qwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwert yuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopasd fghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklz xcvbnmqwertyuiopasdfghjklzxcv bnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmq Business and Corporation Law ASIC v Padbury Mining Limited [2016] FCA 990 15-Jan-18 (Student Details:)
Business and Corporation Law Introduction The ASX announcements are something which has to be made in a careful manner. This is particularly important because a misleading ASX Announcement can result in the prosecution of the listed entity by the ASIC, along with the officers of the entity, who authorized the made announcement. The Corporations Act is another important matter which has to be considered by the companies. This act presents different duties which have to be followed by the key personnel of the company, and included in this is the duties set out under Part 2D.1 of this act. Where this is not done, the result is imposition of civil and criminal liabilities on the relevant person breaching their duties (CCH Australia, 2011). An example where both the above mentioned aspects were merged is the case ofASIC v Padbury Mining Limited[2016] FCA 990. This case had both misleading ASX announcement and breach of director duties (Narushima, 2016). This discussion presents an analysis of this case, in order to show how these beaches took place and the decision given by the court in this matter. Background of the Case Constant attempts were being made by Padbury Mining Limited since last some time, where the attempts were related to the development of a deep water port, located in Western Australia’s Oakajee,alongwithanassociatedrailwaynetwork(ABCNews,2016).Avictorious announcement was made by Padbury on April 11th, 2014 at 9:40 am, where it was stated that the company had attained funding of $6billion in a successful manner for the project. Though, this announcementfailedtomakeadequatedisclosuresregardingtheconditionswhichwere precedent, as the funding was dependent on it, and also failed in identifying the parties who would be providing this claimed funding. These precedent conditions help a lot of importance. This is because the conditions precedent required the company to get a bank guarantee which could match the funding which had been provided by the proposed funder. It came to be known later on that the company did not have the ability of doing so (Levy, 2016). Page2
Business and Corporation Law Before the announcement was made, the last sale price was $0.02 for each of the share. Once the announcement was made, the shares were traded at the value of $.0.045 and were traded in the rangeof$.0.032and$.0.052foreachshare.Thetotalnumbersofsharestradedwere 209,366,987. On the day of the announcement, at 2:15 pm, the shares went in a trading halt based on the request of the company. This was due to the announcement regarding more details of funding being pending. Till April 29th, 2014, the shares were in suspension or in trading halt. This was the date on which the announcement regarding the funding parties had terminated their agreement. As a result of this, the project never got the funding which was needed and this led to the project never being constructed. This led to the company being prosecuted by ASIC, along with two of the directors, who had been involved in the making of the first announcement being prosecuted by the ASIC. These two were the chairman, Terence Quinn, and the managing director, Gary Stokes (Levy, 2016). Duties breached In the introduction portion of this discussion, it was stated that the directors of the companies have been given certain responsibilities and duties by the Corporations Act. Amongst the different duties is the one covered under section 180(1), which provides the duty of care and diligence. As per section 180(1), the directors or the other officers of the company are required to exercise their powers and have to discharge their duties, in a careful and diligent manner (ICNL, 2018). This has to be done as would be done by a reasonable individual, where this individual: Was an officer or the director of the company in the situations faced by the company; and Was holder of the office as was held by and also had the same responsibilities in company, as the officer or the director held (Austlii, 2018). This section provides that a breach of this section would attract civil penalty covered under section 1317E of this act. Section 1317E relates to the declaration of contravention. Upon the court becoming satisfied that the civil provisions have been breached, they make a declaration of contravention.One of thecivil penaltyprovisions isthe director/officersduties. Under subsection 2 of this section, the contents of declaration of contravention have been covered. This section also provides that once a declaration is made, the ASIC can seek a disqualification order Page3
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