Federal Court Confirms Validity of Over 150 Million Althea Shares Issued Since 2020

Background to the Court Orders

Althea Group Holdings Limited (ASX:AGH), a prominent player in the cannabis pharmaceutical and recreational sectors, has received critical Federal Court orders addressing its prior non-compliance with disclosure obligations under the Corporations Act 2001 (Cth). The company had failed to lodge Cleansing Notices within the statutory timeframes following various share issues between December 2020 and July 2024.

These procedural oversights raised concerns about the validity of subsequent share sales and potential civil liabilities for parties involved in trading those shares. The company sought curative orders to resolve these issues and restore market confidence.

Key Provisions of the Court’s Decision

On 31 January 2025, Justice McElwaine of the Federal Court of Australia delivered orders that effectively validate all offers and sales of shares issued during the relevant period, notwithstanding the prior failures to lodge required notices. This declaration removes any legal cloud over the transferability and ownership of those shares.

Importantly, the Court also granted relief from civil liability to all parties who sold or on-sold these shares, except for former company secretary and CFO Robert Meissner, who remains excluded from this protection. This carve-out signals potential ongoing scrutiny or liability concerns related to his tenure.

Implications for Althea and Investors

Following the Court’s orders, Althea is mandated to lodge a Cleansing Prospectus with ASIC within two business days, which will serve to remove any trading restrictions attached to the shares. Subsequently, the company will apply to the ASX for reinstatement of its shares to trading, a crucial step for restoring liquidity and investor confidence.

The share issues covered by the orders are extensive, including placements, incentive plan issues, convertible note conversions, and share purchase plans, collectively representing a significant portion of the company’s capital structure over recent years. This comprehensive relief ensures continuity and stability in Althea’s shareholder base.

Context within Althea’s Growth Trajectory

Althea operates in highly regulated cannabis markets across Australia, North America, and Europe, balancing pharmaceutical-grade medicinal cannabis with recreational products through its Peak Processing Solutions division. Maintaining regulatory compliance and market trust is paramount as the company pursues growth in these emerging sectors.

The court’s intervention mitigates a potentially disruptive compliance issue, allowing Althea to focus on operational execution and strategic expansion without the overhang of legal uncertainty related to its capital raising activities.

Looking Ahead

While the court orders provide immediate relief, the exclusion of the former CFO from liability relief and the company’s prior disclosure lapses may invite closer regulatory scrutiny going forward. Investors will be watching closely for the timely lodgement of the Cleansing Prospectus and the successful reinstatement of shares to trading, which will be key milestones in restoring full market confidence.