Background
Dragon Mining Limited sought final approval of a scheme of arrangement with its ordinary shareholders under s 411 of the Corporations Act 2001 (Cth). The scheme contemplated cancellation of Dragon Mining shares and the transfer of shares in Dragon Gold Mining Ltd to Dragon Mining shareholders as scheme consideration, subject to the scheme becoming effective and Dragon Gold obtaining unconditional HKEX listing approval.
At the first hearing, the Court had ordered Dragon Mining to convene a scheme meeting and approved the scheme booklet process. At the 6 August 2026 meeting, 47 shareholders present and voting, representing 56,689,990 votes, voted unanimously for the scheme. Although this represented 29.88% of all shares on issue and 6.62% of all shareholders, turnout exceeded that at the company’s annual general meetings over the preceding five years.
The Court’s Holding
Justice Vandongen approved the scheme under s 411(4)(b). The Court found that the statutory and procedural requirements had been met: the earlier orders and scheme booklet had been lodged with ASIC, the booklet and hearing notice had been properly dispatched and advertised, and the scheme meeting had been conducted as ordered. ASIC had provided a no-objection statement for the purposes of s 411(17)(b).
The Court also held that the scheme was fair and reasonable and capable of approval by an intelligent and honest, properly informed shareholder acting in that capacity. The unanimous vote, the independent expert’s opinion that the scheme was fair and reasonable and in shareholders’ best interests absent a superior proposal, and the directors’ unanimous recommendation supported that conclusion. There was no evidence of bad faith, minority oppression, inadequate disclosure, public-policy concerns, or an objection from a shareholder.
Key Takeaways
- A scheme may be approved despite relatively low overall shareholder turnout where the statutory voting thresholds are met and the evidence shows no procedural or disclosure problem.
- The Court’s role at the second hearing is supervisory, including assessment of statutory compliance, fairness, disclosure, good faith and minority oppression.
- The Court noted facts relevant to Dragon Mining’s intended reliance on the US Securities Act s 3(a)(10) exemption, without deciding whether that exemption would ultimately be available.
Why It Matters
The decision illustrates the evidence needed for final court approval of an Australian scheme of arrangement: compliance with convening and dispatch orders, voting results, ASIC’s position, satisfaction or waiver of conditions precedent, and evidence addressing fairness and disclosure.
It also confirms the usual Australian approach where scheme consideration includes securities and parties intend to invoke the US Securities Act s 3(a)(10) exemption: the Court may record the relevant fairness-hearing circumstances but does not determine the availability of the US exemption.