AUSTRALIA: ASIC to update and consolidate Australia takeover guidance

Wednesday November 14 2012

The ASIC has released a consultation paper proposing to update and consolidate its Australia takeover regulatory guidance.

ASIC proposes to consolidate 17 existing regulatory guides, which represents the bulk of its policies covering Chapters 6–6C of the Corporations Act 2001 (which deal with takeovers) into 4 new guides covering topics including takeover bids, substantial holdings, and compulsory acquisition and buy-outs. ASIC has also proposed to reissue the class orders discussed in the draft guidance.

The guides will also contain updated policy to reflect ASIC’s current views on Australia takeovers and will also address some discrete issues ASIC has identified in the administration of the law.

Proposals for amendments to existing policies are limited to matters associated with past legislative changes and other technical matters ASIC considers necessary or desirable to address to ensure the revised guidance on each topic reflects ASIC’s current approach.

Specific revisions and new policy proposals include:

• discussion on rights issues and underwriting arrangements which have the potential to affect control of an entity
• updated guidance on when a selective benefit may be prohibited in a takeover bid because it may be likely to induce a person to accept the bid or dispose of target securities
• new guidance and class order relief in relation to the use and operation of acceptance facilities in takeover bids, and
• updated guidance on when a person may have a ‘relevant interest’ in securities and the associated requirements to disclose substantial holdings and comply with the takeover provisions.

A few existing regulatory guides relating to takeover bids are not included in the proposed update:

• RG 25 – Takeovers: False and misleading statements
• RG 59 – Announcing and withdrawing takeover bids (s653 and s746)
• RG 71 – Downstream acquisitions (Note: This guide was recently updated)
• RG 74 – Acquisitions approved by members (Note: This guide was recently updated)
• RG 128 – Collective action by institutional investors
• RG 163 – Takeovers: Minimum bid price principle—s621

Submissions are to be received by 22nd February 2013. The Regulatory Guide is expected to be published in May 2013.

Note that on 5 October 2012 the Department of the Treasury released a scoping paper in relation to a number of issues regarding the takeover provisions raised by ASIC. The consultation process being conducted by Treasury on these issues is separate and independent from the consultation process outlined in this paper which is focused on updating and consolidating ASIC’s guidance and class orders.

Click here for the consultation paper.