Chapter 14
Takeovers
Chapter Summary
1
MEMBERSHIP
A person may agree to be a member of the company on its registration: s 231(a), but most become members after
registration, namely when their name is entered on the register of members: s 231(b).
1.1
Register of members
A company is required to keep a register of members which contains each member’s name and address and the
date on which the entry of the member’s name is made in the register: s 169(1). Where the company has more
than 50 members, the company is required to keep an up-to-date index of members’ names: s 169(2).
Only members can exercise certain remedies. Thus the question as to whether a person is a member can be very
important. For example, see cases such as: RE INDEPENDENT QUARRIES PTY LTD (1994) 12 ACLC 159, (1994)
12 ACSR 188; COSHOTT V PRINCIPAL STRATEGIC OPTIONS PTY LTD (2001) 38 ACSR 547, [2001]
NSWCA 110.
2
GENERAL
2.1
Relevant interest
A person holds a “relevant interest” in securities if they hold the securities, or have power to exercise or control
the exercise of a right to vote attached to the securities, or have power to dispose of the securities: 408(1).
A person (who is not necessarily the holder of shares) is regarded as having power to exercise or control the
exercise of a right to vote where this is exercisable through a trust, agreement, a practice or otherwise: s 408(2).
2.2
Prohibited acquisitions
Section 606 prohibits the following acquisitions of relevant interests in voting shares in a company with more than
50 members, and because of a transaction, a person’s voting power increases from 20 per cent or below to more
than 20 per cent, or from a starting point that is above 20 per cent and below 90 per cent.
2.3
Permitted acquisitions
The section 611 table sets out acquisitions that are exempt from the section 606 prohibition. These include:
 Item 1 is an acquisition that results from a takeover bid.
 Item 8 refers to a newly formed target, where the company has not started to carry on any business and
has not borrowed any money.
 Item 9 permits a 3 per cent creep in six months. Thus an acquisition by person is lawful if, throughout the
six months before the acquisition, the person has had voting power in the company of at least 19 per
cent, and as a result of the acquisition, the voting power increases more than 3 per cent higher than they
had six months before the acquisition.
2.4
Different types of takeover bid
There are two types of takeover bid: an off-market bid (for quoted or unquoted securities) and a market bid (only
available for quoted securities): s 616 (Part 6.3)).
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RULES FOR FORMULATING THE TAKEOVER OFFER
The rules are in Part 6.4 of the Corporations Act. An off-market bid must relate to securities in a class of securities (the
bid class) and the securities include those which are convertible to bid class securities during the offer period: s 617.
3.1
Equality of treatment of all shareholders
All shareholders must be treated the same. Thus:
 an offer for securities under an off-market bid must be an offer to buy all or a specified proportion of the
securities in the bid class: s 618(1).
 All of the offers made under an off-market bid must be the same: s 619(1).
 All of the offers under an off-market bid must bear the same date and must observe the same formal
requirements that are set out in s 620.
3.2
Consideration
Under an off-market bid the bidder can offer any form of consideration: s 621(1).
Under a market bid the bidder must offer to acquire the securities for cash only: s 621(2). The consideration
offered under all takeover bids must equal or exceed the maximum consideration that the bidder or an associate
provided or agreed to provide for a security in the bid class during the four months before the end of the bid: s
621(3).
Escalating agreements are prohibited: s 621. The offering by a bidder of collateral benefits is prohibited: s 622.
4
PROCEDURE
The procedure for the takeover of companies is regulated by ss 631 to 659C of the Corporations Act.
Section 634 provides an overview of the steps involved in an off-market bid, and section 635 provides detail.
Section 636 sets out the requirements for a bidder’s statement. Refer to Table 14.1 in the text for more detail in
relation to the steps, and the timing of those steps, in an off market bid.
4.1
Proposing or announcing a bid
A person contravenes the Corporations Act if (either alone or with other persons) the person publicly proposes to
make a takeover bid for securities in a company; and the person does not make offers for the securities under a
takeover bid within two months after the proposal. The terms and conditions of the bid must be the same as or not
substantially less favourable than those in the public proposal: s 631(1). The court can make an order to compel a
person to proceed with a bid: s 1325B.
A person must not publicly propose, either alone or with other persons, to make a takeover bid if the person
knows the proposed bid will not be made, or is reckless as to whether the proposed bid is made. A person is
reckless as to whether they will be able to perform their obligations relating to the takeover bid if a substantial
proportion of the offers under the bid are accepted: s 631(2).
