Melbourne Law School



CORPORATE LAW ELECTRONIC BULLETINBulletin No 54, February 2002 Published by LAWLEX on behalf ofCentre for Corporate Law and Securities Regulation,Faculty of Law, The University of Melbourne()with the support ofThe Australian Securities and Investments Commission (),The Australian Stock Exchange ()and the leading law firms:Blake Dawson Waldron ()Clayton Utz ()Mallesons Stephen Jaques ()Phillips Fox ()Editor: Professor Ian Ramsay, Director, Centre for Corporate Law and Securities Regulation ACCESS TO BULLETINAs a subscriber, you may view and print the latest Bulletin immediately from the archive site on the Internet at:.au/cclsr/archiveCHANGE OF EMAIL ADDRESSSubscribers who change their email address should notify LAWLEX at "cclsr@.au".COPYRIGHTCentre for Corporate Law and Securities Regulation 2002. All rights reserved. You may distribute this document. However, it must be distributed in its entirety or not at all.CONTENTS1. RECENT CORPORATE LAW DEVELOPMENTS (A) Government announces amendments to Financial Services Reform legislation (B) New tax advice website for investors(C) SEC to propose new corporate disclosure rules(D) NYSE appoints special board committee to advise on corporate governance(E) NYSE board approves changes in rules regarding research analysts (F) Independence of Australian company auditors(G) Solutions for super safety - Association of Superannuation Funds of Australia(H) ASA releases 2002 poor performer list(I) Report by the Senate Economics References Committee titled "Inquiry into the Framework for the Market Supervision of Australia's Stock Exhanges" 2. RECENT ASIC DEVELOPMENTS(A) Companies clarify information on foreign exchange rates(B) ASIC releases electronic licensing system(C) Application of new accounting standard(D) ASIC announces findings of auditor independence survey3. RECENT ASX DEVELOPMENTS(A) ASX foreign exempt listings - proposed rule amendments (B) Financial Services Reform Act 2001 - Listing Rule amendments(C) ASX launches futures market4. RECENT TAKEOVERS PANEL MATTERS(A) Panel publishes guidance note on Panel procedures(B) Panel releases draft guidance on costs orders5. RECENT CORPORATE LAW DECISIONS(A) The war on disclosure(B) Dealing in securities in breach of law(C) Liability of directors outside Australia - insolvent trading(D) Oppression of minority shareholder - how is compensation assessed?(E) Personal liability under 588Z - exercise of judicial discretion(F) Eliminating minority shareholders by selective capital reduction(G) Exemplary damages for breach of fiduciary duty(H) The power to refuse to register a transfer of shares(I) Administration rather than receivership avoids section 267 of the Corporations Act6. MAJOR SURVEY ON NOT-FOR-PROFIT COMPANIES7. RECENT CORPORATE LAW JOURNAL ARTICLES8. CONTRIBUTIONS9. SUBSCRIPTION TO THE BULLETIN10. DISCLAIMER1. RECENT CORPORATE LAW DEVELOPMENTS(A) GOVERNMENT ANNOUNCES AMENDMENTS TO FINANCIAL SERVICES REFORM LEGISLATION On 22 February 2002 the Parliamentary Secretary to the Treasurer, Senator the Hon Ian Campbell, announced that he intends to move amendments relating to the anti-hawking and insider trading provisions of the Corporations Act. These provisions were inserted into the Corporations Act by the Financial Services Reform Act and will commence operation on 11 March 2002. Senator Campbell noted that numerous industry participants had raised significant concerns about how these provisions might impact on their operations since his return to the Treasury portfolio. "The anti-hawking and insider trading provisions have been of particular concern because of their potential to impact on such a wide range of financial service providers and because they will apply from 11 March 2002," Senator Campbell said. "The proposed amendments will address the major concerns raised by industry." Senator Campbell stated that the proposed amendments would clarify the scope of the current restrictions on offers of financial products other than securities and managed investment interests that are contained in section 992A of the Corporations Act. The amendments would limit the application of the anti-hawking provisions in section 992A to offers made through personal meetings or contact made by telephone. They would also limit the application of these provisions to offers to retail clients. Senator Campbell also stated that he intended to move amendments to the insider trading provisions that would extend the scope of the current exceptions in sections 1043H to 1043J which relate to a person's knowledge of their own trading activities or intentions. "The proposed amendments will address industry concerns that these exceptions were drafted too narrowly and did not adequately accommodate the full range of derivative products that will be subject to the insider trading provisions following the commencement of the Financial Services Reform Act. They aim to ensure that OTC market makers will not be prevented from managing risk through the use of derivative products due to knowledge of their own trading activities or intentions in relation to underlying financial products," Senator Campbell said. "In the light of the importance and urgency of these matters, I will seek to move the proposed amendments at the earliest possible opportunity." Senator Campbell added that he had initiated discussions with the Opposition and other Senate parties on the proposed amendments in the hope of facilitating their passage during the current sittings on a `non-controversial' fast-track.Senator Campbell will also recommend to the Governor-General that he make regulations under section 1368 of the Corporations Act that will extend the scope of the insider trading exceptions with effect from 11 March 2002. (B) NEW TAX ADVICE WEBSITE FOR INVESTORSOn 14 February 2002 the Australian Taxation Office began operating a new website to better inform people about the tax implications of investment schemes. People can find the Tax Office's new Tax Planning site at Commissioner Michael Carmody said the new site features the essential checklist of what people need to look for before they put their money into a managed investment scheme or similar arrangement.It also tells potential investors of the warning signs to look for when considering investing. Many of the warnings have come directly from people who found themselves in schemes that were later rejected by the Tax Office. "All investment decisions should be made on the basis of expected commercial returns and the underlying viability of the venture, Mr Carmody said. People should not make an investment decision on the basis of a claimed tax benefit alone. He said the new website would help investors and tax agents to make informed investment decisions.Investors can access all the Tax Office's rulings, test cases, taxpayer alerts and publications, plus information about taxpayers' obligations and how the tax system works.(C) SEC TO PROPOSE NEW CORPORATE DISCLOSURE RULESOn 13 February 2002 the US Securities and Exchange Commission announced that it intends to propose changes in corporate disclosure rules as the first in a series of steps designed to improve the financial reporting and disclosure system.Specifically, the Commission intends to propose rules that will:- Provide accelerated reporting by companies of transactions by company insiders in company securities, including transactions with the company;- Accelerate filing by companies of their quarterly and annual reports;- Expand the list of significant events requiring current disclosure on existing Form 8-K. Such events could include changes in rating agency decisions, obligations that are not currently disclosed and lock-out periods affecting employee stock-ownership plans.- Add a requirement that public companies post their Exchange Act reports on their web sites at the same time they are filed with the SEC; and - Require disclosure of critical accounting policies in Management's Discussion and Analysis of Financial Condition and Results of Operations, contained in annual reports.(1) Proposed amendments for insider reportingThe Commission is considering a variety of ways to improve public disclosure of trading activities by executive officers, directors and beneficial owners of 10% of a company's stock. Under the Securities Exchange Act of 1934, trades must be reported by the tenth day of the month following the month in which the trades occur. That represents a delay of up to 40 days, which is inadequate for today's markets. The Commission supports a legislative solution that would dramatically shorten this period.In the meantime, given the importance to the marketplace of transactions by corporate executives and directors, the Commission intends to propose that, pursuant to their reporting obligations, companies disclose on a current basis significant transactions in the company's stock by their executive officers and directors. As a complement to this initiative, the Commission is seeking ways to provide for electronic filing of reports of insider transactions. Direct reporting on the EDGAR system by insiders would entail the distribution and monitoring of literally tens of thousands of personal identification numbers to these insiders. Accordingly, the Commission is considering an approach that would require companies to file electronically information that they receive from insiders, including under new accelerated requirements such as those described above.In addition, the Commission is re-examining an existing provision in its rules that permits officers and directors that sell stock back to their company to delay reporting until 45 days after the end of the fiscal year in which the transaction took place. This current provision allows a potential reporting delay of many months. To eliminate this delay, the Commission intends to propose that a company report on a current basis any transactions involving securities of the company entered into with any of its executive officers or directors.(2) Proposed amendments for mandated secondary market reportingThe Commission's secondary market disclosure system under the Securities Exchange Act of 1934 requires U.S. public companies to make disclosure at annual and quarterly intervals, with limited, specified events reported on a more current basis. The Commission believes that the time periods for filing under this system need to be shortened and the list of events requiring more current reporting needs to be expanded.(a) Annual and quarterly reportsThe Commission intends to propose that public companies file their annual reports on Form 10-K within 60 days after the end of their fiscal year, rather than 90 days. The Commission also intends to propose that public companies file their quarterly reports on Form 10-Q within 30 days after the end of their first three fiscal quarters, rather than 45 days. The time periods for filing these reports have not changed in over 30 years, despite previous attempts to do so. The significantly reduced time periods for the capture and analysis of information and significant technological advances since these time periods were last revised necessitate a new consideration of the timing of mandated disclosure to the markets. (b) Current reportsThe Commission believes that markets and investors need more timely access to a greater range of important information concerning public companies than what is required by the existing reporting system. Accordingly, the Commission intends to expand the types of information that companies must report on Form 8-K. Some of the items that the Commission is evaluating for inclusion in these reports include:- Changes in rating agency decisions and other rating agency contacts;- Transactions in the company's securities, including derivative securities, with executive officers and directors;- Defaults and other events that could trigger acceleration of direct or contingent obligations; - Transactions that result in material direct or contingent obligations not included in a prospectus filed by the company with the Commission; - Offerings of equity securities not included in a prospectus filed by the company with the Commission;- Waivers of corporate ethics and conduct rules for officers, directors and other key employees;- Material modifications to rights of security holders;- Departure of the company's CEO, CFO, COO or president (or persons in equivalent positions); - Notices that reliance on a prior audit is no longer permissible, or that the auditor will not consent to use of its report in a Securities Act filing;- Definitive agreement that is material to the company (negotiations of agreements would be excluded from this requirement unless and until a definitive agreement is entered into);- Any loss or gain of a material customer or contract;- Any material write-offs, restructurings or impairments;- Any material change in accounting policy or estimate;- Movement or de-listing of the company's securities from one quotation system or exchange to another; and- Any material events, including the beginning and end of lock-out periods, regarding the company's employee benefit, retirement and stock ownership plans.Given the significance of current disclosure of these events to participants in the secondary markets, the Commission intends to propose that companies file reports of these events no later than the second business day following their occurrence. The Commission also is considering whether some of these events require filing by the opening of business on the day after the occurrence of the event. (c) Disclosure on company websitesThe Commission believes that mandated public company disclosure should be more readily available to investors in a variety of locations. To further this goal, the Commission intends to propose amendments that would require public companies to make their Exchange Act reports available on their Internet web sites, if available, at the same time as they are filed. This requirement would not in any way replace or reduce a company's obligation to file with the Commission.(3) Disclosures about critical accounting policiesThe Commission intends to propose amendments to its rules for Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) to require disclosure about critical accounting policies. As described in a Cautionary Advice Release issued by the Commission on December 12, 2001, critical accounting policies are those that are both most important to the portrayal of a company's financial condition and results, and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.The proposals may require public companies to include in their MD&A full explanations, in clear and understandable format and language, of their critical accounting policies, the judgments and uncertainties affecting the application of those policies, and the likelihood that materially different amounts would be reported under different conditions or using different assumptions. The objective of this disclosure would be consistent with the objective of MD&A to provide information on events or uncertainties known to management that would have a material impact on reported financial information. Such disclosure would assist investors in understanding a company's financial condition, changes in financial condition, and results of operations.The Commission will issue proposing releases on these matters and solicit public comment with the intent to adopt new rules as quickly as possible.The anticipated rule proposals are the first steps in the Commission's efforts to improve the current system of financial reporting and disclosure. The Commission is conducting a number of other reviews that likely will result in additional rulemaking.