Federal Court of Australia

Bowen Coking Coal Limited, in the matter of Bowen Coking Coal Limited [2020] FCA 1738

ORDERS

THE COURT ORDERS THAT:

1.    In respect of the 60,000,000 ordinary fully paid shares of the applicant, which were issued on 9 November 2020:

(a)    pursuant to s 1322(4)(d) of the Corporations Act 2001 (Cth) (Corporations Act), the five business days referred to in s 708A(6)(a) of the Corporations Act be extended to 24 November 2020;

(b)    pursuant to s 1322(4)(a) of the Corporations Act, it is declared that a notice under s 708A(5)(e) of the Corporations Act given to the Australian Securities Exchange Limited (ASX) in respect of those shares within the period provided for in subparagraph (a) be deemed to take effect as if it had been given to the ASX on the date of issue of those shares;

(c)    pursuant to s 1322(4)(a) of the Corporations Act, it is declared that any offer for sale, or sale of, those shares during the period after their issue to the date of the orders made in this proceeding is not invalid by any reason of:

(i)    any failure of a notice under s 708A(5)(e) of the Corporations Act to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(ii)    the sellers’ consequent failure to comply with ss 707(3) or 727(1) of the Corporations Act; and

(d)    pursuant to s 1322(4)(c) of the Corporations Act, any persons to whom any of those shares were issued, or have been sold, and who have in turn on-sold any of those shares, is relived in whole from any civil liability in respect of:

(i)    any failure of a notice under s 708A(5)(e) of the Corporations Act to exempt the sellers from the obligation of disclosure under the Corporations Act; and

(ii)    the sellers’ consequent failure to comply with ss 707(3) or 727(1) of the Corporations Act.

2.    As soon as reasonably practical after orders are made in these proceedings, the Applicant:

(a)    serve a sealed copy of the orders:

(i)    on the Australian Securities and Investments Commission;

(ii)    on the ASX; and

(iii)    by express post on each person to whom the shares in paragraph 1 were issued at the address given by each person for recording on the Applicant’s register of members; and

(b)    publish an announcement to the ASX including a sealed copy of the orders made in this proceeding.

3.    For a period of 28 days from the date of publication of a copy of the orders made in these proceedings on the ASX website, any person who claims to have suffered substantial injustice or is likely to suffer substantial injustice by the making of any or all of these orders has liberty to apply to vary or to discharge them within that period.

4.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

GREENWOOD J:

1    These proceedings are concerned with an application under s 1322 of the Corporations Act 2001 (Cth) (the “Act”) brought by Bowen Coking Coal Limited (the “company”). By the application, the applicant seeks orders pursuant to the section to extend the time for the lodging of a document described as a “Cleansing Notice” with respect to the issue on 9 November 2020 of 60 million shares in the company. The application also seeks to address any consequential failures to comply with ss 707(5) or 727(1) of the Act concerning the trading in any shares forming part of that issue and also to obtain relief from civil liability for those to whom the shares were issued or who have traded in them.

2    I have had the benefit of reading all of the affidavit material in support of the application and, in particular, I have read the affidavit of the Managing Director of the applicant, Mr Gerhard Cornelis Redelinghuys, sworn 26 November 2020; the affidavit of Mr Duncan Patrick Cornish, the Chief Financial Officer and Company Secretary of the applicant, sworn 26 November 2020; and the affidavit of Mr Stephen John Newton, who is the Senior Compliance Manager for Petra Capital Pty Ltd, who had a role to play in the placement and the share issue. I have also had the benefit of reading supplementary affidavits which have been relied upon and a further affidavit by Mr Cornish of 30 November 2020 which addresses some procedural matters. It is not necessary to mention that matter any further.

3    There is a further affidavit by Ms Michelle Eastwell sworn 30 November 2020. Ms Eastwell is a partner of HopgoodGanim Lawyers, the solicitors for the applicant, and she deposes to a number of matters, most relevantly for present purposes, a letter from the Australian Securities and Investments Commission (“ASIC”) dated 27 November 2020 in which ASIC makes clear that it simply, in effect, abides by an order of the Court on the matter, and the affidavit also refers to a letter from the Australian Securities Exchange (“ASX”) dated 27 November 2020 by which the ASX says that it neither supports nor opposes the company’s application. I have taken all of those matters into account in considering the application. It seems to me that it is unnecessary to recite in any detail the particular background facts to the application.

4    It is sufficient to say that, having had the benefit of reading the affidavits, I accept entirely all of the factual matters set out in the affidavits in support of the application. Briefly, it should be noted that the applicant is, of course, an Australian registered company listed on the ASX. The primary business activities of the applicant include mineral exploration and the development of coal projects with a primary focus on metallurgical coal. These facts are, of course, all drawn from the affidavit material. On 9 November 2020, as already mentioned, the applicant issued 60 million shares to certain professional investors within the terms or limits of s 708(11) of the Act and to sophisticated investors within the terms of s 708(8) of the Act.

5    Any further sale of these shares would require disclosure under s 707 of the Act. However, if a notice in accordance with s 708A(5)(e) of the Act, which is the document described as the Cleansing Notice, had been lodged with the ASX’s Market Announcement Platform (“MAP”), such disclosure would not be necessary. The application is made necessary because the applicant failed to lodge a Cleansing Notice in respect of the issue within five business days after the day on which the relevant securities were issued by the company: s 708A(6)(a) of the Act. The effect of that inadvertent failure is that subsequent transactions involving shares issued as part of the issue could be in breach of the Act and, as a consequence, involve uncertainties concerning the validity of such transactions.

6    Accordingly, in order to remedy these difficulties, the application is brought under s 1322 of the Act. It should also be noted that the failure to lodge the notice under s 708A(5)(e) of the Act within the time limited by s 708A(6)(a) of the Act became apparent to the applicant as a result of an email from Ms Verity Barritt on 23 November 2020 to Mr Cornish. Ms Barritt is the Head of Corporate Finance at Petra Capital Pty Ltd, who, as I said earlier, had a role to play in the placement. As a result of that notice, the applicant and its officers moved expeditiously and thoroughly to address the failure to issue the notice within time and began a process of invoking steps to address that matter as a question of important regulatory governance. I accept all of the things that are said about that matter in the affidavit material.

7    The applicant asserts that the Court ought to make orders under s 1322 of the Act on the footing that the extension of time for validating the notice, which was ultimately lodged on 24 November 2020, is essentially in the nature of a procedural matter. Secondly, it is said that all of the persons concerned in relation to the inadvertent failure acted honestly. Thirdly, it is said that it is just and equitable that orders be made in all of the circumstances deposed to in the affidavits. Fourthly, it is said that no substantial injustice has been, or is likely to be, caused to any person by the making of the orders. I accept all of those propositions based on the affidavit material I have before me.

8    I am satisfied that the Court's jurisdiction is properly engaged.

9    I am also satisfied that the discretionary factors are made out.

10    Accordingly, the Court makes the orders as proposed in the application.

Associate:

Dated:    30 November 2020