Background
Perpetual Trustee Company Ltd (PTCo), a wholly owned subsidiary of ASX-listed Perpetual Ltd, applied under ss 411 and 1319 of the Corporations Act 2001 (Cth) for orders concerning a proposed internal scheme of arrangement. The scheme formed one part of the separation of Perpetual’s wealth-management business ahead of its proposed sale to Bain Capital Private Equity LP.
Under the scheme, specified wealth-management assets, liabilities and litigation would transfer from PTCo to Perpetual Trustees W.A. Ltd (PTWA), another Perpetual-group company. Other components of the business separation were to occur outside the scheme, including contractual assignments or novations and a proposed transfer of PTCo’s traditional trustee business under Pt 5D.6 of the Act.
The Court’s Holding
Black J held that the statutory prerequisites for a first-hearing order under s 411 were met. The proposed transfer was an “arrangement” between PTCo and its sole shareholder, Perpetual, despite being an intragroup reconstruction and involving only a partial transfer of PTCo’s undertaking and property.
The Court found the scheme booklet gave Perpetual sufficient material information, the procedural requirements had been satisfied, and the scheme was fit for shareholder consideration. Evidence from Grant Samuel indicated that creditors would not be materially prejudiced. ASIC had been given notice and did not propose to oppose the application at that stage.
The Court therefore made orders convening a meeting of PTCo’s sole shareholder and approving distribution of the scheme booklet. Final approval, including consideration of the effect on creditors and other affected persons, remained for the second court hearing.
Key Takeaways
- A members’ scheme can facilitate an internal corporate reconstruction, including where the company has only one shareholder.
- At the first hearing, the Court considers whether the scheme is adequately explained and apparently suitable for approval, rather than deciding its final merits.
- Contractual restrictions on assignment may not prevent a transfer ordered under s 413, but affected counterparties may raise objections at the second hearing.
Why It Matters
The decision confirms the availability of a scheme of arrangement as a mechanism for transferring selected assets, liabilities and litigation within a corporate group as part of a broader business separation. It also illustrates the importance of disclosure, creditor-impact evidence and notice to potentially affected clients and counterparties.
The ruling was procedural, not final approval of the restructuring. The scheme’s implementation remained subject to shareholder approval and the Court’s determination at the second hearing.