ASIC challenges Wellington Capital in court
The Federal Court will decide whether Wellington Capital's decision to distribute shares and not cash to unit holders in Premium Income Fund (PIF) was legal, the Australian Securities and Investments Commission (ASIC) has announced.
The corporate regulator launched a legal challenge in Federal Court after Wellington, the responsible entity of the fund, distributed shares from a recent transaction to individual unit holders without obtaining their consent.
Wellington announced last month that Asset Resolution Limited (ARL) had acquired $90.75 million in PIF assets in return for which the fund acquired shares in ARL.
Following the transaction Wellington issued ARL shares to individual PIF unit holders, according to ASIC.
"Wellington did not consult with or obtain the consent of the PIF unit holders concerning the distribution of PIF's ARL shares to the unit holders," ASIC stated.
The regulator sought a declaration that any such distribution would be invalid and that the shares remain the property of the PIF, rather than the individual unit holders.
Furthermore, ASIC asserted that the constitution of the PIF did not permit Wellington to distribute ARL shares to the unit holders.
The matter will next be heard at the Federal Court in Sydney on 17 October 2012.
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