QuestionWhat do you think would be ASICs principal claim against Superman Limited? Limited. On 20 June 2020, a link to the YouTube video was posted on the websitehttps://hotcopper.com.au.The representations that were repeated in London were false or materially misleading for thesame reasons as applied to the representations made in Hong Kong. In addition, therepresentation to the effect that it was a condition of the Takeaway Agreement that the buyercommits to funding the construction of the Plant was false because there was no suchobligation.As was the case for the representations made at the Conference in Hong Kong, SupermanLimited did not take steps at the time nor for some time thereafter to disclose to the marketthe errors in the repres ions.The representation about the $4.5 billion value was retracted on 20 June 2020. At that time,Superman Limited also released to the ASX a response to an ASX query in which it disclosedthe true position as to funding for the Plant. It is agreed that the disclosure was 'in line withall previous announcements made by [Superman Limited] to the ASX dated 20 April 2020,20 April 2020 and 20 May 2020 that project financing negotiations were in progress'.It is agreed that:On 28 June 2020, the ASX reinstated the securities of [Superman Limited] to officialquotation. The [Superman Limited] share price fell from its closing price on 20 June 2020 of10 cents to an intra-day low of 8.1 cents (19% fall) and a closing price on 28 June 2020 of 9cents (10% fall). On 20 June 2020, 44 million shares were traded with a total value of $3.985million, which was 5 times greater than the average volume and value of shares traded in the5 days prior. [Superman Limited] market capitalisation also fell from $273.14 million on 20June 2020 to $241 million on 20 June 2020However, ASIC does not take the further step of alleging that actual loss was sufferedbecause of the representations that were made. Senior Counsel for ASIC accepted that therewould need to be 'quantitative evidence and the exclusion of confounding information andother types of information in the market' for loss to be established. ASIC commencedproceedings against Superman Limited and Mr Clark Kent. The relevant events concern a kryptonite resource in Dubbo known as the Strength Project.The Project was acquired by Superman Limited in December 2019. In February 2020, abuyer entered into an agreement with a subsidiary of Superman Limited to purchasekryptonite offtake from the Project (Takeaway Agreement). The Takeaway Agreement wassubject to the satisfaction of several conditions' precedent, including a condition that thesubsidiary obtains finance for the development and construction of the Project (FinanceCondition). Material terms of the Takeaway Agreement included (a) the buyer assisting in thedevelopment, construction, and financing of a processing plant for the Project byrecommending a financial advisor who would work globally on securing financing(Financing Mandate); (b) if the buyer exercised an option to acquire 20% of the shares inSuperman Limited then it would be entitled to a discount of 10% on the base price forkryptonite supplied by the Project (Buyer's Discount); and (c) the share option would expirethree months after the issuance of a bankable feasibility study (Share Option).On 19 February 2020, Superman Limited announced the Takeaway Agreement, including theShare Option and the Finance Condition. In doing so, it did not disclose the terms of theFinancing Mandate or the existence of the Buyer's Discount. However, it is agreed that:The existence of a potential commercial in confidence price premium or adjustment wasreferred to at footnote 2 of the...Announcement, a similar notation was also made in [anotherdocument] dated 21 February 2020. The existence of the Buyer's Discount was subsequentlydisclosed in [Superman Limited's] announcement dated 6 March 2020.During a presentation at the Super hero's conference held in Hong Kong on 20 April 2020,one of the directors of Superman Limited, Mr Clark Kent, stated that (a) "Superman Limitedhad secured finance for the construction of the Plant, and the buyer had committed to fundingconstruction of the Plant"; and (b) "the value to Superman Limited of the TakeawayAgreement based upon the projected production volume in the Takeaway Agreement was$4.5 billion".The representation about the funding commitment for the construction of the Plant was falsebecause Superman Limited had not secured finance for the construction of the Plant, and thebuyer had not committed to funding the construction of the Plant. The representation aboutthe value of the Takeaway Agreement was materially misleading without disclosure of theBuyer's Discount because the Buyer's Discount applied but was not factored into thecalculation.Superman Limited did not take steps at the time nor for some time thereafter to disclose tothe market the errors in the representations.During a further presentation at a 121 Conference held in London on 20 May 2020, Mr Kentmade the same representations he had made in Hong Kong concerning finance forconstruction of the plant and the value of the production volume being $5 billion.In addition, Mr Kent stated that it was a condition of the Takeaway Agreement that the buyercommit to funding the construction of the Plant.The London presentation was released on YouTube on or about 20 June 2020 where itremained until about 20 July 2020 when it was taken down at the request of Superman

