Vmoto Limited 02R [2025] ATP 9 (17 March 2025)

1. The applicant submitted that the Shortfall Offer and the Follow-on Placement did not comply with Guidance Note 17 and that the Vmoto board "had no intention of, and made no attempt to, broadly place those shares". The applicant also queried the need for funds in the 2023 Capital Raising.
2. Vmoto submitted that the Entitlement Offer was undertaken in accordance with all applicable laws and for a genuine need for funds.
3. Guidance Note 17 (at [35]) provides that "an application needs to demonstrate (by evidence and reasoning) a basis for the Panel's intervention, identifying the effect complained of. The application must be made in a timely manner to minimise potential harm and disruption to the company and shareholders."
4. We do not consider that the applicant demonstrated a basis for the Panel's intervention here, having regard to the lack of probative evidence supporting the applicant's allegations and the historical nature of these allegations.

1. The applicant submitted that "[t]he company's announcement on the 16/12/2024 of its intention to delist and off market equal access scheme to buy back 40m shares at a fraction of the depreciated value of the company's tangible assets, 15 days before the end of it's [sic] financial year when shareholders were completely uninformed about the company's recent performance, was clearly not in all shareholders best interests". The applicant submitted that the timing of the Buy-back was unacceptable and that "[t]he 10% of shares on issue bought back from people not wishing to remain shareholders in an unlisted environment is in fact 40% of 25%".
2. Vmoto submitted that "the Proposed Delisting does not have any effect on the control or potential control of Vmoto and does not result in the acquisition of a substantial interest in Vmoto by any person".
3. Vmoto provided a table (reproduced below[16]) showing the extent to which the relevant interest and voting power of each of Vmoto's existing substantial shareholders increased as a result of the Buy-back:

1. Vmoto also submitted that the Buy-back was undertaken in accordance with applicable law and ASIC guidance, following a unanimous decision from its board and an in-principle approval from the ASX.[17] It also submitted, referring to its response to the ASX Aware Letter, that "although not considered material by Vmoto", its net profit after tax for the year ended 31 December 2024 was higher than the guidance provided in April 2024 "due to certain slow and obsolete stocks and doubtful debts not requiring impairment".
2. We considered Vmoto's financial updates in the context of the Buy-back. On balance, we decided not to take it any further given (in no particular order):

(a) issues related to the quality of financial reporting are best dealt with by the corporate regulator ASIC

(b) the ASX Aware Letter with regards to (among other things) Vmoto's FY24 results exceeding earnings guidance and Vmoto's response on 11 March 2025 (in which it confirmed that the outperformance was not material having regard to ASX's guidance[18] and provided its basis for this conclusion)

(c) the Vmoto 3Q24 Market Update, which included a more positive outlook, had been released prior to the Buy-back and

(d) when announcing the Buy-back and Proposed De-listing, the Vmoto board had stressed that the company's share price implied a valuation that was materially below the company's fundamental value.

1. We turned our minds to the potential control effect of the Buy-back and Proposed De-listing. In Flinders Mines Limited 02 and 03,[19] the Panel stated that:

The decision of a company's board to seek to de-list involves the exercise of business or commercial judgement, and may be subject to (among other things) requirements of the applicable listing rules, the discretions and policy of the relevant listing authority, director's duties and minority shareholders remedies. It is not the Panel's role, in the ordinary course, to opine on such judgements or enforce requirements for which other regulators or the courts have primary responsibility. However, the overlap of such requirements does not prevent the Panel exercising its jurisdiction in relation to matters that do fall within its jurisdiction and role. In our view, where de-listing has or is likely to have an effect on control or the acquisition of a substantial interest in a listed company, and appears inconsistent with the purposes in section 602, it is appropriate for us to consider whether it gives rise to unacceptable circumstances.

1. Here, we are not satisfied that the allegations made, and the materials provided, in relation to the Buy-back and Proposed De-listing warrant us making further enquiries.

1. The applicant submitted that, on 24 February 2025, it had lodged a request with ASIC to investigate the lack of substantial holding notices from two Vmoto shareholders.
2. Vmoto submitted that "despite it not being Vmoto's obligation to do so, it had notified applicable existing substantial shareholders of the potential need to lodge an applicable substantial shareholding notice".
3. We consider the lack of disclosure from two of Vmoto's largest shareholders to be concerning, particularly in the context of the Buy-back and Proposed De-listing, where shareholders have no other way of knowing who ultimately holds those shares. Despite Vmoto's submission, no substantial holder notice was lodged by the relevant shareholders during these proceedings.[20]
4. Accordingly, given our concerns, we decided to refer this matter to ASIC for investigation.

