There are two parties, which are involved in this case. These two parties are Fame who is the appellant of this case. On the other hand, another party is the Australian Securities Commission (ASC) who acts as third respondent of the case (Lowry, 2012). This case mainly raises queries on the meaning and effects of the ss 995 and 998 of Corporations Law. Jeffries is a public company having its shares is listed on Stock Exchange.
The appellant Fame holds all time-shares of the company. Mr JF O’ Halloran who holds the position of Chairman of Directors of the company is engaged in the activity of controlling the business. He has discharged from his duty on April 1995. Along with the ordinary shares, the capital of the company constitutes of convertible preference shares. The appellant of the case Fame holds preference shares of the company in 1995. 4 February 1999 is expected to be the conversion date.
On this date, the preference shares are converted into ordinary shares. Along with this, Articles of Association of the company provides facility of earlier conversion on certain special circumstances. If the Jeffries Company failed to pay a specified amount of dividend to the shareholders, then the holder of the shares has an opportunity to accelerate the process of conversion of shares either for all parties or for some other parties (Latimer, 2012). In this case, the number of shares that are required to be allotted in place of conversion process is determining on the basis of a formula.
This formula assumes for present purpose which states that weighted average price of shares, which constitutes any of the elements of fully paid ordinary shares, which are traded in Stock Exchange within twenty days immediately before the date of conversion. There is an inverse relationship between the selling price of trading period and allotment of shares.
It implies that if the selling price of ordinary shares remains lower during the period of twenty days, higher the number of shares that are allotted to the holder of the preference share at the time of conversion. On the date of Thursday 27 April 1995, Mr O' Halloran come to know that the intentions of the directors were the announcement the conversion on Friday 28 April 1995 and no dividends have been paid for the conversion of preference shares for the period which is ending on Sunday 30 April 1995. This situation has a potential of accelerating the process of conversion of shares.