Preferential-Issue Proceeds Must Follow Disclosed Objects; Later Ratification Cannot Cure Fraud or Unfair Trade Practices

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Full Text of the Document

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....Shareholder ratification cannot retrospectively validate diversion of preferential-issue proceeds from the objects disclosed in the explanatory statement where the conduct breaches securities-market disclosure duties and constitutes fraud or an unfair trade practice. Issue-specific objects, rather than broad memorandum objects, govern whether proceeds were deployed as represented. Immediate use of funds for undisclosed loans or share investments, without a substantiated commercial explanation, may support an inference that the disclosed objects were never intended to be performed. Prospectus-based variation mechanisms do not apply to private placements or cure completed diversions. Continuing disclosure requirements promote transparency but do not authorise post-facto deviations, while later amendments to corporate objects remain prospective only.....