European Lithium Obtains ASX Waiver to Cancel Options and Performance Rights Ahead of Critical Metals Acquisition

European Lithium’s Acquisition by Critical Metals and Regulatory Context

European Lithium Limited is advancing its acquisition by Critical Metals Corp., a NASDAQ-listed company, under a scheme of arrangement initially announced in May 2026 and amended in July 2026. The transaction involves two schemes: a share scheme covering all fully paid ordinary shares in EUR and an option scheme covering shares issued upon exercise of EUR listed options. This acquisition marks a major development for the West Australian lithium-focused company headquartered in West Leederville, Western Australia.

The scheme is governed by Part 5.1 of the Corporations Act 2001 (Cth), which regulates corporate restructures and mergers in Australia. Compliance with ASX Listing Rules, including those related to cancellation and variation of securities, is mandatory. European Lithium applied for a waiver from ASX Listing Rule 6.23.2 on 8 July 2026, which was approved on 22 July 2026, subject to the schemes becoming effective. This approval is essential for the transaction’s completion as structured.

EUR’s Outstanding Securities and Cancellation Process

As of 24 July 2026, European Lithium’s capital structure included 1,725,640,096 fully paid ordinary shares, 242,327,782 listed options (ASX:EUROC) exercisable at $0.10 until 30 April 2027, 3,133,250 unlisted options (ASX:EURAK) exercisable at $0.08 until 31 December 2026, and 270,000,000 performance rights (ASX:EURAJ) issued across six classes with varying vesting conditions.

The performance rights are structured with tiered incentives based on share price milestones: Class 1 and 2 vest if the volume weighted average price reaches $0.50 and $0.60, respectively, within set periods. Classes 3 to 6 vest at price targets of $0.70, $0.80, $0.90, and $1.00, with vesting extending to December 2029. Under the acquisition terms, unlisted options and performance rights in Classes 1 and 2 will be cancelled and exchanged for fully paid Critical Metals shares, while Classes 3 to 6 performance rights will be cancelled with holders receiving economically equivalent warrants in Critical Metals.

Necessity of ASX Listing Rule 6.23.2 Waiver

ASX Listing Rule 6.23.2 normally requires shareholder approval for cancellations of options for consideration. Without the waiver, European Lithium would have needed shareholder consent to cancel outstanding unlisted options and performance rights. This rule ensures shareholders approve significant changes to securities, especially when compensation is involved.

European Lithium and Critical Metals included contractual terms in the scheme implementation deed mandating no outstanding unlisted options or performance rights post-implementation. The waiver application highlighted practical challenges of obtaining separate shareholder approval within the scheme of arrangement framework, which already involves significant corporate changes. The ASX granted the waiver on condition that the company clearly disclose its rationale and effect, which this update satisfies.

Security Cancellation Deeds and Replacement Securities

Cancelled EUR securities will be converted into Critical Metals securities via Security Cancellation Deeds between the company and each security holder. These deeds specify terms for extinguishing existing options and performance rights and issuing either new fully paid Critical Metals shares or CRML Replacement Warrants. The scheme booklet, to be distributed before shareholder voting, will detail the exact replacement securities per holder.

This approach provides contractual certainty for security holders surrendering their EUR rights. Holders of unlisted options and Classes 1 and 2 performance rights will receive Critical Metals shares, while Classes 3 to 6 performance rights holders will obtain warrants designed to maintain economic equivalence. This tiered method respects the differing nature and vesting schedules of the security classes, ensuring appropriate instruments for longer-term incentives.

Waiver’s Impact on Transaction Efficiency

The ASX Listing Rule 6.23.2 waiver significantly streamlines the acquisition process. Without it, European Lithium would have needed to hold a separate shareholder meeting to approve cancellation of unlisted options and performance rights, increasing costs and complexity beyond the main scheme approval meeting. The waiver consolidates approvals, allowing the transaction to proceed through a single shareholder meeting addressing the core schemes.

The waiver is conditional on the schemes becoming effective, ensuring it only applies if the acquisition receives shareholder approval and proceeds. This condition protects security holders by maintaining their ability to approve the overall transaction. The ASX’s approval reflects recognition that the waiver is appropriate within a Corporations Act takeover structure.

Treatment of Listed Options Under the Share Scheme

European Lithium’s listed options (ASX:EUROC) are treated separately from unlisted options. The share scheme covers shares issued on exercise of listed options, allowing holders to exercise their options before scheme implementation. These options have a $0.10 exercise price and expire on 30 April 2027, giving holders a defined period to convert to shares.

This differs from the automatic cancellation of unlisted options and performance rights. Listed option holders may exercise their options to become shareholders before implementation or receive consideration for unexercised options under scheme terms. The disclosed terms provide transparency for holders to make informed decisions amid the acquisition.

Capital Structure and Effects on Critical Metals Shareholders

European Lithium’s extensive capital structure—with over 1.7 billion ordinary shares plus numerous options and performance rights—will significantly affect Critical Metals’ capitalization post-acquisition. The total diluted share count, including all option conversions and performance rights vesting, represents a substantial number of securities transferring or being replaced within Critical Metals.

This dilution reflects that acquisition consideration will be paid in Critical Metals securities rather than cash. Investors in Critical Metals will absorb this dilution, which preserves liquidity but expands share count. The conversion of Classes 3 to 6 performance rights into warrants defers share issuance, providing structural flexibility by postponing dilution until warrant exercise.

Next Steps Toward Scheme Completion

The ASX Listing Rule 6.23.2 waiver granted on 22 July 2026 removes a major regulatory barrier to scheme implementation. The next key step is preparing and releasing the scheme booklet to EUR shareholders, detailing the schemes, transaction rationale, independent expert fairness opinions, and replacement security allocations. The booklet will also announce the shareholder meeting date and location for voting on the schemes.

Upon shareholder approval, other conditions precedent—including regulatory approvals and scheme deed conditions—must be met before the schemes become effective. Once effective, EUR securities will be cancelled and replaced with Critical Metals securities. Investors should watch for further European Lithium announcements regarding the booklet release and meeting details.

Regulatory Safeguards and Shareholder Protections

Although the ASX Listing Rule 6.23.2 waiver removes the need for separate shareholder approval of option and performance rights cancellation, shareholders remain protected by the requirement to approve the overall schemes under the Corporations Act. This includes an independent expert’s report evaluating fairness and reasonableness, and requisite shareholder voting majorities.

The company has disclosed the waiver’s purpose and effect as required by the ASX, ensuring investor transparency. The waiver solely removes procedural approval for cancellation, while substantive transaction approval remains firmly with shareholders.