(D) NYSE APPOINTS SPECIAL BOARD COMMITTEE TO ADVISE ON CORPORATE GOVERNANCEOn 13 February 2002 the New York Stock Exchange appointed a special Committee of its Board of Directors to review listing requirements and matters involving corporate governance.The committee, to be called the Corporate Accountability and Listing Standards Committee, will be co-chaired by H Carl McCall, Comptroller of the State of New York; Gerald M Levin, CEO of AOL Time Warner Inc; and Leon E Panetta, director of the Panetta Institute for Public Policy. All serve on the NYSE Board of Directors. The committee was established following discussion at the Exchange's 7 February Board meeting, and subsequent discussions with SEC Chairman Harvey Pitt. The committee will gather input from the various constituencies of the Exchange and the financial-services industry to provide guidance to the NYSE and industry governing bodies on measures to bolster public confidence. It will review corporate governance and shareholder accountability issues such as composition of corporate boards and committees, disclosure requirements, and the role of independent audit committees. The committee will issue a report on its findings as early as June 2002. "It is imperative that we reinforce trust and confidence in our publicly traded companies and in our markets," said NYSE Chairman and CEO Dick Grasso. "Investors demand and deserve nothing less than timely and accurate disclosure, sound corporate governance, and an established set of practices that ensure transparency and integrity. This is in the best interests of investors, issuers and the markets. Mr Grasso emphasized the special committee will work in tandem with the legislative and regulatory bodies as well as other marketplaces. "Competition among markets must be put aside to restore public confidence," he said.(E) NYSE BOARD APPROVES CHANGES IN RULES REGARDING RESEARCH ANALYSTS On 7 February 2002 the New York Stock Exchange board of directors approved major changes in the way member organizations, their research analysts and investment-banking departments manage and disclose conflicts of interest. In addition to addressing conflicts of interest, the amendments require greater clarity and depth in research reports, including information about valuation methods, meanings of ratings, percentage of all recommended securities in various rating categories, and price-performance charts. The proposed changes have been developed in collaboration with NASD Regulation and the securities industry at the initiative of the Securities and Exchange Commission (SEC) and will be proposed to the SEC for approval.Summary of proposed rulesResearch Analysts: Restricts compensation that research analysts can receive from investment-banking activity, their purchasing of subject companies' securities around rating changes and IPOs, and their trading before and after issuance of research reports; and prohibits trading contrary to recommendations.Member Organizations: Establishes "quiet periods" for publishing research following participation in an IPO or secondary offering as manager or co-manager, and prohibits offering favourable research as an inducement for business.Member Organizations and Research Analysts: For written communications and public appearances, requires clear and prominent disclosure of: - Firm ownership of 1 percent or more of any class of equity security of a subject company. - The financial interest of analysts or their household members in a subject company.- Conflicts of interest at the time a research report is issued or a public appearance occurs. - Compensation paid by subject company to firm within the last 12 months or expected within the next three months.Member Organizations, Research Analysts and Listed Companies: Neither investment-banking department nor subject company may review or approve research reports prior to distribution.(F) INDEPENDENCE OF AUSTRALIAN COMPANY AUDITORSIn a press release dated 4 February 2002, the Parliamentary Secretary to the Treasurer, Senator Ian Campbell, called for submissions on the report on the Independence of Australian Company Auditors prepared by Professor Ian Ramsay of The University of Melbourne, and urged industry to give the report their careful consideration. The Government welcomes input from all stakeholder groups on these important issues in finalising its response to the Ramsay recommendations.Senator Campbell stated that after considering stakeholder views on the Ramsay recommendations, the Government plans to announce decisions on audit independence and related issues after any appropriate further consultation - and proceed to implementation in the second half of the year.The Ramsay report can be found at: , marked to the attention of Mr Wallace Femandes, should be forwarded to: The General Manager, Corporate Governance and Accounting Policy Division, The Treasury, Langton Place, PARKES, ACT, 2600. Submissions are due by Friday 1 March 2002 although extensions may be applied for. As submissions may be made public, any confidential material should be marked accordingly.(G) SOLUTIONS FOR SUPER SAFETY - ASFAIn a submission dated 4 February 2002 the Association of Superannuation Funds of Australia (ASFA) said that the Government's Options Paper on Safety in Super would wrongly allocate more regulatory resources towards licensing and capital guarantees, when what is needed most is a greater presence in the field by the regulator, according to ASFA.Under the then Minister for Financial Services and Regulation Joe Hockey, "Options for improving the safety of superannuation" released on 2 October 2001, called for submissions from interested parties by 1 February.ASFA's submission concludes that the prime pockets of risk that need to be reduced are: amongst the smaller Approved Trustee funds; and investment risk (absence of diversified investment plans) amongst some smaller corporate plans."The Options Paper's proposals for universal capital guarantee requirements could force the demise of many not-for-profit funds that are currently operating very well in the interests of their members. At the same time these proposals would allow some of the funds running more substantive risks to continue their ill-advised practices, said Philippa Smith, CEO of ASFA. Some of the most notable incidences of loss - such as the CNAL case - have occurred with licensed or Approved Trustees, so entry controls alone are not the answer, said Ms Smith. What is needed is a better targeted approach from a regulator who is active in the field. With around 11,000 APRA-regulated funds, the Australian super industry is large and diverse, something the Options Paper appears not to have adequately considered. Australia is not unique in this regard - ASFA's submission examines what regulatory practices are effective in other countries," Ms Smith said.ASFA makes a number of recommendations to improve super's safety. These include:- Tougher screening of new Approved Trustees- A "points system" for operational and governance risk rather than crude capital requirements on all types of funds- Mandatory trustee liability insurance- More specific and diversified investment plans- Ensure APRA is able to intervene quickly where members' benefits are at risk (including more visits to smaller funds)- "Trigger" levy mechanism to compensate fund members in certain cases of loss.The ASFA submission can be viewed on the ASFA website at SmithCEOASFATel: (02) 9264 9300Mobile: 0418 231 482Dr Michaela AndersonDirector Policy & ResearchASFATel: (02) 9264 9300Mobile: 0414 725 900(H) ASA RELEASES 2002 POOR PERFORMER LISTThe Australian Shareholders' Association (ASA) has released its fifth annual list of 'Poor Performers'. The list contains 35 companies that the ASA has singled out for special attention during 2002. The companies have been selected using Shareholder Rate Of Return (SROR) figures provided by The Australian newspaper.The SROR calculation is a composite of the movement in share price, dividend and imputation tax credits. It takes account of changes in capital and is defined as the annualist total return to shareholders from maintaining their investment in a stock over a period. Compared with their ASX sectors up to 30 June 2001, companies on the 'poor performer' list have substantially under-performed over three years. In most cases, the SROR has been negative over a three-year period, and neither the one-year SROR nor the share price movement since 30 June 2001 has justified the exclusion of a company from the list.ASA will specify its voting intentions in respect of undirected proxies for meetings it will attend. To access this information, visit the ASA website list of the 35 companies is available on the ASA website at further information contact:Stuart WilsonExecutive Officer ChairmanASATel: 1300 368 448 (I) REPORT BY THE SENATE ECONOMICS REFERENCES COMMITTEE TITLED "INQUIRY INTO THE FRAMEWORK FOR THE MARKET SUPERVISION OF AUSTRALIA'S STOCK EXHANGES" In February 2002 the Federal Government's Senate Economics References Committee released its Report titled "Inquiry into the Framework for the Market Supervision of Australia's Stock Exchanges". The report is available at: . Following is an edited extract from the Executive Summary.(1) Advantages and disadvantages of existing frameworkThe Committee's first task in this inquiry was to examine the advantages and disadvantages of the framework for the market supervision of Australia's stock exchanges. The Committee has found that there are a number of significant advantages, most notably the following:- familiarity with and proximity to the market - being both the operator and front line supervisor places ASX in a strong position to both recognize any irregularities in trading and respond to them quickly and flexibly;- the exchange has the ability to adapt elements of its supervisory arrangements to meet the needs of the market and its users through changes to operating rules to reflect the needs of the market and its users and cater for developments in business practices;- market participants and users bear the cost of regulation; and- the framework bestows a commercial incentive on the ASX to ensure that it discharges supervisory responsibilities effectively - it has a vested interest in maintaining reputation and attracting investment.It is clear that the majority of market participants who gave evidence to the inquiry consider that the ASX operates the market well within the current framework, maintaining a high degree of integrity and confidence.There are also some significant disadvantages associated with the framework. Many of these have come about as a result of the exchange's demutualisation and listing.They include:- conflicts between commercial and supervisory responsibilities - that is, questions about whether a 'for profit' exchange will devote sufficient resources to ensuring effective supervision, or be tempted to commercialise services such as the provision of information that might otherwise have been considered a public good;- an inherent conflict of interest resulting from self listing; and- conflicts of interest resulting from the ASX's expansion of its commercial activities, which result in it being required to supervise the activities of direct competitors.The exchange itself argues that many of the disadvantages identified are problems of perception rather than reality. They point to the fact that there is a commercial disincentive associated with failing to maintain the highest standards of integrity, which offsets any temptation that might have existed to take commercial advantage of its position. The exchange has also implemented a further level of quality assurance with the formation of the subsidiary company ASX Supervisory Review (ASXSR). Trade Practices Law and the monitoring activities of the Australian Competition and Consumer Commission (ACCC) provide further disincentive. Lastly, there is the oversight regulator, the Australian Securities and Investment Commission (ASIC) which retains extensive powers to monitor and audit exchange activity.The Committee concluded that no major change to Australia's market supervision framework should be contemplated at this point. While ASIC has found, and the ASX has investigated, instances of market misconduct, little evidence was presented that the supervisory framework was inadequate in performing that task. Evidence was presented of a potential for conflicts to occur which may impinge on ASX's supervisory responsibilities, but there is also clear evidence that the ASX and regulators are conscious of the potential problems associated with the current model and are acting to address them. However, should there be a significant material change in ASX operations or should the ASX merge with another exchange, or enter into an alliance which differs significantly from the ASX-SGX [Singapore Stock Exchange] link, the Committee should again review the market supervision framework.The Committee considers that the ASX should be given a period of time to demonstrate that initiatives such as ASXSR are sufficient to address the conflicts of interest issues, and that it is capable of continuing to uphold high standards while facing commercial challenges as well.The Committee also considers it important that ASIC regularly audit ASX's compliance with its supervisory obligations and provide regular reports to the Minister and to Parliament. The Committee acknowledges that the ASX has indicated that it believes ASIC should have the power to undertake active surveillance or compliance assessments of all market operators.The Committee wishes to stress the importance of the transparency of the supervisory arrangements. This is to be achieved by, among other things, ensuring that the ASXSR is properly resourced and has appropriate reporting structures, that the findings of the ASXSR are as open as possible, that ASIC audits ASX compliance with its supervisory obligations, that the ASX continues with the practice of publicly consulting on rule changes, and that the Trade Practices Act (TPA) continues to apply to the ASX. The Committee also notes that the ASX maintains a public register of Listing Rules waiver decisions, but recommends that that register include reasons for the waiver decision - subject to considerations of commercial confidentiality - and be available on the ASX website.(2) Demutualisation and alliancesThe Committee's second term of reference asked it to examine the implications (if any) of the demutualisation and listing of an exchange and any proposed alliance between Australian exchanges and other exchanges. The major issue in this area was whether the ownership limits that apply to the exchange impeded its ability to strike alliances with other exchanges.The Committee accepts that there are sound arguments for encouraging alliances between markets. In particular, the Committee notes the benefits that can flow to the Australian economy through improved market depth and liquidity as a result of opening up opportunities for a larger pool of investors.Whether mergers are desirable is more questionable. The Committee notes that an attempted merger between the ASX and the New Zealand Stock Exchange was abandoned and that mergers are not currently considered feasible in this region. To that extent, the issue of the desirability of mergers does not arise.The ASX considered that alliances may be facilitated by exchanges taking a stake in each other's shareholdings and to this end sought an increase in the previous ownership limit from 5 to 15 per cent, a change implemented in the Financial Services Reform Act. The Committee is of the view that there is no evidence to suggest raising the ownership limit to 15 per cent will have any major detrimental outcomes. Further, raising the limit to 15 per cent brings exchanges into line with other major financial institutions such as banks. Finally, the introduction of a 'fit and proper person test' in the FSR Act adds a level of protection that compensates for the change in ownership limits.The second issue in this area was whether the existing supervisory framework would be appropriate if any alliances or mergers were effected. The Committee notes that ASX has recently concluded an alliance with the Singapore Stock Exchange, establishing a two-way trading link in December 2001.The Committee heard evidence that the ASX encountered difficulties in establishing the Singapore link within the current legal framework, the dealing and market operating provisions being 'tortured and stretched'. It is too early to determine whether the existing provisions of the law will prove entirely adequate to accommodate the alliance's operations. This is a matter that ASIC will need to monitor carefully.The Committee also notes the significant regulatory differences between Singapore and Australia and that the ASX and ASIC have attempted to address these differences by relying on market operating rules. Nonetheless, investors need to be aware that regulatory differences do exist and the Committee suggests that the ASX introduce a 'health warning' for potential investors, reminding them of these issues.The Committee also notes that ASX and ASIC have instituted a trial of arrangements for handling conflict and perceptions of conflict in relation to the supervision of ASX International Services.As noted above, the Committee is of the view that it should again review the market supervision framework if the ASX merges with another exchange or enters an alliance that differs significantly from the SGX-ASX link.