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Newspaper report I have given two newspaper report example from a news article from previous years below. Note that your article must bear a 2020 date. The 2015 example is shorter as the length requirements were different then but format is the same. Sometimes in summarising the facts you may need to look to earlier news reports or other sources for the background to the specific issue currently being reported. That is fine. Sometimes other legal issues will be involved. You are welcome to discuss these but ensure that the main part of your report has the corporations law issues as the focus. Sometimes there will be a range of things which could be discussed. There is more than one way that a commentary or analysis might be approached and students who choose the same article might legitimately focus their discussion on different aspects. Sources need to be acknowledged in accordance with the Australian Guide to Legal Citation but I am not expecting to see a wide variety of sources. Refer to 7.11 of AGLC on how to cite newspapers. Fairfax buyback surprises as profit beats forecasts Max Mason The Canberra Times, 19 February 2015 http://www.canberratimes.com.au/business/media-and-marketing/fairfax-buybacksurprises-as-profit-beats-forecasts-20150219-13irgk.html Fairfax media has announced an on market buy-back of up to 121 million shares about 5 per cent of its stock over the next 12 months.1 Employment advertising was under severe pressure but digital advertising revenue grew. The property website Domain reported a jump in earnings but the CEO, Mr Hywood said there was no plan to split the Domain business from Fairfax and list it on the ASX. In December Fairfax announced a merger with Macquarie Radio which is expected to be completed in March. An interim dividend of 2 cents will be paid on March 18. The article refers to analyst surprise at the move on the basis that the stock doesn’t look cheap and it signals a lack of growth opportunities. The CEO Greg Hywood said there was room to reward shareholders while having enough cash and debt facility for mergers and acquisition opportunities. Traditionally companies were prohibited from purchasing their own shares because it offends against the principle of capital maintenance. The principle of capital maintenance is to some extent a counterweight to the principle of limited liability. It is designed to ensure that the company’s capital should be maintained for the benefit of creditors. It 1

Mason M, Fairfax buyback surprises as profit beats forecasts, The Canberra Times (online), 19 February 2015,< http://www.canberratimes.com.au/business/media-andmarketing/fairfax-buyback-surprises-as-profit-beats-forecasts-20150219-13irgk.html>

recognises that capital might be lost in the course of trading. Little practical protection is offered in the case of companies which have a nominal paid up capital. The prohibition against companies buying their own shares still exists in the legislation in section 257A Corporations Act 2001 (Cth) so how does Fairfax come to be announcing a buy-back of its own shares? The legislation allows buy-backs in certain circumstances, chiefly where the buy-back does not materially prejudice the company’s ability to pay its creditors. The principle of capital maintenance is thereby not offended or at least the buy-back is consistent with the aim of creditor protection. The two most common types of buy-backs are on-market which is the type being used by Fairfax and an equal access scheme. In both schemes, shareholders have an opportunity to participate but the mechanism is different. In the on-market buy-back the company’s broker enters the market and offers to buy shares at a particular price. The protection which is built in to protect the interests of creditors is that there is a limit on the amount of shares which can be bought back. 2It is known as the 10/12 rule. A company cannot buy-back more than 10% of its shares in a 12 month period. If the proposal would exceed that limit it needs to be approved by an ordinary resolution of members.3 Fairfax’s proposal is under the 10/12 limit. An alternative to a buy-back is a reduction of capital provided for in section 256B Corporations Act 2001 (Cth). The key difference from the shareholder’s point of view is that with a buy-back the shareholder has the choice whether to accept the offer or not. If a reduction of capital is approved by shareholders then all shareholders are bound and have no choice, whether they voted for the reduction of capital or not. The article also refers to payment of an interim dividend. The rules about dividends also incorporate protections designed to protect the interests of creditors. Under section 254T Corporations Act 2001 (Cth) directors may declare and pay a dividend if there is an excess of assets over liabilities, it is fair and reasonable and there is no material prejudice to the ability of the company to pay its creditors. This provision is relatively recent, replacing the requirements that dividends be paid out of profit.

References Corporations Act 2001 (Cth)

2 3

S 257A Corporations Act 2001 (Cth). S 257C Corporations Act 2001 (Cth).

