Class Actions in Australia (see table below)
Class actions are one avenue of legal action that have delivered results for shareholders.
Below is a list of cases against listed, or previously listed, entities that have either been concluded or are underway. The major events for each case can be found by searching on the entity or clicking on the link provided.
Essentially a class action allows one or more shareholders to bring an action as the representative of a larger group of persons known as the class. There must be at least seven people with a claim, the claim must arise out of related circumstances and it must give rise to a substantial common issue of law or fact.
Class actions provide a remedy where, although many people are affected, each person’s loss is small and not economically viable to recover through individual cases. Shareholders can thus get access to justice where in the past only deep pockets counted. Also, people who may be ignorant of their rights or fearful of taking action, are assisted by having one member of the affected group, commence proceedings on behalf of all the members.
Litigation funders such as IMF (Australia) Limited, which is listed on the Australian Stock Exchange, are increasingly providing the funding for class actions. IMF will pay all the legal fees and disbursements in the case, and will pay the other side’s costs if the case is lost. If the case is won, IMF receives back the legal fees it has paid, and will receive a percentage of the proceeds before funds are distributed to members of the class.
In some cases, potential members of a class action have been asked to provide a registration fee in advance. deListed is opposed to this practice and warns small shareholders not to join such class actions.
Where they may have already paid a fee, shareholders are entitled to know how their money is being spent. If they are not being informed of progress with a class action or there is no substantive progress with the action, they should be seeking a refund of their fee.
OTHER LEGAL ACTIONS
Generally by the time a company gets to administration, receivership or liquidation, shareholders are last in the pecking order. Secured creditors, employees and unsecured creditors get preference for funds.
Recovery actions against directors, executives or auditors are still few and far between. While the Corporations Act is strict on insolvent trading, it is a notoriously difficult area in terms of enforcement.
Basically if directors suspect that their company is insolvent and the company is insolvent and incurs a debt, directors personally can be ordered to repay the debt. The claim for recovery must be made by the liquidator or (with the consent of the liquidator) by a creditor of the company.
