Re Kinetiko Energy Ltd;
[2020] WASC 169
•20 MAY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE KINETIKO ENERGY LTD; EX PARTE KINETIKO ENERGY LTD [2020] WASC 169
CORAM: HILL J
HEARD: 14 MAY 2020
DELIVERED : 20 MAY 2020
FILE NO/S: COR 65 of 2020
MATTER: In the matter of Kinetiko Energy Ltd
EX PARTE
KINETIKO ENERGY LTD
Plaintiff
Catchwords:
Corporations law - Securities - Application for extension of time period in s 723(3)(b) and s 724(1)(b)(ii) of the Corporations Act 2001 (Cth) in which securities must be admitted for quotation after the date of the disclosure document - Order extending the period for admission to quotation - Application for confirmation and validation of issue of shares - Order confirming and validating issue
Legislation:
Corporations Act 2001 (Cth), s 254E, s 723(3)(b), s 724(1)(b)(ii), s 1322(4)(a), s 1322(4)(d)
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr A J Papamatheos |
Solicitors:
| Plaintiff | : | Price Sierakowski |
Case(s) referred to in decision(s):
Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488
Re Austsino Resources Group Ltd [2018] FCA 883
Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22
Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174
Re Jaxsta Ltd [2018] WASC 390
Re Solco Ltd [2015] FCA 635; (2015) 106 ACSR 591
Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418
Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396
HILL J:
Introduction
On 11 May 2020, the plaintiff, Kinetiko Energy Ltd (Kinetiko), filed an urgent application seeking orders under s 1322(4)(d) of the Corporations Act 2001 (Cth) (Act) to extend the time under s 723(3)(b) and s 724(1)(b)(ii) of the Act for the admission to quotation by the ASX Ltd (ASX) of securities issued by the plaintiff until five days after determination of this application. Subject to the plaintiff's securities being admitted to quotation by the ASX, Kinetiko also sought orders under s 254E and s 1322(4)(a) of the Act for the validation and confirmation of the issue of these securities.
On 30 January 2020, the plaintiff lodged a prospectus with the Australian Securities and Investments Commission (ASIC) and a supplementary prospectus on 27 February 2020 (Prospectus). Under the Act, all securities issued pursuant to the Prospectus were required to be admitted to quotation by the ASX by 30 April 2020.
Kinetiko has issued four tranches of securities under the Prospectus. In respect of the first three tranches, Kinetiko received notification from the ASX that the securities would be admitted to quotation prior to 30 April 2020. In respect of the fourth tranche, which was issued on 30 April 2020, the ASX notified Kinetiko that the securities would be officially quoted on 4 May 2020.
As a consequence of the failure to obtain admission to quotation of all securities to be issued under the Prospectus by 30 April 2020, in the absence of relief being granted by the court, all securities issued under the Prospectus are invalid and Kinetiko will be required to return all funds it has received to the applicants.
Kinetiko says that unless an extension of time is granted, this will likely cause substantial injustice as it will give rise to financial difficulties and lead to the de-listing of the company. Additionally, Kinetiko's shareholders will be denied the ability to trade their shares and the shareholders who subscribed for shares under the Prospectus would lose their entitlement to have tradeable securities.
The application came on for hearing before me on 14 May 2020. At the conclusion of the hearing, I made orders under s 1322(4)(d) of the Act granting an extension of time of the time periods in s 723(3)(b) and s 724(1)(b)(ii) of the Act and orders under s 254E and s 1322(4)(a) of the Act validating and confirming the issue of the securities. I said that I would provide reasons for my orders in due course. These are the reasons for my decision.
Factual background
In support of its application, Kinetiko relied on six affidavits: an affidavit of Stephen Hewitt-Dutton filed 11 May 2020 (the company secretary of Kinetiko); an affidavit of Connor David Graham filed 11 May 2020 (a legal practitioner and a director of the plaintiff's solicitors); an affidavit of Adam Sierakowski filed 12 May 2020 (a non‑executive director of Kinetiko); an affidavit of Paul Doropoulos filed 12 May 2020 (the chief financial officer of Kinetiko); an affidavit of Agapitos Marcus Michael filed 12 May 2020 (a non-executive director of Kinetiko); and an affidavit of Nicholas Gary Mansfield filed 14 May 2020 (a legal practitioner employed by the plaintiff's solicitors).
