On 5 September 2012 Wellington, as responsible entity of the PIF, announced that Asset Resolution Limited (ARL) had acquired $90.75 million in assets of the PIF in return for which the PIF acquired shares in ARL, after which Wellington took steps to have the ARL shares issued to the individual PIF unit holders.
ASIC asserted the constitution of the fund did not permit this distribution, for which Wellington did not consult unit holder.
It challenged the distribution in the Federal Court but in October last year the Court dismissed ASIC’s application for relief, prompting ASIC to lodge an appeal in the Full Court, the appeals division of the Federal Court.
This appeal was heard on May 17 this year and yesterday ASIC announced the appeal had been successful.
“Ruling in favour of ASIC, the court ordered declarations that Wellington did not have the power to make an ín specie distribution of shares, as opposed to cash, to unit holders in the PIF and that Wellington had acted contrary to the PIF Constitution in doing so,” ASIC stated.
According to ASIC, the court said Wellington’s conduct as responsible entity of the fund “amounted to a partial retirement from office other than in accordance with the provisions of the [Corporations] Act.”
“Responsible entities have a duty to ensure they are exercising their powers in accordance with a registered scheme’s constitution and the law, especially where the proposed exercise of power could affect unit holders’ rights.” ASIC deputy chairman Peter Kell said in a statement.
ASIC said it has sought clarification from Wellington on what disclosure it will make to unit holders as a consequence of the court’s declarations of contravention.
However ASIC also noted that Wellington had issued, on 28 May 2013, two releases on the National Stock Exchange of Australia saying they intended to appeal the decision in the High Court.