4.2
Date for determining holders of securities
The people to whom information about the bid is are the holders of the securities referred to in those items as at
the date set by the bidder in the bidder’s statement; or a separate written notice given to the target on or before the
date set by the bidder: Corporations Act, s 633(2).
The bidder may set the date when the bidder asks the target for a list of members under s 641, but it must be on or
after the date on which the bidder gives the bidder’s statement, or the separate written notice, to the target; and on
or before the date on which the first offers under the bid are made to holders of the securities: s 633(3).
As soon as practicable after setting the day, the bidder must give notice of it by—if the securities in the bid class
are quoted—giving the notice to the relevant market operator or, otherwise, lodging the notice with ASIC: s
633(4).
5
INFORMATION
There is a need to provide certain information when a takeover bid is made. Section 633 sets out the requirements
for sending the bidder’s statement, the target’s statement and any accompanying information to the holders of bid
securities.
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5.1
The bidder’s statement
See section 636(1) for the general requirements for content which must be included in the bidder’s statement.
If the bidder’s statement includes an offer of non-cash consideration, the statement must include an expert’s report
that states whether in his or her opinion, the value stated is fair and reasonable and gives the reasons for forming
that opinion: s 636(2). Provision is made for the independence of the expert and for the disclosure of any
association between the bidder and the expert or the target and the expert: ss 648(2) and (3).
The bidder’s statement may only include a statement by a person, if the person has consented to it being included
in the bidder’s statement. The bidder must keep the consent: s 636(4).
Section 637 contains certain formality requirements.
5.2
The target’s response
See section 638 for requirements as to the content of the Target’s statement. There is a general requirement that it
include all the information that holders of bid class securities and their professional advisers would reasonably
require to make an informed assessment whether to accept the offer under the bid: s 638(1). However, the
statement must contain this information only to the extent to which it is reasonable for investors and their
professional advisers to expect to find the information in the statement; and only if the information is known to
any of the directors of the target: s 638(1A).
In deciding what information should be included in the target’s statement there must be regard to:
(a) the nature of the bid class securities;
(b) if the bid class securities are interests in a managed investment scheme—the nature of the scheme;
(c) the matters that the holders of bid class securities may reasonably be expected to know;
(d) the fact that certain matters may reasonably be expected to be known to their professional advisers; and
(e) the time available to the target to prepare the statement (s 638(2)).
A target should not give a target’s statement after the target has become aware of a misleading or deceptive
statement, omission or new circumstance that is material from the point of view of a holder of securities to whom
the statement is given (unless the deficiency is corrected): s 670A.
A target’s statement must contain a statement by each director of the target, recommending that offers under the
bid be accepted or not accepted and giving reasons for the recommendation. Alternatively, the directors may give
reasons why a recommendation is not made: s 638(3). If the target company is under administration, the statement
must be given by the liquidator or administrator or deed’s administrator: s 638(4).
A target’s statement may include a statement by a person which is included in the target’s statement with their
consent. This consent must not be withdrawn before the lodgment of the target’s statement with ASIC: s 638(5).
The target company must keep the consent: s 638(6).
Formalities are set out in section 639.
5.3
Expert’s report
If the bidder is connected with the target (see section 640(1) for more precise details), an expert’s report must
accompany the target’s statement. The report must state whether, in the expert’s opinion, the takeover offers are
fair and reasonable and give the reasons for forming that opinion: s 640(1)
5.4
Target must inform bidder about securities holdings
If the bidder requests information about the target’s security holders and gives the target a bidder’s statement, the
target must inform the bidder of the name and address of each person who, at a time specified by the bidder (see s
641(2), discussed below) held securities in the bid class or convertible into securities in the bid class. The target
must also inform the bidder of the type, and number of each type, of those securities: s 641(1). See section 641
for more details as to the target’s obligation in this regard.
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5.5
Expenses of directors of target companies
The target’s directors have a right to recover from the target any expenses they reasonably incur in the interest of
members of the target and in relation to the takeover bid, regardless of anything in the target’s constitution: s
642(1).
6
UPDATING AND CORRECTING THE BIDDER’S STATEMENT AND TARGET’S
STATEMENT
6.1
Supplementary bidder’s statement
If a bidder becomes aware of a misleading or deceptive statement or an omission in the bidder’s statement, or if a
new circumstance has arisen since the bidder’s statement was lodged, the bidder must prepare, send and lodge a
supplementary bidder’s statement which remedies this defect: ss 643(1) & 647.
