Australian Securities and Investments Commission v Big Star Energy Limited (No 3)

In the matter of Australian Securities and Investments Commission v Big Star Energy Limited (No 3), the Australian Securities and Investments Commission (ASIC) brought proceedings against Big Star Energy Limited (BSE) and its former directors, Ms McAppion and Mr Cruickshank, for alleged breaches of continuous disclosure obligations under the Corporations Act 2001 (Cth). BSE, a company listed on the Australian Securities Exchange (ASX), was alleged to have failed to disclose material information regarding the identity of the purchaser of significant assets and the absence of financial approval and due diligence. The court was tasked with determining whether BSE contravened section 674 of the Corporations Act and whether the non-disclosure of the information was material. Additionally, the court considered whether the directors were knowingly concerned in the contravention and whether they breached their duties under section 180(1) of the Corporations Act.

The primary legal issues before the court were whether BSE was required to disclose the identity of the purchaser under ASX Listing Rules 3.1 and 3.1A, whether the company had assessed the prospect of the purchaser completing under the sale agreements, and whether the non-disclosed information was material. The court also examined whether the directors contravened section 674(2A) by being knowingly concerned in the contravention and whether they breached their duties under section 180(1). The court further considered the admissibility and weight of expert evidence on the materiality of the non-disclosed information and the state of knowledge required for a person to be knowingly concerned in a contravention.

The court held that BSE did not contravene section 674(2) of the Corporations Act as it was not required to disclose the identity of the purchaser under ASX Listing Rules 3.1 and 3.1A. The court found that the company had not assessed the prospect of the purchaser completing under the sale agreements, but this was not a requirement under the Act. The court also found that the non-disclosed information was not material, as the expert evidence did not establish that a reasonable person would have expected the information to have a material effect on the share price or volume of BSE. The court rejected the challenge to the expertise of the witness and held that the directors were not knowingly concerned in the contravention or in breach of their duties under section 180(1). The court applied the business judgment rule to the directors' conduct.

In conclusion, the court dismissed ASIC's claims against BSE and its former directors. The court found that BSE did not contravene its continuous disclosure obligations under the Corporations Act, and the directors were not knowingly concerned in the contravention or in breach of their duties. The court reserved the costs of and incidental to the proceeding.