Corporate Advisory Update – 9 April 2015

April, 2015

In the media

Committees of inspection – beware (section 548 of the Corporations Act)

A recent decision of the Western Australian Supreme Court has caused confusion of the operation of section 548 of the Corporations Act 2001 (Cth), again prompting the Australian Restructuring Insolvency & Turnaround Association (ARITA) to call for reform of the provision.

Section 548 deals with a liquidator convening meetings for the appointment of a committee of inspection, in respect of companies not in a pooled group. In some circumstances, if a party (especially a shareholder or officer in a company) is denied the opportunity to attend a meeting and make representations at that meeting, or to vote at a meeting, that may constitute a substantial injustice.
Recent cases considering this section include:

  1.  Jindal Transworld Pty Ltd v Scottsdale Homes No 10 Pty Ltd (No 2) [2010] SASC 210;
  2. Re Rivercity Motorway Pty Ltd; Ex parte Owen, [2014] FCA 1008; and
  3. Re The Bell Group (in liq) [2015] WASC 88.

The South Australian Supreme Court, the Federal Court and the Western Australian Supreme Court respectively have reached different conclusions with respect to whether meetings of contributories should be convened.

ARITA suggests that law reform is some time away and practitioners should convene meetings of contributories as the section requires.

For more information, please click here.

ASIC suspends FX company’s licence

ASIC has suspended the Australian financial services (AFS) licence of FX provider AGM Markets Pty Ltd (AGM) for six months.

ASIC has the power to suspend or cancel an AFS licence where a financial services business has ceased to operate.

ASIC has said that:

  1. the granting of an AFS licence is not an ongoing right where a company no longer operates within the financial services market;
  2. product distribution and financial market innovation and complexity, which includes the retail margin foreign exchange market, has been identified as a focus area for ASIC.

This move confirms ASIC’s commitment to crackdown on the margin FX industry and retail investment in foreign exchange.

For more information, please click here.

ACCC welcomes pro-competitive recommendations of Harper review

The Competition Policy Review Panel has released its final report. This is the most significant review of its kind in over 20 years.
The ACCC has announced that it supports proposals to:

  1. make the misuse of market power provision workable;
  2. introduce a prohibition on concerted practices (to tackle cartel-like conduct that may otherwise be permitted); and
  3. improve merger assessment processes and the recommendations to simplify the Act and make it easier for businesses to understand their obligations under the Competition and Consumer Act 2010.

The ACCC Chairman, Rod Sims, has said that the ACCC “particularly supports the Report’s findings on roads, shipping, intellectual property and parallel imports.”

For more information, please click here.

Published -articles, papers, reports

Competition Policy Review – Executive Summary, March 2015

The Competition Policy Review Final Report, released on 31 March 2015, can be found here.

The Boardroom Report 01 April 2015

The Australian Institute of Company Directors has published its sixth issue of the Boardroom Report on 1 April 2015. This issue considers the following topics:

  1. privacy rules bite;
  2. innovative not-for-profit organisations in Australia;
  3. protecting small business (unfair contracts);
  4. Guide to principle 7 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations;
  5. China CSR improving and
  6. Directions 2015

For more information, please click here.

Cases

Australian Competition & Consumer Commission v Origin Energy Electricity Limited [2015] FCA 278

On 27 March 2015, Justice Katzmann of the Federal Court sitting in Sydney handed down orders against Origin Energy Electricity Limited (Origin). Her Honour ordered Origin to pay to pay $2 million in penalties in relation to unlawful door-to-door selling practices in proceedings brought by the Australian Competition and Consumer Commission (ACCC). The Court also ordered Origin’s marketing company, SalesForce Australia Pty Ltd (SalesForce), to pay $325,000 in penalties.

The Court found that Origin and SalesForce had engaged in unconscionable conduct, undue harassment or coercion, false or misleading representations and breaches of the unsolicited consumer agreement provisions of the Australian Consumer Law (ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth)).

These are the fifth proceedings the ACCC has taken against an energy retailer in relation to inappropriate door-to-door marketing activities.

Her Honour stated:

… In each case the sales representative practised deceptions on the consumers in order to secure their custom … They preyed on the vulnerable and the ill-informed … [The conduct] is serious, not only because of the deliberate deceptions and the exploitation of vulnerable consumers, but also because of the location and context in which the conduct occurred: at private homes to which the respondents were not invited.

Her Honour ordered Origin and SalesForce to:

  1. jointly publish a corrective newspaper notice;
  2. maintain compliance programs; and
  3. contribute to the ACCC’s costs.

To read the full decision, please click here.

BOQ Equipment Finance Ltd v Scott & Ors [2015] QSC 60

This case considers:

  1. BANKING AND FINANCE – INSTRUMENTS – where the plaintiff claimed payment of money lent to the defendants under a written agreement – where the subject agreement was a bill of sale whereby the first and second defendants assigned by way of security to the plaintiff, two printers that were used in a business conducted through the third defendant – where the defendants claimed they were induced to enter the agreement by misrepresentations made by the operator of a  franchise  of the plaintiff’s parent company, the Bank of Queensland – where the defendants claimed they should not have to repay the money they borrowed from the plaintiff.
  2. CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH – PERFORMANCE – where the plaintiff claimed payment of money lent to the defendants under a written agreement – where the agreement was a bill of sale whereby the first and second defendants assigned two printers by way of security to the plaintiff – where the printers were used in a business conducted through the third defendant – where the defendants claimed they were induced to enter the agreement by misrepresentations made by the operator of a  franchise  of the plaintiff’s parent company, the Bank of Queensland – where the alleged misrepresentations were that the defendants would not have to make any payment under the agreement unless and until there was a further agreement to extend credit to them by the bank and that the subject agreement was represented as an essential step towards obtaining a debtor finance facility – where the defendants claimed they should not have to repay the money they borrowed from the plaintiff.

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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