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    ASIC sniffs out trouble at Chemeq
    By Rebecca Urban
    December 24, 2004

    Troubled pharmaceutical maker Chemeq is facing penalties potentially worth millions after being hit by allegations that it failed to comply with continuous disclosure laws.

    The Australian Securities and Investments Commission yesterday filed proceedings in the Federal Court alleging Chemeq had contravened the Corporations Act seven times between February 2003 and October 6 this year.

    An undertaking from the court could prove disastrous for the Perth-based company that has been forced to delay the first shipment of its antibiotic replacement for pigs and chickens to South Africa because of production problems at its new manufacturing plant.

    Chemeq requested that its shares be placed in a trading halt on Thursday afternoon so it could prepare a statement responding to the allegations. It is believed that the company plans to oppose ASIC's application.

    The corporate watchdog has accused the company of failing to inform the market of the cost blow-outs in building its Rockingham factory and that purchase orders it received from South Africa were subject to a "sunset" clause. It also alleges the company failed to inform the market of its further funding requirements after raising $10 million in a share issue and of a patent that had been granted in the US.

    ASIC wants declarations that Chemeq failed to comply with its continuous disclosure obligations under the Act. It also wants the court to impose penalties - up to $200,000 for each contravention before July 1 this year and up to $1 million for each offence since.

    Chemeq shares last traded at $1.24

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