The Federal Court has found that Astra Resources PLC (Astra Resources) and its subsidiary, Astra Consolidated Nominees Pty Ltd (Astra Nominees), breached the fundraising provisions of the Corporations Act, as part of civil proceedings brought by ASIC.
In his judgment delivered last Friday, Justice White upheld ASIC's claims that Astra Resources and Astra Nominees breached the Corporations Act by raising funds from investors without a prospectus or similar disclosure document, as required under the law. His Honour was satisfied that Astra Nominees made offers of Astra Resources shares, as alleged by ASIC, while Astra Resources distributed share application forms to investors.
The Judge indicated that he will make declarations of contravention against the companies, as sought by ASIC, after further hearing from the parties about the precise terms of those declarations.
In concluding that declarations are appropriate in this case, Justice White said, 'They will constitute a clear finding of the contravening conduct of the defendants and will mark the Court's disapproval of their behaviour. It is appropriate that those involved in making offers of shares to the public and in distributing application forms for the offer of shares comply with the requirements of the Act, and the making of the declarations should reinforce that obligation'.
A copy of the full judgment is available here.
The matter has been listed for a directions hearing on 14 September 2015 to hear submissions about the precise terms of the declarations against Astra Resources and Astra Nominees.
The remainder of ASIC's claims against the companies and its former directors, Jaydeep Biswas, Barrie Meerkin and Silvana De Cianni will be determined in the next stage of the proceeding.
ASIC launched its legal action in May 2014 (refer 14-108MR).
In its claim against Astra Resources and Astra Nominees, ASIC alleges that those companies illegally raised more than $6.5 million from almost 300 Australian investors between September 2011 and September 2012.
ASIC also alleges that the former directors, Mr Biswas, Mr Meerkin and Ms De Cianni failed to take reasonable steps to prevent the illegal fundraising.
ASIC is seeking orders to have Astra Resources and Astra Nominees inform affected shareholders that they may elect to have their share purchase contracts set aside and claim a refund or damages.
ASIC is also seeking orders that the former directors be disqualified from managing corporations.