Registrar of Companies will not appeal Feltex decision

The Registrar of Companies will not appeal the District Court decision of 2 August 2010 which acquitted five Feltex directors of charges under the Financial Reporting Act.

The charges were that the directors each breached the Act because unaudited interim financial statements of Feltex for the six months to 31 December 2005 did not correctly state the current status of the $100 million-plus ANZ Bank facility, or disclose that terms of that lending had been breached by Feltex.

In 2007 the Securities Commission investigated the Feltex IPO, and later disclosures and reports. It referred breaches of the Act to the Registrar, and the Registrar then investigated.

“In the course of the investigation I obtained expert external accounting advice and referred the matter to the Crown Solicitor. Further legal advice was taken before the laying of charges in December 2008” said Neville Harris, Registrar of Companies.

As recorded in the decision, the directors acknowledged to the Court that they had breached the Act. Unless the directors could prove a statutory defence, conviction would have followed.

The Act provides a defence if the director proves they took all reasonable steps to comply. Having heard evidence from the directors, bank officials, and the company’s auditors Ernst & Young, the Court held that the directors had established this defence, and acquitted them.

An appeal can be brought on issues of law, but not on factual matters.

“After a review of the decision and assisted by independent legal advice I have decided not to appeal this decision” said Mr Harris.