Kinetiko was incorporated on 25 January 2010 and admitted to the Official List of the ASX on 19 July 2011.[1] Its principal business activity is onshore gas exploration in South Africa.
[1] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [8] ‑ [9], 'SDH-1', 'SDH-2'.
On 4 October 2017, Kinetiko's shares were suspended from trading. Its securities have remained suspended since that date.
In January 2020, the ASX gave notice to Kinetiko that in order to be re‑admitted to the Official List of the ASX, the company would need to satisfy the requirements of Listing Rule 12.2 and have $1,500,000 in working capital. If it did not achieve this by 3 February 2020, the ASX intended to remove Kinetiko from the Official List of the ASX. Subsequently, by agreement between the ASX and Kinetiko, this deadline has been extended to 15 June 2020.[2]
[2] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [29], 'SDH-19'.
On 30 January 2020, Kinetiko lodged the Prospectus with ASIC. The Prospectus contained three offers of securities:[3]
(a)a non-renounceable entitlement offer of 102,023,068 shares on the basis of one share for every four shares held on the record date at an issue price of $0.02 each, to raise up to $2,040,461 before costs (Entitlement Offer);
(b)an offer of the shortfall to the Entitlement Offer (Shortfall Offer); and
(c)an offer of up to 50,000,000 shares to be issued to sophisticated investors at an issue price of $0.02 per share to raise up to $1,000,000 before costs (Placement Offer).
[3] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [31].
The Prospectus contained a minimum subscription condition and stated that the securities would be admitted for quotation on a financial market.
On 12 February 2020, Kinetiko issued 2,900,000 shares in respect of applications it had received under the Placement Offer (First Tranche). On or about 13 February 2020, the ASX informed Kinetiko that these shares would be officially quoted as from the commencement of trading on 14 February 2020.[4]
[4] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [33], 'SHD-21'.
On 3 March 2020, Kinetiko issued 64,135,945 shares in respect of applications it had received under the Entitlement Offer (Second Tranche). On or about that same date, the ASX informed Kinetiko that these shares would be officially quoted as from the commencement of trading on 4 March 2020.[5]
[5] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [36], 'SHD-24'.
On 18 March 2020, Kinetiko issued 14,467,325 shares as a partial allotment of shares under the Shortfall Offer (Third Tranche). On or about 19 March 2020, the ASX informed Kinetiko that these shares would be officially quoted as from the commencement of trading on 20 March 2020.[6]
[6] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [38], 'SHD-26'.
On 30 April 2020, Kinetiko issued 53,668,713 shares comprised of 23,361,700 shares allotted under the Shortfall Offer and 30,307,013 shares under the Placement Offer (Fourth Tranche).
The evidence of Mr Hewitt-Dutton was that the Fourth Tranche was not issued until 30 April 2020 partially because of the impact of the onset of the pandemic COVID-19 on the ability of the company to attract investors and because Kinetiko had not received all the application forms from the applicants until 30 April 2020.[7]
[7] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [42], [49].
Mr Graham, the legal practitioner who had the primary conduct of the capital raising, gave evidence that he understood that all Kinetiko needed to do to comply with the time limit in the Act was to issue all securities under the Prospectus and apply for the quotation of the securities within the three month time limit.[8] His evidence was that he did not take any steps to verify whether this understanding was correct or undertake any legal analysis on this issue.[9] At that time, his attention was primarily focused on meeting the time frame for the conditions set by the ASX for relisting, namely, achieving the necessary working capital by 8 June 2020 and relisting prior to 15 June 2020.[10]
[8] Affidavit of Connor David Graham filed 11 May 2020 [31].
[9] Affidavit of Connor David Graham filed 11 May 2020 [32].
[10] Affidavit of Connor David Graham filed 11 May 2020 [33].
On 1 May 2020, the ASX informed Kinetiko that the shares in the Fourth Tranche would be officially quoted as from the commencement of trading on 4 May 2020.[11] That is, as at 30 April 2020, Kinetiko had not received notification that the securities in the Fourth Tranche would be admitted to quotation nor had it received unconditional approval from the ASX for the re-admission of its securities to the Official List.
