4 Jan 2011 07:00
OILEX LTD ABN 50 078 652 632 NOTICE OF GENERAL MEETING OF SHAREHOLDERS Monday, 7 February 2011 4.00 pm AT The CELTIC CLUB, 48 ORD STREET, WEST Perth Western Australia NOTICE OF GENERAL MEETING This Notice of Meeting should be read in conjunction with the attached Explanatory Memorandum (Annexure A).
NOTICE IS HEREBY GIVEN that a General Meeting of shareholders of OILEX LTD ABN 50 078 652 632 ("the Company") will be held at The Celtic Club, 48 Ord Street, West Perth, Western Australia on Monday, 7 February 2011 at 4.00pm (Perth time), to conduct the following business:
BUSINESS OF THE MEETING - RESOLUTIONS
Resolution 1 - Ratification of previous issue of Shares
To consider and if thought fit, to pass, with or without amendment, the following as an ordinary resolution:
"That, for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders approve and ratify the issue and allotment of 30,000,000 Shares at a price of 20 pence per Share predominantly to sophisticated and professional investors in the UK, further details of which are set out in the Explanatory Memorandum."
Voting Exclusion Statement: The Company will disregard any votes cast on Resolution 1 by any person who participated in the issue and any Associate of those persons.
However the Company will not disregard a vote if:
(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
Resolution 2 - Issue of Options to Related Party - India Hydrocarbons Limited
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
"That for the purposes of Chapter 2E of the Corporations Act, Listing Rule 10.11 and for all other purposes, Shareholders approve and authorise the allotment and issue of a total of 4,000,000 Options to India Hydrocarbons Limited in accordance with the terms and conditions set out in the Explanatory Memorandum."
Voting Exclusion Statement: The Company will disregard any votes cast on Resolution 2 by India Hydrocarbons Limited and by any Associate of India Hydrocarbons Limited.
However, the Company need not disregard a vote on Resolution 2, if:
(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
All members are invited to attend. An Explanatory Memorandum to shareholdersfollows this Notice.By Order of the BoardJ W R LaurieCompany Secretary23 December 2010PROXIES
1. A Proxy Form is enclosed with this Notice of Meeting. (please see Oilex
website to view Proxy form)
2. Each member who is entitled to attend and cast a vote at the General
Meeting may appoint a proxy. A proxy need not be a member.
3. A member who is entitled to cast 2 or more votes at the Annual General
Meeting may appoint either 1 or 2 proxies. If you wish to appoint 2 proxies you must use a separate proxy form for each proxy and indicate the percentage of your voting rights or the number of shares that each proxy is appointed in respect of on the proxy forms. If you wish to appoint more than 1 proxy you should photocopy the enclosed proxy form or request an additional proxy form to be sent to you. Where a member appoints 2 proxies and does not specify the proportion or number of the member's votes, each proxy may exercise half of the member's rights.
4. An instrument appointing a proxy may not be treated as valid unless the
instrument, and the power of attorney or other authority (if any) under
which the instrument is signed or proof of the power or authority to the
satisfaction of the Directors, is or are:
* deposited at the Company's registered office at Level 2, 50 Kings Park
Road, West Perth, Western Australia;
* sent by facsimile to the Company at fax number (08) 9485 3290; or
* deposited at the Company's share registry, Security Transfer Registrars Pty
Ltd, 770 Canning Highway, Applecross, Western Australia, 6153; not less than 48 hours before the time for the holding of the General Meeting (or any adjournment of that meeting), as the case may be, at which the person named in the instrument proposes to vote.
5. An instrument appointing a proxy must be in writing under the hand of the
appointer or of the appointer's attorney duly authorised in writing or, if the appointer is a body corporate, either under its common seal if it has a common seal, or under the hand of an officer or duly authorised attorney or duly authorised representative.
6. A body corporate which is a Shareholder, or which has been appointed as a
proxy, may appoint an individual to act as its representative at the General Meeting. The appointment must comply with section 250D of the Corporations Act. The representative should bring evidence of their appointment to the General Meeting, including authority under which their appointment is signed, unless previously given to the Company.
7. In accordance with regulation 7.11.37 of the Corporations Regulations 2001,
the Company has determined that the shareholding of each person for the purposes of determining entitlements to attend and vote at the General Meeting will be the entitlement of that person set out in the Company's register as at 7.00pm (Sydney time) on Saturday, 5 February 2010. Accordingly, transactions registered after this time will be disregarded in determining entitlements to attend and vote at the General Meeting.
