Treasury’s scoping paper raises ASIC’s key concerns about current takeovers law and will form the basis for a series of targeted roundtable discussions and ultimately, a more detailed discussion paper. We will continue to monitor likely changes to the takeovers laws from these proposals.
On 5 October 2012, Treasury released an initial scoping paper on modernising takeovers law. While Treasury believes that the current provisions have been successful in achieving their policy objectives since their introduction, the paper addresses a number of issues raised by ASIC.
Treasury’s paper identifies 5 areas of concern, namely:
- creeping acquisitions - the current framework of allowing a shareholder with at least a 19% shareholding to acquire an additional 3% shareholding every 6-months potentially allows a shareholder to acquire a controlling stake without making a formal takeover bid;
- use and disclosure of equity derivatives - the scope of the substantial holding provisions potentially allows equity derivatives to be used to build up an undisclosed stake in a company in the lead up to a formal takeover bid, and to acquire an undisclosed blocking stake;
- clarity of takeovers proposals - the current regime potentially allows would-be bidders to approach target boards with proposals that are structured in such a way that circumvents the requirement of making offers within 2 months of a public proposal;
- accurate disclosure of associations - the difficulties of proving association between shareholders exerting influence may undermine the effectiveness of the association provisions; and
- the impact of new media on the circulation of price-sensitive information - ASIC is working with the ASX to provide further guidance to listed entities on responding to market rumours originating outside conventional news and market channels.
The paper will form the basis for targeted roundtable discussions between Treasury and a range of stakeholders, following which Treasury aims to generate a more detailed discussion paper.