The Federal Court has upheld CSR's appeal against a decision blocking plans for a demerger because of the risk to the company's ability to meet future asbestos liabilities.
CSR appealed against the Federal Court's decision in February this year, declining to order a meeting of CSR's shareholders to consider the proposed demerger of CSR's sugar and renewable energy business into two listed companies - "Sucrogen" and "New CSR".
Professor Michael Adams, head of the University of Western Sydney's law school and corporate governance expert, was surprised the demerger was originally blocked and believes last week's outcome is the right one.
Describing CSR as a good corporate citizen, Adams said the decision needed to be appealed as he believes CSR should have been allowed to go forward to the next step in the demerger process.
"We've learnt from James Hardie...but CSR is a very different company. They have a very long history and they're a very different corporate entity from James Hardie. Their governance procedures have been well-established long before this [case] and so it's about credibility and genuineness, and I think CSR has demonstrated that," Adams said.
Commenting on the February decision, Adams said the court's decision to block the demerger indicated that "Australia is finally tackling the challenge of enforcing good corporate governance" describing it as "true corporate morality in action".
Although agreeing that CSR should be allowed to go ahead, Adams said: "It's important that asbestos and contingent liabilities are being very carefully looked at."
- Briana Everett
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