Re Poseidon Nickel Ltd

Poseidon Nickel Ltd applied for relief from certain disclosure requirements under s 1322 of the Corporations Act 2001 (Cth). Poseidon issued shares on 40 occasions in apparent contravention of disclosure requirements in s 707(3) and s 727(1) of the Corporations Act. Almost all of the shares were on-sold within 12 months. The court was required to determine whether a declaration should be made that sales of shares were not invalid and whether an order should be made relieving sellers from civil liability. The court also had to consider whether relief from civil liability should extend to companies issued with shares under the terms of a convertible note agreement and a subscription deed.

The court found that relief should be granted to protect the interests of current holders of the shares and to maintain the integrity of future dealings in shares in Poseidon. The orders should be framed to protect any interest that current holders of Poseidon shares may have in raising any complaint or claim concerning the matters that led to the contraventions of the Corporations Act. The court declined to grant orders extending relief to certain parties who were involved in the conduct that may have resulted in contraventions. The court noted that no relief was sought by Poseidon or its present or former officers in respect of their own conduct.

The court made orders that any offer for sale or sale of the shares during the period from the date of issue until 5 April 2018 is not invalid by reason of the seller's failure to issue a notice under s 708A of the Corporations Act or a prospectus as the case may be before selling the shares, and any consequent failure to comply with s 707(3) and s 727(1) of the Corporations Act. Any holder as at the date of these orders of shares listed in Annexure A who is still the holder at the time of application may apply at any time in the next 12 months for a different order. Subject to certain exceptions, pursuant to s 1322(4)(c) of the Corporations Act any sellers of the shares listed in Annexure A are relieved from any civil liability arising out of any contravention of s 707(3) and s 727(1) of the Corporations Act. An announcement was required to be made to the Australian Securities Exchange. Any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of any or all of these orders has liberty to apply to vary or to discharge these orders within 28 days.