CORPORATIONS – prospectus – rights issue – representation in prospectus that application would be made for quotation of New Shares on ASX – statutory requirement to make application for quotation within seven days of date of prospectus – requirement overlooked – application to extend period – discretion of Court – general principles – period extended – order that costs of application not to be met out of company funds
IN THE MATTER OF WAVE CAPITAL LIMITED W3022 OF 2003
FRENCH J 12 SEPTEMBER 2003 PERTH
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W3022 OF 2003
IN THE MATTER OF SECTION 1322 OF THE CORPORATIONS ACT
AND:
IN THE MATTER OF WAVE CAPITAL LIMITED ACN 006 031 161 APPLICANT
JUDGE:
FRENCH J
DATE OF ORDER:
12 SEPTEMBER 2003
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.The period of seven days referred to in paragraph 723(3)(a) and in sub-paragraph 724(b)(i) of the Corporations Act 2001 in respect of the prospectus dated 29 July 2003 (‘the Prospectus’) issued by the Applicant be extended to the date contemplated by paragraph 3 hereof.
2.Upon service of this Order on the Australian Securities and Investments Commission (‘ASIC’), ASIC will include such Order on its database.
3.The date fixed for the purposes of paragraph 1 is to be the next day following the lodgment by the Company of an application to Australian Stock Exchange Ltd as provided for in the Prospectus and in any event no later than three days from the date of this Order.
4.The Applicant and all other interested parties including ASIC have liberty to apply to revoke or vary the Orders (1) and (3) above.
5.The costs of this application are not to be met out of company funds.
6.There by liberty to the Company to vary or revoke the last mentioned order.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
W3022 OF 2003
IN THE MATTER OF SECTION 1322 OF THE CORPORATIONS ACT
AND:
IN THE MATTER OF WAVE CAPITAL LIMITED ACN 006 031 161 APPLICANT
JUDGE:
FRENCH J
DATE:
12 SEPTEMBER 2003
PLACE:
PERTH
REASONS FOR JUDGMENT
Introduction
Wave Capital Limited (‘Wave’) is a publicly listed company which, under its former name Waivcom Worldwide Limited, was in voluntary administration and subject to a Deed of Company Arrangement with its creditors from 25 June 2001 until 7 July 2003 when the Deed was terminated. The company’s shares have been suspended from trading since 19 March 2001. It has now embarked…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Re Wave Capital Ltd [2003] FCA 969
Case
[2003] FCA 969
Decision Date
CaseChat Overview and Summary
Wave Capital Ltd, a company previously in voluntary administration, has applied to the Court for an extension of time to comply with specific requirements under the Corporations Act 2001. The company has requested an extension to the deadlines set out in sections 723(3) and 724(1)(b) of the Act in relation to a prospectus issued on 29 July 2003. This application arises from the company's restructuring efforts, which involve a rights issue to existing shareholders, the conversion of convertible notes and an administrator loan into shares, and the issuance of underwriter options. The company's shares remain suspended from trading on the Australian Securities Exchange, and the company seeks to extend the timeframe to facilitate its restructuring and recapitalisation.
The legal issues before the Court pertain to the interpretation and application of sections 723(3) and 724(1)(b) of the Corporations Act 2001. Specifically, the Court must determine whether the circumstances of Wave Capital Ltd justify an extension of the time limits for complying with these statutory provisions. The company argues that the extensions are necessary to allow it to complete its restructuring and recapitalisation, which is critical for its ongoing viability and compliance with the Act. The Court also had to consider the implications of granting such an extension on other stakeholders, including the Australian Securities and Investments Commission and the company's shareholders.
In granting the extension, the Court found that the circumstances of Wave Capital Ltd warranted a deviation from the strict statutory timeframes. The Court noted the company's efforts to restructure and recapitalise, which it considered to be in the best interests of the company and its stakeholders. The Court emphasised the importance of allowing the company sufficient time to complete its restructuring, which is essential for its continued operation and compliance with the Act. The Court also highlighted the need for flexibility in the application of statutory provisions to accommodate unique and complex situations such as the one presented by Wave Capital Ltd.
