This case provides a useful example of when the Federal Court is willing to exercise its discretion to extend the time period for admitting securities to quotation on the ASX, and to validate shares already issued, in connection with a share capital raising. The Court will essentially be guided by the conduct of the company (including any dishonesty) and any injustice to the company, its shareholders and the applicants for the shares in the event that curative orders are not made.

A prospectus (Prospectus) issued by Helios Energy Ltd (Helios), which was dated 16 February 2017, included a minimum subscription condition and a statement that the securities would be admitted for quotation on a financial market.  As such, under the time limits in section 723(3)(b) and section 724(1)(b)(ii) of the Corporations Act 2001 (Cth) (Act), the last day for admission to quotation was 16 May 2017. 

On 7 April 2017, Helios issued securities pursuant to some (but not all) of the offers in the Prospectus.  However, in the week prior to the last date for admission to quotation, Helios had completed all steps necessary for the Prospectus except the ASX requirement for a suitable spread of security holders, and as such could not meet the 16 May 2017 deadline.  In an attempt to extend the last date for admission, Helios issued a “refresh document” under the ASIC Corporations (Minimum Subscription and Quotation Conditions) Instrument 2016/70 (Cth) (LI2016/70) on 15 May 2017.  However, ASIC advised that the relief was not available to Helios because it only applies to a prospectus where no securities have already been issued.  Helios then sought curative orders extending the time for admission to quotation by 15 days to allow the issue of the remaining securities (under section 1322(4)(d) of the Act) and validating the securities already issued (under section 254E and 1322(4)(a) of the Act).

In making an order to extend the time for admission to quotation, Gilmour J found that;

  • the pre-condition in section 1322(6)(c) that no substantial injustice had been, or was likely to be, caused to any person by extending the period was met.  Rather, there would be substantial injustice to each of Helios (who would have to refund money and incur corporate and legal expenses), the existing Helios shareholders (whose securities would not be re-instated for trading and would be affected by the absence of capital for the investments contemplated by the Prospectus) and the applicants (who generally wanted the admission of the shares (issued or to be issued) for quotation) if no curative orders were made;
  • factors in favour of exercising the discretion to grant the extension order included:
    • the extension order was for a relatively short period of time;
    • there was a genuine and good reason for an extension, i.e. mistaken reliance on LI2016/70;
    • Helios had done everything necessary except meet the ASX spread requirements;
    • the orders provided for notice to all persons potentially affected;
    • the extension order was consistent with facilitating the conduct of commerce generally(including by maintaining market confidence that technical difficulties will not necessarily prevent or unduly hinder the raising of capital by the issue of securities to be admitted to quotation); and
    • neither ASX nor ASIC opposed the extension order.

In making an order to validate the securities already issued, Gilmour J found that:

  • the requirements of section 254E (which provides for orders to validate share issues which are invalid for any reason) and section 1322(4)(a) (which provides for an order that the shares issued were not invalidated by reason of a contravention of the Act) were satisfied; and
  • the pre-conditions to section 1322(6) were satisfied because the admission to quotation where Helios has complied with ASX’s requirements was “essentially of a procedural nature”, there was no dishonesty by Helios (rather there was genuine mistake), it was “just and equitable” that the order be made, and the validation orders would cause no substantial injustice if made (but may (for the reasons above) cause substantial injustice if not made).

Gilmour J also refused to exercise discretion to withhold relief on the basis that:

  • there was no evidence of any substantial misconduct, serious wrongdoing or flagrant disregard of applicable law or the constitution; and
  • Helios had acted promptly and properly in seeking legal advice, and resolving to commence (and commencing) these proceedings.