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16-062MR Court orders the wind up of Sino Australia Oil and Gas Limited
Upon the application of ASIC, the Federal Court of Australia has ordered that Sino Australia Oil and Gas Limited (SAO) be wound up on just and equitable grounds and that Mr Peter McCluskey, a Melbourne partner of Ferrier Hodgson, be appointed as liquidator.
In ordering the wind up, Justice Davies found that there had been substantial and serious misconduct and mismanagement in the affairs of the company. Among other things, her Honour found that SAO:
- had permitted prospectus documentation to be issued that contained significant false and misleading statements about contracts that were allegedly held by a subsidiary;
- had presented false and misleading statements in its prospectus documentation in relation to SAO’s profit forecasts; and
- had contravened the continuous disclosure requirements by failing to disclose a significant profit downgrade.
ASIC’s proceedings against SAO and its former chairman, Mr Tianpeng Shao, are continuing.
SAO is the Australian holding company of a Chinese operating company providing specialised drilling services to the oil and gas industry. SAO was listed on the Australian Securities Exchange Limited (ASX) on 12 December 2013 after raising nearly $13 million under an initial public offering (IPO).
In March 2014, ASIC obtained an injunction on an urgent basis arising from concerns that SAO's Chairman, Mr Tianpeng Shao, was attempting to transfer $7.5 million – representing almost the entire cash held by SAO in Australia – to bank accounts in China for purposes that were not disclosed, or not properly disclosed, in SAO’s prospectus documentation during the IPO. That injunction was extended by the Court on a number of occasions thereafter (and ultimately released by the court to the provisional liquidator—see below)(refer: 14-045MR and 14-121MR).
In November 2014, ASIC commenced proceedings against SAO and its former chairman, Mr Tianpeng Shao, seeking financial penalties against SAO and a disqualification order against Mr Shao. (refer: 14-321MR).
On 21 May 2015 the Federal Court ordered, on the application of ASIC, that Mr McCluskey be appointed as provisional liquidator of SAO and to make inquiries in relation to, among other things, the business activities of SAO and its subsidiaries in China and provide a report to the court. ASIC’s application was made as a result of concerns in relation to the accuracy of SAO's prospectus disclosures during its IPO in respect of the drilling and service contracts that SAO claimed to exist between its Chinese operating subsidiary and oil companies in China (refer: 15-124MR).
It is the role of liquidators to investigate and report to creditors about a company’s affairs, realise a company’s assets, enquire into the failure of the company and possible offences by people involved with the company and report them to ASIC and to distribute proceeds of any realisation of the company’s assets in accordance with the priorities under the Corporations Act. ASIC will monitor the liquidation process but will generally not become involved in matters of commercial judgment by a liquidator.
ASIC’s guide on the process of liquidation may assist investors