LAWFUEL – The Legal Newswire – The Federal Court of Australia, in Melbourne, today declared that Ross Investments (Aust) Pty Ltd contravened the Corporations Act by sending unsolicited offers to purchase Cambridge Credit Corporation Limited (Cambridge) debentures to holders of those debentures.
The Court also declared that by causing the Cambridge offer documents to be sent to the offerees, Ross Investment’s sole director, Dr Robert Douglas Ross was knowingly concerned in that contravention.
The declarations were made following proceedings brought by the Australian Securities and Investments Commission (ASIC) against Ross Investments and Dr Ross, heard by the Federal Court on 29 May 2007.
The Court found that the Cambridge offer documents did not contain a fair estimate of the value of the debentures and even if the offer documents did contain a fair estimate they failed to provide the requisite basis upon which the estimates were made.
Justice Ray Finkelstein of the Federal Court ordered Ross Investments to write to the Cambridge debenture holders who accepted Ross Investments’ unsolicited off-market offers, sent in November 2005 and January 2007, by 21 September 2007. His Honour, Justice Finkelstein, ordered Ross Investments to advise affected Cambridge debenture holders of the fair estimate of the value of the debentures, as at the date of the offer. The fair estimate of the value of the debentures, as at the date of the offers, was approximately three times greater than that offered by Ross Investments.
Ross Investments, a company based in Bendigo, Victoria, must also advise affected Cambridge debenture holders that they have 30 days to terminate their agreement and recover their debentures.
Ross Investments and Dr Ross were jointly ordered to pay ASIC’s costs of the proceeding.
‘Today’s decision highlights that unsolicited offers to purchase financial products off-market, which includes shares and debentures, must contain the fair value of that product or the market value of the product where it is traded on a licensed market. This is to ensure that someone who receives an offer can make an informed decision as to whether to accept the offer’, ASIC’s Executive Director, Enforcement, Ms Jan Redfern said.
Background On 28 February 2007, ASIC obtained orders against Ross Investments and Dr Ross in which the Court provided similar relief for Incitec Pivot Limited shareholders who had received unsolicited offers from Ross Investments that failed to comply with the law.
Ross Investments remains subject to orders made on 28 February 2007 restraining it from making unsolicited offers to purchase financial products unless the offer document contains the market value, or where the product is not traded on a licensed market, a fair estimate of the value of the financial product and an explanation of the basis on which that estimate is made.