[11] Affidavit of Stephen Hewitt-Dutton filed 11 May 2020 [48], 'SHD-33'.
On 4 May 2020, the ASX emailed Mr Graham raising a concern in relation to the expiration on 30 April 2020 of the three month period for quotation of securities under the Prospectus.[12] Mr Graham's evidence was that no one from the ASX had raised with him prior to this date the need for ASX to have given Kinetiko unconditional approval for all shares to be issued under the Prospectus on or before 30 April 2020.[13]
[12] Affidavit of Connor David Graham filed 11 May 2020 [37], 'CG-12'.
[13] Affidavit of Connor David Graham filed 11 May 2020 [38].
Legislative framework
Chapter 6D of the Act governs fundraising by companies. Division 5 is headed 'Procedure for offering securities' and includes provisions regarding the disclosures which must be made to investors and the procedure by which securities can be offered.
Relevantly, the Act requires that:
(a)certain offers must be made in, or be accompanied by, a disclosure document;[14]
(b)any application money received by the company must be held on trust until the securities are issued or transferred or the money is returned to the applicants.[15]
[14] Corporations Act 2001 (Cth) s 721.
[15] Corporations Act 2001 (Cth) s 722.
Section 723 governs how securities can be issued or transferred under a disclosure document. Specifically, s 723(3) provides:
(3)If a disclosure document for an offer of securities states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere) and:
(a)an application for the admission of the securities to quotation is not made within 7 days after the date of the disclosure document; or
(b)the securities are not admitted to quotation within 3 months after the date of the disclosure document;
then:
(c)an issue or transfer of securities in response to an application made under the disclosure document is void; and
(d)the person offering the securities must return the money received by the person from the applicants as soon as practicable.
If the securities to be issued under the disclosure document are not admitted to quotation within the three months, under s 724 of the Act, the company can do one of the following:
(a)repay the money to the applicants;[16]
(b)give the applicant a supplementary or replacement disclosure document and one month to withdraw their application and be repaid;[17]
(c)issue or transfer the securities to the applicants and give them a supplementary or replacement disclosure document and one month to withdraw their application and be repaid.[18]
[16] Corporations Act 2001 (Cth) s 724(2)(a).
[17] Corporations Act 2001 (Cth) s 724(2)(b) and s 724(3).
[18] Corporations Act 2001 (Cth) s 724(2)(c) and s 724(3).
If securities have been issued under the disclosure document, the company cannot avail itself of the option of lodging a replacement prospectus.[19]
[19] Re Helios Energy Ltd [2017] FCA 840; (2017) 122 ACSR 174 [12], [22], [24(d)].
In Re Solco Ltd, McKerracher J summarised the legislative scheme in ch 6D of the Act.[20] Save for the amendments which have subsequently occurred, pursuant to the ASIC Corporations (Minimum Subscriptions and Quotation Conditions) Instrument 2016/70 (Cth), which are not relevant in the present case, I accept that this is an accurate summary of the applicable legislative scheme.
[20] Re Solco Ltd [2015] FCA 635; (2015) 106 ACSR 591 [15] - [19]. See also Re G8 Communications Ltd [2016] FCA 297; (2016) 112 ACSR 22 [15] ‑ [16]; Re Helios Energy Ltd [18]; Re Austsino Resources Group Ltd [2018] FCA 883 [12]; Re Jaxsta Ltd [2018] WASC 390 [35].
The statutory purpose of s 723 of the Act is that investors, who expect the issued securities to be admitted to quotation on a financial market, should receive such securities within the prescribed time frame so that they are able to take advantage of the quotation.[21]
[21] Re Solco Ltd [20].
Finally, as was noted by McKerracher J, where an application such as the one before me is brought after the expiration of the time period in s 723(3) of the Act, the other two sections that are relevant to the application are the remedial provisions s 254E and s 1322 of the Act.[22]
[22] Re Solco Ltd [18] ‑ [19].
