Case: Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission (ASIC) v Adler [2002] NSWSC 171 ; (2002) 168 FLR 253, (2002) 41 ACSR 72 
Outcome: discussed
The particular definition of 'officer' was introduced to the Act in 1999 by the Corporation Law Economic Reform Program Act 1999 (Cth). However, like issues have arisen in relation to similar provisions at various times. A useful summary appears in the judgment of McColl JA in Forge v Australian Securities and Investments Commission (2004) 213 ALR 574 at [183] [195]. A very wide application was given to the definition by Santow J in Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission (ASIC) v Adler [2002] NSWSC 171 ; (2002) 168 FLR 253, (2002) 41 ACSR 72 at [55] [75]. There does not appear to have been any discussion about that aspect of the judgment on the appeal ( Adler v Australian Securities and Investments Commission [2003] NSWCA 131 ; (2003) 179 FLR 1, (2003) 46 ACSR 504). Austin J also recently discussed some former similar provisions in Australian Securities and Investments Commission v Vines (2006) 55 ACSR 617 at [1030] [1056], [1123] [1131], [1266] [1276] and [1415] [1425], although the factual situation in that case differed substantially from the present facts. 23 The facts in Australian Securities and Investments Commission v Adler are somewhat closer. Adler was a director of HIH Insurance Limited (HIH) from 16 April 1999 to 26 February 2001. He joined the Investment Committee of HIH on 2 June 1999 and was a member of that Committee throughout 2000. HIH Casualty and General Insurance Co Limited (HIHC) was a wholly owned subsidiary of HIH. Adler had no office in that company. It was held that Adler was an officer of HIHC by virtue of his participation in decisions by the Board of HIH and the Investment Committee of HIH affecting the affairs of HIHC. It was found that he was one 'who makes or participates in making, decisions that affect the whole, or a substantial part, of the business of HIHC', namely investment decisions, and also, as a director of the parent HIH, had at the relevant times 'a capacity to affect significantly the corporation's (HIHC's) financial standing'. 24 That reasoning is not directly applicable to the present circumstances as it was a case of parent and subsidiary. However, it can be argued that the effect of the Agreement is to substitute the board of Grande Group for the board of Akai Australia for all practical purposes and it can also be argued that the position of Ho viz a viz Grande Group is more significant than was the role of Adler in relation to HIHC. Whilst any such conclusion, and indeed the correctness of the reasoning in Australian Securities and Investments Commission v Adler, may be debateable, the issue is appropriate to be settled at trial rather than at this interlocutory stage. I thus conclude that there is a prima facie case that Ho was a deemed officer of Akai Australia at the relevant time, although not a deemed director. As appears from paragraph 1 of the Details of Claim, there are relevant differences in the effect of being a deemed officer as compared with a deemed director as some consequences of being a director are not suffered by officers (eg, there is no liability under s 588G). All of paragraph 1 of the Details of Claim is predicated upon the respondents being directors or officers. 25 The next issue is whether there is a prima facie case that either Grande Group or Grande Holdings was a holding company of Akai Australia such as to lead to the potential contravention of s 588V as alleged in paragraph 2 of the Details of Claim. By s 9, 'holding company', in relation to a body corporate, means a body corporate of which the first body corporate is a subsidiary. Whether a body corporate is a subsidiary is determined by the application of ss 46, 47 and 48 of the Act. It is suggested that here each of Grande Group and Grande Holdings controlled the composition of the Board of Akai Australia and was in a position to cast, or control a casting of, more than one-half of a maximum number of votes that might be cast at a general meeting of Akai Australia. 26 In the case of Grande Group, it is alleged that the prima facie case followed from the Agreement and the control it could exercise directly and through Akai Electric; and, in the case of Grande Holdings, by virtue of its shareholding in, and control of, Grande Group.