6.2
Supplementary target’s statement
A supplementary target’s statement must be prepared if a target becomes aware of a misleading or deceptive
statement in the target’s statement; or an omission from the target’s statement of information, or if a new
circumstance has arisen since the target’s statement was lodged. The target must prepare a supplementary target’s
statement that remedies this defect: s 644(1). The target must then send and lodge the supplementary target’s
statement: s 647.
6.3
Formalities for supplementary bidder’s or target’s statement
At the beginning of a supplementary bidder’s or target’s statement there must be a statement that it is a
supplementary statement; and an identification of the statement it supplements, as well as any previous
supplementary statements. The supplementary statement is to be read together with the statement it supplements
and any previous supplementary statements: s 645(1). A supplementary statement must be dated on when it is
lodged with ASIC: s 645(4).
Formalities for the approval of a supplementary statement by the bidder or target are in sections 645(2) and (3).
If a supplementary statement is lodged with ASIC, the bidder’s or target’s statement is taken to be the original
statement together with the supplementary statement: s 646. Section 647 provides to whom a supplementary
statement must be sent.
6.4
Expert’s reports
If the bidder or target obtains two or more expert’s reports, Or s 640(1)), the bidder’s or target’s statement must
be accompanied by a copy of each report: s 648A(1). The expert must not be an associate of the bidder or target: s
648A(2).
The report must also disclose any financial or other interest of the expert that could reasonably be regarded as
being capable of affecting the expert’s ability to give an unbiased opinion, and must also disclose any fee,
payment or other benefit (whether direct or indirect) that the expert has received or will or may receive in
connection with making the report: s 648A(3).
7
PROPORTIONAL TAKEOVER APPROVAL PROVISIONS
Subdivision C governs proportional takeover provisions: ss 648D to 648H. These apply notwithstanding anything
contained in the operating rules of a financial market, or the constitution of a company, or any agreement: s 648H.
7.1
Constitution of a company may contain proportional takeover provisions
The constitution of a company may contain provisions to the effect that, if offers are made under a proportional
takeover bid, the registration of a transfer to give effect to a takeover contract for the bid is prohibited unless and
until an approving resolution is passed in accordance with the provisions.
An approving resolution is taken to have been passed if the proportion of votes in favour of the resolution is
greater than the proportion specified in the provisions (which must not exceed 50%): s 648D(1). See also ss
648D(2) & (3).
7.2
Effect of rejection of approval resolution
If a resolution to approve the bid is not passed in accordance with the approval provisions before the deadline:
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

offers that have not been accepted are taken to be withdrawn
all offers under the bid that have been accepted, and from whose acceptance binding contracts have not
resulted, are taken to be withdrawn at the end of the deadline: s 648F(3)(a).
The bidder must then return to each person who has accepted an offer any documents that the person sent the
bidder with the acceptance of the offer: s 648F(3)(b). The bidder is entitled to rescind; and must rescind as soon
as practicable after the deadline, each binding takeover contract for the bid: s 648F(3)(c). A person who has
accepted an offer made under the bid is entitled to rescind their takeover contract: s 648F(4).
7.3
Including proportional takeover provisions in constitution
Proportional takeover approval provisions generally cease to apply at the end of three years: s 648G(1)(a) (or
such shorter time as may be specified: s 648G(1)(b). Renewal is possible: s 648G(1)(c) and this occurs in the
same manner in which the company could alter its constitution to insert proportional takeover approval
provisions: s 648G(4). Members who together hold not less than 10 per cent (by number) of the issued securities
in a class of securities in the company to which the provisions apply, may apply to the court to have the purported
alteration or renewal set aside to the extent to which it relates to that class. Unless such an application is finally
determined, the company is taken for all purposes to have validly altered its constitution by inserting or renewing
the provisions: s 648G(6).
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TELEPHONE MONITORING
The recorder of the bidder or target must make a clear sound recording of all telephone calls that the recorder
makes during the bid period to a holder of securities in the bid class. The recorder must also record any call to
discuss the takeover bid: Corporations Act, s 648J(1). If the recorder invites the holder to call the recorder, then
the recorder must make a clear sound recording of all telephone calls that the holder makes to the recorder during
the bid period: s 648J(1A).
There is no requirement to record calls if the holder is a wholesale holder: s 648J(3). A holder is a wholesale
holder if the value of the securities equals or exceeds the prescribed amount; or a qualified accountant has given
the holder a certificate (s 761G(7)(c)) within the preceding six months; or the holder is a professional investor; or
the holder is a person, or a member of a class of persons, prescribed in the regulations: s 648J(4).
