Cadence Asset Management Pty Ltd v Concept Sports Limited

[2005] FCAFC 265

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Interrogate

Catchwords

1. Corporations
2. › Fundraising
3. › Prospectus
4. › Disclosure obligations
5. › Contravention of s 728(1)
6. › Right to compensation under s 729(1)
7. › Whether subscribing shareholder must rescind contract to acquire shares before recovering loss
8. › Whether rule in [name withheld] v City of Glasgow Bank qualifies statutory right under s 729(1)
9. › Corporations Act 2001 (Cth), ss 563A, 728, 729
1. Corporations
2. › Members' rights and liabilities
3. › Capital maintenance
4. › Rule in [name withheld] v City of Glasgow Bank
5. › Statutory modification by s 563A
6. › Relationship between s 563A and s 729(1)
7. › Whether s 563A renders [name withheld] rule unnecessary in relation to s 729(1) claims
8. › Corporations Act 2001 (Cth), ss 516, 563A

Quick Take

A subscribing shareholder who has suffered loss because a prospectus contravened s 728(1) of the Corporations Act 2001 (Cth) may recover that loss under s 729(1) from the company that issued the prospectus without first rescinding the contract to acquire the shares. The rule in [name withheld] v City of Glasgow Bank does not qualify the statutory right under s 729(1). However, if the company is in liquidation, the shareholder's right to payment is postponed behind creditor claims by operation of s 563A.