(3) Effectiveness of trade practices lawThe Committee notes that the ASX's motivation to expand its range of services relates to it being a relatively minor player in terms of international financial markets. The small size of the ASX in those terms places pressure to continually stay relevant and competitive internationally. The success of such a strategy is assisted by flexibility in trade practices law by allowing certain concessions in respect of the TPA.The Committee considers that the ASX's need to continue with a global perspective will be ongoing. As such the TPA will have to be applied with a view to international trends. However, the development of ASX's ability to compete globally will always have to be carefully balanced against the need to maintain competition in Australian financial markets. The past benefits of maintaining competitive pressures in this sector are clear.The Committee finds that the application of the trade practices law is addressing the needs of the ASX in a manner which offers flexibility via its system of authorisations, section 87B undertakings and the appeals system. These tools offer flexibility while also maintaining a competitive environment, with the final arbiter in any situation regarding the TPA being the courts.However, the Committee is mindful that as the ASX expands its activities into other commercial areas, it is causing concern to some of its competitors. The ASX is aware of these concerns. The Committee believes that moves to increase the transparency of the supervisory framework - including the establishment of the ASXSR - and the application of the Trade Practices Act to the ASX will assist in addressing those concerns.The Committee also notes that in the majority of submissions and evidence received, the adequacy of trade practices law in ensuring a competitive stock exchange market was not questioned.2. RECENT ASIC DEVELOPMENTS(A) COMPANIES CLARIFY INFORMATION ON FOREIGN EXCHANGE RATESOn 11 February 2002 ASIC revoked two interim stop orders, following the clarification of information about material assumptions in replacement prospectuses lodged by Frankland River Olive Company and Palandri Wines Limited.Interim stop orders on the Frankland River Olive Company's Fourth Stage Prospectus and the Palandri America Wine Business Prospectus were revoked after the companies lodged replacement prospectuses which addressed ASIC's concerns.ASIC was concerned that investors would not have been able to make informed decisions about investing through the prospectuses because there was no reasonable basis for the assumptions on foreign currency exchange rates which had a material impact on the forecasts in both prospectuses.The Corporations Act requires companies to disclose all material assumptions and have a reasonable basis for making those assumptions. The legal requirements are set out in ASIC Policy Statement 170.In its replacement prospectus, Frankland River Olive Company has addressed ASIC's concerns by removing the material assumptions that were affected by foreign currency exchange rates and all of the long-range forecasts from the prospectus because the company could not keep the forecasts and comply with ASIC Policy Statement 170.Palandri Wines Limited has addressed ASIC's concerns in its replacement prospectus by removing the assumptions regarding exchange rates and all unsupported prospective financial information, because again the assumptions and forecasts could not comply with ASIC Policy Statement 170.The revocation of the interim stop orders allow both companies to offer, issue, sell or transfer securities under the replacement prospectuses.For further information contact:Sharman GrantActing Director, Financial Services RegulationASICTel: (03) 9280 3478Mobile: 0411 549 042(B) ASIC RELEASES ELECTRONIC LICENSING SYSTEMOn 11 February 2002 ASIC announced the release of its eLicensing system as part of the implementation of the Financial Services Reform Act (FSR Act).The eLicensing system interactively tailors each AFS licence application so that applicants are asked only the questions relevant to them. It also provides a tailored checklist to help people submit the correct documents in support of their application.ASIC will be able to issue Australian financial. services licences after 11 March when the FSR Act commences.More information on eLicensing can be obtained via the ASIC website at , through ASIC's Infoline at infoline@.au or on 1300 300 630, or via online help tools or the AFS Licensing Kit (issued 1 February).For further information contact:Pauline Vamos Director, FSR Licensing and Business OperationsASICTel: (02) 9911 2178 Mobile: 0411 549 187(C) APPLICATION OF NEW ACCOUNTING STANDARDIn January 2002 ASIC announced that in a survey of financial statements to 30 June 2001 it had identified a number of problems in the application of the new accounting standard AASB 1018 'Statement of Financial Performance'.ASIC reviewed the financial reports of 80 listed companies to measure their compliance with AASB 1018, the new accounting standard that replaced 'profit and loss' statements with 'Statements of Financial Performance'.'While many companies have made genuine attempts to comply with both the spirit and the letter of the new standard, it appears there has been confusion in interpretation of the standard, ASIC's Chief Accountant Ian Mackintosh said. ASIC will be recommending improvements to AASB 1018 to the Australian Accounting Standards Board to clarify and reinforce the spirit of the new standard. In a relatively small number of cases, standards have been interpreted in unusual ways, and in some cases it is hard to justify the interpretations made. ASIC will be looking more closely to determine if any additional action is warranted. Companies are reminded that the ASIC Act requires them to construe the accounting standards in a way that promotes the purpose or object of the standard, even if it is not expressly stated', Mr Mackintosh said.ASIC also conducted a more limited review of the procedures adopted by some large listed companies and their auditors in relation to the existence and valuation of inventories, as well as the determination of cost of sales.While the companies' procedures generally appeared to be appropriate, there were some concerns about consistency in the measurement of the cost of inventories and the cost of sales.ASIC will pursue these matters with the companies concerned.ASIC intends to focus again on compliance with AASB 1018 in its review of full-year financial reports of selected listed companies balancing from 1 July 2001 to 31 December 2001. ASIC will also review compliance with the new AASB 1029 'Interim Financial Reporting' in the half-year financial reports of selected listed companies.For further information contact:Ian MackintoshASIC Chief AccountantTel: (02) 9911 2497Mobile: 0419 206 260(D) ASIC ANNOUNCES FINDINGS OF AUDITOR INDEPENDENCE SURVEYIn January 2002 Mr David Knott, Chairman ASIC, announced the findings of ASIC's survey of auditor independence which was concluded prior to Christmas.ASIC last year surveyed 100 of Australia's largest companies seeking responses to a range of questions concerning their relationship with their auditors. The survey was a voluntary exercise, carried out with the support of the Group of 100, to which 67 of the surveyed companies provided comprehensive replies. 'The restricted size of this survey requires some caution in interpreting the responses, Mr Knott said. Nevertheless, the information collected is a useful addition to available data and supports the following propositions:- the provision of non-audit services by audit firms to their Australian clients is widespread, at least in respect of major corporates (almost all respondents to the survey confirmed having retained their audit firms to provide other services, particularly taxation advice).- audit firms are earning substantial fees for non-audit services (on average the non-audit fees accounted for nearly 50% of total fees paid).- processes for dealing with potential conflicts of interest require attention (most companies lacked robust processes for ensuring that the independence of audit was not prejudiced by the provision of non-audit services).- rotation of audit partners remains inconsistent (less than half of the respondents required it) and rotation of firms is almost non-existent.- most companies do not monitor investments in their securities by their auditors' superannuation funds.- only a few companies have former audit firm's partners on their Board (and only a small number have employed ex-audit staff in the company as senior executives).- the vast majority of respondents had an audit committee in place with appropriate operating guidelines.Mr Knott stated that the high level of fees earned by audit firms through non-audit services reinforces the potential for conflicts of interest. Although some findings from this survey indicate a recognition of this problem by both companies and their auditors, there appears to be a lack of rigour in processes to manage conflicts and a continuing reluctance to adopt robust audit rotation as an anticonflicts measure he said. Additional background to ASIC's survey, including a summary of the responses, is available from ASIC's website at . The identity of respondents is confidential in keeping with the voluntary nature of the survey.For further information contact:Ian MackintoshASIC Chief AccountantTel: (02) 9911 2497Mobile: 0410 206 2603. RECENT ASX DEVELOPMENTS(A) ASX FOREIGN EXEMPT LISTINGS - PROPOSED RULE AMENDMENTSLast year ASX announced that it proposed to amend the Listing Rules to update and revise provisions relating to Foreign Exempt entities.Under the proposed amendments, the threshold for admission to the Foreign Exempt category will be increased to $A2 billion of net assets or $A200 million profit after tax in each of the previous three years. Any entity not meeting either of these criteria may apply to convert to a full ASX Listing, in which case it must comply with all of the Listing Rules. An Exposure Draft was released on 31 January 2002 in relation to the proposed amendments, and comments are sought by 15 March 2002. A copy of the Exposure Draft may be obtained from ASX's website - . (B) FINANCIAL SERVICES REFORM ACT 2001 - LISTING RULE AMENDMENTSOn 14 December 2001, ASX published an Exposure Draft of Listing Rule Amendments. The majority of Listing Rule amendments in that package were consequential on the Financial Services Reform Act 2001 (Cth) (the Act) coming into operation. Other minor rule amendments and corrections were included in the Exposure Draft. ASX received three submissions on the Exposure Draft but no formal response document was prepared as the amendments were technical in nature. The rule amendments are scheduled to come into effect on 11 March 2002, following the non-disallowance period and to coincide with the commencement of the Act. It is anticipated that the rule amendments will be sent to subscribers of the Listing Rules in the first week of March. A number of Guidance Notes are in the process of review and amendment to take account of changes consequential to the commencement of the Act and these will be reissued together with the rule amendment package.The amended Listing Rules and re-issued Guidance Notes will also be available on ASX's website - by 11 March 2002.(C) ASX LAUNCHES FUTURES MARKETThe ASX Futures Exchange Limited (ASXF) launched its futures market on 30 January 2002 having previously received government approval to operate as a futures exchange. ASX now offers an integrated trading and clearing environment where investors can trade shares, options, warrants, interest rate securities, ETFs and equity based futures contracts.ASXF commenced its market operations with 2 futures contracts, the ASX Mini200 and the ASX Mini50. The new contracts are based on the S&P/ASX 200 share price index and the S&P/ASX50 share price index. They are known as Mini futures because they have a contract multipier of only $10 per point, rather than higher multipiers typically applied to other futures contracts. Mini index futures contracts have been particularly successful overseas in attracting a broad user base with the E-Mini S&P 500 and the E-Mini Nasdaq 100 among the top-10 most actively traded index contract worldwide.The futures contracts will also complement the two Exchange Traded Fund (ETF) products ASX facilitated with State Street Global Advisors (SsgA) which listed in August 2001.ASX Mini contracts offer scrip lodgment facilities where holders will be able to lodge shares as cover for their initial margins with no exchange fee and without having to move those shares from their CHESS sub-account.The ASXF market is cleared by Options Clearing House (OCH) an approved futures clearing house under the Corporations Act. Copies of the ASXF Business Rules and Futures Clearing Rules are available from ASX. If you would like to subscribe to the Rules, please contact ASX Customer Service on 1300 300 279 or email ASX on info@.au. 4. RECENT TAKEOVERS PANEL MATTERS(A) PANEL PUBLISHES GUIDANCE NOTE ON PANEL PROCEDURESOn 14 February 2002 the Takeovers Panel published a Guidance Note outlining the process taken by a sitting Panel and the Panel Executive when considering an application. The Guidance Note was prepared in response to feedback received from takeoversmarket participants and their advisers.The Guidance Note summarises the steps a sitting Panel usually takes when considering an application and conducting proceedings and outlines the role of the Panel Executive.The Panel believes the Guidance Note will assist takeovers market participants and their advisers to understand Panel processes prior to making an application or becoming party to Panel proceedings.A copy of the Guidance Note is available on the Panel's website at: (B) PANEL RELEASES DRAFT GUIDANCE ON COSTS ORDERSThe Panel has released for public comment a draft Guidance Note on its powers to make Costs orders in matters before the Panel.The Panel said that costs orders will not be commonplace because its proceedings are intended to be quick informal and commercial. Therefore, the costs to parties appearing before it are likely to be low.The Panel noted that it can only make costs orders, like other orders, under section 657D of the Corporations Act if it has made a declaration of unacceptable circumstances in the matter before the Panel. However, it also said that costs will not automatically follow the event i.e. a party who is successful in an application before the Panel should not assume that it will automatically have its costs paid by the unsuccessful party.The Panel has the power