On 10 April 2019 the Takeovers Panel (Panel) released for consultation a draft revised guidance note on equity derivatives (GN 20). The Panel proposes to clarify its position in relation to the disclosure of equity derivatives.

The consultation paper makes it clear that all long positions of 5% or more – whether held as a physical position, in equity derivatives or a combination of both – should be disclosed. The Panel has, in the draft revised GN 20, reflected its position that economic interests should be disclosed, irrespective of whether a control transaction is on foot or being contemplated.


GN 20 was first published by the Panel 11 years ago, following 3 years of internal consultation and public consultation regarding equity derivatives. While the public consultation version of the 2008 GN 20 contemplated that all holdings which had a combined physical position and equity derivative holding of 5% or more should be disclosed, following public consultation the focus of GN 20 was narrowed so that it was limited to ‘control transactions’.

This limitation of GN 20 was in part due to the sophistication of the market at the time (equity derivatives had only recently become more commonly used), a desire for consistency with the position adopted in the United Kingdom’s takeovers regime, and the concern that the Panel's powers were limited to control situations.

However, the world has changed since 2008:

Summary of draft revised GN 20

The draft revised GN 20 states the Panel’s expectation that all long positions over 5% should be disclosed (irrespective of whether there is a control transaction) and provides guidance on the matters the Panel will take into account in considering what orders should be made if the Panel finds that non-disclosure of equity derivatives is unacceptable.

The key aspects of the draft revised GN 20 are summarised below:


The draft revised GN 20 has been published for consultation, with submissions due by 31 May 2019. However, stakeholders who do not disclose their long positions in equity derivatives in line with the Panel’s draft guidance in the interim will do so at their own risk.

  • Many overseas jurisdictions (such as the United Kingdom, Hong Kong and New Zealand) now require aggregation of equity derivatives with physical holdings when determining whether disclosure of substantial holdings is required; and
  • Equity derivatives are now widely used in Australia (and internationally) – recent examples include:
    • KKR taking a position in MYOB Group Limited by way of an equity derivative, before acquiring a physical position and making a takeover bid for MYOB Group Limited;
    • Mr Bruce Gordon using cash-settled equity swaps to maintain and increase his position in Nine Entertainment Co. Holdings Limited when it merged with Fairfax Media Limited (in observance of media ownership laws); and
    • Spotless Group Holdings Limited’s disclosure in relation to Coltrane Asset Management’s interest in it during Downer EDI Services Pty Ltd’s bid for Spotless Group Holdings Limited.