Section 254E of the Act provides:
(1)On application by a company, a shareholder, a creditor or any other person whose interests have been or may be affected, the Court may make an order validating, or confirming the terms of, a purported issue of shares if:
(a)the issue is or may be invalid for any reason; or
(b)the terms of the issue are inconsistent with or not authorised by:
(i)this Act; or
(ii)another law of a State or Territory; or
(iii)the company's constitution (if any).
(2)On lodgement of a copy of the order with ASIC, the order has effect from the time of the purported issue.
Section 1322 relevantly provides:
(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6)The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c)‑that the person subject to the civil liability concerned acted honestly; and
(c)in every case - that no substantial injustice has been or is likely to be caused to any person.
On an application under s 1322 of the Act, it is necessary that the prescriptive requirements of the wording in s 1322(4)(a) and s 1322(4)(d) and the preconditions in s 1322(6) be satisfied.[23]
[23] Weinstock v Beck [2013] HCA 14; (2013) 251 CLR 396 [43] (French CJ), [53] (Hayne, Crennan & Kiefel JJ), [64] (Gageler J).
The powers conferred under s 1322 of the Act reflect the broad legislative policy that the law should not unnecessarily invalidate transactions or cause inconvenience because of non-compliance with the requirements of the Act where such non-compliance is the result of honest error or inadvertence and where the court can avoid such effects without causing prejudice to third parties or the public interest in ensuring compliance with the law. This broad policy does not authorise the court to lightly set aside the requirements of the Act where such requirements have not been observed. It is necessary for the court to consider the circumstances of each individual case to ensure that it is appropriate to grant the indulgence sought and that, in making such orders, it does not undermine requirements of the Act.[24]
[24] Re Wave Capital Ltd [2003] FCA 969; (2003) 47 ACSR 418 [29].
In considering an application under s 1322(4)(d), as was noted by Barker J in Blaze Asset Pty Ltd v Target Energy Ltd:[25]
[T]he exercise of the power … involves in effect a two stage process. First, the Court needs to determine whether, having regard to the circumstances of the case and the general objects of the Act it is appropriate to make an order extending a relevant period, or abridging a relevant period. Secondly, if those circumstances are made out, then the Court must address the question whether any substantial prejudice has been or is likely to be caused to any person by the making of such an order.
[25] Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488 [31]. See also Re Jaxsta Ltd [41]-[42].
That is, the power under s 1322(4)(d) must be exercised having regard to the general objects and purposes of s 723(3) of the Act. Any order made by the court must not undermine the reasons for the requirements of the Act and must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act.[26]
[26] Re Wave Capital Ltd [29]; Re Jaxsta Ltd [43].
Disposition
Application for extension of time
I accept that Kinetiko is an interested person who may seek relief, as required by s 1322(4)(d).
Without an extension of time, the shares that have been issued by Kinetiko will be void, and Kinetiko will be required to return the application money it has received. It is not in doubt that the court can grant the extension of the time limit for obtaining quotation of the shares under s 723(3)(b) and s 1322(4)(d) of the Act, even though the relevant time period expired on 1 May 2020.
For the following reasons, I was and am satisfied in the circumstances of this case that it is appropriate to grant the extension of time sought.
First, the extension sought by Kinetiko was for a relatively short period of time. An extension of 21 days does not, in the circumstances of this case, undermine the statutory purpose of s 723(3) of the Act.
Second, Kinetiko has provided an explanation as to the reason for the delay. In summary, the error arose as a consequence of a misunderstanding by the solicitors for the company, together with delays in completing the fundraising as a consequence of COVID-19. In respect of the delays and inconveniences arising as a consequence of COVID-19, I accept and find that these were unexpected and not intentional. I accept that there is and was no failure of the persons concerned or Kinetiko to act honestly.
Third, in the absence of an extension being granted, there are serious and potentially irreversible consequences for Kinetiko. In addition to the obligation to return the funds it has received from the applicants, Kinetiko would be unable to comply with the conditions imposed by the ASX for its reinstatement to the Official List and Kinetiko would be delisted. This would result in the incurring of substantial legal and corporate costs including the possibility of costs associated with an initial public offering and re-admission fee. This would operate to the disadvantage of Kinetiko and its existing shareholders as well as those applicants who wish to retain their investment.
