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Corporate Law (Australia)

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Question 1

a)      Register of company  names for the Company Resmed Ltd

What is the company ABN?

The ABN number of Resmed Ltd company is 30 003 765 142.

What type of the company is Resmed Ltd?

The Resmed is under the category of Australian Public Company, Ltd by shares.

What document was registered on 28/10/2009?

The document that was registered on 28/10/2009 by the Resmed Ltd Company is the document number 1F0269044 which has 3 pages and its Description is 484E Change to Company Details Appointment or the Cessation of A.

a)      The register of enforceable undertaking of Christopher Chandran 

The undertaking a rose from the audit of which body?

The undertaking was from 10-02AD Enforceable undertakings given by the Auditors of failed Estate Property Group Limited and the Australian Capital Reserve Limited. On Tuesday 5th January 2010

Explain your own words what were 2 of ASIC’s concerns in relation to the “going concern” basis on which 2006 financial report was prepared?

One of the concerns was that according to the opinion of audit that was unqualified that was signed by the lead Mr. Chandran who was the lead auditor on behalf of the Estate Property Group ltd  for the for the financial report of (EPG) for the year that ended June 30th 2006. According to the investigation carried out by ASIC, it was reported that, that audit that was conducted by Mr. Chandran was not adequate and as the auditor in charge he had a failure in ensuring that the audit was complying with the standards of Australian auditing as it is a requirement set by the Corporations Act of 2001

The second concern was that as the auditor in charge, Mr. Whiddett signed the opinions that were unqualified in respect of the finance report of

  1. The 30th June finance report of the company called Australian Capital Reserve Ltd (ACR)
  2. Estate of Miller Pty Ltd (EOM) financial year that ended 30th June 2005
  3. Estate property Group Ltd (EPG) for the financial year that ended June 30th, 2005

According to the investigation carried out by ASIC it was reported that the audits that Mr. Whiddett conducted were not enough and the auditor in charge, he had a failure  in ensuring that these audits were in compliance with the Australian Auditing standards as set by the Act.

Question 2

a. What is the main requirement of the listing rule about “continuous disclosure”?

Continuous disclosure is the suitable advising of information to ensure that the traders in the market informed of tasks and developments whenever they happen. The information to be given to the markets must be given to ASX’s office for announcement.

Listing rule 3.1: Immediate notice of material information

When the body gets the information that the prices or value of its securities would be affected by a reasonable person then immediate notice must be made to the ASX.

Listing rule 3.2 and 3.3 were deleted on 11/01/2010

Listing rule 3.4: Notice of specific information

States that in a span of 10 business days after the end of the period of offer for a takeover bid, an entity must deliver the following information to ASX

Firstly, if the trader (or a body’s child) made the takeover bid and the concerns in the entity was equity securities. A distribution program, the names, percentages and the 20 largest entities set must be provided.

Secondly, if the trader was matter to the takeover bid and enforced acquirement will not proceed.

Listing rule 3.5, 3.6, 3.7, 3.8 have been since deleted from the ASX regulations. And reference is made to 3.8A

Listing 3.8A: Company making a buy-back

The entity must fill the following documents and return them in time to ASX, they include; the announcement of buy-back, change relating to buy-back, daily notification, final notice, copy of any cancellation notice of share lodge with ASIC resulting from a buy-back.

Listing rule 3.9: Company making a buy-back

States that “once an agreement make up a buy-back is rescinded or discharged except by performance, then the trader must inform the ASX, the number of shares in the agreement half an hour before beginning of trading the next day where the agreement is rescinded or discharged.

Listing rule 3.10: Capital

A trader must immediately give information to the ASX about

3.10.1. Details of the capital reorganization in the company e.g. trusts and interests.

3.10.2: Details of shares call

3.10.3. Proposal of securities issues i.e. the issued class of securities, number of securities to be issued, principal conditions of the issued security, price of issue or considerations, why the issues is being undertaken, the approval for permission from the security holders, and who will take the issue i.e. is it to a class.

3.10.4. The lodging of any product disclosure statement or document or details memorandum. Such copies should be delivered to ASX after the lodge with ASIC immediately and the memorandum given before the issue.

