Rasley (Singapore) Pte Ltd v Financial & Energy Exchange Ltd

Rasley (Singapore) Pte Ltd sought an order for inspection of the books of Financial & Energy Exchange Ltd (FEX) under section 247A of the Corporations Act 2001 (Cth). The Federal Court was required to determine whether Rasley's application was made in good faith and for a proper purpose. The central issue was whether the share issues and related party transactions raised a case for investigation sufficient to warrant the exercise of the court's discretion in favour of allowing inspection of FEX's books. The court considered the nature and extent of the concerns raised by Rasley, the adequacy of the information provided by FEX, and whether the inspection was necessary to determine whether any further action should be taken.

The court found that Rasley's concerns about the substantial dilution of its shareholding through the share issues and the potential improper related party transactions constituted a case for investigation. The significant increase in the number of shares on issue, without any consideration paid and without notice to, consultation with or the consent of other shareholders, raised concerns about the proper conduct of FEX's affairs. The related party transactions, which appeared to be at arm's length and potentially not in FEX's best interests, also warranted further investigation. The court determined that the inspection of documents relevant to these matters was necessary to determine whether any further action should be taken.

Accordingly, the court granted Rasley's application in part, authorising inspection of documents relevant to the share issues and the leases but not documents about the other related party transactions. The parties were ordered to confer to agree on the categories of documents relevant to the share issues and the leases and who should inspect them. The court reserved costs, indicating that they would be determined at a later stage. The orders were to be settled by the parties and filed by 4.00 pm on Friday, 23 October 2020.