The recorder must notify the holder that the call is being recorded for the purposes of the Act: s 648K. The
recorder otherwise commits an offence under the Telecommunications (Interception) Act 1979.
The recorder must mark the medium in which the recording is stored so as to identify the parties to the
conversation and the date and time it was made: s 648L. The recorder must maintain an index: s 648M which
must be kept at the registered office of the recording custodian (s 648N) for 12 months after the end of the bid
period or such longer period as is determined by ASIC in writing: s 648P.
The recording custodian must not use, or disclose the contents of, the entries in the index if it is not necessary to
do so for the purpose of ensuring compliance with the corporations legislation: s 648Q. Unauthorised copying is
also prohibited: s 648R. The index and recording is a book for the purposes of legislation: s 648T.
9
VARIATION OF OFFERS
9.1
Market bids
A bidder may only vary the offers under a market bid in accordance with s 649B or s 649C: s 649A. ASIC may
allow other variations: s 655A. The bidder may increase the current market bid price, except during the last five
trading days of the relevant financial market in the offer period: s 649B. The bidder may extend the offer period,
but this must be announced to the relevant financial market at least five trading days before the end of the offer
period. (The announcement may be made up to the end of the offer period if, during those five trading days,
another person lodges with ASIC a bidder’s statement or announces or makes offers under a takeover bid for
securities in the bid class, or where the consideration for offers under another takeover bid for securities in the bid
class is improved. The offer period is extended by having the extension announced to the relevant financial
market: s 649C. The bid will also be automatically extended in certain circumstances: see s 624 for details.
9.2
Off-market bids (express variation by bidder)
A bidder may vary the offers under an off-market bid only in accordance with ss 650B, 650C or 650D: s 650A(1).
ASIC may allow other variations under s 655A. If the bidder varies the offer, the bidder must vary all unaccepted
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offers under the bid in the same way: s 650A(2). Sections 650B(2) and (3) deal with the effect of a variation on
takeover contracts that have already resulted from acceptances of offers under the bid when the variation is made.
Under s 650B, the bidder may vary the offers made under the bid to improve the consideration offered by:
 increasing a cash sum offered; or by increasing the number of securities offered; or
 increasing the rate of interest payable under debentures offered; or
 increasing the amount or value of debentures offered; or
 increasing the number of unissued securities that may be acquired under options offered; or
 offering a cash sum in addition to securities; or
 if the securities being acquired include shares to which rights to accrued dividends are attached—by
giving the holders the right to retain the whole or a part of the dividend or be paid an amount equal to the
amount of the dividend (in addition to the consideration already offered); or offering an additional
alternative form of consideration.
If the bidder increases the consideration during the last seven days of the offer period, s 624(2) extends the offer
period by 14 days. Section 650B sets out the effect of improving the consideration on the rights of a person who
has already accepted an offer when the variation is made. (See table 14.3 in the text for more detail). Basically, a
person who has accepted the offer is entitled to receive the improved consideration immediately: s 650A(2A),
unless the time for payment of the consideration has not yet occurred, or (if it is a pre-condition of the improved
consideration), the person has made any necessary election. If a person who has accepted an offer has the right to
make a fresh election as to the form of consideration to be taken, the bidder must send the person as soon as
practicable after the variation a written notice informing them about their right to make the election: s 650A(3).
Section 651B says how the election is to be exercised. Sections 648B and 648C provide for the manner in which
documents may be sent to holders.
A bidder making an off-market bid may extend the offer period at any time before the end of the offer period: s
650C(1). Where the bid is subject to a defeating condition, provision exists for the bidder in certain circumstances
to extend the offer period: s 650C(2). Section 624 defines how long the offer period is.
To vary offers under an off-market bid, the bidder must prepare a notice that sets out the terms of the proposed
variation (s 650D(1)) which must be sent to persons who have accepted the offer unless the variation merely
extends the offer period and the bid is not subject to a defeating condition at the time the notice is given: s
650D(2).
If a person who accepts an offer made under an off-market bid is entitled to withdraw their acceptance, this is
done by the person giving the bidder a notice within a month of receiving a notice of variation (s 650E(2)(a)) and
returning any consideration received (s 650E(2)(b)) and giving the bidder any necessary transfer documents (s
650E(4)).
