Corporate Advisory Update - December 2016

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In the media

Government response to the final report of the review of the small amount credit contract laws

The Turnbull Government has today released its response to the final report of the independent review of the small amount credit contract (SACC) laws.

The final report has made a number of recommendations designed to increase financial inclusion and reduce the risk that consumers may be unable to meet their basic needs or may default on other necessary commitments.

The full response can be viewed here: Government response to the final report of the review of the small amount credit contract laws

Former listed public company director found guilty of dishonest conduct

Former TZ Limited director, Andrew John Sigalla, was found guilty on 24 counts of dishonest conduct, following a 22-day trial before a jury in the Supreme Court of New South Wales.

The action was brought under section 184(2) of the Corporations Act 2001, following an investigation by ASIC that commenced in 2009.

Company director convicted for making a false statement in a document lodged with ASIC

Mr Sam Grace, a Sydney based company director, has pleaded guilty and was convicted of contravening section 1308(2) of the Corporations Act 2001 for lodging a document with ASIC that contained a false or misleading statement.

Mr Grace signed and lodged ‘ASIC Form 6010 – Application for voluntary deregistration of a company’, to deregister a company that was in fact a party to proceedings in the New South Wales Civil and Administrative Tribunal.

He was convicted and given a recognisance release order of $500 to be of good behaviour for twelve months.

In Practice and Courts

Corporations Amendment (Crowd-sourced Funding) Bill 2016

The Bill enables unlisted public companies with less than $25 million in assets and annual turnover to facilitate crowd sourced equity funding.

These companies will be able to raise up to $5 million in any 12 month period through crowdfunding platforms.

Small companies that become public companies to use crowdfunding will be given a transition period of up to five years during which they will be eligible for exemptions from certain corporate governance and reporting requirements.

ASX’s admission requirements for listed

On 2 November 2016, ASX released its Response to Consultation on updating ASX’s admission requirements for listed entities, together with the final Listing Rule and Guidance Note changes outlined in the Response to Consultation.

The changes are mostly consistent with Consultation Paper 155, but show signs of ASIC being a little more flexible than the Consultation Paper.

Some of these changes are already operating, while others are will come into effect on 19 December 2016.

Final Listing Rule changes can be viewed below:

Cases

Deloitte Services Pty Ltd v HBO EMTB Interiors (NSW) Pty Ltd (In Liquidation) [2016] NSWSC 1597

Facts

  • The plaintiff (“Deloitte”) engaged the first and second defendants (respectively, “Interiors” and “Projects”) to provide project management services for the fit-out of office premises. The services were provided by Projects even when Interiors was the counter-party to the contract.
  • The third defendant, Mr Fitzgerald, was the managing director and controlling mind of the group of companies.
  • Deloitte says that under the arrangements made between it and Projects:
    1. Projects was required to certify payment claims made by the contractor engaged to undertake the fit-out work;
    2. having done so, Projects was to invoice Deloitte for the amount so certified;
    3. Deloitte was to pay the amount invoiced into a “client monies trust account” (“the trust account”) maintained by Projects; and
    4. Projects was then to pay the certified amount of the progress claim to the contractor.
  • Deloitte claimed that Projects failed to account for $3.6m by:
    1. Over-invoicing Deloitte for contractors’ progress claims; and
    2. By failing to pay those contractors all the amounts actually due to them.
  • Deloitte argued that in those circumstances, Projects breached ss 18, 20 and 21 of the ACL and that it suffered loss of $3.6m as a result.

The Court’s Decision

  • Deloitte’s claim was upheld by McDougall J, with the defendant being found liable for damages for engaging in misleading or deceptive conduct, and unconscionable conduct for over-invoicing Deloitte for the contractors’ progress claims and under-paying contractors.
  • Mr Fitzgerald was also found to be co-ordinately liable for being knowingly involved in the contraventions.
For further information, please do not hesitate to contact us.

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