Question

QuestionWhat do you think would be ASICs principal claim against Superman Limited? Limited. On 20 June 2020, a link to the YouTube video was posted on the websitehttps://hotcopper.com.au.The representations that were repeated in London were false or materially misleading for thesame reasons as applied to the representations made in Hong Kong. In addition, therepresentation to the effect that it was a condition of the Takeaway Agreement that the buyercommits to funding the construction of the Plant was false because there was no suchobligation.As was the case for the representations made at the Conference in Hong Kong, SupermanLimited did not take steps at the time nor for some time thereafter to disclose to the marketthe errors in the repres ions.The representation about the $4.5 billion value was retracted on 20 June 2020. At that time,Superman Limited also released to the ASX a response to an ASX query in which it disclosedthe true position as to funding for the Plant. It is agreed that the disclosure was 'in line withall previous announcements made by [Superman Limited] to the ASX dated 20 April 2020,20 April 2020 and 20 May 2020 that project financing negotiations were in progress'.It is agreed that:On 28 June 2020, the ASX reinstated the securities of [Superman Limited] to officialquotation. The [Superman Limited] share price fell from its closing price on 20 June 2020 of10 cents to an intra-day low of 8.1 cents (19% fall) and a closing price on 28 June 2020 of 9cents (10% fall). On 20 June 2020, 44 million shares were traded with a total value of $3.985million, which was 5 times greater than the average volume and value of shares traded in the5 days prior. [Superman Limited] market capitalisation also fell from $273.14 million on 20June 2020 to $241 million on 20 June 2020However, ASIC does not take the further step of alleging that actual loss was sufferedbecause of the representations that were made. Senior Counsel for ASIC accepted that therewould need to be 'quantitative evidence and the exclusion of confounding information andother types of information in the market' for loss to be established. ASIC commencedproceedings against Superman Limited and Mr Clark Kent. The relevant events concern a kryptonite resource in Dubbo known as the Strength Project.The Project was acquired by Superman Limited in December 2019. In February 2020, abuyer entered into an agreement with a subsidiary of Superman Limited to purchasekryptonite offtake from the Project (Takeaway Agreement). The Takeaway Agreement wassubject to the satisfaction of several conditions' precedent, including a condition that thesubsidiary obtains finance for the development and construction of the Project (FinanceCondition). Material terms of the Takeaway Agreement included (a) the buyer assisting in thedevelopment, construction, and financing of a processing plant for the Project byrecommending a financial advisor who would work globally on securing financing(Financing Mandate); (b) if the buyer exercised an option to acquire 20% of the shares inSuperman Limited then it would be entitled to a discount of 10% on the base price forkryptonite supplied by the Project (Buyer's Discount); and (c) the share option would expirethree months after the issuance of a bankable feasibility study (Share Option).On 19 February 2020, Superman Limited announced the Takeaway Agreement, including theShare Option and the Finance Condition. In doing so, it did not disclose the terms of theFinancing Mandate or the existence of the Buyer's Discount. However, it is agreed that:The existence of a potential commercial in confidence price premium or adjustment wasreferred to at footnote 2 of the...Announcement, a similar notation was also made in [anotherdocument] dated 21 February 2020. The existence of the Buyer's Discount was subsequentlydisclosed in [Superman Limited's] announcement dated 6 March 2020.During a presentation at the Super hero's conference held in Hong Kong on 20 April 2020,one of the directors of Superman Limited, Mr Clark Kent, stated that (a) &#34;Superman Limitedhad secured finance for the construction of the Plant, and the buyer had committed to fundingconstruction of the Plant&#34;; and (b) &#34;the value to Superman Limited of the TakeawayAgreement based upon the projected production volume in the Takeaway Agreement was$4.5 billion&#34;.The representation about the funding commitment for the construction of the Plant was falsebecause Superman Limited had not secured finance for the construction of the Plant, and thebuyer had not committed to funding the construction of the Plant. The representation aboutthe value of the Takeaway Agreement was materially misleading without disclosure of theBuyer's Discount because the Buyer's Discount applied but was not factored into thecalculation.Superman Limited did not take steps at the time nor for some time thereafter to disclose tothe market the errors in the representations.During a further presentation at a 121 Conference held in London on 20 May 2020, Mr Kentmade the same representations he had made in Hong Kong concerning finance forconstruction of the plant and the value of the production volume being $5 billion.In addition, Mr Kent stated that it was a condition of the Takeaway Agreement that the buyercommit to funding the construction of the Plant.The London presentation was released on YouTube on or about 20 June 2020 where itremained until about 20 July 2020 when it was taken down at the request of Superman

Accepted Answer

Note ' The solution is provided in a generalized way.
Superman Limited is a fictitious corporation…

Question What do you think would be ASICs principal claim against Superman Limited?