1. Under section 657C(3), an application for a declaration under section 657A must be made within two months after the circumstances have occurred or a longer period determined by the Panel.
2. The applicant requested "favourable consideration of an extension of time because it is now apparent that the dominant Managing Director has been preparing the ground over a much longer period than 2 months to achieve his ambition to take control of the company by reducing the number of shares in minority hands and putting shares into friendly hands".
3. Vmoto submitted that we should not exercise our discretion to extend time given:

(a) the 2023 Capital Raising, the Consideration Share Issue and the Small Holdings Sale Facility all occurred some time ago, in 2023 and 2024

(b) the application failed "to make any credible allegations of unacceptable circumstances, let alone unacceptable circumstances that are clear and serious"

(c) no essential matters supporting the application came to light within the two months preceding the application and

(d) there was no reasonable explanation for such delay.

1. In its review application, the applicant submitted that it had been denied the knowledge that would have led it to make a timely application given the lack of disclosure from the substantial shareholders (see paragraph 23 above).
2. We note that the Employee Share Issue was within time but represents approximately 2% of Vmoto's issued capital and is therefore unlikely to have a control effect and, on its own, be the subject of a declaration of unacceptable circumstances.
3. Having regard to our decision not to conduct proceedings, we do not consider it necessary to reach a view on whether to formally extend time under section 657C for the making of the application.

1. The applicant submitted that the voting form provided by Vmoto in relation to the Section 249D Meeting was "very confusing" and that the letter from the board in the notice of meeting made false and misleading statements including that the requisitioning shareholders were attempting to obtain effective control of the board and the company without paying any control premium.
2. Vmoto submitted that its directors provided a recommendation to shareholders as to how to vote at the Section 249D Meeting in the notice of meeting which was consistent with the proper exercise of their directors' duties and that "[n]othing in the EGM Notice or the Proxy Form can properly be considered to be misleading or confusing".
3. In the circumstances, we did not find the statement of the board in the notice of meeting to be unacceptable.

1. A number of Vmoto shareholders wrote to the Panel executive in support of the submissions made by the applicant. These shareholders consented to the parties being provided with their submissions and the parties were given the opportunity to make submissions in response.
2. We accept that, given the Proposed De-listing, there was considerable market interest in this matter and, on occasion, the Panel will receive comments from interested persons who are not parties. It has discretion to do so, or not to receive them.[21]
3. The initial Panel decided to receive submissions from non-party shareholders and we had the benefit of these in these proceedings. We did not consider that further submissions from Vmoto shareholders were likely to be able to assist us and decided not to receive them, or any submissions made by the parties in response to these submissions.

1. Vmoto submitted that it had concerns about the applicant breaching its media canvassing undertakings and rule 19 of the Procedural Rules in light of a post made on the stock discussion website HotCopper.
2. We consider that Vmoto's allegations were substantively unsupported. In any event, it is not unreasonable for a requisitioning shareholder to seek to gain shareholder support ahead of the relevant meeting. We are satisfied, on the evidence provided, that the applicant did not breach the Procedural Rules.

1. For the reasons above, we do not consider that there is any reasonable prospect that we would make a declaration of unacceptable circumstances. Accordingly, we have decided not to conduct proceedings in relation to the application under regulation 20 of the Australian Securities and Investments Commission Regulations 2001 (Cth).

1. Given that we have decided not to conduct proceedings, we do not (and do not need to) consider whether to make any interim or final orders.

[1] Unless otherwise indicated, all statutory references are to the Corporations Act 2001 (Cth) and all terms used in Chapter 6, 6A or 6C have the meaning given in the relevant Chapter (as modified by ASIC)

[3] The transactions included the Entitlement Offer and Follow-on Placement, the Small Holdings Sale Facility, the Consideration Share Issue and the Employee Share Issue

[5] See Vmoto Limited [2025] ATP 7 at [21]

[6] Noting, for completeness, that the President did not have the benefit of the ASX Aware Letter or Vmoto's response to the ASX Aware Letter at the time of his decision

[9] We did not receive the President's reasons for granting consent under s657EA(2)

[10] See further at [76] to [78]

[11] Vmoto Limited [2025] ATP 7 at [26]

[13] Mount Gibson Iron Limited [2008] ATP 4 at [15]

[14] Dragon Mining Limited [2014] ATP 5 at [60], footnotes omitted

[15] Other than the Employee Share Issue, discussed at paragraph 71 below

[17] ASX Guidance Note 33: Removal of entities from the ASX Official List, page 9

[18] See paragraph 4(a) of section 7.3 of Guidance Note 8

[20] We note that substantial holder notices have since been lodged. We make no comments on these.

[21] Procedural Rules, rule 20, Takeovers Panel Procedural Guidelines 2020 at [4.5]