Welcome to today’s Chamberlains Selection, where we will discuss with James d’Apice on the matter of Global Advanced Metals  NSWSC 1804. We will talk about a minority shareholder in a tantalum producing company who sought the Court’s leave to sue the companies directors for breach of duties.
P, a minority shareholder in a tantalum producing Co, sought the Court’s leave to sue the Co’s directors for breach of duties. P said that in 2016 the Co’s directors sold an asset of the Co’s for $60m when it was worth somewhere between $245m and $900m.  P asserted that the Co’s directors made the decision without enough info and without carefully thinking about it.  In 2018, some of the assets the Co sold in 2016 were sold by that 2016 purchaser for $1.15B. P tried to rely on this but the Court considered this suggestion had a “hindsight problem” – how could a 2018 sale shed light on a 2016 valuation? 
In considering whether to allow the derivative action, the Court found (i) the Co was not likely to bring the claim , (ii) the application was in good faith because P, as a shareholder, would benefit from any success the Co enjoyed. , and (iii) there was a serious question to be tried. . However, crucially, the Court found it would not be in the Co’s best interests to grant leave  including because of the distraction to the management of the Co, the likely increase in D and O insurance premiums, and the availability of external finance.  –  Leave was not granted.