to direct any person to pay the costs of the parties to Panel proceedings (but not the costs the Panel itself incurs in proceedings). Those costs can include the costs of lawyers, bankers and other commercial advisers. Generally the Panel said that it will only award those costs that are actually, necessarily, properly and reasonably incurred in the course of the proceedings before the PanelThe Panel's policy is that a party is generally entitled to make or resist an application once, presenting a case of reasonable merit, in a businesslike way, without exposure to a costs order.The Panel said that it may make a costs order against a party if the party presents a case that is not arguable, engages in delay or obstruction, abuses the process, makes unsubstantiated assertions, or seeks an unmeritorious review.The Costs Guidance Note is on the Panel's website at . RECENT CORPORATE LAW DECISIONS(A) THE WAR ON DISCLOSURE(By Nicole Calleja, Allens Arthur Robinson - This article is reprinted with permission from the Allens Arthur Robinson newsletter, Focus: Mergers & Acquisitions)GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd [2001] FCA 1761, Federal Court of Australia, Gyles J, 11 December 2001The full text of this judgment is available at: or (1) IntroductionImproving disclosure practices was a priority for Australian regulatory authorities in 2001. The Australian Securities and Investments Commission (ASIC) and the Australian Stock Exchange (ASX) were first out of the blocks with their launch of a joint National Continuous Disclosure Surveillance Program in February 2001. This was followed by the introduction of a new Australian Financial Review column titled 'Under Scrutiny', which specifically monitors share price queries by the ASX.In addition, ASX amended Guidance Note 8 (which relates to the continuous disclosure obligations in Listing Rule 3.1) in a way that places greater emphasis on obtaining better disclosure for investors in certain circumstances, including where there is market speculation, or where analysts have been briefed or a company changes its forecast revenue or profits.ASIC was similarly proactive, calling for powers to fine those listed companies that breach continuous disclosure requirements, and warning that surveillance may be undertaken. ASIC's active pursuit of AMP Limited in relation to its analyst briefings is evidence that this is no idle threat. It was in this context that ASIC Deputy Chair Jillian Segal recently stated that ASIC is "still fighting the war on 'disclosure'".The courts also became involved in the debate. In GPG (Australia Trading) Pty Ltd v GIO Australia Holdings Ltd [2001] FCA 1761, Justice Gyles found that GIO Australia Holdings Ltd (GIO) had breached the prohibition against misleading and deceptive conduct by failing to disclose information in its possession concerning losses incurred by its reinsurance business.(2) FactsGIO was privatised and floated in 1992. By January 1999, AMP Limited (AMP) had acquired 57% of GIO's shares (largely as a result of a takeover AMP made in respect of GIO in 1998). Part of GIO's business involved reinsurance, that is, accepting premiums in return for taking a share of risks undertaken by other insurers. On 12 May 1999, GIO announced that significant losses had been sustained by its reinsurance business, and on 16 August 1999, GIO announced its intention to exit the reinsurance business.On 24 September 1999, GIO and AMP released simultaneous announcements concerning a proposal for AMP to acquire 100% of GIO via a scheme of arrangement (the Scheme Proposal). The terms of the proposal involved GIO shareholders transferring their shares to AMP in exchange for listed debt instruments so as to receive a face value equivalent to $3.05 per GIO share. In addition, it was proposed that AMP would issue each GIO shareholder with an unlisted contingent instrument (Contingent Instrument) potentially entitling the holder to two further cash instalments, depending on the results of GIO's reinsurance business.Following GIO and AMP's announcements on 24 September 1999, a report was prepared by a member of the investment committee of GPG (Australia Trading) Pty Ltd (GPG), recommending that GPG invest in GIO. The recommendation was accepted and between 30 September 1999 and 2 November 1999, GPG progressively acquired more than 16 million shares in GIO.On 2 November 1999, GIO announced that its financial situation had continued to deteriorate, to the extent that the directors believed it was highly unlikely that the first payment would be made under the Contingent Instrument contemplated in the proposal announced on 24 September 1999. Then, on 4 November 1999, GIO announced that AMP was not prepared to implement the Scheme Proposal on the terms previously announced and put forward a revised proposal under which GIO shareholders would receive AMP Income Securities with a face value of $2.75 per GIO share (previously $3.05) and a Reinsurance Note potentially entitling the holder to two cash instalments.GPG alleged that its purchases of GIO shares were induced by the announcements made by GIO and AMP on 24 September 1999 and their failure to make different disclosure until early November. GIO's November announcements caused a significant fall in the market value of the GIO shares acquired by GPG. Accordingly, GPG sued GIO for the losses it incurred as a result of the fall of the market value of the GIO shares. GPG alleged that GIO had engaged in misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) (TPA) and other legislation. Contravention of the continuous disclosure obligation in section 1001A(2) of the former Corporations Law was also alleged. GPG made similar claims against AMP, also alleging that AMP had engaged in unconscionable conduct in equity and had contravened section 51AA of the TPA.(3) DecisionJustice Gyles gave judgment against GIO and awarded GPG damages of $8.36 million (plus costs). The proceeding against AMP was dismissed with costs.(a) Was GIO's 24 September announcement misleading or deceptive?Justice Gyles considered the terms of the announcement, what the market had been told about the state of GIO's reinsurance business and GIO's state of knowledge at the time, and concluded that GIO had engaged in misleading and deceptive conduct. However, Justice Gyles said he thought "the information was not certain enough to require a decision to immediately increase the provisions [in order to deal with the reinsurance losses] and not certain enough to warrant disclosure to the market absent any other announcement." He stated that once GIO decided to make an announcement, it was obliged not to make a misleading announcement and should have disclosed the substance of a report prepared in September 1999 by GIO's in-house actuaries concerning the reinsurance losses, appropriately qualified to reflect the nature of the information. Justice Gyles found that the absence of such information rendered the statement misleading and deceptive. He then went on to note:"I have not overlooked either the fact that premature release of information may cause damage to shareholders or the fact that casting any doubt upon the adequacy of the increased provision so recently announced would be viewed seriously by the market. Having chosen to speak, GIO came under an obligation not to mislead in so doing."(b) Did GIO's announcement cause loss or damage to GPG?Justice Gyles found that GIO's announcement of 24 September 1999 had caused loss or damage to GPG. Central to this finding was his acceptance of the evidence given by Maurice Loomes, an investment analyst who was a director of GPG at the relevant time and who made the recommendation to buy the GIO shares. Loomes stated that had GIO disclosed on 24 September 1999 what it knew about the extent of the reinsurance losses at that time (in particular, if it had disclosed the substance of the report prepared in September 1999 by GIO's in-house actuaries), he would not have recommended the investment. Justice Gyles concluded that acceptance of the evidence of Loomes effectively decided the issue of causation in favour of GPG, because without Loomes' recommendation there would have been no investment.(c) Was GIO duty-bound to disclosure further information following its 24 September announcement?Justice Gyles left open the issue of possible grounds to attack GIO for non-disclosure, but he concluded that the "non-disclosure case, even if established, would not lead to any different result".(d) Was AMP's 24 September announcement and subsequent non-disclosure misleading or deceptive?With respect to AMP's 24 September announcement, Justice Gyles found that AMP was not obliged to disclose what it knew about the probability of GIO making further losses. He also dismissed GPG's argument that AMP's announcement was misleading or deceptive. GPG argued that the intentions disclosed by AMP in its announcement were misleading or deceptive because AMP later resiled from the representations it had made as to what it would do in relation to the scheme in the future. Justice Gyles stated that with "some hesitation" he had to accept the minutes of the AMP Board of 23 September 1999 as evidence that AMP's announcement was neither misleading nor deceptive because there was "nothing about the resolution, or in the surrounding circumstances, to lead to the view that the Board or the delegates of the Board did not mean what was said at the time. The mere fact that some weeks later it took a different position does not suggest any more than that AMP changed its position".(e) Was AMP's conduct from 29 October 1999 unconscionable?Justice Gyles concluded that the demand for "a radical change to the escape clause" and the subsequent refusal by AMP to enter into the Scheme Proposal as announced was unconscionable. This was because the announcement AMP made on 24 September 1999 was unqualified as to its commitment to the scheme.(4) ConclusionIf a company possesses information that is not of itself certain enough to require immediate disclosure, such information may nevertheless need to be disclosed in circumstances where the company chooses to make an announcement to which the information is pertinent. Where a company chooses to make an announcement it is obliged not to mislead in so doing.(B) DEALING IN SECURITIES IN BREACH OF LAW(By Stephen Taffe, Phillips Fox)R v Albuino [2001] SASC 397, Supreme Court of South Australia, Doyle CJ, Bleby and Martin JJ, 4 December 2001(1) IntroductionThis case was an appeal by Antonio Albuino ('the appellant') against his conviction in the District Court of South Australia. The appellant was convicted after a trial by jury of an offence against section 1000(1)(b) and section 1311 of the former Corporations Law.Section 1000(1) of the Corporations Law provided:"(1) A person shall not:(a) by making or publishing a statement, promise or forecast that the person knows to be misleading, false or deceptive;(b) by a dishonest concealment of material facts;(c) by the reckless making or publishing (dishonestly or otherwise) of a statement, promise or forecast that is misleading, false or deceptive; or(d) by recording or storing in, or by means of, any mechanical, electronic or other device information that the person knows to be false in a material particular or materially misleading;induce or attempt to induce another person to deal in securities."Section 311 of the Corporations Law created the offence.The prosecution alleged that, by a dishonest concealment of material facts, namely the involvement of Cresar Pty Ltd (Cresar) in the operation of the business 'Air Kangaroo Island' and of the financial position of Airtransit Pty Ltd ('Airtransit') and the financial position of Cresar, Antonio Albuino ('Albuino') and another person ('X') induced Patrick Citerne ('Citerne') to deal in securities in contravention of the Corporations Law.The appellant was jointly charged with X.(2) Factual backgroundAirtransit was the owner and operator of the business 'Air Kangaroo Island', a small regional airline operating services between Adelaide and Kangaroo Island. Cresar was a company owned by the appellant.Citerne was a pilot who was interested in investing in a regional airline. In early 1994, he had several discussions with the appellant and X in relation to investing in Air Kangaroo Island. Citerne eventually entered into a formal agreement for the purchase from the appellant of 17 per cent of the issued shares in Airtransit for $100,000.Citerne's cheque was in fact deposited in the Cresar bank account. Soon afterwards, the financial affairs of Air Kangaroo Island deteriorated rapidly. In July 1994, liquidators were appointed to both Airtransit and Cresar.The prosecution alleged there was a dishonest concealment of three material facts, namely the involvement of Cresar in the operation of the airline business, the true financial position of Airtransit and the financial position of Cresar. It was alleged that the concealment induced Citerne to deal in securities by entering into the written agreement.(3) DecisionThe appellant raised seven grounds in the appeal against his conviction. Bleby J gave the lead decision, and Doyle CJ and Martin J both agreed.(a) Ground 1The appellant submitted that section 1000 of the Corporations Law only applied to dealing in securities of a listed public company, and that it had no application to securities of a proprietary company. In his decision, Bleby J considered other sections in Part 7.11 of the Corporations Law and also the predecessor to section 1000 of the Corporations Law. His Honour concluded that if the relevant words of section 1000 carried the respective meanings given to them by the Act, the dealing in securities referred to in the section included dealing in securities of a proprietary company.(b) Ground 2The appellant alleged that the trial Judge erred in admitting evidence of two alleged positive false misrepresentations, and further erred in failing to direct the jury that the prosecution was required to prove those representations beyond reasonable doubt. Bleby J held that this was a case not of positive misrepresentations but of alleged dishonest concealment of facts. The prosecution had a duty to lead evidence of all relevant conversations between the parties in order to prove what was not disclosed. The evidence that was admitted did not give rise to any unfairness or possible confusion in the mind of the jury. Further, the appellant did not establish that the trial Judge's summing up was inherently unfair.(c) Ground 3The appellant alleged that it was incorrect and confusing to the jury for the trial Judge to direct them that if they were satisfied beyond reasonable doubt that any one of the material facts had been concealed then the element of concealment would have been proved. His Honour held that the trial Judge's direction was correct as a matter of law, in that proof of all particulars alleged is not required for proof of the offence if the conduct proved and coming within the scope of the particulars is sufficient to constitute the crime alleged. Bleby J held further that in his opinion the direction was not confusing.(d) Ground 4The appellant alleged that the trial Judge erred in directing the jury that 'you do not then have to concern yourselves with exactly what was said by [X] and what was said by Albuino'. It was submitted that this was effectively a direction that the positive misrepresentations were not required to be proved beyond reasonable doubt. His Honour held that what was said by the trial Judge was part of a comprehensive and accurate direction as to joint criminal enterprise, and he rejected the appellant's argument.(e) Ground 5The appellant alleged that the trial Judge erred by admitting into evidence what was described as 'opinion evidence' as to what the appellant did and said. Bleby J held that the evidence objected to was not opinion evidence, but was the witness's own method of summarising what the appellant had said or done.