The Court found that the appointment of voluntary administrators to a company constituted oppressive conduct under section 232 of the Corporations Act 2001 (Cth) in circumstances where it was part of a clear strategy by the controlling shareholder to gain control of the company’s business, to the exclusion of the minority shareholders. This case provides some useful observations on the operation of section 232, particularly around action by a parent company “of the affairs of” a subsidiary.
The Court refused to declare an appointment of administrators invalid under section 447C of the Corporations Act 2001 (Cth) on the basis of a previous purportedly invalid removal of a director and alleged insufficient grounds to establish that the company was, or was likely to become insolvent. This case illustrates the Court’s willingness to overlook technical anomalies in exercising its discretion under section 447C where the end result for the company would be the same, and a broad approach in assessing whether there are reasonable grounds to form a view that a company
This case serves as an important reminder that board appointments should not be taken lightly - even as a “personal favour”. Directors should ensure that they are sufficiently abreast of the affairs of their companies and actively involved in their management. An argument that a director was “not really involved” in management is unlikely to find favour when the company finds itself in strife.
American and British directors of corporations should be mindful of the different standards of conduct, obligations, and potential personal liability when holding directorships in Turkish companies, particularly if such companies’ financial situation is deteriorating.
When the final version of the Omnibus II Directive comes into force, it will amend the Solvency II Directive so that it includes a sunrise clause, a phasing-in clause, and a run-off and restructuring exemption, as well as significant reporting and other transitional measures. It will also allow or require the European Commission and the European Insurance and Occupational Pensions Authority (EIOPA) to adopt “regulatory technical standards”,“implementing technical standards” and “comply or explain Guidelines”.
The English Court has devised a new route to impose liability on a company's UBO who strips assets from the company leaving creditors to claim in its insolvency. UBOs feeling comfortable about the security of their corporate veil after the Supreme Court’s decision in Prest[1], will need to look carefully at this recent decision, which may be applied in other jurisdictions with corporate laws based on English law, such as BVI and Cyprus.
This decision is a testament to the flexibility of schemes of arrangement in Australia as a means of effecting settlements with a company’s creditors as well as third parties such as the company’s insurers. The Federal Court also demonstrated its propensity to take a liberal interpretation of what constitutes a “compromise or arrangement” to enliven its jurisdiction to convene a meeting of creditors for the purpose of considering a proposed scheme of arrangement.
From 15 August 2013, the Insolvency & Trustee Service Australia (ITSA) will now be known as the Australian Financial Security Authority (AFSA). The name change is thought to better capture the breadth of the services administered by the authority, but the services remain the same, namely, the administration and regulation of Australia’s personal insolvency system and the administration of the Personal Property Securities Register.
English courts may, when making ex parte (without notice) orders in a court-appointed receivership, include a final order that the defendant pays the costs incurred in obtaining the order notwithstanding that it was not notified of the application for the order.
The UK’s Prudential Regulation Authority (PRA) has been developing its Early Warning Indicators (EWIs) for Solvency II internal model firms for more than a year. From September 2013, it will expect these firms to: