Government to overturn Sons of Gwalia ruling
The West Australian and AAP January 19, 2010, 6:42 am
Chris Bowen.
ROB HOMER
The Federal Government will legislate to overturn the High Court ruling in the Sons of Gwalia case, which made it easier for shareholders to recover funds when a company collapses.
In the 2007 ruling, the High Court overturned the convention that shareholders ranked behind creditors in an insolvency.
Lawyers, directors welcome government action
IMF moves to reassure investors as shares take dive
But Corporate Law Minister Chris Bowen said the ruling undermined the distinction between debt and equity and the government would move to amend the Corporations Act to reverse the effect.
"I was concerned that not only funders, banks, but also creditors who are often small businesses were being disadvantaged by that ruling," he told ABC Radio.
Sons of Gwalia collapsed in 2004 after forward-selling the bulk of its production and then failing to find enough gold to meet the contracts.
The collapse came as a shock to many shareholders who argued they had been misled by the company as to the true state of its hedging arrangements and financial affairs.
Legal action ensued and the High Court later ruled that a shareholder in a failed company had the same right as an unsecured creditor to pursue a claim against the company in cases where the shareholder had suffered loss as a result of misleading and deceptive conduct by the company.
The decision meant shareholder class actions were more likely to proceed against failed companies that have funds to disperse.
Mr Bowen also released a discussion paper on the operation of Australia's insolvent trading laws in the event of a business rescue outside external administration.
Informal work-outs played an important role in business rescue and the use of formal insolvency re-organisation procedures was not always appropriate, he said.
a chance for us
- Forums
- ASX - By Stock
- CUO
- shareholder
CUO
copperco limited
shareholder
-
- There are more pages in this discussion • 26 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add CUO (ASX) to my watchlist
Currently unlisted public company.
The Watchlist
SER
STRATEGIC ENERGY RESOURCES LIMITED
David DeTata, Managing Director
David DeTata
Managing Director
SPONSORED BY The Market Online