Chemeq to defend ASIC legal actionDecember 23, 2004 - 7:20PMPage...

Chemeq to defend ASIC legal action
December 23, 2004 - 7:20PM

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Pharmaceuticals company Chemeq has pledged to "vigorously oppose" legal action brought against it by the corporate regulator for alleged contraventions of continuous disclosure rules.

The Australian Securities and Investments Commission (ASIC) announced it has filed proceedings against Chemeq in the Federal Court in Perth alleging contravention of the continuous disclosure requirements of the Corporations Act between February 2003 and October 2004.

In addition to declarations that Chemeq had failed to comply with the requirements, ASIC is also seeking penalties which could run to millions of dollars.

In a statement, ASIC alleged that Chemeq had failed to inform the market of increased costs setting up its manufacturing plant at East Rockingham in Western Australia from February, 2003, to August 2004.

ASIC also alleges that Chemeq failed to inform the market that certain purchase orders from South Africa contained a sunset clause requiring that they be filled by June 30, 2004 and that Chemeq failed to tell the market that the orders would not be met by that time before the due date.

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AdvertisementThe regulator had also alleged that Chemeq failed to inform the market about further funding requirements in the period following the raising of $10 million in a share placement on June 8, 2004, up until August 27.

And ASIC has alleged that Chemeq did not inform the market of the granting of a US patent between September 28 and October 6 this year.

Chemeq, which placed its shares in a trading halt on Thursday, said in a statement it denied the allegations and "will vigorously oppose" ASIC's application to the Federal Court for declarations of contravention to be made against it.

"Chemeq believes that it has at all times complied with its continuous disclosure obligations and is taking legal advice in relation to the application," the company said.

"The matters raised by ASIC are complex, evidenced by the fact ASIC itself is seeking relief from the Court from the requirement to provide supporting affidavits with its application.

"Instead, ASIC is asking the Court to allow the matter to be dealt with by way of pleadings.

"Chemeq looks forward to the opportunity to have these matters dealt with by the Court and is confident its compliance with the Listing Rules and Corporations Act obligations will be upheld."

Contraventions of the continuous reporting requirements occurring before July 1, 2004 attract a penalty of up to $200,000, while those happening after that date are liable for a penalty of up to $1 million.