Re ResApp Health Ltd

ResApp Health Ltd sought approval from the court to allow a third party to make telephone calls to its shareholders. The purpose of these calls was to communicate information regarding a proposed scheme of arrangement in accordance with a pre-prepared script. The court had to determine whether the plaintiff adequately disclosed all relevant information to the court, particularly in light of prior announcements made to the Australian Securities Exchange that had not been fully transparent and subsequent corrective announcements.

The central legal issue was whether the plaintiff fulfilled its duty of full and frank disclosure to the court. The plaintiff had previously made an announcement to the ASX that outlined the benefits of the scheme but failed to mention potential disadvantages. After issuing a corrective announcement identifying these disadvantages, the plaintiff did not disclose these ASX announcements or the issues raised by the Australian Securities and Investments Commission in relation to them to the court. The court needed to assess whether this failure to disclose amounted to a breach of the duty of disclosure.

In determining the matter, the court emphasised the importance of full and frank disclosure in corporate proceedings. The court found that the plaintiff's failure to disclose the ASX announcements and the ASIC issues to the court was a significant omission. This failure to disclose undermined the integrity of the court process and potentially misled the court. Consequently, the court refused to approve the proposed scheme of arrangement as it stood, highlighting the necessity for complete transparency in such communications to shareholders. The court’s decision underscored the importance of adhering to disclosure obligations in corporate restructuring processes.