3.10.5. Any undertaken issue of security i.e. if it is not a bonus issue or a pro rata issue.

3.10.6. If any exercise is to be undertaken by an underwriter of a right then the details must be presented to avoid change of the duties of the underwriter.

3.10.7. For convertible securities when an event occurs that provides the security holder conversion or exercise rights the details must be provided

3.10.8. A copy of the conditions and terms of any dividend or distribution plan must also be provided even when amending.

Listing rule 3.10A: Forthcoming release of restricted securities and securities subject to voluntary escrow

the ASX must receive any information regarding restricted securities or securities relating to voluntary escrow, where it must be before ten business days before the escrow period ends. Nonetheless this rule has exception to voluntary escrows transacted before 30th September 2001.

Listing rule 3.11: Options

The ASX must be informed by the entity about,

3.11.1. A change in the option exercise price or the underlying securities number in which the option is to be exercised and the effecting dates of the change.

3.11.2. When the option enters the underwriting agreement for the exercise option the ASX must be notified immediately about the underwriters name and commission or fee payable.

Listing rule 3.12: Forfeited shares in NL companies

For a no liability company forfeited shares the notification of the forfeiture must be immediately communicated to the ASX. This includes;

3.12.1. Auction Time and date before midday every Monday until the selling date of the forfeited shares.

3.12.2. The redeemed number of shares by former holders every week until the auction every Monday until the selling date of the forfeited shares.

3.12.3. The offered shares for sale, those sold, the remaining, the average sale price and the sales proceeds after the auction. This must be by midday a day after the auction.

3.12.4. Five business days after the auction the payable amount to the former shareholders due to non calls non-payments and the amount per share must be transmitted to the ASX.

3.12.5. The information of re-issued shares, the proceeds and the remaining forfeited shares must be relayed to ASX immediately after the offer to shareholders closes.

3.12.6. The number of shares to be traded and ways they will be traded must be known a day before the trading.

3.12.7. In once every week the shares sold the remaining number the average price and proceeds fro trading must be established.

3.12.8. For cancelled shares the number must be known by midday after the general meeting that meets to reflect on the cancellation.

Listing rule 3.13: Meeting

The ASX must be notified about;

3.13.1. Any directors’ elections by the security holders at meetings, which should the date of the meeting and be five business days before the nominations closing date.

3.13.2. After the meeting the outcome for the resolutions by the shareholders, which should be immediately after the meeting. Incase of adjournment it must be communicated.

3.13.3. The contents in the advertisement of the meeting before the meeting.

Listing rule 3.14: Offices

The entity’s change of physical address, telephone, fax of its office must be communicated immediately.

Listing rule 3.15: Registers

3.15.1. Entity must communicate the change of address where the register is being kept.

3.15.2. For Australian companies any proposal to cease operations must be communicated within 20 business days before the register ceases to operate.

3.15.3. For foreigners the proposal to cease operations for depository receipts must be within 20 business days.

Listing rule 3.16: change of chairperson, responsible entity, auditor, or director

Listing rule 3.17: Documents sent to security holders

Listing rule 3.18: Additional disclosures if loans are an asset.

Upon request the entity should communicate the amount of each loan, borrowers, security held, maturity date, and interest rates.

Listing rule: 3.19: ownership limits

Any restrictions apart from the Corporation Act or the Foreign Acquisitions and Takeovers Act from the ownership and/or control of securities must be communicated i.e. including changes in percentage shares.

Listing rule 3.20: Record date and compliance with timetable.

Immediate communication must be made if the entity chooses and/or changes a proposed record date, where a notice of before seven business days.

b. What is the effect of a confidentiality agreement on this requirement (according to the ASX rules)?

A confidentiality agreement should and must not hinder the entity or company from abiding by its obligations as provided by the listing rules and more specifically its commitment to provide ASX with information for release to the markets as required by the rules.

c. Give 2 examples of information which would be considered confidential and an exception to the rule.

Confidential information

Information that an entity would consider confidential would be information that would give its competitors a better competitive advantage position.

Information regarding the production process for a producing company is confidential. Incomplete negotiations and proposals are also confidential.

Information of the raw materials and reagents used in the company for production is also confidential. Internal management proposals and ideas about the entity are also confidential.