Fourth, granting the extension of time is consistent with the purpose and policy of the legislation including the facilitation of the conduct of commerce generally.
Fifth, Kinetiko has acted promptly in bringing this application and there has been no delay in bringing this matter on for an urgent hearing.
Sixth, both the ASX and ASIC have indicated that they do not support or oppose the application, nor do they intend to appear at the hearing of the matter.[27] ASIC formed this view taking into account a number of matters, including that the company did not seek relief in respect of any contraventions by Kinetiko, its directors or company secretary.[28]
[27] Affidavit of Nicholas Gary Mansfield filed 14 May 2020, 'NGM-5', 'NGM-6'.
[28] Affidavit of Nicholas Gary Mansfield filed 14 May 2020, 'NGM-6'.
Seventh, I was and am satisfied that the interests of the applicants under the Prospectus are adequately protected by the orders proposed by the company. Specifically, notice is required to be given to all persons potentially affected by the orders and they have the ability to return to the court to revoke or vary the orders.
The precondition and requirement in s 1322(6)(c) that no substantial injustice has been or is likely to be caused to any person is also satisfied.
In respect of Kinetiko, if no extension is granted, it will have to refund the capital it has raised and in all likelihood will be delisted. As a consequence, I accept that there will be substantial injustice to Kinetiko if curative orders are not made.
In respect of the existing shareholders of Kinetiko, I infer that they will be affected if their shares are not reinstated for trading and that their shares would be affected by the absence of the capital that has been raised to continue the business of Kinetiko. I accept that the existing shareholders would suffer substantial injustice if curative orders are not made.
In respect of the applicants under the Prospectus, they presently have the option of requiring repayment of their money which right they have held since 1 May 2020. I am satisfied they have been informed of their right to do so by Kinetiko and that Kinetiko intends to repay money to any applicant who requests the return of their money. Given that the applicants have applied for shares in Kinetiko, I infer that the applicants want the shares to be issued for quotation. Without an extension of time being granted, the applicants will not get the shares immediately, or at all, which could cause them substantial injustice.
In my opinion, any prejudice to the applicants who wished to withdraw from their application under the Prospectus and require repayment of their money can be appropriately accommodated by the following. First, reserving to the applicants liberty to apply on short notice to revoke or vary the orders. This will provide an individual applicant with a method to withdraw from their application under the Prospectus. Second, Kinetiko proffered an undertaking to not use any of the offer proceeds from the Prospectus presently in its bank account until the earlier of five business days after the determination of this application or the securities being admitted to quotation as that term is defined in the Act.
For these reasons I consider that if orders are made under s 1322(4)(d) of the Act, substantial injustice will not be caused.
Application for validation or confirmation of issue of shares
Under s 254E(1) of the Act, the court can validate and confirm the issue of the four tranches of shares under the Prospectus. Pursuant to s 1322(4)(a), the court can make orders confirming that the shares that have been issued by Kinetiko are not invalidated by reason of a contravention of the Act.
As set out above, I accept that Kinetiko is an interested person who may seek relief, as required by s 1322(4). As the company who issued the shares, Kinetiko can bring an application under s 254E(1) of the Act.
Turning first to the application under s 254D of the Act, the court can make an order under that section if a purported issue of shares may be invalid. I am satisfied that the issue of the four tranches of shares would, without orders being made by the court, be invalid by reason of s 723(3)(c) of the Act.
In respect of the application under s 1322(4)(a), I am satisfied that it is appropriate to make the order sought by the plaintiff as:
(a)the proposed order is framed in terms of a declaration;
(b)the act, matter or thing is the admission for quotation for the purposes of s 723(3)(b) and s 724(1)(b)(ii) of the Act;
(c)Kinetiko has contravened the requirements of these sections of the Act, including by failing to return monies to the applicants under the Prospectus as required by s 723(3)(c) and s 723(3)(d).
I am satisfied that the pre-conditions of s 1322(6)(a)(i) and s 1322(6)(a)(ii) of the Act are satisfied in that the act (the admission for quotation) is essentially of a procedural nature and there is no failure of the persons concerned or Kinetiko to act honestly. Specifically, there is no evidence before the court in the affidavits of the directors or company secretary of Kinetiko, nor its solicitors, that Kinetiko or its directors and officers have acted dishonestly.
