The Court commented [52]:

“It is important to recognise that the initial orders made by the Court, while not conclusive as to process or substance, are likely to be significant in terms of what happens later. First, shareholders may well assume that the proposal and associated procedure does have the approval of the High Court. Whatever rules are fixed will plainly affect promoter and shareholder alike. Further, compliance with the initially ordered procedure is likely to be a significant factor on the application for final approval especially given the expensive nature of the exercise which will by then have been carried out.”

The Judges concluded [53] that they could see no procedural objection to Stevens J reviewing and supplementing the earlier orders.

VOTING OUTCOME AND FINAL ORDERS BY THE HIGH COURT

The postal voting period ended on 17 November 2006. Later that evening the Panel was advised of the outcome of the votes in each company. The votes in each company were:

  Investor Response Voting in Favour
Dominion Income 68% 97%
PF31 71% 98%
Newmarket 67% 96%

The Dominion Group's application for the High Court's final approval of the scheme was heard by Asher J on 28 November 2006. His Honour's minute of the hearing included [4]:

“A memorandum has been filed on behalf of the Takeovers Panel. The Takeovers Panel has noted that the proposed scheme has been approved by the holders of a significant majority of the total voting rights in each of the companies. As the voting thresholds proposed by the Panel at the earlier hearing have in fact been met, the Panel does not seek to be heard in respect of the final orders for the proposed scheme.”

Asher J's minute concluded by making the orders needed to bring the scheme into effect.
CONCLUSION

The decisions by the High Court and the Court of Appeal on the Dominion Group amalgamation are important signals as to how the Courts are likely to deal with future applications from the Panel to be heard in relation to schemes of arrangement involving code companies.

In particular it appears that:

(1)The Panel will be heard by the Court as a party interested in schemes of arrangement involving code companies;
(2)

The Panel's statutory powers include the right to seek to be heard by the Court in relation to a scheme of arrangement involving code companies.

With respect to the merits of the Dominion Income case:

(1)The High Court considered that the merits of the Panel's case supported the Court varying its initial orders to provide for an additional voting requirement of support by the holders of the majority of the total voting rights in each amalgamating company;
(2)The Court of Appeal reversed the decision of the High Court. However their Honours said that this decision was a “finely balanced” one.
FUTURE POLICY

As a result of the Dominion Income case the Panel reaffirms the policy it announced in May 2006 that it would seek to be heard by the High Court on schemes of arrangement involving code companies at the stage that initial orders are being made.

The Panel is willing to engage at an early stage with market participants who plan to promote a scheme of arrangement involving code companies. This will enable any issues the Panel may have with the proposed scheme to be resolved before the initial application under s236 of the Companies Act is made to the High Court.

1. Re Dominion Income Property Fund Limited and Ors (Unreported, 20 October 2006, HC Auckland, CIV-2006-404-5768).

2. Dominion Income Property Fund Limited and Ors v Takeovers Panel (Unreported, 26 October 2006, Court of Appeal CA 229/06).
 
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