Exceptions to the rule

When ASX foresees the likelihood of a false market in the company’s securities then requests for information to rectify the false market the company must provide the information requested. The ASX should not breach any law in disclosing any information.

Question3.

a)      Fred is annoyed that an unsolicited credit card has been sent to his teenage son Billy, by a corporate finance Company.

The section that has been breached is SECT 12DM part (1) that states that persons should not in either trade or commerce declare aright to be paid from another individual for unsolicited finance services. Also the section that is breached is SECT 12 DL that states that one should not send a credit card or debit card  to another person a part from the when it is in the accordance with section (2). The failure to comply with these conditions SECT 12 GB provides the penalty for both the corporate persons and non corporate .Under the Act SECT 12 GB finds the corporation with the offense that is punishable by law on conviction. The penalty on offenses against subdivision D part (1), states the penalties that since it was a corporate body a fine of not exceeding 10,000, penalty un.

b)      Sally was sent a Notice by ASIC requiring her appearance for examination. Sally has refused

To attend

The section that has been breached is the Australian Securities and the Investments Commission Act 2001- Sect 19. The section that applies on a person that the ASIC on sensible ground feels suspicious or has faith that an individual can provide very important information that concerns the issue that is being investigated on or is to be investigated under Division 1. The notice was the notice to appear a particular member or the member of the staff for the examination on oath and answer some questions.

Failure to comply with this section 19, the penalty is prescribed in Australian Securities and Investment Commission Act 2001 – SECT 63, it states that an individual recklessly or knowingly fails to keep the section 19 will be penalized to 100 penalty units or be imprisoned for a period of 2 years or sometimes both may be applied to that individual.  

b)      George is the authorized representative of a financial services licensee and gives out a disclosure document, knowing that it is defective.

The section that is breached is SECT 12 DA, the section warns that one should not either in business or trade be involved in conduct in relation to financial services that can be misleading or can be deceptive or has the probability to mislead or be deceive.

Section 12DA part (1A) the conduct that contravenes section 670A of the corporation act (misleading or deceptive takeover documents) or section 728 of the Act of corporation (misleading or deceptive fundraising documents), disclosure of documents or a statement that has a meaning in the corporations Act section 953A and lastly the corporation Act section 1022A in relation to the disclosure of documents or statements that its meaning is given in this section.

Penalty

This section does not give rise to an offense or there is no liability or penalty because the defense is available. In SECT12 GH that explains the conduct by directors, agents or employees. That states that if the proceeding that is provided in this subsection that regards to the conduct involved by a corporate body, being conduct in connection to the Division that applies, it well be good to determine the state of mind of the corporate body, it is enough to show that directors, agents and employees of a corporate body being a director agent or employee who engaged in the conduct in within the range of the individual’s real or apparent authority had that kind of mind. It continues explaining that any form of conduct engaged in on behalf of a corporate body by directors, agents or employees within the range of individual’s real or apparent authority and engaged by any other individual who has the consent or an agreement is within the range of the real or apparent power of the directors, employee or agents; it is taken for the reason of this division to have been involved in also by the corporate body. Furthermore, if in the proceedings provided under this sub-section regarding the conduct involved in by an individual other than a corporate body, being the conduct in connection to which a provision this Division is applicable, it is important to establish the state of mind of the individual, it is enough to show that employees or agents of an individual being an employee or an agents by whom the conduct was involved in within the range of the employee’s or agent’s real or apparent power, had that state of mind. It is noted that, the conducts that one engages in on behalf of a principal other than a corporate body by either an employee or an agent of the person within the range of real or apparent source of power of an employee or an agent or by any other individual going to the direction, agreement or consent within the range of real or apparent source of power of the employees or agents; is considered for the function of this Division, to have been engaged by the principal also. On top of these, the reference under this section to the state of mind of an individual comprises a reference to the knowledge, intention belief, opinion, or the function of the individual and the individual’s reason for the intention of the individual’s intent, belief, opinion or purpose. Lastly the criminal code part 2.5, have no application in connection to an offense against the provision of this sub-division.

c)      Jenny is acting as administrator of a company and at the same time she is a partner of the firm auditing the company, without the leave of the Court.

