Independent expert deems share scheme unfair to shareholders but reasonable overall
The Supreme Court of Western Australia cleared European Lithium Limited to put two schemes to a vote, despite an independent expert finding one unfair.
The court made the orders on 15 September 2026 and released its reasons the next day in Re European Lithium Limited; Ex parte European Lithium Limited [2026] WASC 391. They authorised European Lithium to send a scheme booklet to shareholders and optionholders ahead of meetings set for 22 October 2026.
European Lithium, an ASX-listed company also quoted in Frankfurt and on the US OTCQB market, filed the application under s. 411 and s. 1319 of the Corporations Act 2001 (Cth). The schemes would let Critical Metals Corp, a Nasdaq-listed company, acquire all of European Lithium's shares and options, giving it full ownership of the Tanbreez Rare Earth Project in Greenland, alongside its existing full ownership of the Wolfsberg Lithium Project in Austria. European Lithium's shareholders would hold approximately 41 percent of the combined group.
Three of European Lithium's four directors also sat on the Critical Metals board, including its chief executive. Only one director had no ties to the acquirer. That director alone made up an independent board committee, with protocols modelled on Takeovers Panel Guidance Note 19, to negotiate the deal and manage the conflict. The court found that this setup, together with how it was disclosed, dealt with the conflict adequately, even though the same law firm and corporate adviser acting for European Lithium also advised the committee.
An independent expert, Horizon Nexus Partners, found that the share scheme consideration was worth less than European Lithium's shares on a control basis, making that scheme unfair to shareholders. It nonetheless found the share scheme reasonable and in shareholders' best interests, absent a rival offer. It judged the separate option scheme fair and reasonable.
The court said that its role was not to weigh the commercial merits of the deal, only whether European Lithium had properly proposed the schemes and whether they were fit for a vote. It found that European Lithium had met this standard, noting the scheme booklet clearly set out the expert's opinion for securityholders to weigh.
The exchange ratio moved with Critical Metals' Nasdaq share price, within a floor and a ceiling. The court flagged a new law affecting capital gains tax treatment for non-resident shareholders, requiring the booklet to note it.
ASIC reviewed the schemes and the booklet, secured several disclosure waivers, and did not oppose them at this hearing. The court was due to consider final approval at a second hearing set for late October 2026.