The Court made several orders to provide the necessary extensions and to ensure transparency and flexibility in the company's restructuring process. The Court extended the period for complying with the statutory requirements to the next day following the lodgment of an application to the Australian Stock Exchange, but in any event no later than three days from the date of the order. The Court also directed the Australian Securities and Investments Commission to include the order on its database and granted liberty to all interested parties to apply to revoke or vary the orders. The Court further ordered that the costs of the application were not to be met out of company funds. Finally, the Court allowed the company to vary or revoke the last mentioned order.
Orders
Orders of the court
1. The period of seven days referred to in paragraph 723(3)(a) and in sub-paragraph 724(b)(i) of the Corporations Act 2001 in respect of the prospectus dated 29 July 2003 (‘the Prospectus’) issued by the Applicant be extended to the date contemplated by paragraph 3 hereof.
2. Upon service of this Order on the Australian Securities and Investments Commission (‘ASIC’), ASIC will include such Order on its database.
3. The date fixed for the purposes of paragraph 1 is to be the next day following the lodgment by the Company of an application to Australian Stock Exchange Ltd as provided for in the Prospectus and in any event no later than three days from the date of this Order.
4. The Applicant and all other interested parties including ASIC have liberty to apply to revoke or vary the Orders (1) and (3) above.
5. The costs of this application are not to be met out of company funds.
6. There by liberty to the Company to vary or revoke the last mentioned order.
Background
Background to the litigation
The company has now applied to this Court, as a matter of urgency, for an order under s 1322(4) extending the time for complying with the requirements of s 723(3). It seeks a like order with respect to the related provisions of s 724(1)(b) of the Act. Factual Background Wave is a company which was incorporated in Victoria in 1982. Until 1 September 2003 it was known as Waivcom Worldwide Limited. It was first listed on the ASX in January 1986. On 16 March 2001, the company went into voluntary administration. Trading in its shares was suspended by the ASX on 19 March 2001. A Deed of Company Arrangement was agreed by a meeting of creditors on 4 June 2001 and executed on 25 June 2001. The administrators have sold the businesses of the company in accordance with the terms of the Deed. Attempts to sell the limited shell were unsuccessful. However, in October 2002 18,237,358 shares together with Convertible Notes were sold to interests associated with the present directors for $550,000, $275,000 of which was payable on 7 July 2003 and the balance on or before 7 September 2003. The purchasers paid $50,000 to the Deed administrators in full and final satisfaction of the requirements of the Deed so that it could be terminated. The Deed of Arrangement was terminated on 7 July and at that date Messrs. Jeremy Shervington, Adam Rankine-Wilson, Geoffrey Lambert and Philip Rees were appointed as directors. Mr Rees was also appointed as company secretary. Messrs. Fearis Salter Power Shervington, of which Mr Shervington is a partner, were appointed as the company’s solicitors. The company presently has 1,261 shareholders and remains suspended from trading on the ASX. The new board set about the restructuring and recapitalisation of the company. On 29 July 2003, the company issued a Prospectus for an offer comprising the following elements:(a)A Rights Issue to existing shareholders of up to 405,350,268 New Shares for subscription by way of a non-renounceable offer at an issue price of ½ cent per share payable in full on application. This offer was made on the basis of an entitlement to subscribe for six new shares for every existing share held at the date of the offer. The new shares offered pursuant to the Rights Issue would, when issued, rank equally in all respects with each other and with the Existing Shares. This issue is calculated to raise $2,026,751 before costs. (b)120,000,000 New Shares are offered to Convertible Note holders who elect to convert their Convertible Notes and Administrator Loan into shares at the rate of one New Share for every 0.5 cents of the written down face value of the Convertible Notes and to capitalise their contribution to the Administrator Loan at the rate of one New Share for every 0.5 cents of loan amount contributed. The conversion will not involve the injection of cash into the company but the retirement of the written down value of the debts of $550,000 represented by the Convertible Notes and $50,000 represented by the Administrator Loan. (c)This involves the issue of 95 million Underwriter Options to the Underwriter and parties nominated by the Underwriter (including directors). The Underwriter Options are to be granted for no consideration.The offers were expressed to close at 5pm on 1 September 2003 unless extended.