Wednesday 16 February 2022

Australia: mandatory examination under s596A of the Corporations Act 2001

The High Court gave judgment today in Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) [2022] HCA 3. The case concerned the operation of section 596A ("Mandatory examination") of the Corporations Act 2001. To quote directly from the summary of the judgment (available here, pdf) the court held (by majority):

The purpose and concern of s 596A is not confined to the interests of the corporation, its creditors, or its contributories, or to the bringing of criminal or regulatory proceedings in connection with the affairs of the corporation. Examining an officer of a corporation for the purpose of pursuing a claim against the corporation in external administration or one of its officers or advisers for the enforcement of the law can be a legitimate use of the power conferred by s 596A, irrespective of whether it is in the interests of the corporation or whether the claim relates to all or only some of the corporation's creditors or contributories"

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