In the matter of NSX Limited [2024] NSWSC 989

In the matter of NSX Limited [2024] NSWSC 989

The Court was satisfied that the two share issues to ISX contravened s 606 of the Corporations Act 2001 (Cth), but the contraventions were innocent, NSX acted promptly once the issues were identified, ASIC had notice and did not oppose, ISX consented, and cancellation of the contravening shares coupled with a subordinated convertible loan provided a proper mechanism to remedy the contravention, advance the interests of NSX and its shareholders by supporting continued ASX trading, and avoid detriment to creditors.

Jurisdiction
Australia
Judgment Date
02 August 2024
Procedural Posture
Application Under S 1325 a of the Corporations Act 2001 (cth) for Remedial Orders Cancelling Shares / Principal Judgment; Orders Made on 2 August 2024
Outcome
Order made for cancellation of certain shares issued in two placements, with that cancellation taken to be a reduction in NSX's share capital.
Legal Topics
['share Issues' 'takeovers Prohibition' 'contravention of S 606 of the Corporations Act 2001 (cth)' 'remedial Orders' 'cancellation of Shares' 'reduction of Share Capital' 'asx Listing Rules' 'convertible Loan and Subordination']
['corporations Law' 'equity'] ['share Issues' 'takeovers Prohibition' 'contravention of S 606 of the Corporations Act 2001 (cth)' 'remedial Orders' 'cancellation of Shares' 'reduction of Share Capital' 'asx Listing Rules' 'convertible Loan and Subordination']

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Procedural Posture

Application Under S 1325 a of the Corporations Act 2001 (cth) for Remedial Orders Cancelling Shares / Principal Judgment; Orders Made on 2 August 2024

Legal Issues

  1. 1 ['Whether orders should be made under s 1325A of the Corporations Act 2001 (Cth) to remedy an inadvertent contravention of s 606 arising from two share issues by cancelling shares issued to ISX.' "Whether cancellation of the shares should be taken to be a reduction in NSX's share capital authorised by s 258E(3) of the Corporations Act 2001 (Cth)." 'Whether the proposed remedy was appropriate having regard to the interests of NSX, its shareholders and creditors, and the position of ASIC, ASX and ISX.']

Ratio Decidendi

The Court was satisfied that the two share issues to ISX contravened s 606 of the Corporations Act 2001 (Cth), but the contraventions were innocent, NSX acted promptly once the issues were identified, ASIC had notice and did not oppose, ISX consented, and cancellation of the contravening shares coupled with a subordinated convertible loan provided a proper mechanism to remedy the contravention, advance the interests of NSX and its shareholders by supporting continued ASX trading, and avoid detriment to creditors.

Court Disposition

Order made for cancellation of certain shares issued in two placements, with that cancellation taken to be a reduction in NSX's share capital.

Orders

  • ['Orders made in accordance with paragraphs 1 and 2 of the Originating Process filed on 31 March 2024.' 'The exhibit be returned.']