ASIC has taken legal action against Sino Australia Oil and Gas Limited (SAO) and its former chairman for making misleading and deceptive statements.
Launching civil penalty proceedings in the Federal Court of Australia against SAO, ASIC is seeking declarations the company breached its continuous disclosure obligations and made misleading and deceptive statements in its prospectus documentation during 2013. ASIC is also seeking an order imposing a pecuniary penalty on SAO.
In its civil action against Tianpeng Shao, SAO’s former chairman and executive director, ASIC is seeking declarations Mr Shao failed to act with the proper degree of care and diligence as a director and breached continuous disclosure laws, and that he be disqualified from managing companies.
SAO listed on the Australian Securities Exchange Limited (ASX) in December 2013 after raising nearly $13 million from investors.
In March 2014, ASIC obtained an injunction on an urgent basis following concerns that SAO was about to transfer $7.5 million – representing almost all of the cash held by SAO in Australia – to bank accounts in China for purposes that were not disclosed, or not properly disclosed, in SAO’s prospectus. The injunction, which has been extended on a number of occasions, is in place until 6 March 2015.
ASIC’s investigation into the matter is ongoing.
The proceedings are listed for a directions hearing in the Federal Court in Melbourne on 6 March 2015.
Background
As part of its legal action, ASIC is seeking from the court:
- a declaration that SAO breached sections 674(2) and 728(1) of the Corporation Act 2001 (Corporations Act) and an order imposing a pecuniary penalty on SAO
- a declaration that Mr Shao contravened sections 180(1) and 674(2A) of the Corporations Act and that he be disqualified from managing corporations
- an order that SAO engage in corrective disclosure by:
- writing a letter to each person who applied to purchase SAO shares between 28 Feb 2013 and 12 Dec 2013
- publishing a notice by way of advertisement in a newspaper in each state and territory, and
- publishing a notice by way of announcement to the ASX and on SAO’s website, and
- an order entitling subscribers for SAO shares to apply to the company for the return of their application moneys and cancellation of their shares.
The maximum penalty for a contravention of section 674(2) of the Corporations Act by a corporation is $1 million.
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