Russell McVeagh, led by Corporate partner Joe Windmeyer and Litigation partner Marika Eastwick-Field, has assisted Tilt Renewables Limited (TLT), a leading developer, owner, and manager of renewable energy generation assets in Australasia, to implement its return of A$260m of capital to shareholders by way of court-approved scheme of arrangement under Part 15 of the Companies Act 1993. By utilising a scheme, TLT was able to return surplus capital to shareholders in a timely manner that provided certainty, was tax efficient, and treated all shareholders equally.
Given restrictions in place due to COVID-19, both the Court and shareholder approval processes were undertaken almost entirely virtually and with the TLT and Russell McVeagh teams predominantly working remotely. This included, amongst other things, utilising temporary law changes to enable the virtual swearing of affidavits and proceeding with an entirely virtual shareholder meeting (via webinar) to approve the scheme.
While TLT is a "code company" for the purposes of the Takeovers Code, the Court's judgment (available here) confirms that the provisions of the Companies Act that impose specific additional obligations in relation to arrangements or amalgamations involving code companies did not apply. Because the scheme involved a pro rata return of capital, it did not affect the relative voting and distribution rights of shareholders (even with the effects of rounding). These findings should provide helpful guidance for code companies and their legal advisors considering proceeding by way of scheme of arrangement for pro rata returns of capital.
Both the United Kingdom and Australia have specific processes by which companies can undertake returns of capital with shareholder approval (without a requirement for Court approval). It may be beneficial in the future for New Zealand to look to harmonise its approach with these jurisdictions to realise further efficiencies in relation to transactions of this nature.
Russell McVeagh has acted on many high profile and complex schemes of arrangement in the past. For a summary of recent schemes of arrangement, including a helpful guide to schemes of arrangement in New Zealand, please see here.
This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.