(f) Ground 6This ground alleged that for a combination of reasons specified in other grounds of appeal, the trial Judge's verdict was unsafe and unsatisfactory. His Honour held that none of the grounds of appeal advanced, either individually or collectively, rendered the verdict unsafe. In rejecting this ground, His Honour noted that the jury was assisted by a written summary of the elements of the offence and that, in his opinion, the trial Judge's directions were clear.(g) Ground 7This ground concerned one aspect of the trial Judge's written directions to the jury. The part of the directions complained of stated 'by means of the dishonest concealment of a material fact or facts the accused induced or attempted to induce Citerne to invest his money'. The allegation in the particulars of the offence was that X and the appellant induced Citerne to deal in securities. The appellant claimed that the reference in the written directions to an attempt went outside the scope of the particulars. Bleby J held that whatever the reason for the inclusion in the directions of the reference to an 'attempt' to induce, there could be no doubt in the minds of the jury what the relevant issue was in the case. As the relevant issue did not include an attempt, the written directions did not cause any miscarriage of justice.Accordingly, all the appellant's grounds were rejected and his appeal was dismissed.(C) LIABILITY OF DIRECTORS OUTSIDE AUSTRALIA - INSOLVENT TRADING(By Mark Stevens, Phillips Fox)James v Andrews [2001] NSWSC 1149, Supreme Court of New South Wales, Young CJ, 6 December 2001The full text of this judgment is available at: or (1) The facts - grounds for appealThe plaintiffs are the liquidator of a company in liquidation. The company in liquidation was registered under the laws of New South Wales ("NSW"). The defendant was a director of the company in liquidation. An Originating Process was filed on 2 August 2000 making a claim against the defendant for compensation under section 588M of the Corporations Law (a claim made under the previous corporations regime) alleging a breach by the Defendant of section 588G, which imposes a duty on directors to avoid insolvent trading.At all material times the defendant was a citizen and resident of New Zealand and was assumed to have never left New Zealand.On 25 January 2001 the plaintiffs sought leave to proceed against the defendant pursuant to the Supreme Court Rules. The defendant, by motion filed 13 October 2000, sought orders setting aside the originating process or a declaration that the Court had no jurisdiction over the defendant in respect of the subject matter of the proceedings. The two notices came before Acting Master Berecry on 16 August 2001. On 23 August 2001 Acting Master Berecry ordered that leave be granted for the plaintiffs to proceed and that the defendant's notice of motion be dismissed.The defendant filed a notice of appeal on 19 September 2001 and the plaintiffs filed a Notice of Contention.(2) The defendant's appealThe defendant raised two arguments in his appeal, namely that:- The plaintiffs had not shown the cause of action arose in NSW and therefore no leave to proceed should have been given; and- The New South Wales Parliament was not competent to legislate so as to make a person, who was never a resident of NSW, liable for the debts of a company which is registered or wound up in NSW.(3) Young CJ's findingsYoung CJ considered the question which must be addressed when considering a contravention of section 588G(2) in these circumstances was:"Where did the failure of the director in his duty to prevent insolvent trading take place?"He found:- The general flavour of section 588G(2) is that directors have an obligation to deal with the company's affairs in such a way as to stop it incurring a debt, and that person is guilty of volitional delinquency in allowing the debt to be incurred.- Following Agar v Hide (2000) 74 ALJR 1219 the court must focus attention upon the nature of the claim which is made in the proceedings, and then ask whether that cause of action arose in the same jurisdiction.- Following Al Fawwaz [2001] 4 AER 149 there is not usually a requirement that a person be physically present when a tort or crime is committed. - Where a statute creates an obligation on a company director, that obligation attaches to the company director wherever they may physically be. The director is bound to discharge their obligations and the mere fact that they are outside the jurisdiction does not derogate these obligations.- Failure to do acts, which should have been done in NSW, make the contravention of section 588G take place in NSW.- The defendant's appeal against leave to proceed was dismissed with costs.Young CJ referred to a number of authorities in determining whether the NSW Parliament had power to legislate in relation to a director of a company registered in NSW who was a citizen, resident and at all material times outside the jurisdiction. In determining this, Young CJ considered whether there was a sufficient nexus with NSW.Young CJ cited the following case extracts in coming to his findings:- Broken Hill South Limited v Commissioner of Taxation (NSW) (1937) 56 CLR 337:"the power to make laws for peace, order and good government of a State does not enable the State Parliament to impose by reference to some act, matter or thing occurring outside the State a liability upon a person unconnected with the State. If [a] connection exists, it is for the legislature to decide how far it should go in the exercise of its powers".- The Myer Emporium Ltd v Commissioner of Stamp Duties (1967) 68 SR (NSW) 220:"The incorporation of the company in New South Wales does constitute a sufficient connection." - White v Briggs Thurburn Acraman & Co (1843) 5 Dunlop (Court of Sessions) 1148.Young CJ agreed that the general method of approaching these sorts of cases is that even if a company is incorporated in one jurisdiction the laws which relate to that company may be enforced over boundaries.Young CJ found:- A company's existence and the rights of all persons interested in that company (including shareholders and directors) derive their interest principally from the statute or from the incorporation of the company.- There is an obligation on directors of NSW companies to observe the requirements of section 588G and that obligation extends to any director, wherever that director may be. - The powers of the NSW Parliament extend the application of section 588G to directors who are outside the jurisdiction.- The defendant's Notice of Motion was dismissed.(D) OPPRESSION OF MINORITY SHAREHOLDER - HOW IS COMPENSATION ASSESSED?(By Dugan Cunningham, Clayton Utz)Shirim v Fesena [2002] NSWSC 10, Supreme Court of New South Wales, Davies AJ, 25 January 2002The full text of this judgment is available at: or (1) IntroductionThe key issue in this case was whether adequate compensation had been given to a minority shareholder who had suffered oppression pursuant to section 260(2) of the former Corporations Law.Dr TR Wenkart and Dr JR Smith acquired the Netherleigh Private Hospital in Sydney. Fesena Pty Limited ("Fesena") was formed to acquire the real estate of the hospital. A company that later became Eastern Suburbs Private Hospital Pty Limited ("ESPH") was formed to run the hospital business as trustee for the Netherleigh Unit Trust. Dr Wenkart took 76% of the shares in Fesena and in ESPH and of the units in the Netherleigh Unit Trust. Dr Smith took 24% and his shares and units were held by Shirim Pty Limited ("Shirim"). Both parties had equal representation on the boards of the two companies.In 1994 Shirim and Dr Smith commenced an oppression suit under section 260 of the Corporations Law. The defendants filed no answering material to the suit and as a result Shirim and Dr Smith sought summary judgment. The motion for summary judgment was resolved by a consent order made on 14 March 1996 by Master McLaughlin which provided that, pursuant to section 260(2) of the Corporations Law, the shares and units held by Shirim would be purchased by certain companies with which Dr Wenkart was associated and the proceedings would be referred to the Master to inquire, inter alia, as to the value of Shirim's shares and units in ESPH, the Netherleigh Unit Trust and Fesena at which the purchaser or purchasers under the orders would acquire them.The inquiry issue was determined by the Master on 6 February 2001 when he held that the value of the shares and units ought to be certified as nil and ordered Shirim to transfer its shares and units for no consideration to the companies which represented Dr Wenkart's interests. Shirim and Dr Smith appealed this order.(2) Principles for assessing oppression compensationDavies AJ agreed with the submission put on behalf of Shirim and Dr Smith before the Master that, in formulating an order under section 260, the Court has a wide discretion which it should exercise for the purpose of compensating the oppressed shareholder for the oppression which occurred. This principle was well established since the decision of the House of Lords in Scottish Cooperative Wholesale Society Limited v Meyer [1959] AC 324.Davies AJ was of the view that, in the application of this principle, the Court treats the order for the purchase of the shares as a means by which the minority shareholder is compensated for the oppression which has occurred. His Honour also said that, although valuations usually occur at the date of the commencement of the proceedings, other dates may be selected if to do so will exclude the financial effects of the oppressive conduct complained of.His Honour also cited from the decision of von Doussa J in Coombs v Dynasty Pty Limited (1994) 12 ACLC 915 where it was stated:"The Court must fix a price that represents a fair value in all the circumstances of the case ... In the valuation exercise the oppressive conduct and the effects which it may have had on the value of the shares is to be disregarded."After disagreeing with the Master's approach to the role of the affidavits filed in the oppression suit, Davies AJ went on to agree with the Master about the principles for assessing oppression compensation. His Honour stated:"That the proper course was for him to consider the issue of oppression and its financial consequences in the light of the totality of the evidence which the plaintiffs and the defendants brought before him. Unless a court, when it makes its order referring the matter for inquiry as to value, specifies the principles upon which the valuation will occur, it is the task of the court undertaking the inquiry to examine the evidence as to oppression and its financial consequences and to ascertain, in light of the whole of the evidence, what is the fair and just value to be determined in the light of the circumstances of the case."Davies AJ then applied this reasoning to the orders of 14 March 1996 by stating:"... the orders should be interpreted as requiring that a valuation be made on the ordinary basis adopted in oppression cases, namely, as requiring that the oppression and its financial consequences be identified and that the value to be calculated be assessed so as to compensate the minority shareholder for the oppression which occurred."(3) Was there oppression?Davies AJ considered it necessary to examine what the evidence established as to the nature of any oppression which occurred.Dr Smith alleged he never agreed to work on a restructuring project at the hospital and that he made his objections known. His Honour concluded that Dr Smith participated and cooperated in the project and that there was no evidence that he ever stated he was totally opposed to the project or that it would go ahead against his opposition. While the project had adverse financial consequences for the hospital, his Honour agreed with the Master's view that the mere carrying out of the work was not an act of oppression by the majority of shareholders because the work was done in good faith with a view to benefiting the hospital business. The making of a bad business decision is not, of itself, oppression.Dr Smith's other allegation was that from about the time the restructuring project was carried out, the Macquarie Hospital Group (in which Dr Wenkart was the controlling figure) took over the effective management of the ESPH business. Davies AJ believed that, by the middle of 1987, the Netherleigh Private Hospital ceased to be operated as a joint venture between Dr Wenkart and Dr Smith and, for administration purposes, became just another hospital in the Macquarie Hospital Group. His Honour compared this situation to that in John J Starr (Real Estate) Pty Limited v Robert R Andrew (A'Asia) Pty Limited (1991) 6 ACSR 63 where it was stated by Young J:"It is essential in company law that all persons who are entitled to participate in meetings are able to participate in them to the extent which the law allows ... Where the rights of the minority are effected by persistent conduct at the board, so that they are not able fully to participate in meetings, then there is, in my view actual oppression ...".Davies AJ concluded that there was conduct on the part of Dr Wenkart and his companies which amounted to oppression of Shirim, and which concerned Dr Smith. Insufficient attention was given to the fact that the hospital had been acquired as a joint venture between Dr Wenkart and Dr Smith and on the understanding that Dr Smith would be consulted and his views would be influential in the affairs of the hospital.(4) What level of compensation?Having found oppression, Davies AJ stated that it was another matter to find that Dr Smith and Shirim should be compensated by way of a substantial value for the shares and units.Counsel for Shirim and Dr Smith sought 24% of a total valuation of $8,200,000 as at 1 December 1986, being $1,968,000. Davies AJ said there were substantial reasons why such a figure should not be determined. One was that to order any such sum would be to provide a great windfall to Shirim and Dr Smith. Additional reasons for not adopting the date of 1 December 1986 were that the proceedings were not commenced until 1994 and the inquiry before the Master was not held until the year 2000. In his Honour's view there would need to be very sound reasons for adopting a date for valuation more than a decade earlier than the determination. In this respect, Davies AJ agreed with the Master that the determination of value should not be made on the basis of the value of the shares and units as at 1 December 1986. He also agreed with the Master that, if the shares and units were valued on the basis of market value as at 30 June 1996, the valuation would be nil.However, Davies AJ concluded that "the orders made by the Master seem on their face to be fallacious". This was because the proceedings before the Master commenced with an application for relief against oppression and the order that was made by the Master provided no relief whatsoever against oppression and its effect was to benefit Dr Wenkart and the Macquarie Hospital Group by transferring the 24% interest which Shirim held in the enterprise for no consideration whatsoever.In light of these observations, his Honour said:"In my opinion, an order should be made which reverses that result and which gives to Shirim and Dr Smith relief against the oppression which occurred and which recognises that the transfer of the shares and units representing a 24 percent interest in the enterprise is of benefit to Dr Wenkart and the Macquarie Hospital Group. In all the circumstances, the amount which is fixed should be relatively low but it should recognise that the interest which Shirim has in the enterprise has a tangible monetary value so far as Dr Wenkart and the Macquarie Hospital Group are concerned."Davies AJ decided he could do no more than assess a figure which was fair to all the parties. He considered a figure of $250,000 would be an appropriate figure to fix as the value at which the shares and units should have been transferred, if transferred at 30 June 1996. This value was increased to $375,000 for the passage of time and to include interest.