Re Elemental Minerals Ltd

The plaintiff, Elemental Minerals Limited, brought this case against the Australian Securities and Investments Commission (ASIC) and the Australian Securities Exchange (ASX). The plaintiff sought declaratory relief in relation to the offer and sale of shares in a significant placement that took place in February 2010. The dispute centres on the validity of the secondary trading of shares issued by the plaintiff and the impact of ASIC's rejection of the Cleansing Prospectus on 17 February 2010.

The key legal issues before the court were whether the secondary trading of shares issued on 12 February 2010 was invalid due to the failure to comply with s 708A(11)(c) of the Corporations Act 2001 (Cth) and whether sellers of those shares were liable for civil penalties. The court needed to determine if the secondary trading of shares between 12 February 2010 and 18 February 2010 was invalid due to the plaintiff's failure to comply with the requirements of s 708A(11)(c) and whether sellers of shares during this period could be held liable for contraventions of s 707(3) of the Act. The court also had to consider the impact of the plaintiff's revised Prospectus, lodged on 18 February 2010, on the validity of the secondary trading of shares.

The court found that the secondary trading of shares issued on 12 February 2010 was not invalid due to the failure to comply with s 708A(11)(c) of the Act. It held that the plaintiff had a reasonable understanding that any secondary trading of those securities would be facilitated by the lodgement of a valid Prospectus and that the rejection of the Prospectus by ASIC did not render the secondary trading invalid. Furthermore, the court held that any sellers of the shares between 12 February 2010 and 18 February 2010 were relieved from any civil liability arising out of contravention of s 707(3) of the Act or by reason of the plaintiff's failure to comply with s 708A(11)(c) of the Act.

As a result of the court's findings, it ordered that any offer for sale or sale of the shares issued as part of the placement announced on 4 February 2010 and the subject of the plaintiff’s Appendix 3B dated 12 February 2010, during the period after the date of issue on 12 February 2010 until 18 February 2010, is not invalid by reason of the plaintiff's failure to comply with s 708A(11)(c) of the Act. It further ordered that any sellers of the shares between 12 February 2010 and 18 February 2010 be relieved from any civil liability arising out of contravention of s 707(3) of the Act or by reason of the plaintiff's failure to comply with s 708A(11)(c) of the Act.