ASIC finalises Supreme Court proceedings to wind up Great Northern Developments
The corporate regulator has finalised proceedings in the Supreme Court of New South Wales against property development company Great Northern Developments Pty Ltd (Great Northern).
Based in Richmond, New South Wales, Great Northern raised funds from investors through loan arrangements and promissory notes to finance its building projects in Queensland.
As at 30 June 2008, Great Northern owed in excess of $24 million to investors.
The Australian Securities and Investments Commission (ASIC) commenced proceedings against Great Northern in September 2009, alleging that Great Northern had offered the loans and promissory notes in breach of the Corporations Act 2001 (the Act), and that it is just and equitable that Great Northern be wound up by the Court.
In September, the Court confirmed that the Great Northern had contravened 283AA of the Act by failing to enter into a trust deed and by failing to appoint a trustee that complies with 283AC before making offers of debentures that require disclosure.
The Court accepted an undertaking from Great Northern that it would enter into a trust deed and appoint a trustee in compliance with the Act.
Great Northern was unable to secure a trustee. However, ASIC assisted the company to achieve regulatory compliance. Firstly, by ensuring that those investors who elected to continue with their investment were transferred to the La Trobe Australian Mortgage Fund - a registered managed investment scheme operated by La Trobe Capital and Mortgage Corporation Limited. Secondly, that the continuing investors obtained a mortgage over Great Northern's properties; and finally, that those investors who did not wish to join the scheme were fully repaid their original investment and interest.
ASIC Commissioner, Dr Peter Boxall AO, said the regulator's action was consistent with ASIC's objective of achieving compliance as a first step to safeguard investor funds.
"Where appropriate, and in the best interest of investors, ASIC will take steps to ensure that fundraising schemes which might be operating outside the requirements of the law are made compliant so that investors are afforded the relevant legal protections," Dr Boxall said.
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