Clinical Cell Culture Ltd, in the matter of (ACN 058 466 523)
[2004] FCA 1798
•3 DECEMBER 2004
FEDERAL COURT OF AUSTRALIA
Clinical Cell Culture Ltd, in the matter of (ACN 058 466 523)
[2004] FCA 1798
CORPORATIONS – application for remedial relief under s 254E and s 1322 of the Corporations Act 2001 (Cth) – where company inadvertently failed to alter its financial year end date.
Corporations Act 2001 (Cth), ss 250N(2), 254E, 319, 320, 323D, 340, 706, 741, 1322
Golden Gate Petroleum Ltd (2004) 22 ACLC 1,292 cited
IN THE MATTER OF CLINICAL CELL CULTURE LTD (ACN 058 466 523)
W270 of 2004
LEE J
3 DECEMBER 2004
PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W270 OF 2004
IN THE MATTER OF CLINICAL CELL CULTURE LTD (ACN 058 466 523)
CLINICAL CELL CULTURE LTD (ACN 058 466 523)
APPLICANT
JUDGE:
LEE J
DATE OF ORDER:
3 DECEMBER 2004
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to section 1322(4)(c) of the Corporations Act 2001 (Cth) (“the Act”), the Applicant and its directors and officers be relieved from any civil liability in respect of a contravention of section 319(3)(a) with respect to the lodgement of its Annual Report for the financial year ending 31 December 2003 by reason of the procedure it adopted to purportedly synchronize its financial year with the financial years for its controlled entities (“the Procedure”).
2.Pursuant to section 1322(4)(c) of the Act, the Applicant and its directors and officers be relieved from any civil liability in respect of a contravention of section 320(1) with respect to the lodgement of its report for a half year ending 30 June 2003 and 30 June 2004 by reason of the Procedure.
3.Pursuant to section 1322(4)(c) of the Act, the Applicant and its directors and officers be relieved from any civil liability in respect of contravention of section 323D(3) with respect to failure to achieve synchronization of financial years for the controlled entities of the Applicant with the financial year for the Applicant by reason of the Procedure.
4.Pursuant to section 1322(4)(c) of the Act, the Applicant and its directors and officers be relieved from any civil liability in respect of contravention of section 250N(2) with respect to failure to hold the 2004 Annual General Meeting of the Applicant within 5 months of the end of the financial year for the Applicant by reason of the Procedure.
5.In the event that the Australian Securities and Investments Commission (“ASIC”) exercises its powers to synchronize the financial year end date for the Applicant under section 340 of the Act, then pursuant to section 1322(4)(d) of the Act, the period for synchronisation of the financial year end date for the controlled entities of the Applicant with the financial year end date for the Applicant under section 323D(3), be extended to such time as the power is exercised.
6.Pursuant to section 1322(4)(d) of the Act, the period set out in section 250N(2) to hold the 2004 Annual General Meeting of the Applicant be extended to 24 November 2004.
7.Pursuant to section 1322(4)(d) of the Act, the period set out in section 319(3) to lodge the 2004 Annual Report of the Applicant (for the financial year ending 31 December 2003) be extended to 1 February 2005.
8.Pursuant to section 1322(4)(d) of the Act, the period set out in section 320(1) to lodge of the Applicant’s report for a half year ending 30 June 2003 and 30 June 2004 be extended to 1 February 2005.
9.Pursuant to section 254E of the Act, the issue of 9,519,120 shares in the Applicant under the Share Issue Plan dated 31 August 2004 and issued on 21 September 2004 each be validated and confirmed.
10.The Applicant lodge a copy of this Order with ASIC forthwith.
11.Upon service of this Order on the ASIC, ASIC do include notice of such Orders in its database.