For the reasons set out above in respect of the application for an extension of time, I consider that the pre-condition in s 1322(6)(a)(iii) is also satisfied in that it is just and equitable for orders to be made validating or confirming the issue of shares. For the same reasons, I also consider that no substantial injustice has been or is likely to be caused to any person by validating the four tranches of shares issued under the Prospectus and consider that substantial injustice may occur if these orders are not made.
In respect of the exercise of discretion under each of s 254E and s 1322(4)(a) of the Act, for the reasons set out above at [38] ‑ [44], I consider that the court should make the orders sought.
There is no evidence of any substantial misconduct or flagrant disregard of the Act which would warrant refusal of the relief sought.
Counsel for the plaintiff drew my attention to whether there had been a potential breach of the statutory trust created by s 722(1) of the Act. The evidence of Mr Doropoulos, the chief financial officer of Kinetiko, was that:
(a)approximately $58,000 was paid into Kinetiko's trading account or cash management account by applicants.[29] At the time these funds were received, Kinetiko had not received an application form from one of the applicants, which was received early afternoon on 10 February 2020;[30]
(b)in the afternoon of 10 February 2020, the directors of Kinetiko authorised the allotment of shares to these applicants, although the shares were not allotted until 12 February 2020;[31]
(c)on the basis of his belief that the shares would be allotted that day, in the afternoon of 10 February 2020, he authorised a payment to be made to a company associated with the chief executive officer of the South African business of Kinetiko who was pressing for reimbursement of expenses that he had incurred in the course of his work for Kinetiko.[32]
[29] Affidavit of Paul Doropoulos filed 12 May 2020 [7] - [11].
[30] Affidavit of Paul Doropoulos filed 12 May 2020 [19].
[31] Affidavit of Paul Doropoulos filed 12 May 2020 [22].
[32] Affidavit of Paul Doropoulos filed 12 May 2020 [12], [21].
It is not clear from the evidence before me as to whether there was a breach of the statutory trust as the allotment of shares was approved at or about the same time as the transfer of funds occurred. In any event, I am satisfied, given the amounts concerned and the timing of these events, that there has been no substantial misconduct or flagrant disregard of Kinetiko's obligations under the Act. I also take account of the application before me, which is to extend time periods under the Act. Neither the company nor its officers seek orders for the court to absolve them or any of them from any liability under s 1322(4)(c) of the Act.
The evidence before me is that after the first three tranches of shares were issued, the funds received by Kinetiko have been withdrawn and used by the company for working capital. After the issue of these shares, these funds ceased to be trust money and could be used by Kinetiko. This does not disentitle Kinetiko from obtaining the orders sought by it.
Finally, there is nothing to suggest that any minority shareholder interest might be oppressed by making the orders sought.
Conclusion and orders
For these reasons, at the conclusion of the hearing I made the following orders:
1.The court notes and accepts the written undertaking of the plaintiff dated 14 May 2020.
2.Pursuant to section 1322(4)(d) of the Corporations Act, the period set out in s 723(3)(b) and s 724(1)(b)(ii) of the Corporations Act for the admission to quotation by the ASX Limited (ASX) of securities of the Plaintiff issued pursuant to the prospectus dated 30 January 2020 and the supplementary prospectus dated 27 February 2020 (Prospectus) be extended until 5 business days after the determination of this application.
3.Subject to the Plaintiff's securities being admitted to quotation by the ASX within 5 business days after the making of this order, pursuant to s 254E and s 1322(4)(a) of the Corporations Act, the issue of shares by the Plaintiff pursuant to the Prospectus is hereby validated and confirmed.
4.The Plaintiff forthwith lodge a copy of these orders with the Australian Securities & Investments Commission.
5.The Plaintiff forthwith make an announcement to the ASX disclosing the terms of these orders.
6.The Plaintiff and all other interested or affected parties have liberty to apply to revoke or vary these orders upon first giving 24 hours prior written notice.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ME
Associate to the Honourable Justice Hill20 MAY 2020
0
8
1