In the matter of Northern Minerals Limited

[2023] NSWSC 1568

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Northern Minerals Limited [2023] NSWSC 1568

Hearing dates:

11 December 2023

Date of orders:

11 December 2023

Decision date:

11 December 2023

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Orders made extending the period in which the company must call a meeting requested by a shareholder, to travel with an extension of the date of the annual general meeting.

Catchwords:

CORPORATIONS — Meeting of members — Request for meeting by shareholder — Where the Commonwealth of Australia has prohibited that shareholder from acquiring further interests in the company — Where the Foreign Investment Review Board is investigating further acquisitions of shares in the company — Whether the Court should make an order extending the period by which the company must call the requested meeting while that investigation is pending.

Legislation Cited:

- Corporations Act 2001 (Cth), ss 203D, 249D, 249E, 250P, 1322

- Foreign Acquisition and Takeovers Act 1975 (Cth), s 67

Cases Cited:

- National Roads & Motorists Association Ltd v Parkin (2004) 49 ACSR 386; [2004] NSWSC 296

- NRMA Insurance Group Ltd v Spragg (2000) 161 FLR 243; 38 ACSR 174; [2001] NSWSC 381

- Oil Basins Ltd v Bass Strait Oil Co (2012) 91 ACSR 700; [2012] FCA 1122

- Re Insurance Australia Group Ltd (2003) 128 FCR 581; 45 ACSR 702; [2003] FCA 581

- Woolworths Ltd v GetUp Ltd [2012] FCA 726

Category:

Principal judgment

Parties:

Northern Minerals Limited (Plaintiff)
Yuxiao Fund Pte Ltd (Defendant)

Representation:

Counsel:
M Izzo SC (Plaintiff)
J Roby (Solicitor) (Defendant)

Solicitors:
Herbert Smith Freehills (Plaintiff)
Hall & Wilcox (Defendant)

File Number(s):

2023/00445149

Judgment – ex tempore (Revised 12 December 2023)

1. By Originating Process filed on 8 December 2023, the Plaintiff, Northern Minerals Ltd (“Company”) seeks an order under s 1322(4) of the Corporations Act 2001 (Cth) (“Act”) extending the time period for it to call and hold a general meeting of its members at the request of the Defendant, Yuxiao Fund Pte Ltd (“YFPL”), which was given to the Company on 1 December 2023. That extension of time is now sought to the earlier of the day upon which the next annual general meeting of the Company is called, or (subject to further order of the Court) 30 April 2024. YFPL appears, by its solicitor, but neither consents nor opposes the relief that is sought.

Affidavit evidence

2. The Company reads the affidavit dated 7 December 2023 of Mr Hartwig, who is its Executive Director, Finance, and who is a member of its board. Mr Hartwig outlines the factual background to the application, which I will set out in relatively brief form since, as will emerge below, the matter appears to be the subject of ongoing regulatory inquiries in respect of the acquisition of shares in the Company by YFPL and any associates of YFPL.

3. The Company is an Australian public company limited by shares and is admitted to the official list of the Australian Securities Exchange (“ASX”), and its ordinary shares are quoted for trading on the ASX. The Company is a heavy rare earth minerals producer, and rare earth minerals are treated as “critical minerals” for the purpose of the Foreign Investment Review Board’s (“FIRB”) “Guidance 8: National Security” dated 12 April 2022, which encourages consultation with the FIRB by foreign persons proposing to undertake a “reviewable national security action” by investing in an entity involved in the extraction, processing or sale of such minerals.

4. YFPL is a shareholder of the Company, which now has a voting power of at least 9.98% in the Company, although the extent of the voting power of YFPL and any associates of YFPL is a matter which appears to be the subject of ongoing investigation. It appears that YFPL sought to increase its interest in the Company and, on 15 February 2023, the Treasurer of the Commonwealth of Australia issued an order under s 67 of the Foreign Acquisition and Takeovers Act 1975 (Cth) prohibiting YFPL acquiring an additional interest in the Company, and also ordered that YFPL not increase the proportion of interests in issued securities it holds in the Company beyond the 9.98% interest it held as of 17 August 2022.

5. It appears that, in 2022, Mr Wu Tao, who may be (although the evidence does not establish) the father of Mr Wu Yuxiao, who is in turn the sole director and shareholder of YFPL, nominated himself as a candidate to be elected to the board of the Company but that request was ultimately withdrawn. On 7 October 2023, Mr Wu Tao was again nominated for election, together with two other candidates, to the board of the Company, at its annual general meeting for the financial year ended 30 June 2023. That meeting has now been deferred pursuant to an extension of time for that meeting granted by the Australian Securities and Investments Commission (“ASIC”) under s 250P of the Act, and it appears a further deferral of that annual general meeting is presently being sought by the Company in the circumstances noted below.

6. On 30 October 2023, the Company announced the first deferral of its annual general meeting, to 29 February 2024, to the ASX, and noted that:

“The Company has also been examining recent share buying activities by certain other persons who may have links to Mr Wu and/or [YFPL].”

7. I should note that the evidence led before the Court does not seek to establish the identity of those persons, or the nature of those links, and I do not reach any finding as to the existence or otherwise of such links in this judgment, where I am not asked to do so and where it is not necessary to do so to determine this application.

8. On 20 November 2023, the Company received a notice pursuant to s 249D of the Act from YFPL seeking to require it to call a general meeting of the Company to consider resolutions, including a resolution to remove an existing director of the company. That section relevantly permits members with at least 5% of the votes that may be cast at a general meeting to require directors of a company to call and arrange to hold that general meeting; requires the directors to call that meeting within 21 days after that request; and s 249E of the Act deals with the position if directors fail to call that general meeting. The Company responded to that request by seeking to obtain YFPL’s agreement to have that resolution dealt with at the annual general meeting which had, as I noted above, then been extended to 29 February 2024, and also pointed to suggested deficiencies in the first notice issued by YFPL under s 249D of the Act.