ASIC didn’t defame Canadian day trader Rear Window Joe Aston and Myriam Robin Australian Financial Review, 29 February 2020 p 37 This article primarily concerns a defamation suit launched by Daniel Schlaepfer and Select Vantage Incorporated against ASIC and Greg Yanco who is Executive Director, Markets at ASIC. It is however relevant to corporations law as it had the potential to impact on the ability of ASIC to carry out its regulatory functions. The article states that, “In 2014, Yanco contacted Select Vantage’s broker Macquarie to raise concerns about possible layering occurring in trades executed by one of its brokerage clients. Macquarie terminated its agreement with Select Vantage days later. Yanco then endeavoured to call around to warn other major brokers that they may soon be approached by a lucrative new client ASIC had some concerns about, without naming Select Vantage.”4 Fagan J described the practice of ‘layering’ as ‘understood by brokers and other stock market participants as referring to a particular technique and pattern of trading by which a misleading impression is created in the market, having the likely effect of stock price manipulation.’5 A number of provisions of the Corporations Act 2001(Cth) were potentially in issue in relation to layering. At a general level s 1041H prohibits misleading or deceptive conduct in relation to a financial product or a financial service. In addition there are a number of specific provisions including s 1041A which relates to market manipulation which provides that it is not permissible to take part in a transaction that is likely to create or maintain an artificial price for financial products. Section 1041B deals with false trading. It prohibits the practice of creating a false or misleading appearance of active trading or about the market for, or price for trading in financial products. Section 1041C deals with market rigging which prohibits taking part in fictitious or artificial transactions or devices which maintain, inflate, depress or cause fluctuations in the price of financial products. Mr Schlaepfer alleged that in ASIC and Mr Yanco speaking to other brokers there was an imputation that his companies were:  engaged in stock market manipulation  and to such an extent that two brokers had terminated their relationship with them  and it was so serious as to warrant the head of Market Supervision at ASIC contacting the head of compliance at a large broking house and him of the risks of doing business with his companies.6 ASIC and Yanco relied on the defence of justification, essentially that even if those imputations were conveyed, they were substantially true. 4 Joe Aston and Myriam Robin, ‘ASIC didn’t defame Canadian day trader’, Australian Financial Review, (Sydney, 29 November 2019) 37. 5 Schlaepfer v ASIC [2019] NSWSC 1644 [12]. 6 Ibid [17].

In November 2014 ASIC issued a market surveillance update entitled, “Australian market participants terminate client for suspected market manipulation.” The update described the trading patterns:    

large numbers of orders from a single entity resting on the order book of relevant securities, many at the same price step disproportionately large number of orders being entered, amended, cancelled and re-entered by that entity a positive correlation between the change in the entity's contribution to order book imbalance and the mid-point price of relevant securities, and clustering of order submission patterns, which may be indicative of co-ordination between ultimate order placers behind the entity.7

The ASIC update also referred to action taken by regulatory authorities in Japan and the UK against named traders including Select Vantage Inc. Although Fagan J found that the alleged imputations and innuendoes were not conveyed he nevertheless went on to consider the defence of truth and in particular whether the conduct of Select Vantage and Schlaepfer breached s 1041A or s 1041B. The defence relied upon expert reports of Professor Putnins who identified statistical characteristic of the trading which supported an inference that there was coordinated layering, that many orders were not bona fide and were placed for the purpose of creating a false appearance on the market and which would likely influence the price.8 tI was not necessary to show that an artificial price was actually achieved. 9ASIC further contended that Mr Schlaepfer ‘counselled and procured the traders to place the non-bona fide orders and that he aided and abetted them or was otherwise knowingly concerned in their manipulative activity in contravention of ss 1041A and 1041B of the Corporations Act.’10 Professor Putnins evidence was preferred by Fagan J over the evidence of Dr Carr who was expert called by the plaintiffs. Dr Carr is an economist employed by the US Securities and Exchange Commission. In his evidence he suggested that patterns of trading would not amount to layering as long as it was not the intention of the trader to cancel the order at the time the order was placed. In his view determining intention is a subject inquiry. Fagan J said that a circumstantial case may nevertheless support an inference of fraudulent or manipulative intent. Fagan j said that the weight of his evidence was also adversely affected by his adoption of a very prescriptive criteria for layering. Requiring cancellation of orders on the layered side of the book to be placed within seconds after an executed trade on the opposite side.11 Fagan J found that in speaking to the brokers, Mr Yanco had a ‘legal duty and interest to convey that information’12 and he did that in his capacity as an officer of ASIC. ‘he spoke 7

Ibid [142]. Ibid [189]. 9 Ibid [245]. 10 Ibid [190]. 11 Ibid [237]. 12 Ibid [265]. 8

to the brokers in discharge of a public duty created by legislation for the economic benefit of the entire community.’13 Further the brokers had an interest in receiving that information in order to ensure that their licence obligations were met. This went to the defence of qualified privilege that the defendant had a duty or interest in publishing certain material.

13

Ibid and see s 12A (2) Australian Securities and Investment Commission Act 2001 (Cth)....