Enares Pty Limited v Nimble Money Limited

Enares Pty Limited sought an appeal against Nimble Money Limited, a short-term money lending company, concerning the denial of their request for document inspection under Section 247 of the Corporations Act 2001 (Cth). Enares, holding approximately 15% of Nimble's shares, applied to inspect Nimble's documents, expressing concerns about the Board's refinancing decision involving subordinated debt. Nimble, amidst financial distress and transitioning to medium to long-term lending, had secured a non-binding term sheet with existing funders for refinancing. The primary judge dismissed Enares' application, ruling that their concerns lacked merit and their request for inspection was neither in good faith nor for a proper purpose.

The central legal issue was whether Enares' request for document inspection was bona fide and aimed at a proper purpose under Section 247A of the Act. Enares argued that Nimble's Board had breached a duty by not negotiating a rights issue with Enares, which was dismissed by the primary judge. The judge concluded that there was no evidence to suggest the Board had any viable alternative to their refinancing strategy, especially considering the failed attempts to raise equity over the past two years. The proposed rights issue by Enares was conditional and not a concrete proposal, thus not warranting a change in the Board's strategy. Given these circumstances, Enares' request for document inspection was deemed unfounded and not in good faith.

The Court of Appeal upheld the primary judge's decision, finding Enares' concerns unsubstantiated and their request for inspection unjustified. The appeal was dismissed, and Enares was ordered to pay Nimble's costs of the appeal. The Court emphasised that the Board's refinancing decision was prudent, considering the company's financial constraints and the unlikelihood of a successful equity raising strategy. As Enares' concerns were baseless, the request for document inspection did not meet the criteria for a proper purpose under the Act. The Court's decision underscores the necessity for shareholders to demonstrate genuine concerns and legitimate purposes when seeking document inspections under corporate law.