and be in a position to form their own views about the issues and related matters.
Last updated: 9 October 2020