Taruga Gold Limited, in the matter of Taruga Gold Limited [2015] FCA 892

REASONS FOR JUDGMENT 1 On 20 May 2015, the plaintiff, Taruga Gold Limited (the company) announced to the Australian Stock Exchange (ASX) a capital raising consisting of a placement of shares and also an offer to the existing shareholders of the right to purchase further shares in the company, pursuant to what is referred to as a Share Purchase Plan. The Share Purchase Plan offer entitled the existing shareholders to purchase shares in Taruga Gold on the same terms as the persons who would obtain shares by way of the placement. The prospectus containing the offer was dated and lodged with the Australian Securities and Investments Commission (ASIC) on 3 June 2015. 2 By reason of s 723(3)(a) and s 724(1)(b)(i) of the Corporations Act 2001 (Cth), the plaintiff was obliged, within seven days of the date of the prospectus, to apply to the ASX for the quotation of the new securities on the ASX. 3 The operation of the two sections to which I have referred meant that the application for the quotation of the new securities had to be made to the ASX by 10 June 2015. However, this was not done. 4 The plaintiff now applies for relief under s 1322(4)(d) of the Corporations Act to extend the time provided for in s 723(3)(a) and s 724(1)(b)(i) of the Corporations Act, for applying to the Australian Stock Exchange (ASX) for the quotation of the new securities on the ASX. 5 There is some urgency associated with this application because there is a meeting of the company's shareholders to be held on 7 July 2015 for amongst other things, the purpose of approving the share placement and the Share Purchase Plan. The offer under the Share Purchase Plan contained in the prospectus, remains open for acceptance until 6 July 2015. There are already a number of shareholders who have accepted the offer contained in the prospectus. 6 The approach taken by the Court in determining whether to grant relief under s 1322(4)(d) of the Corporations Act, for the extension of time for the doing of an act, has recently been referred to by McKerracher J in Solco Ltd, in the matter of Solco Ltd [2015] FCA 635. 7 Generally speaking, the Court seeks to strike a balance between upholding the integrity of the requirements of the Corporations Act and facilitating the conduct of commerce. The Court will generally approach the grant of this relief in a beneficial manner and so as not to cause undue prejudice to the company and its shareholders; but may withhold relief in circumstances where there is deliberateness or flagrancy by a party in relation to the failure to comply with the Corporations Act or where it is in the public interest to do so. 8 Section 1322(6)(c) of the Corporations Act requires that the Court not to make an order under s 1322(4)(d) unless it is satisfied that no substantial injustice has been or is likely to be caused to any person. 9 The affidavit of Mr Daniel Smith, a director of the plaintiff, dated 30 June 2015, explained why the application was not made within the seven day period. Mr Smith explained that on previous occasions when he had been involved in capital raisings to which Appendix 3B of the ASX Listing Rules applied, he would know the number of securities that were required to be listed before he applied for them to be listed, but in this case he did not. It was, he said, a mistake on his part to believe that similar obligations would flow from this particular prospectus. Mr Smith said that he was not aware of the requirements under s 723(3)(a) and 724(1)(b)(i) of the Corporations Act. Therefore, he did not make the application for the quotation of the new securities to the ASX in time. 10 I accept that this was an honest mistake on Mr Smith's part and that this is a factor which is taken into account in favour of the making of the orders sought. 11 In addition, on 26 June 2015, as soon as it could after it became aware of the error, the company approached ASIC whose response was that it was unable to assist. This led to the making of this application to the Court which was filed on 1 July 2015. 12 I am satisfied that this is a case where no substantial injustice has been or is likely to be caused to any person if the orders are made. This is because the offer in the prospectus is still open, no shares have been issued and no third party rights are involved. 13 On the other hand, the company and its shareholders are likely to suffer prejudice if the orders are not made. This is because the shareholders will be deprived of the opportunity of accepting the offer and obtaining shares pursuant to the offer and, further, if the company wished to achieve the same objective it would need to go to the effort and the expense of starting the whole process again. 14 I also observe that before this hearing, the company notified both ASIC and the ASX of its intention to apply for these orders and each of those institutions advised the company that it had no objection to the making of the orders. 15 In the circumstances, therefore, I am prepared to grant the relief sought. 16 Accordingly, I will make the orders sought in the originating application. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.