(E) PERSONAL LIABILITY UNDER 588Z - EXERCISE OF JUDICIAL DISCRETION(By Alex Vynokur, Baker & McKenzie) Nilant v Shenton; Shenton v Nilant; Edenbank Nominees Pty Ltd (in liq) v Shenton [2001] WASCA 421, Supreme Court of Western Australia Full Court, Steytler, Parker and Miller JJ, 20 December 2001The full text of this judgment is available at: or J delivered the judgment with the other Justices agreeing.(1) Background The proceedings in this case arose out of the liquidation of Edenbank Nominees Pty Ltd ("Edenbank"). Mr Nilant, the liquidator of Edenbank, applied for an order pursuant to section 588Z of the Corporations Law (as it then was) ("the Law") that Mr Shenton be personally liable for a specified part of debts and liabilities of Edenbank. The basis for the application of the liquidator was that Mr Shenton had contravened the then section 229 of the Law by managing Edenbank when he was an insolvent under administration. At the relevant time this was prohibited by section 229 which was then a provision specified in section 588Z(b)(i). Mr Shenton had been declared bankrupt on 17 March 1995 and he was an insolvent under administration until the annulment of his bankruptcy on 27 June 1996. The case for the liquidator focused on, what on the evidence was found to be, a loan to Edenbank of $200,000 from Derbyshire Nominees Pty Ltd ("Derbyshire"), a company effectively controlled by a Mr Newman. There was evidence that agreement was reached for the making of this loan on 15 November 1995 and the money was paid over on that day. Both on that day, and during earlier negotiations and discussions that led to the loan, Derbyshire had been represented by Mr Newman and Edenbank by Mr Shenton and at times also by a Mr Cotesworth. Demand for repayment in full of the $200,000 was made by Derbyshire on 30 January 1996 but Edenbank failed to repay the loan or any part of it. On 13 January 1997 Derbyshire entered summary judgment against Edenbank in the District Court in the sum of $200,000 plus interest and costs in respect of the amount of this loan.(2) Decision at first instanceThe decision at first instance was handed down by White J on 1 February 2001. A significant issue before White J was whether Mr Shenton had been managing Edenbank at the time of the loan on 15 November 1995. In respect of this, the liquidator contended that Mr Shenton was managing Edenbank, while Mr Shenton submitted that while he performed certain acts in relation to the affairs of Edenbank he acted at all times under the direction of and subject to Mr Cotesworth, whom he submitted was managing Edenbank. His Honour was persuaded, on the evidence before him, that Mr Shenton had managed Edenbank while an insolvent under administration and, in particular, did so on 15 November 1995 and during the period leading up to that date in relation to the negotiation of the loan. Section 588Z was applied and an order made subjecting Mr Shenton to personal liability in respect of the debts and liabilities of Edenbank. His Honour was not persuaded, however, that the order should extend to the full extent of the loan from Derbyshire to Edenbank of $200,000 as had been sought by the liquidator. White J limited the liability imposed by virtue of his order to an amount not exceeding $35,000.(3) AppealBoth the liquidator and Mr Shenton have appealed. The liquidator contended that the amount specified as the limit of Mr Shenton's liability in the order should be $200,000 as had been sought in the application of the liquidator, rather than $35,000. Mr Shenton argued that no order should have been made in the proper exercise of discretion. He also contended that it should not have been found that he had managed Edenbank. (4) Appeal decision(a) Management of the CompanyBy virtue of the definition of "managing the company" in section 91(A)(2) of the Law, it was apparent to Parker J that it is sufficient to constitute managing a company if a person in any way is concerned in its management, or takes part in its management, and this is so whether the person acts directly or indirectly. By section 91A(1) the statutory definition is applied not only to section 588Z but also to section 229. The Court agreed with the judge at first instance that involvement must be more than passing, and certainly not of a kind where merely clerical or administrative acts are performed; it required activities involving some responsibility, but not necessarily of an ultimate kind whereby control is exercised.The Full Court agreed with White J that there was a great deal of evidence both as to Mr Shenton's role in the negotiation of the loan of the $200,000, and otherwise, which was clearly well capable of supporting the view that Mr Shenton had managed the company within the meaning of section 588Z and section 91A(2). Therefore, this ground of Mr Shenton's appeal failed.(b) Discretion - at first instanceThe Full Court was of the opinion that the issue of real substance in the appeal was the exercise of discretion under section 588Z. There were two points of focus for the discretion: whether to make an order at all and the limit placed by the order on the personal liability ordered. Parker J went on to analyse the effect and purpose of operation of section 588Z, concluding that a clear implication of the provision is that there should be some relevant connection between the debts and liabilities of the company and the role of the person, who is made subject to an order for personal liability, in the management of the company. Given the absence of explicit statutory guidance, it was necessary for Parker J to have regard to the purposes to be served by the provision in the statutory scheme. That purpose was found to be not the punishment of the bankrupt but the protection of the commercial community.The Full Court was of the view that the trial Judge's reasons did not seek to explore beyond that bare connection why it was appropriate in this case for an order for personal liability to be made. In particular, it has not been identified or explained on what basis his Honour saw the purposes of the statute being furthered by an order against Mr Shenton in this case. Therefore, the Full Court was not satisfied that that the discretion was exercised having regard only to proper considerations and after giving them due weight. In addition, the Court held that the decision of White J to reduce the amount of personal liability of Mr Shenton from $200,000 (the amount of the loan) to $35,000 was incorrect because the matters taken into account did not have any sufficient legal or factual connection to the loan. Thus, the decision to make an order and to limit the personal liability to $35,000 was set aside and the discretion was reconsidered by the Full Court.(c) Discretion - on appealThe Court took into account the following matters in deciding how to exercise its discretion:- Mr Shenton made no secret of his bankruptcy, and indeed informed all relevant people that he was an undischarged bankrupt and that he was aware that that fact precluded him from lawfully managing the company;- The lender (Derbyshire) took advice from both a solicitor and accountant before entering into the loan transaction, and decided to proceed against the advice; and- Derbyshire financed the liquidation of Edenbank, and the liquidator failed to submit evidence as to whether moneys had been recovered from sources other than Mr Shenton. As a consequence of this, the liquidator made a strong submission not to limit Mr Shenton's liability below the full amount of $200,000. Parker J stated that in the absence of necessary evidence and findings, a satisfactory view of the effect on the affairs of Edenbank of the debt incurred under Mr Shenton's influence cannot be formed. His Honour concluded that it had not been shown that Mr Shenton's management, in this respect, necessarily caused the public or Derbyshire to suffer financial loss (see Poyser v Commissioner for Corporate Affairs (1985) 3 ACLC 584). It was thus held that given the confined basis upon which the application was brought and supported, it has not been demonstrated that the public interest would be advanced in any significant way by the making of an order.Consequently, the Full Court allowed Mr Shenton's appeal and set aside the order for personal liability. The liquidator's appeal was dismissed. (F) ELIMINATING MINORITY SHAREHOLDERS BY SELECTIVE CAPITAL REDUCTION(By Tim MacKinnon, Blake Dawson Waldron)Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd [2001] NSWCA 427; New South Wales Court of Appeal; Beazley and Giles JA and Davies AJA; 12 December 2001The full text of this judgment is available at: or (1) SummaryIn this case, the New South Wales Court of Appeal rejected a challenge by a minority shareholder, Winpar Holdings Pty Ltd ("Winpar'") to a selective reduction of capital by Goldfields Kalgoorlie Ltd ("GKL"). In dismissing an appeal from the decision of Santow J, Giles JA (Beazley JA and Davies AJA concurring) considered a number of issues including: (a) the need for a separate class meeting, rather than just a separate resolution, of cancelled shareholders under section 256C(2) of the Corporations Law ("Law") (as it was when the proceedings were brought); (b) the validation of an irregular capital reduction under section 256D(2) and section 1322;(c) the interrelationship between the capital reduction provisions in Part 2J.1 and schemes of arrangement; and(d) the non- application of the Gambotto principles to selective capital reductions. (2) FactsThe facts were, briefly, as follows. As a consequence of a takeover bid in 1995, 87.7% of the shares in GKL were held by Goldfields Ltd and its subsidiary, Renaissance Mining Pty Ltd (the "Goldfields shareholders"). The rest of the GKL shares were held by the non-Goldfields shareholders including Winpar which held 0.05% of the GKL shares. Both Goldfields Ltd and its subsidiary GKL were listed companies. Removal of the minority or non- Goldfields shareholders (including Winpar) by a selective reduction of capital would enable Goldfields Ltd to eliminate the duplication of costs involved in maintaining two listed entities and achieve other special benefits.On 28 June 2000, at an extraordinary general meeting, resolutions were put separately to the Goldfields shareholders and the non- Goldfields shareholders to approve a selective capital reduction involving the cancellation of all of the shares of the non-Goldfields shareholders in consideration of a cash payment to them of $0.55 per share. A special resolution approving the reduction was passed separately by the Goldfields shareholders and the non-Goldfields shareholders. Winpar voted against the resolution put to the non- Goldfields shareholders and subsequently challenged the validity of the capital reduction.(3) Need for class meeting of cancelled shareholdersWinpar's first ground of challenge was that the selective capital reduction was not "approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled" as required by section 256C(2). This was because there was not a separate meeting of the non-Goldfields shareholders, instead there was merely a separate resolution passed by the non-Goldfield shareholders as part of the business of the extraordinary general meeting of all the GKL shareholders. Giles JA agreed with Winpar's argument. Section 256C(2) required a class meeting which meant a separate meeting of the non-Goldfields shareholders had to be opened and closed, with election of its own Chairman and (although it was not necessarily required) without the presence of Goldfields shareholders. (4) Selective reduction of capital still valid by virtue of section 256C(2)Despite this failure to comply with section 256C(2), Giles JA held that GKL's selective reduction of capital was still valid because of section 256D(2) which provides that a failure to comply with section 256B and section 256C "does not affect the validity of the reduction". Giles JA observed that Winpar had an opportunity to challenge the proposed invalid resolution after receiving the notice of meeting or at the meeting itself but once the resolution was passed the Law "preferred certainty over invalidity". (5) Section 1322 validation of procedural irregularityAlthough he did not need to address the issue, Giles JA also considered that validation of the procedural irregularity was made out under section 1322(2). He rejected Winpar's argument that there was no "proceeding under this Law" to be protected by section 1322(2) because no meeting had been called. Instead Giles JA affirmed the broader definition of "proceeding" advanced in re Broadway Motors Holdings Pty Ltd (in liquidation) (1986) 6 NSWLR 45 that a proceeding under the Law was a procedure "required to be taken by the company or was one which the Act required if the company or its members wished successfully to achieve particular legal consequences". Giles JA (Davies AJA dissented on this point) also held that the failure to call the meeting as the particular meeting required was a procedural irregularity, which was covered by section 1322, rather than a substantive irregularity. There was also no substantial injustice caused by that procedural irregularity. For similar reasons, Giles JA found that protection was also afforded by section 1322(4).(6) Should the selective reduction of capital have been made by scheme of arrangement?Winpar contended that the capital reduction was a takeover by cancellation and should properly have been effected by a scheme of arrangement under section 411. This contention was also rejected. The scheme of arrangement was not an exclusive procedure. A selective capital reduction is not excluded merely because the same outcome could have been achieved by a scheme of arrangement. (7) Application of the Gambotto principlesGiles JA also held that the selective capital reduction did not have to satisfy the Gambotto principles because the Law itself provides the necessary machinery for the protection of minority shareholders. Firstly, the selective capital reduction was being undertaken for a proper purpose because it was done in accordance with Part 2J.1 of the Law and by the minority shareholders who had the power to veto it. Secondly, the Law also ensured procedural and substantive fairness by requiring disclosure of all material information (section 256A(c)), the capital reduction to be fair and reasonable to shareholders as a whole (section 256B(1)(a)) and by providing for relief under section 1324 of the Law. To superimpose the Gambotto principles over part 2J.1 would be conflicting and confusing.(8) Allocation of the value of special benefits and adequate disclosure of special benefitsThe Court upheld Santow J's decision that, in valuing the consideration payable to the non-Goldfields shareholders, it was fair and reasonable to shareholders as a whole for the independent expert to allocate the special benefits pro rata over all of the issued shares and not allocate the benefits solely to the shares of the shareholders whose shares were to be cancelled. Giles JA also rejected Winpar's further ground of appeal that there was inadequate disclosure of the special benefits achieved by the majority shareholders. These were essentially issues of fact.(G) EXEMPLARY DAMAGES FOR BREACH OF FIDUCIARY DUTY(By Megan Manwaring, Mallesons Stephen Jaques)Digital Pulse Pty Limited v Christopher Harris [2002] NSWSC 33, New South Wales Supreme Court, Palmer J, 8 February 2002The full text of this judgment is available at: (1) Summary of findingsThis case deals principally with a claim for exemplary damages for the breach by two employees of their fiduciary duty of loyalty to their employer and, in particular, raises the vexed question as to whether a court of equity can award exemplary damages.Palmer J held that a court of equity could award exemplary damages and that such damages could be awarded for breach of fiduciary duty.If the decision stands, it has important implications for fiduciaries generally and for directors and senior managers in particular.