Dourado Resources Limited v Aurium Resources Limited

Dourado Resources Limited sought an extension of time from the Federal Court of Australia to comply with a statutory condition of its off-market takeover offer for Aurium Resources Limited. The plaintiff, Dourado Resources, had made an off-market takeover bid for Aurium Resources on 2 September 2010, and in accordance with section 625(3)(c)(i) of the Corporations Act 2001, was required to apply for the quotation of securities on a financial market within seven days from the commencement of the bid period. The bid period began on 2 September 2010, when Dourado sent its bidder’s statement to Aurium. However, Dourado did not apply for the quotation of the securities until 16 September 2010, which was the date of the commencement of the offer period, and not within seven days from the commencement of the bid period. Dourado now sought an order extending the time for compliance with section 625(3)(c)(i) of the Corporations Act to 16 September 2010, the date upon which the application to the ASX for the quotation of the shares was actually made.

The primary legal issue before the Court was whether it should exercise its discretion under section 1325A(2)(b)(i) of the Corporations Act to extend the time for Dourado to comply with the statutory condition of section 625(3)(c)(i). The Court noted that it had the power to make such an order in circumstances where a party had made an honest mistake in the advice it had received, and had acted expeditiously to regularise the position. The Court also considered whether the refusal of the application would prejudice the interests of third parties.

The Court held that the orders sought by Dourado should be made. It found that the error made by the solicitor advising Dourado was an honest mistake, and that Dourado had acted expeditiously to regularise the position once it was informed of the failure to comply with section 625(3)(c)(i). The Court also found that if the orders were not made, the acceptances of the takeover bid, which had been received by Dourado, would likely be rendered void, and the interests of third parties would thereby be prejudiced. The Court noted that the defendant did not oppose the making of the orders, and that the Australian Securities and Investments Commission, which had been served with the application, neither consented to, nor opposed, the making of the orders.

The Court ordered that the time for compliance with section 625(3)(c)(i) of the Corporations Act be extended to 16 September 2010, and that the plaintiff and all other interested or affected parties have liberty to apply to vary these orders upon first giving 24 hours written notice. The plaintiff was also ordered to pay the defendant’s costs of this application.