If the offers under an off-market bid are subject to a defeating condition, the bidder may free the offers and the
takeover contracts from the condition only by giving the target a notice declaring the offers to be free from the
condition in accordance with s 650F. If offers made under the bid are/were subject to a defeating condition, and
the bidder has not declared the offers to be free from the condition within the relevant period, all takeover
contracts, and all acceptances that have not resulted in binding takeover contracts, for an off-market bid are void
(s 650G) and accordingly transfers based on these must not be registered.
9.3
Off-market bids (automatic variations)
Section 651A automatically varies offers under an off-market bid if the bidder purchases securities in the bid class
outside the bid during the bid period for a cash sum which is higher than that payable under the bid, or if the bid
does not include cash consideration (at least as one of the alternative forms of consideration): s 651A(1). The
effect of s 623 is that the purchase outside the bid has to be made through an on-market transaction: ss 623(1) and
s 623(3)(b).
If one of the forms of consideration offered under an off-market bid is a cash sum only, and the person has not
accepted the offer before the purchase outside the bid occurs, the cash sum is taken to be increased to the highest
outside purchase price before the offer is accepted: s 651A(2).
The consideration payable for each security covered by a takeover contract arising from the acceptance of an offer
for a cash sum only is increased to the highest outside purchase price. A person who has already received the
whole or any part of the consideration under the contract is entitled to receive the increase in consideration
immediately: s 651A(3).
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Where a person accepts an offer under a bid at any time during the bid period, and the consideration under the
takeover contract does not consist only of a cash sum, the person may elect to take as consideration a cash sum
equal to the highest outside purchase price instead of the consideration they originally accepted. The election
must be made within 14 days after the end of the offer period: s 651B(4).
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WITHDRAWAL AND SUSPENSION OF OFFERS
Unaccepted offers under a takeover bid may only be withdrawn under s 652B or s 652C: s 652A. Unaccepted
offers under a takeover bid may be withdrawn with the written consent of ASIC, which may grant consent subject
to conditions: s 652A.
A bidder may withdraw unaccepted offers in a market bid if an event stated in s 652C occurs and the bidder’s
voting power in the target is at or below 50 per cent when the event happens. These events include where the
target converts all or any of its shares into a larger or smaller number of shares (s 254H) or where the target or a
subsidiary resolves to reduce its share capital in any way. For other events, refer to section 652C(1).
A target may also withdraw unaccepted offers if a liquidator (or provisional liquidator) or administrator of a target
or subsidiary is appointed, or the court makes a winding up order of the target or subsidiary. An unaccepted offer
may also be withdrawn if the target or subsidiary execute a deed of company administration, or if a receiver of
the whole or a substantial part of the property of such a company is appointed : s 652C(1)(b).
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ACCEPTANCES
An acceptance of an offer under an off-market bid must comply with any applicable regulations made under s
653A.
If an off-market bid is made for securities that a person who is able during the offer period to give good title to a
parcel of those securities, and has not already accepted an offer under the bid for those securities, that person may
accept as if an offer on terms identical with the other offers made under the bid had been made to that person in
relation to those securities: s 653B(1)(a).
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OTHER ACTIVITIES DURING THE BID PERIOD
12.1 Disposal of dispose of any securities in the bid class during the bid period
The bidder must not dispose of any securities in the bid class during the bid period: s 654A(1). This does not
apply to a disposal of securities by the bidder if someone who is not an associate of the bidder makes an offer, or
improves the consideration offered, under a takeover bid for securities in the bid class after the bidder’s statement
is given to the target, and the bidder disposes of the securities after the offer is made or the consideration is
improved: s 654A(2).
12.2 Disclosures about substantial shareholdings in listed companies
During the bid period, substantial shareholding notices that need to be lodged under s 671B must be lodged by
9.30 am the next business day (rather than the usual two business days): s 654B.
12.3 Disclosures about substantial shareholdings in unlisted companies
A bidder making a bid for securities of an unlisted company must give the target a notice stating the bidder’s
voting power in the target if, at a particular time during the bid period, the bidder’s voting power in the target
rises from below a percentage in the following list to that percentage or higher:
(a) 25 per cent;
(b) 50 per cent;
(c) 75 per cent;
(d) 90 per cent (see s 654C(1)).
The notice must be given as soon as practicable, and in any event within two business days after the rise in voting
power occurred: s 654C(2). The target must make the notice available at its registered office for inspection
without charge by any holder of bid class securities during the bid period. The target must lodge the notice with
ASIC: s 654C(4).
