On Friday 22 May, the Full Court of the Federal Court handed down judgment in Queensland North Australia Pty Ltd v Takeovers Panel  FCAFC 68 and clarified the time limit for making an application to the Takeovers Panel for a declaration of unacceptable circumstances.
Section 657(3) of the Corporations Act 2001 (Cth) (Act) provides that an application must be made within 2 months after the “circumstances have occurred” or a longer period determined by the Takeovers Panel.
The case concerned a contravention of s 606 of the Act resulting from 2 acquisitions which increased the shareholding of the Appellant, being a company controlled by Clive Palmer, from 0% to 44.3%.
At first instance, Justice Collier construed “circumstances” to include ongoing or continuing circumstances for the purposes of the section. On this basis, the Court held that because the Appellants continued to maintain the relevant shareholding which created a continuing state of affairs, an application made to the Takeovers Panel outside 2 months from the date of the relevant acquisitions was still within the prescribed time period.
The Full Court rejected this interpretation and applied a plain reading of the section taking into account the policy objectives of the takeover provisions in Chapter 6 of the Act (being to promote an efficient competitive and informed market in which regulatory interventions in the operation of the market are disposed of in a timely manner).
The relevant “circumstances” must be capable of being identified as having arisen at a particular time. Allowing the “circumstances” to be reset on a daily basis does not meet the commercial imperatives of the legislative scheme.
The Full Court also made a clear distinction between “circumstances” and the effect of the circumstances to ensure the time limits operated effectively. The relevant “circumstances” in this case were the acquisitions, the most recent of which was outside the relevant time limits.
The matter was remitted back to the Takeover Panel to determine the application for an extension of time according to law.
The same principles apply to the 3 month time limit in s 657B of the Act.
The time limits imposed by ss 657B and 657C(3) of the Act must be strictly adhered to by reference to the date of the occurrence of the specific transaction in question. Further, any application to the Takeovers Panel to extend the time period must be accompanied by the supporting material and dealt with according to the rules of natural justice.