The remarkable run of association cases before the Takeovers Panel this year has continued into July, with the Panel now having considered no less than seven alleged instances of undisclosed associations in 2011.

The most recent of these cases is Viento Group Limited 02 [2011] ATP 12 (Viento 02), in which the Panel declined to make a declaration of unacceptable circumstances because, on the material available to it, the Panel was not satisfied that it could draw the necessary inferences to find the alleged associations.

Interestingly, this was the second time in seven months that the Panel had been asked to consider alleged associations in relation to Viento Group Limited (Viento).

In the first of these cases, Viento Group Limited [2011] ATP 1 (Viento 01), the applicant was Viento itself and the Panel concluded that a couple in a de facto relationship (and each of the entities they controlled) were associates in relation to Viento as they intended to control the composition of the Viento board or the conduct of its affairs, and acted in concert in relation to those affairs.

In Viento 01, the Panel ultimately made a declaration of unacceptable circumstances and ordered the divestment of the Viento shares acquired by entities controlled by the couple after their voting power in Viento reached the 20% threshold.

Ironically, the applicant in Viento 02 was the acquirer of the Viento shares that had been divested pursuant to the orders made by the Panel in Viento 01.

The divested shares were acquired by the applicant in late April and at that time represented 10% of the ordinary shares in Viento.

Five days after it had acquired the divested shares, the applicant requisitioned an extraordinary general meeting of Viento to consider resolutions to remove the existing directors of Viento and replace them with its own nominees.

A further five days later, Viento announced on ASX that it had issued approximately 12% of the ordinary shares in Viento by way of placement.

The applicant in Viento 02 submitted to the Panel that a group of alleged associates, which included the Executive Chairman of Viento, the stockbroking firm that ASIC had appointed to sell the shares the subject of the divestment order in Viento 01 (being the shares acquired by the applicant) and the person to whom shares had been placed by Viento in the days after the applicant had requisitioned the meeting, had built up a combined shareholding of a little over 41% in Viento. It sought final orders which included that the shares acquired by the alleged associates in excess of 20% be vested in ASIC and sold by private tender to non-associated parties.

In Mount Gibson Iron Limited [2008] ATP 4, the Panel said circumstances which are relevant to establishing an association include:

  • a shared goal or purpose;
  • prior collaborative conduct;
  • structural links and familial relationships;
  • common investments and dealings;
  • common knowledge of relevant facts; and
  • actions which are uncommercial.

As the Panel has said on several occasions, and most recently in Bentley Capital Limited 01R [2011] ATP 13, it will often be necessary to draw inferences from patterns of behaviour, commercial logic and other evidence suggestive of association.  It will rarely be the case that "smoking gun" evidence is available to either the applicant or the Panel.

In Viento 02, there was no "smoking gun" evidence.  While the Panel considered possible instances of previous commercial dealings, common investments and familial relationships, it could not draw the necessary inferences to find an undisclosed association between any of the alleged associates.  The decision shows that the Panel is taking a consistent – tough but fair – approach to the question of whether an association exists.


On 29 July 2011, the applicant announced on ASX that it has launched a takeover bid for all of the shares in Viento. This follows an announcment only days earlier that it had decided to put its entire stake in Viento up for sale. The market will watch the next steps at Viento with interest.