Re QBiotics Limited

In the case of QBiotics Limited, QBiotics sought a declaration that certain share transfers, which were completed between shareholders of the company from 20 July 2010 to 18 February 2016, were not invalid. The company argued that these share transfers contravened certain provisions of its constitution. QBiotics contended that the share transfers were substantive rather than procedural in nature, but that the Court should nonetheless declare them valid under section 1322(4) of the Corporations Act 2001 (Cth), provided it was satisfied that no substantial injustice had been or was likely to be caused to any person.

The central legal issue in this case was whether the Court should declare that the share transfers, which contravened the company's constitution, were nonetheless valid. The Court had to determine whether the share transfers were substantive contraventions of the company's constitution and whether it was just and equitable to declare them valid despite the contraventions. The Court also had to consider whether making such a declaration would cause substantial injustice to any party.

The Court found that the share transfers were indeed substantive contraventions of the company's constitution. However, the Court concluded that there was no evidence of any substantial injustice that would result from declaring the share transfers valid. The Court noted that 11 of the top 20 shareholders had already signed deeds of release, and it was likely that the remaining shareholders would also sign if given more time. The Court considered the broad policy underlying section 1322(4) of the Corporations Act, which permits the validation of substantive contraventions under certain conditions. The Court held that it was just and equitable to declare the share transfers valid, as doing so would not prejudice any third parties or the public interest in compliance with the Act.

Accordingly, the Court made a declaration that the share transfers in question were not invalid. This decision allows the share transfers to stand, provided that all relevant shareholders sign the deeds of release.