(2) FactsTwo of the defendants, Harris and Eden, were employees of the plaintiff, Digital Pulse Pty Limited ("Digital"), who carried on a business of providing computer-based multi-media services to clients. While still employees of Digital, Harris and Eden established a company, Juice-D Media Pty Limited, the third defendant ("Juice"), and:- diverted new business opportunities of Digital to Juice;- recruited Digital's existing clients to Juice;- followed a deliberate plan of remaining employees of Digital until Juice was self-supporting and then resigning from Digital to work for Juice; and- sent confidential information of Digital to Juice.(3) Legal issues(a) Appropriateness of exemplary damagesPalmer J held that exemplary damages are in a different category to compensatory damages and served the following purposes:- to punish the wrongdoer for reprehensible conduct;- to deter not only the wrongdoer but others of like mind in the community from similar conduct; and- to ameliorate the victim's sense of grievance and thereby to abate the urge for self help or violent retribution, to the danger of the public peace.This is to be contrasted with compensatory damages, which are intended to place a plaintiff in as good a position, so far as money can do it, as if the wrong had not occurred.Palmer J quoted with approval a statement from Mayne & McGregor on Damages (12th Ed (1961) p.196) that exemplary damages are awarded where the defendant's conduct is:"wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like, or, as it is sometimes put, where [the defendant] acts in contumelious disregard of the plaintiff's right".In this case, the actions of Harris and Eden warranted the award of exemplary damages as all of the circumstances taken together demonstrated:"deliberate wrongdoing for profit, in contumelious disregard of Digital's rights, deserving of special condemnation and punishment. To call a spade a spade, what Messrs Harris and Eden did was to defraud their employer of its valuable business opportunities and its confidential information".Palmer J supported this finding by reference to the consequences of an employee's breach of the statutory duty of loyalty under section 232(6) of the Corporations Law (now section 182(1) of the Corporations Act 2001 (Cwlth) (the "Corporations Act")). He considered it relevant that if the Australian Securities and Investments Commission had applied for a pecuniary penalty under section 1317J(1) of the Corporations Act, Harris and Eden would have been liable to a penalty of up to $200,000 under section 1317G(1).(b) Whether exemplary damages available in equitySurprisingly, previous judicial authority in Australia has not decided the question of whether exemplary damages are available in equity.Having found that the circumstances of the case warranted exemplary damages, Palmer J briefly contrasted the conflicting views on whether exemplary damages are available in equity:- In Bailey v Namol (1994) 53 FCR 102 at 112 the Full Federal Court (Burchett, Gummow and O'Loughlin JJ) observed that there were authorities in Canada and New Zealand which suggested that as a general proposition exemplary damages could be awarded for breach of fiduciary duty but also remarked that there is much to be said for the contrary view that "equity and penalty are strangers" (at 112-113). The court found it unnecessary to decide the point in that case.- The opinion of Meagher, Gummow and Lehane that the grant of exemplary damages for breach of confidence was illustrative of the errors produced by the fallacy that equity and the common law had been fused by the Judicature Acts ("Equity: Doctrines and Remedies" 3rd Ed, para 259); and- The opinion of Dr I C F Spry that there is no reason in principle why a court of equity should not award exemplary damages ("Principles of Equitable Remedies", 3rd Ed, note 12).Palmer J considered that doubt as to the availability of exemplary damages in equity arose from the idea that punishment was always foreign to the nature of the equity jurisdiction and that equity never gave a plaintiff more than that to which he or she was strictly entitled (D B Dobbs "Handbook on the Law of Remedies: Damages, Equity, Restitution" West (1973) 212 note 99).Palmer J referred to the following in disagreeing with this statement:- numerous decisions in the 16th and 17th centuries show that Chancery judges exercised a jurisdiction encompassing wrongs such as forgery and perjury and that defendants were sometimes punished with imprisonment, fines, the pillory and irons; - it is incorrect to say that equity never gives a plaintiff more than his or her strict entitlement - when determining an account of profits, an honest fiduciary will be awarded a more generous scale of allowances and, indeed, a grossly dishonest fiduciary may even be deprived of allowances altogether; and- the equity court, which at least in New South Wales administers the Corporations Act, is empowered to inflict punishment under the civil penalty provisions on those who breach sections of the Corporations Act which incorporate equitable duties.Palmer J also referred to a report of the United Kingdom Law Commission (Report No 247 "Aggravated, Exemplary and Restitutionary Damages") in which the Commission argued that notwithstanding the absence of English authorities for awarding exemplary damages for an equitable wrong, they could see no reason of principle or practicality for excluding equitable wrongs from any rational statutory expansion of the law of exemplary damages (at paragraph 5.55).Palmer J found that there was no authority that exemplary damages could not, as a matter of principle, be given by a court of equity for breach of fiduciary duty and that:"… to hold that wrongful conduct which would attract an award of exemplary damages in an action in tort cannot attract exemplary damages if the cause of action is equitable creates an anomaly which, in this country, is not justifiable either by precedent or by principle".Palmer J held that the law in Australia permits the award of exemplary damages for breach of fiduciary duty and the present case was an appropriate case in which to award such damages. In reaching this conclusion it was unnecessary to rely on any notion of a fusion of common law and equity: the jurisdiction to award exemplary damages was found to exist already in equity. The underlying rationale was stated as follows:"Consistency in the law requires that the availability of exemplary damages should be coextensive with its rationale. Where wrongful and reprehensible conducts calls for the manifest disapprobation of the community, where a punishment is called for to deter the wrongdoer and others of like mind from similar conduct and where something more than compensation is felt necessary to ameliorate the plaintiff's sense of outrage, then it should make no difference in the availability of exemplary damages that the court to which the plaintiff comes is a court of equity rather than a court of common law.There is no need to appeal to any perceived fusion between the principles of equity and those of the common law in order to invest the equity court with jurisdiction to award exemplary damages. Such jurisdiction is already inherent in the court".(H) THE POWER TO REFUSE TO REGISTER A TRANSFER OF SHARES(By Adam Brooks, Herbert Geer & Rundle)Leaver v Taxi Combined Services (Launceston) Pty Ltd (2002) TASSC 2, Supreme Court of Tasmania, 30 January 2002, Crawford JThe full text of this judgment is available at: or (1) FactsThis case concerns a dispute about shares in Taxi Combined Services (Launceston) Pty Ltd ("the Company").Mr Lewis had an interest in 30 shares in the Company prior to his death. In Mr Lewis' will, he included a gift to Mr Newton of all taxis and taxi licences owned by him at the date of his death. The applicant in this case (Mr Newton) sought the transfer of the 30 shares from the Lewis estate to himself.(2) HistoryAt a meeting of the directors of the Company in August 1997, 2 motions were passed which had the effect of refusing to register the transfer of the 30 shares to Mr Newton. The vast majority of shareholders of the Company appeared to oppose Mr Newton becoming a shareholder of the company.The shareholders of the Company were parties to a "shareholder deed". The deed provided that shares in the Company could only be held by and transferred to the holder of a public vehicle licence with respect to a motor vehicle the owner of which employed the services of the Company's base station. Shareholders of the Company were allotted 10 shares for each public vehicle licence they held. In the deed, each of the shareholders agreed that for so long as they were the holder of shares in the Company, they would employ the base station to service any vehicle with respect to which they were the holder of a public vehicle licence. The shareholders of the Company also agreed to ensure that the driver of the relevant vehicle would comply with the regulations determined by the board.The regulations of the Company gave the directors the power to decline to register a transfer of shares to a person they did not approve. The deed provided that the directors could not unreasonably withhold approval to the transfer of shares where the member provides (to the satisfaction of the directors) proof that the proposed transferee is a respectable, responsible and solvent person who will be the holder of a public vehicle licence.(3) LawThe case involved sections 1093 and 1094 of the Corporations Act 2001 (these sections will be sections 1071E and 1071F respectively of the Corporations Act with the commencement of the Financial Services Reform Act as of 11 March 2002). The new sections are in the following terms:"Section 1071E - Notice of Refusal to Register TransferIf a company refuses to register a transfer of a security of the company, it must, within 2 months after the date on which the transfer was lodged with it, give the transferee notice of the refusal.Section 1071F - Remedy for Refusal to Register Transfer or Transmission(1) if a relevant authority in relation to a company:(a) refuses or fails to register; or(b) refuses or fails to give its consent or approval to the registration of;a transfer or transmission of securities of the company, the transferee or transmittee may apply to the Court for an order under this section.(2) If the Court is satisfied on the application that the refusal or failure was without just cause, the Court may:(a) order that the transfer or transmission be registered; or(b) make such other order as it seems just and reasonable, including:(i) in the case of a transfer or transmission of shares - an order providing for the purchase of the shares by a specified member of the company or by the company; and(ii) in the case of a purchase by the company - an order providing for the reduction accordingly of the capital of the company."(4) AnalysisCrawford J reviewed authority in relation to the 2 month requirement in section 1093 and noted that the Court's jurisdiction under section 1094 must be determined on the basis of whether the board's refusal or failure to register the transfer was without just cause.Mr Newton submitted that at least 20 days expired after the section 1093 "due date" before the transferees were notified of the refusal.Crawford J was not persuaded that the board had unreasonably delayed in dealing with the share transfers. "Although a finding of unreasonable delay may be relevant and may, depending on the factual circumstances, be determinative and lead to answering the question in the affirmative, it is not the test which the legislation requires must ultimately be applied. Delay, reasonable and unreasonable, in dealing with share transfers, along with all other relevant facts may need to be considered on the hearing of an application under section 1094".In reviewing authorities, Crawford J noted that "it seems to me that there is a clear deficiency in section 1093 and unless and until it is remedied by amending legislation, companies may feel obliged to process transfers well within the 2 month limitation period notwithstanding exceptional circumstances, such as a request from the parties to the transfer to delay the process".It is important to note that the failure to comply with section 1093 is an offence.Crawford J held that a breach of section 1093 does not vitiate a refusal to approve a transfer.Crawford J then considered the substantive issue as to whether the refusal to consent to the transfer was without just cause. In the course of reviewing evidence on this question, the court heard allegations that Mr Newton had gained a financial advantage to the detriment of the Company through the conduct of a competing business, evidence of various alleged failures to abide by the Company's rules and verbal abuse by Mr Newton of the Company's staff.(5) ConclusionCrawford J held that Mr Newton had not established that the refusal of the directors of the Company to approve the transfers was without cause. To the contrary, it was held that the decision was made in good faith and in the interests of the Company. On the facts, Crawford J found Mr Newton to be "exceedingly aggressive and abrasive, and disruptive to the orderly and good management to the affairs of the Company".The Company was described as being "in the nature of a co-operative". Crawford J accepted that the board had (properly) considered that there had been a breakdown in trust and confidence between the Company and Mr Newton and that it was undesirable and contrary to the best interests of the Company that he should be a shareholder.(I) ADMINISTRATION RATHER THAN RECEIVERSHIP AVOIDS SECTION 267 OF THE CORPORATIONS ACT(By Wendii See and Philip Stern, Ernst & Young Law)In Australian Innovations Ltd v Powerline GES Pty Ltd (2001) NSWSC (28 December 2001) Palmer J of the Supreme Court of New South Wales held the appointment of voluntary administrators under section 436C of the Corporations Act 2001 (the Act) by a chargee (a director of which was also a director of the chargor), was not an enforcement of the charge. Hence the charge was not void under section 267 of the Act, by the failure of the chargee to obtain leave of the Court before the appointment.(1) FactsIn Australian Innovations the plaintiff chargee (the Chargee) sought a declaration under section 447C validating its appointment of administrators to the chargor company (the Chargor). The appointment was challenged by another creditor (the Creditor) of the Chargor. The Chargee and Creditor were both bidding for the purchase of the Chargor's business assets. The Creditor had offered a greater purchase price, however, the Chargee would not release its security until its debt was paid in full. The Chargee was willing to give a release if the administrators sold the business to an entity related to the Chargee, notwithstanding that the price offered by the Chargee was less than that offered by the Creditor.The Creditor argued, inter alia, that:- the Chargee was a "relevant person" within section 267 as one of its directors was also a director of the Chargor; and - a purported step in enforcement occurred when the administrators were appointed by the Chargee pursuant to section 436C(1).The administrators were purportedly appointed on 13 November 2001 pursuant to section 436C(1) of the Act which provides:"a person who is entitled to enforce a charge on the whole, or substantially the whole, of the company's property may by writing appoint an administrator of the company if the charge has become, and is still, enforceable."