ASIC has commenced proceedings in the Federal Court of Australia in Melbourne against former managing director of Murray Goulburn Co-operative Co. Limited (MG) and MG Responsible Entity Limited (MGRE), Mr Gary Helou, and former CFO of MG and MGRE, Mr Bradley Hingle, over their involvement in MGRE’s failure to disclose to the Australian Securities Exchange (ASX) market sensitive information in a timely manner.
The proceedings relate to announcements released by MGRE to the ASX on 29 February 2016 (the February Announcement) forecasting:
- an Available Weighted Average Southern Milk Region Farmgate Milk Price (FMP) for the financial year ending 30 June 2016 of $5.60 per kgms; and
- a full year net profit after tax (NPAT) for the financial year ending 30 June 2016 of approximately $63 million (February Earnings Guidance).
ASIC alleges that Mr Helou and Mr Hingle:
- were involved in the breaches by MG and MGRE of their continuous disclosure obligations in the Corporations Act; and
- breached their duties as directors and officers to act with reasonable care and diligence by:
- failing to adequately monitor the financial position and performance of MG and MGRE against the February Earnings Guidance;
- failing to inform the Board before 26 April 2016 of information which indicated the February Earnings Guidance was unlikely to be achieved;
- causing or otherwise permitting MG and MGRE to make misleading statements in the February Announcement; and
- causing or otherwise permitting MG and MGRE to breach their continuous disclosure obligations.
Further ASIC alleges that Mr Helou engaged in misleading or deceptive conduct by approving the February Announcement.
ASIC is seeking:
- declarations that Mr Helou contravened sections 180(1), 601FD(1)(b), 601FD(1)(f), 674(2A), 675(2A) and 1041H of the Corporations Act 2001 (Cth) (Corporations Act);
- declarations that Mr Hingle contravened sections 180(1), 601FD(1)(b), 601FD(1)(f), 674(2A), 675(2A) of the Corporations Act; and
- that Mr Helou and Mr Hingle each be disqualified from managing a corporation for such period as the Court deems appropriate.
The matter has been set down for a Case Management Hearing at 9.30am on 2 August 2019.
Links to the Originating Process and Statement of Claim filed by ASIC to commence its proceedings are below.
Commissioner Cathie Armour said, “ASIC will take action to disqualify directors and officers who cause a company to contravene its market disclosure obligations, or are involved in the company’s contravention.”
On 15 December 2017, the Federal Court of Australia ordered MGRE, as trustee and responsible entity for the MG Unit Trust (ASX code: MGC) to pay a pecuniary penalty of $650,000 for contravening its continuous disclosure obligations.
The court found that MGRE contravened section 674(2) of the Corporations Act on and from 22 March 2016, continuing until 27 April 2016 by failing to notify the ASX that circumstances had arisen a consequence of which was that, Murray Goulburn Co-operative Co. Limited (MG) was unlikely to achieve the forecasts given by MG and MGRE in the February Announcement (17-441MR). Those forecasts concerned:
- Available Weighted Average Southern Milk Region Farmgate Milk Price for the financial year ending 30 June 2016 of $5.60 per kilogram of milk solids; and
- Full-year net profit after tax for the financial year ending 30 June 2016 of approximately $63 million.
Editor's note 1:
On 2 August 2019, the Federal Court of Australia made case management orders, including orders to set down the matter for 13 September 2019 to hear any applications by the defendants to stay ASIC’s proceedings.
Editor's note 2:
On 14 and 15 August 2019, Mr Helou and Mr Hingle filed applications seeking orders that ASIC’s proceeding be permanently stayed.
Justice Beach heard the applications by the defendants on 13 September 2019. On 4 October 2019, the Federal Court of Australia dismissed the defendants’ applications.
Editor's note 3:
On 4 October 2019, the Federal Court of Australia made case management orders in the proceedings, including that the proceeding be set down for trial on the question of liability only, to be heard together with proceeding no. VID 508/2017 (Webster v Murray Goulburn Co-operative Co Ltd & Ors) at 10.15 am on 5 February 2020.
The Court also ordered that the matter return to court on 29 November 2019 for further directions.
Editor's note 4:
The case management hearing originally scheduled for 29 November 2019 has been moved forward to 8 November 2019.
Editor's note 5:
The Court has vacated the order made on 4 October 2019 to set the matter down for trial on 5 February 2020. The trial will now be held on 28 September 2020. A further case management hearing will take place on 7 February 2020.
Editor's note 6:
The trial date of 28 September 2020 was vacated. The matter has been listed for hearing at 10:15am on 12 November 2020.