GLOSSARY
Words which are defined in the Explanatory Memorandum have the same meaning when used in this Notice of Meeting unless the context requires otherwise. For assistance in considering the Notice of Meeting and Explanatory Memorandum, the following words are defined here:
"A$" means Australian dollars.
"Associates" has the meaning given to that term in section 11 and sections 13 to 17 of the Corporations Act.
"ASX" means ASX Limited ACN 008 624 691 and where the context requires, the financial market operated by ASX Limited trading as the Australian Securities Exchange.
"Board" means the board of Directors of the Company.
"Company" means Oilex Ltd ABN 50 078 652 632.
"Constitution" means the constitution of the Company.
"Corporations Act" means the Corporations Act 2001 (Cth).
"Director" means a director of the Company from time to time.
"Explanatory Memorandum" means the explanatory memorandum accompanying this Notice of Meeting at Annexure A.
"General Meeting" means the general meeting of the Company convened under the Notice of Meeting.
"Listing Rules" means the listing rules of ASX.
"Notice of Meeting" means this notice of general meeting.
"Option" means an option to subscribe for a Share.
"Proxy Form" means the proxy form accompanying the Notice of Meeting.
"Resolution" means a resolution set out in the Notice of Meeting.
"Share" means a fully paid ordinary share in the capital of the Company.
"Shareholder" means a holder of Shares.
"Tranche 1 Option" has the meaning given in the Explanatory Memorandum on page 5.
"Tranche 2 Option" has the meaning given in the Explanatory Memorandum on page 5.
ANNEXURE A EXPLANATORY MEMORANDUM
This Explanatory Memorandum should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.
The Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the general meeting of Shareholders to be held on Monday, 7 February 2011 at 4.00pm.
This Explanatory Memorandum should be read in conjunction with the accompanying Notice. Words defined in the Notice have the same meaning when used in this Explanatory Memorandum unless the context requires otherwise.
ORDINARY BUSINESS - RESOLUTIONS
Resolution 1 - Ratification of previous issue of Shares
Background to Resolution 1
On 10 December 2010, the Company announced the completion of a placement of 30,000,000 Shares ("Placement Shares") at an issue price of 20 pence per Share to sophisticated and professional investors in the UK to raise gross proceeds of £6.0million (approximately £5.7million or A$9.1million net of expenses). On 15 December 2010 those Shares were allotted and issued.
Listing Rule 7.4
Listing Rule 7.1 broadly provides that a listed company may not issue securities in any 12 month period which, when aggregated with the number of the other securities issued within that 12 month period, exceed 15% of the number of ordinary shares on issue at the beginning of the 12 month period, unless the issue falls within one of the nominated exceptions or the prior approval of members of the company in general meeting is obtained.
It is possible under Listing Rule 7.4 to ratify previous issues that were made without shareholder approval under Listing Rule 7.1. The effect of such ratification is to restore the company's discretionary power to issue further shares up to 15% of the number of the company's issued Shares at the beginning of the relevant 12 month period without obtaining shareholder approval.
The Company experiences delays and incurs costs when obtaining Shareholder approval each time it wishes to issue securities which exceed the 15% limit and which do not otherwise fall within one of the exceptions to Listing Rule 7.1. It is for these reasons that the Company has chosen to take this opportunity to ratify the issue of the Placement Shares and thereby restore its 15% discretionary authority to issue future Shares without shareholder approval.
For the purposes of Listing Rule 7.4, and in compliance with Listing Rule 7.5, Shareholders are advised as follows:
1. the number of securities issued and allotted under Resolution 1 is 30
million Shares;
2. the Shares were issued at an issue price of 20 pence per Share
(approximately A$0.32 per Share);
3. the Shares are fully paid ordinary shares in the capital of the Company and
rank pari passu in all respects with the Company's existing Shares;
4. the Shares have been issued to sophisticated and professional investors in
the United Kingdom; and
5. the funds raised by the issue of the Placement Shares will be utilised by
the Company primarily for drilling on the Cambay Production Sharing
Contract "tight" Eocene reservoirs in Gujarat, India and for working
capital purposes.
Resolution 2 - Issue of Options to Related Party - India Hydrocarbons Limited
Background to Resolution 2
India Hydrocarbons Limited ("IHL") is a company incorporated in India which provides consultancy services to the oil and gas industry. Since 2005, IHL has provided consultancy services to the companies within the Company's group in its international joint ventures with major Indian corporations and principally in relation to the Company's activities in India.
