ASIC has given notice to Wollongong Coal Limited (Wollongong Coal) restricting the company from issuing any reduced-content prospectus until 11 March 2020.
ASIC ‘s notice under s713(6) of the Corporations Act 2001 means that Wollongong Coal will need to issue a full prospectus if it wishes to raise funds from retail investors.
ASIC was concerned that Wollongong Coal’s major assets relating to the Russell Vale and Wongawilli mines were reported at values in excess of their recoverable amounts in the company’s 31 March 2018 financial report, contrary to requirements of accounting standards. We were concerned that the company’s assessment of recoverable amount used fair value estimates that did not adequately allow for the risks and uncertainties associated with the assets and current market conditions.
ASIC can prevent a company from using a reduced-content prospectus where the company breaches its continuous disclosure or financial reporting obligations, including complying with accounting standards. Fundraisings should occur only with the benefit of a full prospectus so that there is adequate disclosure of a company’s prospects and financial position.
Wollongong Coal has the right to appeal to the Administrative Appeals Tribunal for review of ASIC’s decision.
