JOHANNESBURG (miningweekly.com) – The Federal Court in Perth on Friday banned Gary Stokes and Terence Quinn from managing corporations for three years and slapped each with a A$25 000 fine for breaching their duties as directors of Padbury Mining with respect to the company's disclosure obligations.
In June last year, the Australian Securities and Investment Commission (Asic) started civil penalty proceedings against Padbury Mining and two of its directors over a bungled funding announcement for the Oakajee port and rail project, in Western Australia.
The court ruled that Padbury's announcement on April 11, 2014, that it had secured $6-billion in funding for the port and rail project, was “misleading and deceptive”.
In the four hours between the announcement and a trading halt, Padbury's share price jumped from 2c to hit a high of 5.2c, with more than 200-million shares being traded.
The court’s finding included that Padbury breached its continuous disclosure obligations by failing to disclose to the market the existence of conditions precedent, which would determine whether Padbury was entitled to receive the funding, and which conditions Padbury was not in a position to satisfy at the time of the announcement. Padbury also breached its obligations by failing to disclose the identity of the party which had promised to provide the funding (Superkite, since placed into liquidation).
The court stated that, by authorising the release of the announcement, Stokes and Quinn had failed to carry out their duties as directors of the company with the degree of care and diligence reasonably expected of them.
In addition to their A$25 000 fine each, the pair also has to pay a combined A$200 000 towards Asic’s costs in conducting the proceedings.
“It is crucial to the maintenance of confidence in the Australian market that company directors ensure announcements made by their companies are not misleading, and contain all material information relevant to investors' assessment of deals being announced.
“In this case the omission of significant conditions precedent and the identity of the funder were held to constitute breaches of the laws applying to listed companies,” Asic commissioner John Price said.