As part of its remuneration in providing its services to the Company, the Company has agreed, subject to obtaining all necessary Shareholder approvals, to issue 4,000,000 options (the "IHL Options") to IHL. The intention to issue the IHL Options to IHL and the key terms of the IHL Options was announced by the Company on 12 November 2010. The terms of the IHL Options are set out in Appendix 1 to this Explanatory Memorandum.
The Managing Director and controller of IHL, Mr Sundeep Bhandari, is the son of Mr Laxmi Bhandari, a non-executive director of Oilex Ltd since November 2006. Pursuant to section 228 of the Corporations Act 2001 (Cth) and Rule 10.11 of the Listing Rules, IHL is a "related party" of the Company.
Chapter 2E of the Corporations Act requires that a public company must obtain the approval of its shareholders prior to giving a financial benefit to a related party, unless the financial benefit falls within one of the stated exceptions. The Board considers that the issue of the IHL Options to IHL constitutes the giving of a financial benefit and that, while the Directors (other than Mr Laxmi Bhandari, who does not express an opinion) consider the grant of the IHL Options to be reasonable, the IHL Options do not fall within any of the stated exceptions.
Listing Rule 10.11 provides that a company must not issue equity securities to a related party without the prior approval of shareholders, unless one of the exceptions in Listing Rule 10.12 applies. The Board considers that none of the exceptions apply.
Disclosures required for Resolution 2
Shareholder approval for the issue of the IHL Options the subject of Resolution 2 is therefore sought for the purposes of:
a. Chapter 2E of the Corporations Act; and
b. Listing Rule 10.11.
As approval of Shareholders is being sought for Resolution 2 pursuant to Listing Rule 10.11, Shareholder approval under Listing Rule 7.1 is not required, in accordance with Exception 14 of Listing Rule 7.2.
The following information is provided to assist Shareholders in assessing Resolution 2.
Purpose of Issue of Options and Key Terms
The purpose of the issue of the IHL Options to IHL proposed in Resolution 2 is in recognition of IHL's contribution to the Company's development to date and to provide an added incentive to IHL to contribute to increasing Shareholder value particularly through the Company's `tight' reservoir project at Cambay field, Gujarat and in assisting with the Company's plans to expand its asset base in India.
Subject to adjustments in accordance with their terms, each IHL Option proposed to be issued is exercisable into one Share upon payment of the applicable exercise price which is:
(a) for 2,000,000 IHL Options (the "Tranche 1 Options") - A$0.30 per IHL Option; and
(b) for the remaining 2,000,000 IHL Options (the "Tranche 2 Options") - A$0.37 per IHL Option.
The IHL Options will vest and be exercisable on and from the date of grant but must be exercised before their expiry date which is:
(a) for the Tranche 1 Options - 10 November 2012; and
(b) for the Tranche 2 Options - 10 November 2014.
Unexercised IHL Options will lapse on their expiry date.
Details of the key terms of the IHL Options are set out in Appendix 1 to this Explanatory Memorandum. Both the Tranche 1 Options and the Tranche 2 Options will be issued on the same terms (as set out in Appendix 1 to this Explanatory Memorandum) other than with respect to their exercise price and exercise period.
Information required by Listing Rule 10.13
Listing Rule 10.11 provides that a company must not issue or agree to issue securities to a related party without first obtaining the approval of shareholders by ordinary resolution. As Resolution 2 relates to the issue of securities to a related party, Shareholder approval must be obtained.
Listing Rule 10.13 requires the following information to be provided to Shareholders for the purpose of obtaining Shareholder approval pursuant to Listing Rule 10.11.
a. Recipient of IHL Options: India Hydrocarbons Limited, a company
incorporated in India
b. Date of Grant: The IHL Options will be issued to IHL as soon as practicable
after the date of the General Meeting, but in any event no later than 1
month after the date of the General Meeting
c. Number: 4,000,000 IHL Options will be issued, comprising 2,000,000 Tranche
1 Options and 2,000,000 Tranche 2 Options
d. Exercise Price: Tranche 1 Options - A$0.30 per IHL Option
Tranche 2 Options - A$0.37 per IHL Option
e. Consideration: No consideration is payable upon grant of the IHL Options
f. Vesting Date: Tranche 1 Options - on the date of grant
Tranche 2 Options - on the date of grant
g. Expiry Date: Tranche 1 Options - 10 November 2012
Tranche 2 Options - 10 November 2014
h. Other terms and Conditions: The Options will be issued on the terms and
conditions set out in Appendix 1 to this Explanatory Memorandum. All Shares
issued upon exercise of any IHL Options will rank equally with all existing
Shares.
i. Use of funds raised: There will be no funds raised from the issue of the
IHL Options. Any funds raised from the exercise of the IHL Options will be
used for the working capital purposes of the Company.