9. Subsequently, YFPL issued a notice under s 203D of the Act, indicating an intention to move the resolution for removal of the Company’s director at the next general meeting of the Company, and indicating that notice superseded and replaced the first s 249D notice. The notice under s 203D of the Act had the consequence that that resolution would be addressed at the next general meeting of the Company, whether an annual general meeting or any earlier meeting of the Company that was called. YFPL then issued a second notice under s 249D of the Act requiring the Company to call a further general meeting to address two resolutions, one of which has now been withdrawn.

10. With this somewhat complex factual background, the Company seeks to extend the time to call and hold the general meeting requested by YFPL on two bases. The first is that, since the Company made its ASX announcement referring to the further acquisitions of shares in the Company and to its concerns as to share buying activities by persons who may have links to Mr Wu or YFPL, the FIRB has made inquiries of the Company and the Company understands that an investigation into these matters by FIRB is ongoing, although FIRB has not indicated when that investigation will be completed. Mr Hartwig refers to the Company's view that it is desirable that the FIRB complete that investigation prior to the general meeting requested by the second s 249D notice issued by YFPL. There seems to me to be force in that proposition where it will be open, depending upon the results of its investigation, for the Commonwealth to take steps which may affect the status of shares acquired by YFPL or other persons since YFPL acquired its original interest in the Company, and difficulties may obviously arise if shares are voted at the general meeting, and a result is achieved at the general meeting, which is founded on any shareholding which is impugned by that investigation or consequential regulatory action.

11. Second, Mr Hartwig points to a matter which appears to be a subordinate concern, in the relevant circumstances, as to the costs of calling and holding the meeting requested by YFPL, which are not small. Plainly, there is also real inconvenience for shareholders who are asked to attend two meetings within a relatively short period, but these matters may nonetheless be less significant than the issues identified by the Company in respect of the FIRB's investigation.

Submissions and determination

12. In submissions, Mr Izzo, who appears for the Company in this application, draws attention to the relevant case law, including the Court's power under s 1322(4)(d) of the Act to make an order extending the period for doing any act, matter or thing, or instituting or taking any proceeding under the Act or in relation to a corporation. I bear in mind, also, that the power under s 1322 of the Act is, as Mr Izzo points out, remedial and beneficial in nature and is to be interpreted liberally: Re Insurance Australia Group Ltd (2003) 128 FCR 581; 45 ACSR 702; [2003] FCA 581 at [27]; Oil Basins Ltd v Bass Strait Oil Co (2012) 91 ACSR 700; [2012] FCA 1122 at [67]. I also recognise that extensions of time to hold a meeting of this character have been granted in earlier cases, and this application of the section does not involve any novel extension of the powers conferred on the Court by the section: NRMA Insurance Group Ltd v Spragg (2000) 161 FLR 243; 38 ACSR 174; [2001] NSWSC 381; National Roads & Motorists Association Ltd v Parkin (2004) 49 ACSR 386; [2004] NSWSC 296; Woolworths Ltd v GetUp Ltd [2012] FCA 726.

13. Mr Izzo rightly points out that, before the Court makes such an order it must relevantly be satisfied that no substantial injustice has been or is likely to be caused to any person. Here, it seems to me, that no substantial injustice would be caused to any person by the making of the relevant order where the FIRB’s investigations are ongoing and, generally speaking, the interests of all persons would be best served by voting at a general meeting where the position as to YFPL's entitlement to do so, in respect to any additional shares which it or persons linked to it may have purchased, has been clarified. Obviously enough, all things being equal, it is preferable that the position as to a shareholder’s entitlement to vote is known before its vote is exercised, rather than the Company and its other shareholders being left to unravel the difficulties arising from a vote, where persons who were not entitled to vote may have voted, after the event. I can more readily draw the inference that there is no such substantial injustice to YFPL where it does not seek to oppose the relief that is sought in the application.

14. It seems to me that, in summary, the extension sought should be granted to maximise the prospect that the FIRB’s investigation will be completed and any uncertainties as to the status of YFPL’s or any of its associates’ shareholdings will be clarified, or, at least, the status of any proceedings that may arise from that investigation will be clearer, by the time of the meeting requested by YFPL and a contemporaneous annual general meeting. Although the cost and inconvenience of holding an additional meeting as requested by YFPL was here a secondary consideration for the Company, it seems to me that there is a real risk and inconvenience for shareholders if they are asked to vote at a separate meeting within a relatively short time of the annual general meeting, and in circumstances that publicly available information will indicate to those shareholders that there is a potential uncertainty as to the status of some shareholders who may vote at that meeting. That course at least runs the risk that the legitimacy of the outcome of that meeting will be open to question, without any fault of the Company in that regard.

15. For these reasons, I am satisfied that the order sought by the Company should be made. I note that the ultimate form of that order is to provide for an extension which may travel with a further extension of the annual general meeting which has been sought from ASIC, but only up until 30 April 2024, so far as the form of the extension will provide for the meeting to be held on the earlier of the day to which the next annual general meeting of the Company is called (which cannot be later than the date that ASIC may permit by further relief) or 30 April 2024.

16. There may be a possibility that further orders are needed in the application, as a result of any action that may be taken by the Commonwealth. I have therefore granted liberty to apply on two business days' notice, and also relisted the matter on 26 April 2024, shortly before the last date on which the meeting could be held pursuant to these orders. I make orders in accordance with the short minutes of order initialled by me and placed in the file.

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Decision last updated: 13 December 2023