Australian Securities and Investments Commission v Vocation Limited (In Liquidation)

In the case of Australian Securities and Investments Commission v Vocation Limited (In Liquidation), the Australian Securities and Investments Commission (ASIC) sought relief against Vocation Limited, along with its directors and an officer, for alleged breaches of continuous disclosure obligations under the Corporations Act 2001 (Cth). The dispute centred on whether Vocation Limited contravened section 674(2) by failing to disclose information regarding measures imposed by the Victorian Department of Education and Early Childhood Development (DEECD) on wholly owned subsidiaries that were registered training organisations (RTOs). Specifically, the court examined whether such information was required to be disclosed under ASX Listing Rule 3.1 and whether a reasonable person would expect the information to have a material effect on the price or value of the company’s shares.

The primary legal issues involved whether Vocation Limited breached its continuous disclosure obligations by not disclosing information about the DEECD's imposition of contractual measures on the RTOs. The court considered whether these measures warranted disclosure under ASX Listing Rule 3.1, focusing on the reasonable expectation of a material effect on the company’s share price. Additionally, the court assessed whether Vocation Limited's ASX announcements and the due diligence questionnaire provided to a proposed underwriter were misleading or deceptive, thereby contravening section 1041H of the Act. The court also scrutinised whether the directors breached their duties under sections 674(2A) and 180(1) by causing or permitting the company to contravene the aforementioned provisions.

The Federal Court held that Vocation Limited had contravened its continuous disclosure obligations by failing to disclose the DEECD's measures, which were material to the company's financial position. The court found that the information was not generally available and that a reasonable person would expect such information to have a material effect on the company's share price. Consequently, the court determined that Vocation Limited breached section 674(2). Furthermore, the ASX announcements and the due diligence questionnaire were found to be misleading or deceptive, contravening section 1041H. The directors were held liable for the breaches under sections 674(2A) and 180(1). The court concluded that the directors failed to exercise the requisite care and diligence in permitting the company to contravene the continuous disclosure obligations.

The court ordered a case management hearing to be fixed for 6 June 2019 to determine the remaining questions, including the form of any declaratory relief, all questions of penalty, and all questions of costs. The hearing would also address the appointment of a date for the hearing of all remaining questions, including those arising under sections 1317S and 1318 of the Corporations Act 2001 (Cth). The court made no final orders at this stage but set the framework for the subsequent hearing to address all outstanding issues comprehensively.