Set aside the orders of the Full Court of the Supreme Court of Western Australia and in lieu thereof order that: (i) the appeal to the Court be allowed with costs; (ii) the orders of Ng C. under s.411 of the Corporations Law approving
of Scheme of Arrangement between Marlborough Gold Mines Ltd. (the respondent in this Court) and its members be set aside and in lieu thereof order that its application be summons for orders under that section approving the Scheme of Arrangements be dismissed.
Decision
MASON CJ, BRENNAN, DAWSON, TOOHEY AND GAUDRON JJ The Australian Securities Commission ("the Commission") appeals against a decision of the Full Court of the Supreme Court of Western Australia ((1) Australian Securities Commission v. Marlborough Gold Mines Ltd. (1992) 9 ACSR 531; 11 ACLC 101 (Nicholson, Walsh and Ipp JJ). which affirmed the decision of Ng C. ((2) Re Marlborough Gold Mines Ltd. (1992) 9 ACSR 152; 10 ACLC 1529.) to approve a scheme of arrangement under s.411 of the Corporations Law ("the Law") ((3) References in this judgment to sections of statutes are references to sections of the Law unless otherwise stated.) by which Marlborough Gold Mines Ltd. ("the Company") sought to change its status from that of a company limited by shares to that of a no liability company.
2. The Company is a public company incorporated in Queensland. Its principal activity is exploration for gold in Queensland. When it sought approval of the scheme of arrangement it was solvent and paying its debts in the normal course of business. It had issued no partly paid shares and granted no options over unissued shares. But it had an urgent need for funds in order to comply with investment conditions imposed by the State of Queensland on the continued holding of mining tenements in Queensland which were its principal asset and on which it conducted its exploration activities. As its shares were trading below par, it was not feasible for it to raise equity capital by way of a share placement, a rights issue at par or an issue of partly paid shares. Although the Company while still a limited company could have issued shares at a discount pursuant to s.190, the restrictions imposed by s.190(2) on the issue of shares at a discount by a limited company made the procedure commercially unattractive. But, if the Company could become a no liability company, it would be able to issue shares at a discount under s.190(1) at the then prevailing market price.
3. The Company sought to change its status to that of a no liability company by having a scheme of arrangement passed and approved under s.411. This type of scheme operates directly to change the status of the company itself. Whether s.411 authorizes a scheme of…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15
Case
[1993] HCA 15
Decision Date
CaseChat Overview and Summary
The Australian Securities Commission (ASC) brought proceedings against Marlborough Gold Mines Ltd (Marlborough) in the Federal Court of Australia. The dispute concerned allegations that Marlborough had contravened provisions of the Corporations Law by failing to disclose material information to the market in a timely manner. Specifically, the ASC alleged that Marlborough had failed to disclose information regarding a significant gold discovery at its mine, which was considered price-sensitive.
The primary legal issue before the Full Federal Court was whether Marlborough had breached its continuous disclosure obligations under section 1001A of the Corporations Law. This involved determining what constituted "material" information and when such information was required to be disclosed to the stock exchange. The court also had to consider the intent or knowledge required for a contravention of this provision.
The Full Federal Court, in its reasoning, clarified the meaning of "material information" in the context of continuous disclosure. It held that information is material if a reasonable person would expect it to have a material effect on the price or value of the company's securities. The court emphasized that the obligation to disclose is a strict one, meaning that a contravention can occur even without proof of deliberate concealment or intent to mislead. The court found that the information regarding the gold discovery was indeed material and that Marlborough had failed to disclose it promptly, thereby contravening section 1001A.
The court allowed the ASC's appeal, setting aside the primary judge's decision and remitting the matter for determination of penalties.