12.The Applicant and any other interested party have liberty to apply or vary these orders.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W270 OF 2004
IN THE MATTER OF CLINICAL CELL CULTURE LTD (ACN 058 466 523)
CLINICAL CELL CULTURE LTD (ACN 058 466 523)
APPLICANT
JUDGE:
LEE J
DATE:
3 DECEMBER 2004
PLACE:
PERTH
REASONS FOR JUDGMENT
LEE J:
This is an application for remedial orders under s 254E and s 1322 of the Corporations Act 2001 (Cth) (“the Act”).
The relevant facts are as follows.
The applicant is admitted to the official list of the Australian Stock Exchange Ltd (“the ASX”). It has raised capital for research and development of biological products for use in the treatment of skin wounds and for the exploitation of patented technologies for the repair of skin tissue. The applicant has business offices in Bentley and Perth in Western Australia and a corporate office in Cambridge in the United Kingdom.
On 28 May 2003 at the annual general meeting of shareholders a resolution was passed unanimously purporting to change the applicant’s financial year end-date from 31 December to 30 June. The reason for the change was to synchronize the applicant’s financial year with that of a subsidiary acquired in November 2002 in order to comply with s 323D(3) of the Act. Section 323D(3) of the Act requires a company, registered scheme or disclosing entity, that has to prepare consolidated financial statements, to do whatever is necessary to ensure that the financial years of consolidated entities are synchronised with its own financial years. Section 323D(2) of the Act allows directors to determine that the financial year is to be shorter or longer by no more than 7 days. However these sections do not empower a parent entity to alter its financial year to synchronise with its controlled entities. Such an alteration can only be effected by making an application to the Australian Securities and Investments Commission (“ASIC”) for an exemption order under s 340 of the Act.
The directors and former company secretary of the applicant understood, albeit erroneously on their part, that synchronisation could be achieved by ordinary shareholder resolution. A notification of the resolution was lodged with ASIC on or about 17 June 2003 and the applicant continued to comply with its financial reporting obligations on the erroneous assumption that its financial year end-date had been lawfully altered. Consequently, the applicant contravened ss 319 and 320 of the Act in failing to lodge with ASIC within the prescribed time limits its annual report for the financial year ending 31 December 2003 and its half-year reports for the half years ending 30 June 2003 and 30 June 2004. The applicant further contravened s 250N(2) of the Act by failing to hold the 2004 annual general meeting within 5 months of the end of financial year.
On 4 August 2004 the applicant announced the implementation of a share purchase plan to raise up to $1.5 million to fund the expansion of the company’s European operations. Due to strong level of shareholder interest in the share purchase plan the applicant resolved to increase the amount to be raised to $4 million. The share purchase plan closed oversubscribed. On 21 September 2004 the applicant issued 9,519,120 shares pursuant to the share purchase plan. The shares were issued without disclosure to investors by way of prospectus in reliance on ASIC class order 02/831. By reason of the ineffective change to its financial year end date the applicant was in breach of Chapter 2M of the Act and was not entitled to rely on ASIC class order 02/831. The applicant, therefore, contravened s 706 of the Act, which states that an offer of securities for issue needs disclosure to investors by way of prospectus unless a relevant exemption applies.
I have read all the papers and the submissions and I am satisfied that the defaults that occasioned this application were inadvertent and innocent and that the consequences thereof should be allayed by appropriate orders being made under ss 254E and 1322 of the Act. It is just and equitable and in the interests of all parties that remedial orders be made (see: Golden Gate Petroleum Ltd (2004) 22 ACLC 1,292 at [33]-[35]). I note that the terms of the application and the orders sought have been provided to ASIC, which has stated that it does not propose to oppose the orders. I also note that ASIC has made a remedial declaration under s 741 of the Act and has indicated that leave for the applicant to act to synchronise its financial year with that of the controlled entity will be granted.
Therefore, orders will be made in terms of the minute with several minor amendments.
I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.
Associate:
Dated: 28 January 2011
Counsel for the Applicant: C G Colvin SC Solicitors for the Applicant: Blakiston & Crabb Date of Hearing: 3 December 2004 Date of Judgment: 3 December 2004
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