Australian Securities and Investments Commission v iSignthis Limited

The Australian Securities and Investments Commission (ASIC) brought proceedings against iSignthis Limited and its director, Mr Karantzis, alleging breaches of the Corporations Act 2001 (Cth). ASIC claimed that iSignthis failed to comply with its continuous disclosure obligations and that Mr Karantzis, in his capacity as a director, contravened several sections of the Act, including engaging in misleading conduct and providing false information to the Australian Securities Exchange (ASX). The court was tasked with determining whether iSignthis and Mr Karantzis breached their legal obligations under the Corporations Act.

The primary legal issues before the court were whether iSignthis breached its continuous disclosure obligations by not disclosing material information to the ASX, whether Mr Karantzis knowingly participated in misleading conduct, and whether Mr Karantzis breached his director's duties. Specifically, the court needed to assess whether iSignthis' failure to disclose certain financial information and Visa's termination of its relationship with iSignthis constituted breaches of the Act. Additionally, the court examined whether Mr Karantzis was involved in misleading representations about the company's revenue and whether he breached his duties as a director.

The court found that iSignthis breached its continuous disclosure obligations by failing to notify the ASX about the breakdown of its revenue and Visa’s termination of its business relationship. The court concluded that the non-disclosed information would have materially affected the price or value of iSignthis' shares if it had been generally available. Regarding Mr Karantzis, the court determined that he contravened the Act by knowingly participating in misleading conduct and by providing false or misleading information to the ASX. Furthermore, the court found that Mr Karantzis breached his director's duties by failing to use his position properly and by not acting in the best interests of the corporation. The court held that Mr Karantzis breached his duty of care and diligence and his duty to act in good faith and for a proper purpose.

In summary, the court held that iSignthis Limited breached its continuous disclosure obligations under sections 674(2) and 1041H of the Corporations Act. The court also found that Mr Karantzis contravened sections 674(2A), 1309(2), and (12) of the Act and breached his director's duties under sections 180(1) and 182 of the Act. The final orders included the requirement for the parties to file an agreed minute of orders, a case management hearing, and the reservation of costs.