BPESAM IV M Limited v DRA Global Limited [2020] FCA 738

BPESAM IV M Limited v DRA Global Limited [2020] FCA 738

Resolution 12 approving the share buy-back was invalid as it was based on materially misleading financial statements. The representation to shareholders of the company’s financial position breached Corporations Act s 1041H and ASIC Act s 12DA. The waiver power for the condition precedent in the buy-back agreements was not properly enlivened, given absence of concrete likelihood/timing of a successful capital raise. Injunctive and declaratory relief was appropriate to restrain reliance on the invalid resolution and improper waiver.

Parties
First Applicant: BPESAM IV M Limited; Second Applicant: BPESAM IV N Limited; First Respondent: DRA Global Limited; Second Respondent: Peter Mansell; Third Respondent: Lee Gordon Guthrie; Fourth Respondent: Kathleen Bozanic; Fifth Respondent: Kenneth Thomas; Sixth Respondent: Leon Johan Uys; Seventh Respondent: Andrew James Naude; Eighth Respondent: Gregory Lewis McRostie
Jurisdiction
Australia
Judgment Date
29 May 2020
Procedural Posture
Final Hearing (urgent Application for Relief Re Corporations Law/share Buy Back) / Judgment
Outcome
Declarations made of misleading conduct, invalidity of Resolution 12, and improper waiver; injunctive relief granted restraining reliance on Resolution 12 and the waiver; cost orders as per Court's orders.
Legal Topics
Share Buy Back, Disclosure Obligations, Misleading or Deceptive Conduct, Injunctions, Declarations, Waiver of Condition Precedent, Selective Share Buy Back Procedure
Corporations Share Buy Back Disclosure Obligations Misleading or Deceptive Conduct Injunctions Declarations Waiver of Condition Precedent Selective Share Buy Back Procedure

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 5 Authorities cited 25 Party arguments 2 Amounts and remedies 6
Sign in to unlock

Parties

BPESAM IV M Limited

First Applicant

BPESAM IV N Limited

Second Applicant

DRA Global Limited

First Respondent

Peter Mansell

Second Respondent

Lee Gordon Guthrie

Third Respondent

Kathleen Bozanic

Fourth Respondent

Kenneth Thomas

Fifth Respondent

Leon Johan Uys

Sixth Respondent

Andrew James Naude

Seventh Respondent

Gregory Lewis McRostie

Eighth Respondent

Procedural Posture

Final Hearing (urgent Application for Relief Re Corporations Law/share Buy Back) / Judgment

Legal Issues

  1. 1 Whether financial statements presented to shareholders were misleading or deceptive in contravention of Corporations Act s 1041H and ASIC Act s 12DA
  2. 2 Whether Resolution 12 approving share buy-back is invalid due to incorrect information
  3. 3 Whether condition precedent in share buy-back agreements may validly be waived

Ratio Decidendi

Resolution 12 approving the share buy-back was invalid as it was based on materially misleading financial statements. The representation to shareholders of the company’s financial position breached Corporations Act s 1041H and ASIC Act s 12DA. The waiver power for the condition precedent in the buy-back agreements was not properly enlivened, given absence of concrete likelihood/timing of a successful capital raise. Injunctive and declaratory relief was appropriate to restrain reliance on the invalid resolution and improper waiver.

Court Disposition

Declarations made of misleading conduct, invalidity of Resolution 12, and improper waiver; injunctive relief granted restraining reliance on Resolution 12 and the waiver; cost orders as per Court's orders.

Orders

  • Declaration that respondents engaged in misleading or deceptive conduct contrary to section 1041H of the Corporations Act and s 12DA of the ASIC Act.
  • Declaration that Resolution 12 is invalid.