Chase Corporation Australia P/L v Australian Securities Commission

JUDGMENT No. ... k3& %

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOU TH WALES DISTRIC T REGIS TRY ) NG 3185 of 1992

1

GENERAL DIVISION 1

BETWEEN : CHASE CORPORATION AUSTRALIA PTY
LIMITED
Applicant
Respondent

CORAM: Burchett J.
PLACE : Sydney
DATE : 27 August 1992

BURCHETT J.:

In this matter, the application is made in respect of a former company, Pyaray Pty Limited, the registration of which was cancelled following its inclusion in a list of companies which were understood to be no longer carrying on business, and to be in a situation where it was appropriate for their registration to be cancelled.

meantime was entitled under security documents to give directions in respect of the manner in which voting rights in
relation to certain shares in another company might be
exercised.
It seems to me that, in these circumstances, S. 5 7 4 ( 3 ) of the cor~orations Law clearly applies, even if it be concluded that the company was not, within the meaning of the subsection, carrying on business or in operation at the time of the cancellation; I am at any rate satisfied that it is just that the registration of the company be reinstated. Accordingly, I make an order to that effect in the form which has been submitted.
I note that the Australian Securities Commission does not oppose the making of such an order, but has requested that an undertaking be given to the court that the applicant, which was, at the time of the cancellation, the owner of all the shares in the company, will ensure that all necessary officers of the company are appointed expeditiously. That undertaking has been given.

Subsequently, it transpired that the company Pyaray, as I
shall call it, in fact was entitled to receipt of a sum well
in excess of $1 million payable in October next, and in the

I make the order in the form submitted, which I have

initialled and dated, and placed with the papers.

I certify that this and the preceding page are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett.
Associate: b k F,-k .-, C c----
Date: 27 August 1992

CaseChat Overview and Summary

The Federal Court of Australia was presented with an application by Chase Corporation Australia Pty Limited, the former owner of Pyaray Pty Limited, to reinstate the registration of Pyaray Pty Limited, which had been cancelled. The cancellation occurred as Pyaray Pty Limited was listed among companies deemed to no longer be carrying on business. Despite the cancellation, Pyaray Pty Limited held significant voting rights in another company and was entitled to a substantial sum due in the near future. The court had to determine whether the registration should be reinstated despite the company's inactivity at the time of cancellation.

The central legal issue before the court was whether Section 574(3) of the Corporations Law applied to reinstate the registration of a company that was not carrying on business at the time of its cancellation. The court had to assess if the reinstatement was justified under the circumstances, particularly given the potential financial implications and the entitlement to exercise voting rights. The applicant argued that the registration should be reinstated to protect its rights and interests, while the Australian Securities Commission did not oppose the application, provided that the applicant undertook to ensure that all necessary officers of the company were appointed promptly.

In ruling on the matter, Justice Burchett concluded that Section 574(3) of the Corporations Law did indeed apply, even if the company was not carrying on business or in operation at the time of the cancellation. The court found it just to reinstate the registration, particularly given the significant financial interest at stake. The applicant had agreed to ensure that all necessary officers of the company were appointed quickly, a condition that the Australian Securities Commission had stipulated for proceeding with the reinstatement. Consequently, the court ordered the reinstatement of the company's registration in the form submitted by the applicant.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

meantime was entitled under security documents to give	directions in respect of the manner in which voting rights in
relation to certain shares in another company might be exercised.
It seems to me that, in these circumstances, S. 5 7 4 ( 3 ) of the cor~orations Law clearly applies, even if it be concluded that the company was not, within the meaning of the subsection, carrying on business or in operation at the time of the cancellation; I am at any rate satisfied that it is just that the registration of the company be reinstated. Accordingly, I make an order to that effect in the form which has been submitted.
I note that the Australian Securities Commission does not oppose the making of such an order, but has requested that an undertaking be given to the court that the applicant, which was, at the time of the cancellation, the owner of all the shares in the company, will ensure that all necessary officers of the company are appointed expeditiously. That undertaking has been given.