Bolnisi Gold NL, in the matter of Bolnisi Gold NL (No 2) [2007] FCA 2078

Bolnisi Gold NL, in the matter of Bolnisi Gold NL (No 2) [2007] FCA 2078

The presence of a reciprocal naked no vote break fee provision that is not so large as to be likely to coerce shareholders does not stand in the way of an order to convene the scheme meeting or court approval of the scheme. Further, the procedural irregularity in giving notice to a small number of shareholders did not invalidate the shareholder resolution approving the scheme.

Parties
Plaintiff: Bolnisi Gold NL; Other Party: Coeur d'Alene Mines Corporation; Other Party: Palmarejo Gold and Silver Corporation
Jurisdiction
Australia
Judgment Date
10 December 2007
Procedural Posture
Corporations – Scheme of Arrangement / Second Court Hearing, Approval of Scheme of Arrangement
Outcome
Scheme of arrangement approved; relief granted for notice irregularity
Legal Topics
Scheme of Arrangement, Break Fee Provisions, Shareholder Meetings, Notice Requirements, Reciprocal Break Fees
Corporations Law Scheme of Arrangement Break Fee Provisions Shareholder Meetings Notice Requirements Reciprocal Break Fees

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Parties

Bolnisi Gold NL

Plaintiff

Coeur d'Alene Mines Corporation

Other Party

Palmarejo Gold and Silver Corporation

Other Party

Procedural Posture

Corporations – Scheme of Arrangement / Second Court Hearing, Approval of Scheme of Arrangement

Legal Issues

  1. 1 Whether a naked no vote break fee provision should prevent the scheme of arrangement from being considered by shareholders and approved by the Court
  2. 2 Whether the presence of the break fee was coercive or contrary to members' interests
  3. 3 Effect of procedural irregularities in giving notice to shareholders

Ratio Decidendi

The presence of a reciprocal naked no vote break fee provision that is not so large as to be likely to coerce shareholders does not stand in the way of an order to convene the scheme meeting or court approval of the scheme. Further, the procedural irregularity in giving notice to a small number of shareholders did not invalidate the shareholder resolution approving the scheme.

Court Disposition

Scheme of arrangement approved; relief granted for notice irregularity

Orders

  • Scheme of arrangement between Bolnisi Gold NL and its ordinary shareholders approved pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth)
  • Relief granted under s 1322(4)(a) of the Corporations Act 2001 (Cth): the shareholder resolution was not invalid by reason of non-compliance with notice requirements