The Federal Court in Brisbane has upheld ASIC's refusal to relieve Queensland-based printer consumables distributor Dynamic Supplies from lodging its financial reports with the securities watchdog.
On 30 July, the Court dismissed an appeal by Dynamic Supplies against a prior decision by the Administrative Appeals Tribunal (AAT). The distributor was ordered to lodge all outstanding financial reports dating back to 2002 and cover ASIC's costs of the appeal.
The case dated back to September 2008 when Dynamic Supplies failed to convince ASIC that it would suffer "competitive disadvantage" if it lodged financial reports.
Dynamic Supplies appealed ASIC's decision in November 2008, only to have the AAT affirm ASIC's decision.
It then appealed to the Federal Court in January, arguing that it may become more vulnerable to attacks from rivals if they knew "how deep its pockets were".
According to court documents, Dynamic Supplies managing director Scott McLennan gave evidence about a "price war" with a local subsidiary of a multinational company -- either Hewlett Packard, Brother, Epson or Canon.
Dynamic said this "price war" exemplified the dangers that would arise if its rivals were able to obtain detailed financial information about its operations and were therefore able to mount carefully targeted attacks against it.
The case was dismissed on 30 July.
Dynamic Supplies has not responded to calls from CRN seeking further comment.
ASIC warning
ASIC has urged privately held companies that considered applying for financial reporting relief to consider the above decision.
Under the Corporations Act, companies that satisfied two or more size tests: consolidated revenue of $25 million plus; consolidated gross assets of $12.5 million or more; and employee 50 or more staff, had to file their financials with the securities watchdog.
ASIC said a "large proprietary company" could apply for relief, but this would only be granted if ASIC believed that special circumstances existed. Typically, this required the company to show that complying with the statutory obligation would impose unreasonable burdens, such as competitive disadvantage.
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