(2) The legislationSection 267 of the Corporations Act relevantly provides:"267(1) Where:(a) a company creates a charge on property of the company in favour of a person who is, or in favour of persons at least one of whom is, a relevant person in relation to the charge; and (b) within 6 months after the creation of the charge, the chargee purports to take a step in the enforcement of the charge without the Court having, under subsection (3), given leave for the charge to be enforced;the charge, and any powers purported to be conferred by an instrument creating or evidencing the charge, are, and are taken always to have been, void.""267(2) Without limiting the generality of subsection (1), a person who:(a) appoints a receiver of property of a company under powers conferred by an instrument creating or evidencing a charge created by the company; or(b) whether directly or by an agent, enters into possession or assumes control of property of a company for the purposes of enforcing a charge created by the company;is taken, for the purposes of subsection (1), to take a step in the enforcement of the charge.267(3) On application by the chargee under a charge, the Court may, if it is satisfied that:(a) immediately after the creation of the charge, the company that created the charge was solvent; and(b) in all the circumstances of the case, it is just and equitable for the Court to do so;give leave for the charge to be enforced."Section 267(7) provides:"In this section:Relevant person, in relation to a charge created by a company, means:(a) a person who is at the time when the charge is created, or who has been at any time during the period of 6 months ending at that time, an officer of the company; or(b) a person associated, in relation to the creation of the charge, with a person of a kind referred to in paragraph (a)."(3) FindingsPalmer J held:- a step in enforcement requires the actual, not threatened exercise of rights under the charge;- the rights conferred by the Charge in this case was to be confined to the appointment of receivers only (even though section 267(2) is not a limiting provision, and clause 12 of the Charge provided that upon any (as defined) Event of Default, the chargee could "enforce this Charge and exercise all its rights arising subsequent upon default, whether conferred pursuant to this Charge or otherwise");- section 436C of the Act is not conferred in furtherance of a chargee's powers; - on the contrary section 436C is part of the scheme in Part 5.3A of the Act, the purpose of which is to place a moratorium on the enforcement of rights to maximise the possibility of a company's continued existence and determine if a company can trade out of difficulties or realise assets in some way which is more advantageous to creditors as a whole;- the invitation in section 436C is therefore, not a step in enforcement of charge - in fact it may result in a charge never being enforced;- there are divergent authorities on whether a common directorship will render a chargee an associate of the chargor (see Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 455, where Young J considered that a person who was an officer of the chargor company and a director of the chargee was sufficient to render the chargee a relevant person within section 267; contrasted with IPT Systems Ltd v MTIC Corporate Pty Ltd (2000) 36 ACSR 454, where Owen J held that a mere common directorship was insufficient), however, it was not necessary to determine whether the Chargee company in this case was a "relevant person" by virtue of the common directorship, as the enforcement point was decisive.(4) Significance of this caseThe case is important as it allows related secured creditors the freedom to appoint a voluntary administration and preserve their security. The secured creditor also obtains the benefits of the administration process, in terms of asset preservation (ie section 440F bars enforcement processes in relation to property without consent of the administrator or leave of the Court) and there is no obligation on administrators to obtain market price for assets (as controllers are required to do under section 420A). To date the ability of a chargee to appoint a voluntary administrator has been infrequently used. However, as a result of the recent decision, the prevalence of this type of appointment by secured creditors may increase.The case also means that charges in favour of directors (and other officers) of the company may not be void if the chargee appoints a voluntary administrator under section 436C, rather than a receiver, as this would not be an "enforcement" of the charge; an ironic consequence, seemingly allowing what section 267 was designed to prevent!6. MAJOR SURVEY ON NOT-FOR-PROFIT COMPANIESProfessor Ian Ramsay and Ms Susan Woodward (Centre for Corporate Law and Securities Regulation at The University of Melbourne) in conjunction with Philanthropy Australia are conducting a large scale survey of all companies limited by guarantee that appear on ASIC's register. A questionnaire will be sent to the CEO's of these companies early in March. The survey aims to obtain (on a confidential basis) detail about the size and nature of the activities of not-for profit companies, the reasons for the adoption of a corporate legal structure, the suitability of that structure, accountability to various stakeholders, composition and procedures adopted by their boards of directors and views on the most appropriate regulator.The results of the survey will help the researchers to advise on whether or not existing company laws adequately meet the particular needs of not-for-profit companies. Information from this survey will be useful for future law reform proposals - for example, any reforms about the "establishment of an independent administrative body to oversee charities and related entities" as recommended by the Federal Government Inquiry into the Definition of Charities and Related Organisations (June, 2001).It is vital that we receive as many responses as possible so that we can document accurately the characteristics and needs of not-for-profit companies. If you are on a the Board of, or advise any company limited by guarantee, please do what you can to ensure that the questionnaire is completed as accurately as possible and returned as directed. Summary results will be posted on the Centre's website and this will be mentioned in the bulletin.7. RECENT CORPORATE LAW JOURNAL ARTICLESJ McConvill, 'Directors' Duties to Creditors in Australia after Spies v The Queen' (2002) 20 Company and Securities Law Journal 4In August 2000, the High Court handed down its decision in Spies v The Queen. According to most commentators, the decision ended a "quiet revolution" which had been underway since Walker v Wimborne by rejecting the suggestion that directors owe an independent duty to creditors. In this article, the writer responds to this commentary in two ways. First, by contending that the High Court's comments in Spies concerning directors' duties to creditors were merely obiter, thereby leaving open the possibility that an independent duty to creditors will be confirmed in a subsequent case. Secondly, by suggesting that if the commentary to date is correct, then the Spies decision has minimal impact in terms of creditor protection as directors' duties under the Corporations Act 2001 already provide sufficient protection for creditors.G Hamilton, 'Are a Liquidator's Recoveries Available to the Company's Secured Creditors?' (2002) 20 Company and Securities Law Journal 25At first glance, the question posed as the topic of this article appears relatively straightforward. When subjected to a close analysis, however, the question raises a number of conceptually difficult issues which to date do not appear to have been addressed by the courts or in academic writings. Such issues have significant commercial implications for both secured and unsecured creditors alike. This article examines those circumstances where a liquidator's recoveries are available only to secured creditors, those circumstances where the recoveries are available only to unsecured creditors and certain grey areas between these two positions. It will be seen that when the legislation and evolving case law is critically examined, there are some unexpected, and at times surprising, results.Note, 'Recent Developments in Auditors Independence' (2002) 20 Company and Securities Law Journal 46Note, 'Ownership and Foreign Control of NZSE Companies' (2002) 20 Company and Securities Law Journal 56Note, 'The Takeovers Panel from Toothless Tiger to Sleeping Tiger? Will the Courts Now Advance?' (2002) 20 Company and Securities Law Journal 59I Ramsay, G Stapledon and J Vernon, 'Political Donations by Australian Companies' (2001) 29 Federal Law Review 177D Morrissey, 'SEC Injunctions' (2001) 68 Tennessee Law Review 427Journal of International Banking Law, Vol 16 Nos 8 and 9. Articles include:- Online Account Aggregation - Does it have to be against the Law?- Asset Securitisation and the Singapore Insolvency Regime - A Single Regulator for the EC Financial Market- The Reform of Corporate Insolvency Law in Great BritainTheoretical Inquiries in Law, Vol 2 No 2, July 2001. Special Issue dealing with Protecting Investors in a Global Economy. Articles include:- The Need for Competition in International Securities Regulation - The Issuer Choice Debate- Assessing Regulatory Responses to Securities Market Globalization- Centralization, Competition, and Privatization in Financial Regulation- A Case Study of Securities Regulation in a Small Open Market- Greenhorns, Yankees, and Cosmopolitans: Venture Capital, IPOs, Foreign Firms and US Markets- Incomplete Contracts Theories of the Firm and Comparative Corporate Governance- Sales and Elections as Methods for Transferring Corporate Control- Voting (Insincerely) in Corporate Law- Is Stock Manipulation Bad? Questioning the Conventional Wisdom with Evidence from the Israeli Experience- Open Market Repurchases: Signalling or Managerial Opportunism?A Hainsworth, 'The Case for Establishing Independent Schemes of Corporate and Individual Fault in Criminal Law' (2001) Vol 65 No 5, Journal of Criminal LawP Smart and C Booth, 'Provisional Supervision and Workers' Wages: An Alternative Proposal' (2001) 31 Hong Kong Law Journal 188R Weber, 'Challenges for the New Financial Architecture' (2001) 31 Hong Kong Law Journal 241X Zhang and C Booth, 'Beijing's Initiative on Cross-Border Insolvency: Reflections on a Recent Visit of Hong Kong Professionals to Beijing' (2001) 31 Hong Kong Law Journal 312T Sakamaki, 'Legislation and Problems of Business Combinations in Japan' (2001) No 13 Journal of Business Laws - Nagoya Keizai University 37L Enriques and J Macey, 'Creditors Versus Capital Formation: The Case Against the European Legal Capital Rules' (2001) 86 Cornell Law Review 1165M Kahan and E Kamar, 'Price Discrimination in the Market for Corporate Law' (2001) 86 Cornell Law Review 1205L Strine, 'Delaware's Corporate Law System: Is Corporate America Buying an Exquisite Jewel or a Diamond in the Rough? A Response to Kahan and Kamar's Price Discrimination in the Market for Corporate Law' (2001) 86 Cornell Law Review 1257W Guangying, 'On the Business Judgment Rules Applied in US Anti-takeover Suits' (2001) No 31, Contemporary Law Studies - Fudan University 57P Malandzuk, 'Globalization: Transnational Companies and Their Impact on International Legal Systems' (2001) No 31, Contemporary Law Studies - Fudan University 72A Vassallo, J Carruth, J Barrett and P Garzon, 'Cross-Border Insolvency and Structural Reform in a Global Economy' (2001) 35 The International Lawyer 449Insolvency Law Bulletin, Vol 2 No 4, December 2001. Articles include:- Approval of Ansett Administrators' Settlement with Air New Zealand- Insolvency and Restructuring of E-Companies- When Are Details of Reinsurance Relevant in the Insolvency of an Insurer?D Baird and R Rasmussen, 'Control Rights, Priority Rights, and the Conceptual Foundations of Corporate Reorganizations' (2001) 87 Virginia Law Review 921S Choy and A Guzman, 'Choice and Federal Intervention in Corporate Law' (2001) 87 Virginia Law Review 961L Bebchuk and A Ferrell, 'Federal Intervention to Enhance Shareholder Choice (2001) 87 Virginia Law Review 993M Roe, 'Rents and Their Corporation Consequences' (2001) 53 Stanford Law Review 1463K Richardson, 'Superannuation Trustees and the Exercise of Discretionary Powers' (2001) 22 Queensland Lawyer 57International Company and Commercial Law Review, Vol 12 Nos 10 and 11, October/November 2001. Articles include:- Portuguese Methods of Improving Corporate Governance- Law of Domain Names in Germany - An Overview- Due Diligence, Swedish StyleInternational Company and Commercial Law Review, Vol 12 No 9, September 20021. Articles include:- A New Statutory Regime for Implementing the Financial Services and Markets Act 2000 (UK)- Changes to the Listing Rules in the UK- The Investment and Securities Act 1999: An Overview of Anti-Trust Considerations in Regulation of Mergers in Nigeria- Swiss Aspects of M & A Share TransactionsR Mabey and P Malone, 'Chapter Eleven Reorganization and Utility Companies' (2001) 22 Energy Law Journal 277Delaware Journal of Corporate Law, Vol 26 No 2, 2001. Articles include:- UNOCAL Fifteen Years Later (And What We Can Do About It)- To Whom It May Concern: Fiduciary Duties and Business Associations- Fiduciary Duties and Disclosure Obligations: Resolving Questions After Malone v Brincat Holly M BarberaCorporate Governance Bulletin, August-October 2001, Vol 19 No 3. Articles include:- Level of Independence on Audit Committees Jumps, Annual IRRC Board Study Finds- Director Pay- Compensation Committees- Union Funds' Activism- Institutional Investors' Voting Practices- 2001 Global Proxy Season- Japanese Corporate GovernanceD Branson, 'The Very Uncertain Prospect of 'Global' Convergence in Corporate Governance' (2001) 34 Cornell International Law Journal 321J Chapman, 'Joinder of Corporate Directors, Officers and Employees' Vol 80 No 3, October 2001, Canadian Bar ReviewR Gilson, 'Globalizing Corporate Governance: Convergence of Form or Function' (2001) 44 American Journal of Comparative Law 329Z Goshen and G Parchomovsky, 'On Insider Trading, Markets, and 'Negative' Property Rights in Information' (2001) 87 Virginia Law Review 1229K Greenfield, 'Ultra Vires Lives: A Stakeholder Analysis of Corporate Illegality (With Notes on How Corporate Law Could Reinforce International Law Norms)' (2001) 87 Virginia Law Review 1279J Phillips, 'A New Pleading Standard Under the Private Securities Litigation Format?' (2001) 69 University of Cincinnati Law Review 969P Watts, 'Review - Company Law' (2001) No 3, New Zealand Law ReviewS Stepanov, 'Russia Shores Up Shareholder Rights', November 2001, International Financial Law ReviewOBTAINING COPIES OF ARTICLESSubject to copyright restrictions, the articles listed above are available from The University of Melbourne Legal Resource Centre by fax or post for a fee. The charges for MelbLaw Express are $3.00 per page fax within 2 hours (+ GST); $2.50 per page fax within 4 hours (+ GST) and $1.50 per page mailed out (+GST but includes postage). This service is available 9-5, five days per week. Please note a minimum $15 charge applies to documents of 5 pages or less. Please contact Sophy Kosmidis:fax: int + 61 3 8344 5995;tel: int + 61 3 8344 7313, or email: lawlib@law.unimelb.edu.au8. CONTRIBUTIONSIf you would like to contribute an article or news item to the Bulletin, please email it to: "cclsr@law.unimelb.edu.au".9. SUBSCRIPTION TO THE BULLETINTo subscribe to the Corporate Law Electronic Bulletin or unsubscribe, please send an email to "cclsr@.au".10. DISCLAIMERNo person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publication is provided on the terms and understanding that (1) the authors, editors and endorsers are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, authors, editors and endorsers expressly disclaim all and any liability and responsibility to any person in respect of anything done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. ................
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