In the matter of AGL Limited

Summary:

The board of AGL Energy Limited, Australia’s biggest greenhouse gas emitter, announced in 2021 that they intended to pursue a demerger creating two separate entities, AGL Australia Limited (a retailer) and Accel Energy Limited (a generator). The proposed demerger was being pursued by way of a scheme of arrangement under the Corporations Act 2001 (Cth), which requires Court approval at two stages, along with a shareholder vote. Initially, the Court must approve the materials that AGL puts to shareholders for the vote and to convene the scheme meeting where the vote takes place. Shareholders are typically unable to access the materials prior to the ‘first hearing’ of the application. In the present case, the plaintiff was a high value shareholder of AGL who, without having access to those materials, was concerned that those materials may not adequately address climate risks associated with the demerger.

On 5 May 2022, at a hearing of the Supreme Court of New South Wales, the plaintiff sought leave to be heard in the Court’s hearing of the application, including on the basis that the proposed demerger was not in the best interests of shareholders. Leave was granted and AGL tendered the scheme materials and was required to provide the materials to the plaintiff to review. The Court made orders to publish the scheme booklet unamended, however, it ordered that the videos that AGL proposed to publish on the demerger were to be amended to disclose the risks and disadvantages of the demerger.

On 30 May 2022, AGL decided to withdraw the demerger proposal altogether.

At Issue: Whether AGL's Demerger Booklet provided adequate disclosure for shareholders to make a fairly informed decision in exercising their vote on whether or not to support the demerger.