Manupatra

Fill in the following details to e-mail

Subject

<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Application for declaratory relief to validate trading in securities issued without a valid cleansing prospectus can be allowed where no blatant or flagrant disregard of obligations - (10 Dec 2021) </td> </tr> <tr> <td align="left" valign="top">RE Arizona Lithium Ltd; Ex Parte Arizona Lithium Ltd</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">In present case, on 18 November 2021, the Plaintiff, Arizona Lithium Ltd (Arizona), filed an originating process seeking orders under Section 1322(4)(a) of the Corporations Act, 2001 relating to contraventions of Sections 708A(11), Section 707(3) and Section 727(1) of the Act. The contraventions occurred as a result of sales of securities following two separate instances of securities being issued by the Plaintiff on 10 November and 11 November 2021 without a valid cleansing prospectus pursuant to Section 708A(5)(e) of the Act. 
Arizona has provided a frank and detailed explanation as to the circumstances surrounding the issue of these securities. Based on the evidence, present Court is satisfied that, the failure to issue a cleansing prospectus was caused by inadvertence rather than any deliberate disregard of the plaintiff's obligations. 
Part 6D.2 of the Act imposes disclosure obligations in relation to the issue and sale of securities. In certain circumstances, these obligations can be satisfied by lodging what is commonly referred to as a cleansing notice or a prospectus. If disclosure has not been made by the issuer and the securities are on-sold within 12 months, the party to whom the securities are issued may be obliged to make disclosure. The cleansing notice exception can only be relied upon if the preconditions in Section 708A(5) of the Act are met. The cleansing prospectus exception applies where a prospectus is lodged on or after the date that securities are issued but before the day on which a sale offer is made. Where this occurs, the disclosure requirements for offers and sales of that class of securities are met from that date. 
There is no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of the corporate law or the company's constitution to warrant refusal of the relief sought. There is nothing in the evidence suggesting that, any minority shareholder interest might be oppressed, or any other interest might be affected. All shareholders impacted by the contravention as well as the ASX and ASIC have been notified of the Plaintiff's contravention of the Act and given notice of this hearing. No shareholder or either regulator has sought to intervene in the hearing or given notice they want to be heard on the application. 
 In exercising the discretion to grant relief under Section 1322(4) of the Act, a relevant factor is the promptness with which the Plaintiff has sought to remedy the irregularity once it has been identified. In present case, the Plaintiff discovered the failure to lodge the cleansing prospectus on 11 November 2021 and immediately sought legal advice. One week later, on 18 November 2021, the Plaintiff commenced instant proceedings and sought a trading halt. The Plaintiff acted diligently after being made aware of the issue. In the circumstances of this case, relief should be granted in the terms sought by the Plaintiff.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Trading, Securities, Prospectus</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>