Chapter 2E of the Corporations Act
Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit (which includes the issue of an IHL Option) to a related party of the Company, unless either:
a. the giving of the financial benefit falls within one of the nominated
exemptions in Chapter 2E of the Corporations Act; or
b. prior Shareholder approval is obtained for the giving of the financial
benefit.
For the purposes of Chapter 2E, the Board considers that IHL is a related party of the Company. The proposed issue of IHL Options to IHL involves the provision of a financial benefit to a related party of the Company and, therefore, requires prior Shareholder approval.
In accordance with the requirements of Chapter 2E of the Corporations Act, the following information is provided to Shareholders to allow them to assess the proposed issue of IHL Options:
a. The related party of the Company to whom the financial benefit would be
given if Shareholders approve Resolution 2 is India Hydrocarbons Limited ( IHL), a company incorporated in India and controlled by Mr Sundeep Bhandari, who is the son of Mr Laxmi Bhandari, a non-executive director of the Company.
b. The nature of the financial benefit to be given is the issue of IHL Options
to IHL. If the Company's Shares are trading on the ASX at a higher price than the exercise price of the IHL Options at the time the IHL Options are issued or when the IHL Options are exercised, the effect will be to give an immediate financial benefit to IHL at that time.
c. Each of the Directors independent of resolution 2 recommend Shareholders
vote in favour of Resolution 2 for the reasons set out in this Explanatory Memorandum. Mr Laxmi Bhandari declines to make a recommendation about Resolution 2 as he may be perceived as having a material personal interest in the outcome of the Resolution by reason of his relationship with Mr Sundeep Bhandari, the Managing Director of IHL.
d. No cash consideration will be payable upon issue of the IHL Options. The
other key terms of the IHL Options are set out in Appendix 1 and include:
i. Tranche 1 Options:
* vest on the date of grant;
* expire on 10 November 2012; and
* have an exercise price of A$0.30 per IHL Option.
ii. Tranche 2 Options:
* vest on the date of grant;
* expire on 10 November 2014; and
* have an exercise price of A$0.37 per IHL Option.
e. An estimate of the value of the IHL Options proposed to be issued
pursuant to Resolution 2 using the Black Scholes option pricing model has been calculated as set out below: Tranche Number Grant Date Expiry Date Exercise Value per IHL Price Option Tranche 1 2,000,000 Date of 10 November A$0.30 A$0.182 issue 2012 Tranche 2 2,000,000 Date of 10 November A$0.37 A$0.224 issue 2014 This has been calculated with the following assumptions: (i) risk free interest rate of 4.75%; (ii) current Share price of $0.343, being the average closing price of the Company's Shares on ASX over the last 5 trading days prior to 23 December 2010; (iii) dividend yield of 0%; and (iv) forecast volatility of 91.96%.
f. The passing of Resolution 2 would have the effect of granting IHL up to
4,000,000 IHL Options on the terms set out in Appendix 1. If any of the IHL Options granted are exercised, the effect would be to dilute the shareholding of existing Shareholders. The market price of the Company's shares during the exercise period of the IHL Options will normally determine whether or not the IHL Options will be exercised. If all IHL Options granted under this Resolution 2 were to be exercised, the effect would be to dilute the shareholding of existing Shareholders by approximately 1.57% based on the total number of Shares of 250,074,885 and assuming that no other options are exercised.
g. Details of the remuneration received by, or payable to, IHL in
connection with the provision of consultancy services to the Company is
as follows: for the year ended 30 June 2010 Oilex Ltd's share of the
costs of consultancy services provided by IHL was US$23,681 (A$26,840).
h. Existing relevant interest: As at the date of this Notice, IHL and Mr
Sundeep Bhandari have a relevant interest in 7,600,000 Shares. As at the date of this Notice, Mr Laxmi Bhandari, a non-executive Director and the father of Mr Sundeep Bhandari holds no Shares and holds 750,000 Options.
i. Neither the Directors nor the Company are aware of any other
information that would be reasonably required by Shareholders to make a
decision whether it is in the best interests of the Company to pass
Resolution 2.
