Liz Cheeseman SC and Daniel Habashy recently represented the applicant companies in obtaining a permanent injunction to prevent DRA Global Limited and its directors from acting on a shareholder approval for a selective share buy-back in circumstances where the financial information which had been provided to shareholders proved to be misleading and deceptive. The case is significant in that the Court held (consistently with ASIC RG 110.22) that a company cannot rely on an approval to conduct a valid buy-back where subsequent events render previously disclosed information misleading or deceptive.
The applicants also obtained injunctive relief on a final basis restraining the company from exercising a contractually conferred power to waive a condition precedent to the completion of the buy-back transaction, on the basis that, properly construed, the contractual power to waive was constrained by preconditions which had not been satisfied in the circumstances.
The proceedings were commenced on 30 April 2020, expedited to a final hearing on 19 May 2020, and determined on a final basis on 29 May 2020. The urgency of the matter arose because of the expiry of a time limit in the share buy-back agreements on Sunday, 31 May 2020.
The hearing was conducted via virtual court before McKerracher J in the Federal Court in Perth, with the legal and client representatives attending from Sydney, Perth and Johannesburg.
Liz and Daniel were instructed by Jonathon Ellis, Guy French and David Ryan of DLA Piper. The respondents were represented by Herbert Smith Freehills and Gilbert + Tobin.
Link to the judgment can be found here.
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