Case Study: ASIC vs. BIG STAR ENERGY LTD - Company Law Analysis

This case study examines the legal battle between the Australian Securities and Exchange Commission (ASIC) and BIG STAR ENERGY LTD, a public listed company, focusing on allegations of breach of contract due to failure to disclose accurate information about a purchaser in a sale agreement. The case, heard at the Federal Court of Australia, involved the company's director, Mr. Cruickshank, who was also held responsible for legal obligations. Key issues included the non-disclosure of purchaser details and financial transaction information, the sudden rise in share prices, and the director's failure to fulfill his duty of care under the Corporations Act. The court ruled in favor of ASIC, highlighting the company's failure to maintain continuous disclosure and the director's lack of due diligence. The judgment ordered the company to declare its illegal activities and comply with future court hearings. The case underscores the importance of transparency, adherence to ASIC guidelines, and director's responsibilities in maintaining a transparent financial system.

COMPANY LAW

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• INTRODUCTION
• FACTS
• ISSUE
• RULES
• APPLICATION/ ANALYSIS
• CONCLUSIONS
• REFERENCES
TABLE OF CONTENTS

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INTRODUCTION
• The case is about a public listed company “BIG STAR ENERGY LTD” on which the
Australian Securities and Exchange Commission (ASIC) puts an allegation under the
breach of contract act that the company didn’t abide by the rule of law as it failed to
disclose the true information about the purchaser in the agreement of sale.
• The director of the company was also involved In this case and was help responsible for
the legal obligations.
• The case was held at THE FEDERAL COURT OF AUSTRALIA and the judgement was
passed by the honourable justice Banks Smith.

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FACTS
• The case deals between ASIC and ANTARES in which various facts and information have
been revealed during the time of judgement. It can be viewed as:
• The details of the purchaser was not been disclosed in the agreement.
• The company didn’t revealed the details about the financial transaction related to the
contract.
• As after the company made the announcement of the sale of assets, there was a sudden rise
in the share prices of Antares.
• A request to disclose the information was made by ASX which was then refused stating that
it would hamper the completion of sale.
• Mr Cruickshank, the director of the company also failed to exercise his duty and despite of
knowing everything he didn’t took any steps to resolve the issue.

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ISSUE
• The main issues highlighted before the federal court can be listed as below:
• The disclosure of details to be mentioned in the agreement at the time of announcement.
• Breach of contract by the company.
• The company didn’t follow the protocols given by the ASIC under the section 180 of the
corporations act.
• The other important consideration is that the Director of the company disagreed to the point that
he was also involved in such illegal practices.
• He also argued that he undertook all the precautionary steps for the company in order to get
compliance with the legal obligations.
• The other view considers that it is the director must take the responsibility of such illegal
activities.

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RULES
• The rules on the basis of which the discussions took place in the judgement can be stated as
below:
• There are certain guidelines laid down by the ASIC to maintain the transparency in the
financial system and it is a must to be followed by every company dealing in securities.
• Every single and minute details about the company and the purchaser must be present on the
agreement and it should be specific.
• It should be duly mentioned to under whose authorisation is the agreement made and the
signatory should be liable for any consequences in the future.
• The case comes under the case of negligence in which the director of the company knowingly
put the company under such a situation where it had to face legal repercussions.

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APPLICATION/ ANALYSIS
• The honourable Justice Banks Smith passed the final judgement after studying the detailed
report stating the facts and information in context of the case. It can be segregated as under:
• The judgement was in favour of the ASIC as it was able to provide witnesses in oder to prove
its point.
• The final clarification clearly showed that the company was involved in the breach of contract.
• The company was not able to maintain the continuous disclosure of the information in the
agreement.
• The director, MR Cruickshank lack the degree of care and there was absence of due diligence
from the side of the director.

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• The court in its judgement ordered the company to fill a form in which it should declare
clearly that it indulged in such illegal activities and in future it will appear for further
court hearings in case of any circumstances.
• There is a similar case between ASIC v/s Rich which is also related to the breach of
contract.
• But the difference between the two was that it was against ASIC which failed to provide
witnesses against the company. It was unable to prove any point in relation to the case.
• ASIC was not able to collect enough evidences in order to give its justifications.
• But in case of Antares, it was able to prove its point and collect proper evidences to
provide clarifications in the court.

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CONCLUSIONS
• The court gave its approval towards the allegations put by ASIC on Antares that it didn’t
disclose the details of the purchaser in the contract.
• Also, it continued the illegal practices under the support of the company’s director.
• The court ordered the company to file relief forms relating to the acceptance of legal
obligations.
• The court also gave defined time period to the director to resolve such issues and comply
with the legal regulations in future.

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REFERENCES
• Fayyad, M., 2019. Fundamental Breach of Contract in Terms of the UN Sales Convention
and Emirates Law: A Comparative Legal Study. Arab Law Quarterly, 33(2). pp. 109-151.
• Ramsay, I. and Saunders, B., 2019. An Analysis of the Enforcement of the Statutory Duty
of Care by the Australian Securities and Investments Commission. Company and
Securities Law Journal, 36(6). pp. 497-521.
• Roach, L., 2020. Company Law Concentrate: Law Revision and Study Guide. Oxford
University Press.

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THANK YOU!