The section that will be breached under this circumstance is the SECT – 239CK. This is because when auditing the company that is an employee in at a time may try to hinder the process. This section states that a person should not be involved in an activity that may lead to the obstruction of financial reporting panel or some times may be a member in the performance or exercise the functions of the financial reporting panel and powers. In addition her conduct may result in the disruption of the proceedings of the financial reporting panel.

The other section that may be breached in the course of Jenny’s action is SECT 125 which states the notification of interests to ASIC. As part (1) states that the section has an effect in conditions that during the course of carrying out functions or services as a staff member, carrying out functions, exercising an authority as a delegate of ASIC and lastly, carrying out functions or service as an assistant to the ASIC delegate.  There is a need to mind matters in which an individual has direct or indirect pecuniary or any other interests that can result to conflicts with the good performance or exercises by an individual of these duties, power or service. An individual has to forthwith give a written notice to start that she needs to consider the matter and she has interest in it and also set out the particulars of that interest.

An individual should not recklessly refuse to do what is required to prevent the conflict that has been referred to in the subsection (1) in this section.

Penalty

The penalty is the 50 penalty units or the imprisonment which may take a period of one year or some time a fine and imprisonment may be done simultaneously. an offense constituted that may result to the contravention of this sub-section is punishable on conviction summary.

Question 4

a) What did Trio and the administrators each specifically apply for?

Trio applied for an order to pursue section 601ND of the Corporations Act instructing it to end its schemes on the just and equitable fund.

The administrator applied to seek direction to section 447Dof the same act so as to be justified in ending the schemes relating to section 601NC of the act or any other superior law i.e. the constitution about the schemes.

b) What does section 447D of the Corporations Act allow and what was it used for in this case?

It allows the court to rule on the winding up of a registered scheme of a responsible entity upon justice and equitability or in the span of three months period previous to the application a court had discredited the entity responsible for a scheme or the process was not satisfactory.

The court also rules on the responsible entity, director running the responsible entity, member of the scheme, or ASIC. Or either rule against the application made by the creditor.

c) According to the extract from McDougall J in the precedent Re Rubicon Asset Management Ltd when can the Court wind up a scheme on the just and equitable ground?

In cases where the scheme is insolvent, due to public interest i.e. if the scheme is crushing down, or for the investors protection. It may also be wound up if the responsible body is insolvent in that the entity cannot continue to perform its duties, and when no other responsible body is willing or ready to replace the other responsible entity.

d) In your own words, what features of the scheme did Palmer J say should have sent a warning to financial advisers? And why wouldn’t the advisers have been warned?

There were funds of the AFS that were fraudulently invested and other funds lost, the AFS had other direct and indirect connections to four schemes and Trio was responsible for all the schemes, and the major responsible body was willing to end the schemes. The funds that were being used in the schemes were from superannuation that was to be used for retirement; this was unethical for the administrators. The financial advisors could have been working with liaison with the administrators since everything was very open for them to account for.

e) In your own words, what the Product Disclosure statements and the Deed establishing the Fund permit the fund to invest in?

There was a lot of malice in the whole issue since the Deed that established the fund gave the managers authority to invest in investments of their choice but should be subject that the investors are informed periodically. The Product Disclosure Statements were not inline with the agreement.

f) What did Palmer J order in relation to the schemes?

Palmer J ordered the winding up (termination) of the schemes on basis of justice and equitability.

g) Explain in your own words what were his basis and the supporting reason(s) for making this order?

Palmer J based his order was based on the reasons that some funds of AFS were fraudulently invested, the direct and indirect investments of other four schemes in AFS, Trios responsibility for all the schemes was illegal since it was insolvent, and in the interest of investors and the public the assets had to be recovered and distributed and investigations done into the losses.

h) List 4 things which suggested EMA’s investment in the underlying funds was a scam.

Firstly, the Product Disclosure Statement issued on 31st August 2009 and 28 September 2009 for the ASF never indicated funds invested in a Deferred Purchase Agreement of a Delivery Asset Parcels of EMA ltd.

Secondly, the lawyer of the Canadian director of EMA never knew about the administration of EMA

Third, the PDS did not also state that EMA was under administration of GCSL ltd which was supposedly in Anguilla though its operations were in Hong Kong.

Fourthly, the statements also never disclosed the DPA with EMA which had a numerous transactions that never added up and were never accountable.

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