GrainCorp Limited, in the matter of GrainCorp Limited [2008] FCA 996

REASONS FOR JUDGMENT 1 The plaintiff, GrainCorp Limited (GrainCorp), has applied by originating process for an order under s 1325A(2) of the Corporations Act 2001 (Cth) (the Act) in relation to a failure to comply with s 625(3)(c)(i) of the Act. 2 Section 625(3) relates to conditional takeover offers. It relevantly provides that, if the consideration offered is, or includes, securities and the offer or the bidder's statement states or implies that the securities are to be quoted on a financial market, the offer is to be subject to a condition that an application for admission to quotation will be made within seven days after the start of the bid period in relation to the offer. 3 Section 1325A(2) of the Act provides that the Court may make any order or orders that it considers appropriate if: the consideration offered under a takeover bid is or includes securities, and the offers under the bid or the bidder's statement state or imply that the securities will be able to be traded on a financial market and an application for admission to quotation will be made within seven days after the start of the bid period. 4 GrainCorp's intention to make an off-market bid for all of the issued shares in Ridley Corporation Limited (Ridley) was announced to ASX Limited (ASX) on 16 May 2008. A copy of the Bidder's Statement, lodged by GrainCorp with the Australian Securities and Investments Commission (the Commission), was sent to Ridley on 6 June 2008. The offer foreshadowed in the Bidder's Statement is to acquire all the shares in Ridley on the terms set out in appendices to the Bidder's Statement. Under those terms, an accepting shareholder will receive one fully paid GrainCorp share for every nine Ridley shares. 5 Appendix 1 to the Bidder's Statement sets out the formal terms of the proposed offers. In particular, Appendix 1 provides that an application will be made to ASX within seven days after the date of the Bidder's Statement for the granting of official quotation of the GrainCorp shares to be issued as consideration under the offer. The Appendix sets out the statutory condition that an application to admission to quotation be made within seven days after the start of the bid period. The bid period commenced on 6 June 2008 when the Bidder's Statement was lodged the Commission and sent to Ridley. 6 Ms Georgina Goldsworthy is a senior associate employed by GrainCorp's solicitors, Mallesons Stephen Jaques. Ms Goldsworthy has primary carriage of the transaction on behalf of GrainCorp subject to supervision by one of the firm's partners. In the evening of 17 June 2008, it became apparent to Ms Goldsworthy that application for admission to quotation of the shares, to be issued as consideration under the offers, should have been made to ASX by Friday 13 June 2008, which is the day seven days after the date of lodgement of the Bidder's Statement with Ridley. As a result of oversight on the part of Ms Goldsworthy that had not occurred. 7 I am satisfied that the failure to lodge the application for quotation was the result of accident and oversight. Ms Goldsworthy has explained the circumstances in which her workload led to the oversight. The specific cause of the oversight was the failure to include the application to ASX in a timetable of necessary steps used by the legal team working on the bid. Had Ms Goldsworthy recalled or been reminded at any time prior to 13 June 2008 that an application to ASX for admission to quotation of the GrainCorp shares was required by that date she would have immediately taken steps to ensure that the application was lodged within time. 8 GrainCorp drew the attention of the Commission to the oversight by letter of 19 June 2008. The Commission has informed Mallesons Stephen Jaques that, on the basis of the information provided to the Commission, it has no objection to the making of orders by the Court extending, to 24 June 2008, the time in which GrainCorp may make an application for the admission of the shares to be allotted as consideration pursuant to the offers. 9 The rationale for s 625(3) is clear enough, namely, to ensure that investors who receive shares as consideration would not be left with unlisted securities in circumstances where they were led to assume that the consideration to be offered to them would be listed on an exchange. Neither the Bidder's Statement nor any amended bidder's statement that may be necessary in order to deal with the oversight has yet been sent to shareholders of Ridley. Although the bid period began on the lodgement of the Bidder's Statement on 6 June 2008, the offer period has not yet commenced and will not commence until a replacement bidder's statement, if there is one, is sent to shareholders. That will not occur until at least 14 days after the replacement bidder's statement has been lodged with the Commission. It follows that no offers have yet been made to any shareholder of Ridley. Therefore, there is no offer that is capable of acceptance by any shareholder of Ridley so as to give rise to a binding contract. 10 The power conferred on the court by s 1325A is discretionary but may be exercised in order to advance the objectives of the statutory scheme of the Act. One of those objectives is to ensure that the acquisition of shares in listed companies takes place in an efficient, competitive and informed market. Extending the time within which GrainCorp may make an application for quotation of its shares will involve no injustice to any person. It has always been intended that an application for quotation will be lodged at the appropriate time and, as I have indicated, the failure to lodge an application within the time was entirely inadvertent. The shareholders of Ridley will suffer no prejudice from the extension of time. Rather, the effect of the order will be to provide them with an opportunity to consider and, if thought fit, accept the bid that would otherwise be defeated by non‑compliance with the time condition. A grant of the orders sought by GrainCorp will therefore advance the objects of Chapter 6 of the Act in ensuring that the takeover bid proceeds in an efficient, competitive and informed market. 11 In all of the circumstances, I consider that it is appropriate to accede to the application by GrainCorp. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.