International Law

Insolvent trading law reform: Sons of Gwalia reversed

By David Jacobson

The Corporations Amendment (Sons of Gwalia) Bill 2010 has been introduced into Parliament.

The Bill, if passed, will give effect to the Government?s decision to reverse the High Court decision in Sons of Gwalia v Margaretic.

The Sons of Gwalia decision determined that, in a corporate winding up, certain compensation claims by shareholders against the company ranked equally with the claims of other creditors.

The Bill removes the right of persons bringing claims regarding shareholdings to:

?vote as creditors in a voluntary administration or a winding-up, unless they receive permission from the Court; or
?receive reports to creditors, unless they make a request in writing to the external administrator.

The Bill also introduces reforms relating to notices to creditors, shareholder voting and clarifies the position of shareholders bringing claims for damages against companies.

Full post as published by Australian Regulatory Compliance Review on June 02, 2010 (boomark / email).