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Tower's membership confirmed

GPG fails to convince the High Court membership of Tower Corporation should be restricted.

Sunday, June 7th 1998, 12:00AM

by Philip Macalister

Tower Corporation says its proposed demutualisation and planned Stock Exchange listing is still on track following a High Court decision on who is a member of the group.
Tower had asked the court to answer a number of questions regarding who is a member of the group, notably policyholders in its subsidiary companies.
Justice Gendall said in a reserved decision released on Friday, that membership could only be determined by the group's constitution, namely the Tower Corporation Act and its bylaws.

He said that on a "plain and literal" interpretation membership rested in "policyholders of Tower who hold life insurance, annuity or disability insurance policies, or are parties to an insurance policy issued by, or are parties to a superannuation plan of Tower, or any subsidiary of Tower."
This decision comes as a blow, though not fatal, to Guinness Peat Group (GPG) which argued membership should be limited to the 180,000 people who are policyholders of the original Tower Corporation. It claims the 200,000 policyholders in Tower's Australian and New Zealand subsidiaries are not members.
GPG wants to merge its 51 per cent owned Tyndall Australia with Tower in a demutualisation proposal. Under the proposal Tower's original policyholders would get all (or most of the shares in the demutualisation) and the members of the Tower's subsidiaries would get nothing (or very little).
In his decision Justice Gendall ruled against all of GPG's arguments, and put the widest interpretation possible on Tower's membership.
However, he did draw a distinction between membership and ownership, saying these would have to be determined at a later date.
"The issue as to ultimate property entitled between members is a different issue to the question of who are members. The statute (Tower Corporation Act) makes it plain that it contemplates categories of members who may not eventually be shareholders, or who may take shares on a different basis to others upon any conversion scheme."
Justice Gendall also said any demutualisation proposal needs to be initiated by the Tower board, which must then present it to the High Court for approval.
A court appointed amicus curie (friend of the court) and independent experts will help the judge decide on the equity of the proposal.
Tower is claiming this decision is a major victory for its demutualisation proposal and removes any uncertainty about membership, however GPG claims the question of ownership was still unresolved.
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