Section 444GA of the Corporations Act: Transfer of shares in a company in administration

Section 444GA of the Corporations Act 2001 (Cth) (Corporations Act) allows a deed administrator of a company in administration to seek leave of the Court to compulsorily transfer the shares in the company to another person. This is a powerful tool that can be used to restructure a company or to facilitate a takeover.

To be eligible for a 444GA application, the company must be in administration and the proposed transferee must be able to satisfy the Court that they are a fit and proper person to acquire the shares. The Court will also consider the interests of the company’s creditors and shareholders when making its decision.

There are a number of factors that the Court will consider when deciding whether to grant leave under section 444GA. These include

• The reasons for the proposed transfer
• The effect of the transfer on the company’s creditors and shareholders
• The ability of the proposed transferee to manage the company effectively
• The likely impact of the transfer on the company’s business

Below is an application of the principles of section 444GA taken from Richard Scott Tucker as joint and several administrator of Allegiance Mining Pty Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) (ACN 059 676 783) v Su [2022] WASC 178 (Allegiance Case).

The Allegiance Case concerned an application by the deed administrators of Allegiance Mining Pty Ltd (Allegiance) for leave under section 444GA of the Corporations Act 2001 (Cth) (Corporations Act) to compulsorily transfer all of the shares in Allegiance to Mallee Resources Pty Limited (Mallee).

 Mallee was one of the co-proponents of the Allegiance deed of company arrangement (DOCA). Mr Junyu Su (Mr Su) was a shareholder in and related party creditor of Allegiance’s parent company, Dundas Pty Ltd (in liquidation) (Dundas).

 Mr Su sought leave to oppose the 444GA application. He argued that he was an “interested person” within the meaning of section 444GA(2)(c) of the Corporations Act and that he had standing to oppose the application.

 The Court held that Mr Su was not an “interested person” within the meaning of section 444GA(2)(c) of the Corporations Act. The Court found that Mr Su did not have a sufficient interest in Allegiance to be able to oppose the 444GA application.

 The Court also found that Mr Su had not established any other ground on which he had standing to oppose the 444GA application.

 The Court therefore dismissed Mr Su’s application for leave to oppose the 444GA application.

 The Allegiance Case is an important decision that clarifies the scope of the term “interested person” under section 444GA of the Corporations Act. The decision makes it clear that only those persons who have a direct and substantial interest in the company in administration will be able to oppose a 444GA application.

A 444GA application can be a complex and time-consuming process. It is important to seek legal advice if you are considering making such an application.

Here are some additional things to keep in mind about section 444GA

• The Court may only grant leave under section 444GA if it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.
• The Court may impose conditions on the transfer, such as requiring the proposed transferee to make certain payments to the company’s creditors.
• If the Court grants leave under section 444GA, the transferee will become the registered holder of the shares.