In the matter of Macquarie Americas Holdings Pty Ltd

[2015] NSWSC 2073

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Macquarie Americas Holdings Pty Ltd [2015] NSWSC 2073
Hearing dates:	15 June 2015
Date of orders:	15 June 2015
Decision date:	15 June 2015
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Order that registration of company not invalidated by error or omission; orders made requiring rectification of the register to reflect intended allotment.
Catchwords:	CORPORATIONS – formation – registration or incorporation – validity of registration – error in share subscriptions as recorded at registration – where only one shareholder – rectification ordered – absence of consents required by s 117 – order that registration not invalidated.
Legislation Cited:	(CTH) Corporations Act 2001, s 117(2), s 117(5), s 120(1), s 120(2), s 1322(4)
Category:	Principal judgment
Parties:	Macquarie Americas Holdings Pty Ltd (ACN 124 071 414) (plaintiff) Australian Securities and Investments Commission (defendant)
Representation:	Counsel: H Pintos-Lopez (plaintiff)   Solicitors: McCullough Robertson Lawyers (plaintiff) Australian Securities and Investments Commission (defendant)
File Number(s):	2015/118344

Judgment (ex tempore)

1. HIS HONOUR: By originating process filed on 21 April 2015, the plaintiff Macquarie Americas Holdings Pty Ltd seeks a declaration pursuant to (CTH) Corporations Act 2001, s 1322(4), that it was validly registered on 21 February 2007, and an order pursuant to s 1322(4)(b) that the defendant ASIC rectify the register kept by ASIC in respect of the company to show that the initial number of ordinary shares issued and allocated to the sole shareholder Macquarie Bank Limited upon registration of the company was 12 million (as opposed to 34 million) ordinary shares.

2. It appears that when an application was made for registration of the company in form 201 on 21 February 2007, the figure of 34 million shares – as opposed to 12 million – was incorrectly inserted in Part 6 of the application. I am satisfied that this was an error, by having regard to the contemporaneously dated share certificate issued to Macquarie Bank Limited (which refers to 12 million shares only), and the financial statements of the company as at March 2008 (which indicate a paid-up capital of some 24,100,000 shares, comprising two share issues, the first of 12 million and the second of a further 12,100,000 shares approximately). Although the company's members' register initially reflected the error in the form lodged with ASIC, it was some years later retrospectively corrected to confirm that the number intended was 12 million.

3. Corporations Act, s 120(2), provides that the shares to be taken up by the members, as specified in the application, "are taken to be issued to the members on registration of the company". That should be read in the context of subsection (1), which provides that a person becomes a member of a company on registration "if the person is specified in the application with their consent as a proposed member of the company".

4. The purpose of s 120 is to have the effect that upon registration and without the requirement for any further act or instrument, the member becomes a member and acquires the shares which the member has agreed to take up. It does not mean that a member is to be taken to have been issued shares for which the member has not in truth agreed to subscribe.

5. In this case, Macquarie Bank never agreed to subscribe for more than 12 million shares at the outset, and in truth only 12 million shares were issued to it. It is therefore appropriate, unless substantial injustice would likely be thereby caused to any person, to make an order under s 1322(4)(b) directing the rectification of the register kept by ASIC accordingly.

6. As Macquarie Bank Ltd is the only shareholder, and as it can realistically make no difference to any external party how many shares the only shareholder holds, and as I think I am entitled to infer from the status of those who make the application on behalf of the plaintiff that Macquarie Bank – which though it perhaps ought to have been joined as a party, has not been – is aware of the application, I can be satisfied that no substantial injustice is likely to be caused to any person. I will therefore make the order directing the rectification of the register.

7. As I have said, the plaintiff also seeks an order declaring that its registration is valid. In my view, an order in those terms does not reflect the power granted by s 1322(4), which is not one to declare that an act is valid, but rather to declare that an act is not invalid by reason of any particular contravention of a provision of the Corporations Act or the corporate constitution.

8. As it seems to me, it is unlikely in the extreme that, even in the absence of an order, the specification of an incorrect number of shares in the application would have any invalidating consequence so far as registration is concerned. The absence of consent by the sole member to the application and to taking up of shares is however perhaps in a different position. While the evidence suggests that there was at least informal consent by Macquarie Bank at the time, the plaintiff has not been able to obtain or produce evidence of a written consent on the part of Macquarie Bank. However, the evidence plainly establishes that Macquarie Bank did consent to take up 12 million shares.

9. That may well mean that there was a contravention of s 117(5), which provides that an applicant must have the consents and agreements referred to in subsection (2) when the application is lodged, and after registration give the consents to the company, which must keep the consents and agreements. Subsection (2)(c) requires the name and address of each person who consents to becoming a member and subsection (2)(k) requires the number and class of shares each member agrees in writing to take up. As there appears no question that Macquarie Bank did in fact consent to becoming a member and to taking up 12 million shares and that Macquarie Holdings has conducted its affairs on that basis ever since and, for reasons already indicated, that no substantial injustice would be caused to any person, it is appropriate to make a declaration that the registration of the plaintiff is not invalid by reason of any such contravention of s 117(5).

10. The Court therefore declares that:

1. Pursuant to Corporations Act, s 1322(4)(a), the registration of the plaintiff Macquarie Americas Holdings Pty Ltd ACN 124 071 414 on 21 February 2007 is not invalid by reason of any contravention of Corporations Act, s 117(5), in so far as the applicant may not have held the requisite consents of the proposed member required by ss 117(2)(c) and (k).

2. Pursuant to Corporations Act, s 1322(4)(b), the defendant ASIC rectify the register kept by ASIC in respect of Macquarie Americas Holdings Pty Ltd to show that the initial number of ordinary shares issued and allocated to Macquarie Bank Ltd on registration of Macquarie Americas Holdings Pty Ltd was 12 million ordinary shares.

11. I should note that ASIC was joined as the defendant, was served with the application, did not appear and indicated that it neither opposed nor consented to the application.

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Decision last updated: 11 March 2016