Australian Securities and Investments Commission v DB Management Pty Ltd

The Australian Securities and Investments Commission (ASIC) and Southcorp Wines Pty Ltd appealed to the High Court of Australia against a decision of the Full Court of the Federal Court of Australia. The dispute concerned ASIC's power to modify Chapter 6 of the Corporations Law to permit the compulsory acquisition of shares allotted after the close of a takeover offer period, specifically in relation to outstanding options in Coldstream.

The central legal issue before the High Court was whether ASIC had the legislative authority, under section 730 of the Corporations Law, to modify section 701 of the Law in a manner that extended the concept of a "relevant shareholder" to include persons who became holders of shares in the target company after the takeover offer period had closed. This modification was sought by Southcorp to compulsorily acquire shares issued upon the exercise of certain options in Coldstream after its takeover bid had concluded.

The High Court reasoned that the power granted by section 730 to modify Chapter 6 of the Corporations Law was not intended to permit such a fundamental alteration to the definition of a relevant shareholder, which would effectively bring post-offer period share acquisitions within the scope of compulsory acquisition provisions. The Court found that the modification made by ASIC was beyond the contemplation of section 730 and was therefore *ultra vires*. Consequently, the appeals were allowed, the orders of the Full Court of the Federal Court were set aside, and the appeal to that Court was dismissed.