- ASIC has highlighted a number of topical areas in relation to takeovers. These include creeping acquisitions, equity derivatives and the emergence of non-genuine proposals for control of public companies.
- Treasury has indicated that it will begin the process of consultation in relation to these matters.
In a neutral release that identified that there are often arguments on both sides of a debate, Treasury identified the following areas as ones of interest to be considered further:
- Creeping acquisitions – reflecting the wide ranging discussion in recent times, the advantages and disadvantages of permitting ‘creeping acquisitions’ of 3% in a 6 month period (where a shareholder has a stake of at least 19%) were noted by Treasury.
- Equity derivatives – the questions of the use and disclosure of equity derivatives in control transactions have been identified. This is certainly not a new issue, and is one where the Takeovers Panel proactively provided guidance following the Austral Coal matter some years ago.
- Clarity of takeovers proposals – there has been much commentary around the fact that a person who publicly proposes to make a takeover bid will, under section 631 of the Corporations Act, be obliged to proceed with offers under that bid within 2 months of the proposal. Some have said it is of concern that proposals to acquire a company by way of a scheme of arrangement do not attract the operation of this provision. The consequence of this may be that proposals that are not genuine can be aired without the severity of consequence had those proposals been stated to be in relation to takeovers.
- Association – while not giving much away, Treasury’s release indicates that the accurate disclosure of associations is a critical element of a properly informed market. This is perhaps recognising the difficulty that can be had with respect to proving association. We may see a debate around rebuttable presumptions of association in certain circumstances (eg common directors) as is the case in some other jurisdictions. The debate may also look at the different approaches the Takeovers Panel has taken in relation to association in different matters.
- Impact of new media – related to the issue of clarity of takeover proposals, this concern identifies the rise of new forms of communication and their potential impact on rumours and other matters that can affect a well informed and efficient market.
We understand that Treasury will facilitate consultation in relation to these important matters. Such consultation is to be welcomed. It may also be appropriate for the matter to be referred to the government’s Corporations and Markets Advisory Committee (CAMAC). CAMAC has previously undertaken excellent work in the area of schemes of arrangement and there would be every expectation that a CAMAC report on these matters would be a sound platform from which to move forward with any reform proposals.