j. Over the last 12 months prior to the date of this Notice of Meeting,
the Company's Shares have traded as follows on the ASX: Cents Date High A$0385 8 December 2010 Low A$0.077 18 June 2010 Last A$0.330 22 December 2010 Australian International Financial Reporting Standards Under AASB 2 Share-based Payment, pursuant to the adoption of Australian International Financial Reporting Standards (AIFRS), the Company is required to recognise the fair value of Options granted to Directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period of each Option in the Company's income statement with a corresponding adjustment to equity on the Company's balance sheet. Using the assumed IHL Option value derived from the Black Scholes option pricing calculations set out above in this Explanatory Memorandum, the impact of the issue of IHL Options on the Company's income statement for the financial year ended 30 June 2011 under Resolution 2 would be as follows: Tranche Assumed value of 30 June 2011 Income Statement options Tranche 1 A$363,797 A$363,797 Tranche 2 A$448,882 A$448,882 It should be noted that the actual expense amounts may differ from those set out above if the assumptions underlying the Black Scholes pricing model at the date of issue of the Options vary from those set out above. APPENDIX 1 TO ANNEXURE A OILEX LTD ABN 58 078 652 632 OPTIONS TERMS & CONDITIONS 1. Subject to clause 11, each Option entitles the holder, when exercised, to one (1) Share. 2. The Options are exercisable at any time between the date of issue and 5.00 pm WST on (insert expiry date) by notice in writing to the Company accompanied by payment of the exercise price. 3. An Option can only be exercised after its vesting date. 4. The Options can be exercised in whole or in part, and if exercised in part, multiples of 10,000 must be exercised on each occasion, except where the number of Options held is less than 10,000, in which case all such Options must be exercised at the same time. 5. The exercise price of each Option shall be (insert exercise price). 6. The Options are not transferable and will be unlisted. 7. All Shares issued upon exercise of the Options will rank pari passu in all respects with the Company's then existing fully paid shares. The Company will apply for Official Quotation by the ASX of all Shares issued upon exercise of the Options. 8. There are no participating rights or entitlements inherent in the Options to participate in any new issue of securities (including any pro-rata issue) which may be offered to Shareholders of the Company from time to time prior to the Options expiry date. However at least 7 business days before the record date to determine entitlements to any such new issue of securities, the Company will notify the Option holder (s) of the proposed new issue. This will afford the Option holder(s) an opportunity to exercise all or some of the Options prior to the record date of any such new issue and then participate in that new issue (with respect to the Shares issued on exercise of the Options). 9. The Options do not confer on the Option holder any right to a change in the exercise price, or a change to the number of Shares to be issued on exercise of the Options for any new issue of securities (including any pro-rata issues). 10. The Options do not confer on the Option holder any right to participate in dividends until Shares are allotted pursuant to the exercise of the Options after which such Shares will qualify for any dividend paid on the fully paid ordinary shares in the Company with a record date after the date of allotment. 11. In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules of the ASX (if applicable) and in any case in a manner which will not result in any benefits being conferred on Option holders which are not conferred on Shareholders. 12. The number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to exercise of the Options so that, upon exercise of the Options, the number of Shares received by the Option holder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date to determine entitlements for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issues. NOTICE OF EXERCISE OF OPTIONS To: The Directors Share Registry: Security Transfer Registrars Pty Ltd Oilex Ltd Suite 1, 770 Canning Highway Level 2 APPLECROSS WA 6153 50 Kings Park Road Email: registrar@securitytransfer.com.au WEST PERTH WA 6005 Website: www.securitytransfer.com.au Ph: (618) 9315 2333 Fax: (618) 9315 2233 I/We Shareholder Number: Of Being the registered holder of Options hereby exercise such Options to subscribe for ....... Ordinary fully paid shares at $(insert exercise price) per share. I/We enclose application money of $........ and authorise you to register me/us as the holder of the shares to be allotted to me/us and I/we agree to accept such shares subject to the Rules of the Constitution of the Company Security Security Holder Security Holder Date: Holder 1 2 3 Director Director/ Sole Director/ Day / Month / Secretary Secretary Year Contact Name Contact Telephone Number This application, with application money in Australian Currency, should be lodged at the Company's Share Registry on or before the Expiry Date. Cheques should be made payable to Oilex Ltd and forwarded to Security Transfer Registrars Pty Ltd.
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