AUSTRALIA: Takeover Panel Consultation Paper on Guidance Note 1 – Unacceptable Circumstances

Wednesday March 14 2018

The Australian Takeovers Panel has proposed to revise Guidance Note 1 to provide market participants more certainty by establishing a time frame before which departure from a no increase statement may give rise to unacceptable circumstances.

This guidance note has been prepared to assist market participants understand the Panel’s approach to making a declaration of unacceptable circumstances. The examples are illustrative only and nothing in the note binds the Panel in a particular case.

The proposed revisions give an example of unacceptable circumstances following a last and final statement in relation to a takeover bid (see example 4 of paragraph 32(a) and footnote 39 of Guidance Note 1). The example seeks to provide market participants more certainty by establishing a time frame before which departure from a no increase statement may give rise to unacceptable circumstances.

If the Panel makes a declaration of unacceptable circumstances it has the power to make orders. The Panel aims to correct unacceptable circumstances as quickly and as cost-effectively as possible. It seeks to ensure that control transactions are decided by informed security holders who have confidence in the integrity of Australia’s market for corporate control.

There is no definition of unacceptable circumstances. Based on the wording of section 657A, the Panel’s ability to make a declaration of unacceptable circumstances is broad. The power extends beyond takeover bids to other control transactions. Examples:

1. rights issues and equity placements
2. buy-backs and other reductions of capital
3. resolutions to approve acquisitions of shares
4. compulsory acquisition
5. schemes of arrangement
6. reverse takeovers.

The Panel seeks comments from interested persons on the draft Guidance Note by 20 April 2018. Comments should be emailed to takeovers@takeovers.gov.au.

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