Background
QGold Pty Ltd became the holder of at least 90% of the ordinary shares in Carawine Resources Limited and proposed to compulsorily acquire the remaining shares for $0.11 each under Chapter 6A of the Corporations Act 2001 (Cth). Its compulsory-acquisition notice was accompanied by an expert report from ASIC-nominated expert Sherif Andrawes, who assessed $0.11 as falling within the fair-value range.
After minority shareholders objected, QGold sought court approval under s 664F. The primary judge held that the expert report complied with the Act and that the proposed terms gave fair value, requiring approval of the acquisition. Berge Der Sarkissian and Robert Catto brought separate appeals, principally arguing that the expert and primary judge had not properly accounted for Carawine shares trading above $0.11 during the preceding six months.
The Court’s Holding
The Full Court dismissed both appeals. It held that s 667C requires fair value first to be determined by valuing the company as a whole and allocating that value among its securities. Under s 667C(2), consideration paid for securities in the preceding six months must then be genuinely considered as a check on that valuation and may indicate that an adjustment is needed, but historical trading prices do not determine fair value or automatically establish a minimum acquisition price.
The Court found no error in the primary judge’s conclusion that the expert had actively considered Carawine’s historical trading, including higher prices, but had substantive reasons for giving that evidence limited weight. The statutory method did not require a premium based on QGold’s earlier purchases or forcible acquisition. QGold therefore established that $0.11 per share gave fair value, and each appellant was ordered to pay the respondents’ costs.
Key Takeaways
- Historical prices within the preceding six months must receive genuine consideration under s 667C(2), but they are not determinative of fair value.
- The historical-price inquiry checks the whole-company valuation under s 667C(1) and supports adjustment only when the evidence warrants it.
- Chapter 6A does not impose Chapter 6’s minimum-consideration rule or require a premium for compulsory divestment.
Why It Matters
The decision clarifies how courts and valuation experts must use recent market transactions in Australian compulsory acquisitions. A price previously paid above the proposed acquisition price is relevant evidence, but minority shareholders cannot treat it as an automatic statutory floor.
For 90% holders, the judgment confirms that approval depends on proving fair value through the prescribed whole-company valuation process and a genuine evaluation of recent trading. Experts should expressly explain why historical prices do—or do not—justify adjusting their valuation.