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11-303AD ASIC obtains orders to freeze 15 million Northwest Resources Limited shares
Following an application by ASIC, the Federal Court of Australia has ordered that Craigside Company Limited (Craigside), a company incorporated in the British Virgin Islands and operating from Hong Kong, be restrained from disposing of, or exercising any votes or other rights attached to, 15 million shares that it holds in Northwest Resources Limited (Northwest).
The shares represent approximately 11.46% of Northwest’s issued capital and are the subject of proceedings brought by ASIC under section 1325A of the Corporations Act 2001 (Corporations Act), which includes an application for an order that the shares be vested in ASIC.
ASIC alleges that while Craigside is the holder of the shares, it does not have a relevant interest in them. ASIC also alleges that those that do have a relevant interest in the shares have not disclosed it to Northwest, contrary to the requirements imposed by the Corporations Act.
In addition to restraining Craigside, Justice Middleton also ordered that Northwest not register any dealings in Craigside’s shareholding and that Northwest also cause its share registrars to apply and maintain a holding lock over that shareholding in order to prevent any dealings in them.
ASIC’s application will be further heard by the Court on 2 February 2012.
Northwest is an Australian mining company listed on the Australian Securities Exchange. The Federal Court action was taken by ASIC as part of its continuing focus on maintaining fair and efficient financial markets.
ASIC is continuing its investigation into matters associated with Craigside’s holding in Northwest shares as part of the Project Wickenby cross-agency task force, which was established to investigate and enforce the law relating to the participation in arrangements of an international character regarding breaches of laws relating to financial markets and corporations, amongst other things.
Under section 671B of the Corporations Act, a person who has a substantial holding in a listed company is required to give it certain information.The required information includes, among other things, the person’s name and address along with details of their relevant interest in the voting shares of the company.
A person is considered to have a substantial holding if the total votes attached to the holding in which they or their associates have a relevant interest are 5% or more of the total number of votes attached to a listed company’s voting shares.
Under section 608 of the Corporations Act, a person has a relevant interest in securities if they:
- are the holder of the securities
- have power to exercise, or control the exercise of, a right to vote attached to the securities, or
- have power to dispose of, or control the exercise of power to dispose of, the securities.
Under section 672B of the Corporations Act, a person must disclose, if directed by ASIC or a listed company, full details of their own relevant interest (definition from Act) in the shares and of the circumstances that give rise to that interest. They must also disclose the name and address of each other person (definition from Act) who has a relevant interest in any of the shares or interests.
The purpose of these provisions is to ensure that the identity of those who have the ability to exercise control over a significant number of shares in a listed company, including the ability to influence the voting associated with the shareholding, is known to both the company and the market in which the company’s shares trade.
On 2 February 2012 a directions hearing for this matter was held before Justice Middleton of the Federal Court of Australia. The matter has been set for a further directions hearing on 16 March 2012.