30/06/2021 - 14:56

Court approves Story-I share sale

30/06/2021 - 14:56

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The issue and sale of shares by Leederville-based Apple retailer Story-I has been found to be acceptable by the the state’s Supreme Court.

Court approves Story-I share sale
Justice Hill said she found no evidence of substantial misconduct. Photo: Gabriel Oliveira

The issue and sale of shares by Leederville-based Apple retailer Story-I has been found to be acceptable by the the state’s Supreme Court after it applied for relief over its failure to adequately disclose the issue of shares on two occasions.

The ASX-listed company, which sells Apple products in Indonesia, applied for relief from the Supreme Court in May after its directors discovered the company had breached the Corporations Act by issuing shares in 2018 and 2021 without a valid cleansing notice or prospectus.

The company sought an urgent court declaration that would validate the sale of shares on July 5, 2018 and February 1, 2021, despite the company’s failure to comply with the Corporations Act.

According to documents published by the Supreme Court, Story-I was suspended from trading on March 2, 2020, after it failed to lodge an interim half year financial report with the ASX.

The report was lodged on March 6, 2020, with company secretary Stuart Usher telling the court the failure was caused by delays in obtaining financial information and a subsequent delay in auditors signing off on the report following the outbreak of the COVID-19 pandemic.

The ASX lifted the suspension on March 9, 2020 at 10.21am, meaning that trading in the company’s shares had been suspended for five days and 21 minutes.

More than 11 months later, the company distributed more than 6.4 million shares between Endeavour Pacific, Alfavista Corporate Services and non-executive director Michael Pixley in lieu of unpaid director fees.

In preparing a cleansing notice for the shares issued, Mr Usher told the court he sought advice as he was aware a cleansing prospectus needed to be lodged if the company's securities had been suspended for more than five days in the previous 12 months.

A compliance officer from the ASX informed Mr Usher the company’s securities had been suspended up to and including March 6, 2020, and Mr Usher formed the view Story-I should issue a cleansing notice.

But the ASX later advised the company that it considered the cleansing notice invalid, prompting Story-I to seek a trading halt in its shares and conduct a review of previous share issues.

During the review, it was discovered Story-I had failed to lodge a valid cleansing notice following the issue of 24,000,000 shares to two Singaporean investors on July 5, 2018.

In handing down her judgement, Supreme Court judge Jennifer Hill said she believed the declaration should be granted on the basis that the oversight appeared to be an honest mistake and having found no evidence of substantial misconduct.

In handing down her decision, Justice Hill said she found the company had acted promptly and diligently, having sought to remedy the issue and notify affected parties as soon as it had been identified. 

She said she had also taken into consideration the commercial uncertainty that could arise if the orders were not granted, given the offers of and sales of shares may be void.

The ASX and the Australian Securities and Investments Commission (ASIC) declined to appear at the hearing, and ASIC indicated that it neither supported nor opposed the application.

The judgement comes just months after the company announced plans to reverse a $2.1 million share placement and follows the resignation of its director Chek Ming Cheng.

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