Corporate Advisory Update – 11 September 2015

September, 2015

In the media

ASIC consults on remaking employee redundancy funds class order

The Australian Securities and Investments Commission (ASIC) has recently released a consultation paper proposing to remake a class order on employee redundancy funds that is due to expire (‘sunset’) in October 2016. ASIC proposes to remake this class order to extend relief until 1 October 2017.

For more information, please click here.

New funding model a first step to better corporate regulation

The Australian Institute of Company Directors believes a user-pays funding model for ASIC is a first step towards more effective corporate regulation but says that this measure must be part of a broader review of ASIC’s role and responsibilities.

For more information, please click here.

Published – articles, papers, reports

ASIC’s Corporate Plan 2015–16 to 2018-19 and Focus for 2015-16

ASIC has published its Corporate Plan 2015–16 to 2018-19 and Focus for 2015-16. The Corporate Plan communicates ASIC’s current thoughts on how their long term strategic priorities and challenges are shaping their strategy and responses over the period. It also identifies a number of key ASIC focuses which are of particular concern in the areas of gatekeeper conduct, cyber attacks, poor financial advice, misalignment of retail product design and distribution with consumer understanding, and cross-border businesses, services and transactions.

For more information, please click here.

Cases

Archer Capital 4A Ltd as trustee for the Archer Capital Trust 4A v Sage Group plc [2015] FCA 960

Facts

This case arose out of a process conducted in mid-2011 by Archer Capital Pty Limited (Archer) for the sale of all of the shares then held by the 51 applicants in MYOB Cayman Holdings Limited (MYOB).

The applicants were all parties to a shareholders deed relating to their shares in MYOB (Shareholders Deed). The applicants comprised the first to third applicants (Archer Investors), and the fourth to fifty-first applicants who were “non-Archer applicants”.

The Shareholders Deed contained provisions which enabled the Archer Investors, who together held more than 63% of the shares in MYOB, to sell their MYOB shares to a third party and to require the other shareholders to sell their shares as a result of the Archer Investors exercising “drag along” rights or implementing an “exit proposal”. Archer managed the investments of the Archer Investors and had delegated power to sell the investments.

In late 2010, Archer decided to sell the MYOB investment in late 2011. In June 2011, The Sage Group plc (Sage) contacted Archer to express an interest in purchasing the MYOB shares. On 15 August 2011, after a period of negotiation, a representative of Sage sent an email to Archer attaching a “Final Offer to acquire MYOB” (Final Offer).

Parties submissions

The applicants claimed that this Final Offer was “certain, capable of acceptance and intended to create legal relations upon acceptance” and that as a result of their acceptance of the “Final Offer”, there was a “Share Sale Agreement” between Sage and the applicants for the acquisition by Sage of the applicants’ MYOB shares on the terms of the Final Offer.

The applicants also claimed that the “Share Sale Agreement” contained implied terms that upon satisfaction of the conditions, Sage and the applicants (or the Archer Investors) would execute an agreement in the form of the agreed share sale agreement.

In contrast, Sage submitted (among other things) that the Final Offer letter was not capable of giving rise to a binding agreement between Sage and some or all of the applicants, that a return email from Archer to Sage was not an “acceptance” of a “final binding offer”, and that there were no such implied terms as those claimed.

The applicants claimed damages from Sage for the alleged breach of contract on the express terms of the Final Offer letter and implied terms as pleaded, estoppel and misleading or deceptive conduct.

Neither MYOB nor Archer was a party to the proceedings.

The Court’s Decision

Farrell J concluded that none of the applicants were parties to any agreement of the kind alleged by the applicants nor was there any actionable representations made by or on behalf of Sage to any of the applicants. As such no action of estoppel could be raised and all claims of the applicants were refused.

For more information, please click here.

Rinehart & Anor v Rinehart & Anor [2015] NSWSC 1201

Facts

This case concerned an application for preliminary discovery. The plaintiffs, Bianca Rinehart and John Hancock, were two of four beneficiaries of a trust known as the Hope Margaret Hancock Trust (the Trust). At the time the application was made the first defendant, Mrs Rinehart, was trustee of the Trust. On 28 May 2015, Brereton J appointed Bianca Rinehart as trustee of the Trust in place of Mrs Rinehart.

The principal asset of the Trust was certain shares in the second defendant, Hancock Prospecting Pty Limited (HPPL), including a holding of 156 cumulative special shares (sometimes called “CS shares”). Mrs Rinehart was a director and the executive chairman of HPPL. The plaintiffs sought orders that Mrs Rinehart and HPPL be required to produce certain classes of documents to assist them in determining whether or not they should commence proceedings against Mrs Rinehart and HPPL.

The plaintiffs’ counsel submitted that a further claim that might be available to the plaintiffs and one they wished to investigate was whether HPPL might be liable to them for a knowing involvement in a breach of trust by Mrs Rinehart in preventing the payment of proper dividends on the CS shares.

The defendants submitted, amongst other things, that the plaintiffs had sufficient information to decide whether or not to commence proceedings against either defendant; that the plaintiffs had not made all reasonable inquiries to obtain the information; and that the plaintiffs had unreasonably refused to accept an offer from Mrs Rinehart for the production of documents.

The Court’s Decision

White J ordered that the defendants give discovery and produce for the inspection of the plaintiffs all documents dated, created, sent or received from 1 July 2010 which recorded or disclosed the amount of royalties received by HPPL from any iron ore mining operations located in the Pilbara region of Western Australia and owned or operated by Hamersley Iron Pty Limited, Mount Bruce Mining Pty Limited or any other entity which is part of the Rio Tinto group (aside from the mining operations conducted by the Hope Downs Joint Venture).

For more information, please click here.

Contact Mills Oakley

To find out more about any of the information in this update, please contact:

warren-scott

Warren Scott | Partner
T: +61 3 9605 0984
E: wscott@millsoakley.com.au

daniel-livingston

Daniel Livingston | Partner 
T: +61 3 9605 0965
E: dlivingston@millsoakley.com.au

stuart-gibson

Stuart Gibson | Partner
T: +61 3 9605 0092
E: sgibson@millsoakley.com.au

warwick-painter

Warwick Painter | Partner
T: +61 2 8289 5808
E: wpainter@millsoakley.com.au

gavin-douglas

Gavin Douglas | Partner
T: +61 2 8289 5855
E: gdouglas@millsoakley.com.au

simon-champion

Simon Champion | Partner
T: +61 2 8289 7926
E: schampion@millsoakley.com.au

tim-cox

Tim Cox | Partner
T: +61 2 3228 0442
E: tcox@millsoakley.com.au

 

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