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ASIC’S POWER TO EXEMPT AND MODIFY
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ASIC may exempt a person from a provision of Chapter 6 or declare that the chapter applies to a person as if
specified provisions were omitted, modified or varied as specified in the declaration. An exemption may apply
unconditionally or subject to conditions: s 655A. The Takeovers Panel has power to review the exercise
by ASIC of its powers under this section: s 656A(1).
In deciding whether to give the exemption or declaration, ASIC must consider the purposes of the chapter as set
out in s 602: s 656A(2). ASIC must give to each person whose interests are affected by a decision under s 655A a
notice of the making of the decision, and of the person’s right to have the decision reviewed by the Panel: s
655B(1).
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THE TAKEOVERS PANEL
14.1 Review of ASIC decisions: s 655A & s 673
The Takeovers Panel may review a decision of ASIC under s 655A, or a decision of ASIC under s 673 in relation
to securities of the target of a takeover bid during the bid period: s 656A(1).
An application to the Takeovers Panel for review of the decision may be made by any person whose interests are
affected by the decision: s 656A(2). For the purpose of reviewing the decision, the Takeovers Panel may exercise
all the powers and discretions conferred on ASIC by Chapter 6 or Chapter 6C: s 656A(3).
The Takeover Panel must make a decision affirming the decision, varying the decision, or setting aside the
decision and making a decision in substitution for the decision under review or remitting the matter for
reconsideration by ASIC in accordance with any directions or recommendations of the Panel: s 656A(3). The
decision must published in the Gazette: s 656A(4).
If the Takeovers Panel varies an ASIC decision, or makes a decision in substitution for an ASIC decision, the
ASIC decision as varied, or the substituted decision, is taken for all purposes (other than the purposes of
applications to the Panel for review in accordance with this section) to be a decision of ASIC under s 655A. When
the Takeovers Panel’s determination on the review comes into operation, the ASIC decision as varied, or the
substituted decision, has effect, or is taken to have had effect, on and from the day on which the ASIC decision
has or had effect unless the Panel otherwise orders: s 656A(5).
Subject to s 656B, applying to the Takeovers Panel under s 656A for review of an ASIC decision does not affect
the operation of the decision, or prevent the taking of action to implement the decision: Corporations Act, s
656B(1). On an application by a party to the proceedings before the Takeovers Panel, the Takeovers Panel may
make an order staying the whole or a part of the decision: s 656B(2)(a). If an order is made in an urgent case
without giving a reasonable opportunity to ASIC to make submissions (as required by s 656B(3)(a)), the order
does not come into operation until a notice setting out the terms of the order is served on ASIC: s 656B(4).
14.2 Declaration of unacceptable circumstances: s 657A
The Takeovers Panel may declare circumstances in relation to the affairs of a company to be unacceptable
circumstances, whether or not there is a contravention of the Corporations Act: s 657A(1). A declaration can only
be made if it appears to the Takeovers Panel that the circumstances are unacceptable, having regard to the effect
of the circumstances on the control, or potential control, of the company or another company; or the acquisition,
or proposed acquisition, by a person of a substantial interest in the company or another company. Circumstances
may be unacceptable because they constitute, or give rise to, a contravention of a provision of Chapter 6, 6A, 6B
or 6C: s 657A(2).
For example, in RE VILLAGE ROADSHOW LTD 02 (2004) 22 ACLC 1332, [2004] ATP 12, the Takeovers Panel
stated that a buy-back could lead to unacceptable circumstances where the holders of ordinary shares did not all
have reasonable and equal opportunities to participate in the benefits accruing to some shareholders under the
buy-back.
The Takeovers Panel may only make a declaration or decline to make a declaration of unacceptable circumstances
if it considers that doing so is not against the public interest after taking into account any policy considerations
that the Panel considers relevant: s 657A(2). It must have regard to the purposes of Chapter 6 (see s 602); any
other provisions of Chapter 6; the rules made under s 658C, and the matters specified in regulations made for the
purposes of s 195(3)(c) of the ASIC Act. The Panel may also have regard to any other matters it considers
relevant. In having regard to the purpose set out in s 602(c) in relation to an acquisition, or proposed acquisition,
of a substantial interest in a company, body or scheme, the Panel must take into account the actions of the
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directors of the company or body or the responsible entity for a scheme (including actions that caused the
acquisition or proposed acquisition not to proceed or contributed to it not proceeding): s 657A(3).
The Takeovers Panel must give interested parties the opportunity to make submissions before making a
declaration (i.e. each person to whom a proposed declaration relates; each party to the proceedings; and ASIC): s
657A(4). The Takeovers Panel can only make a declaration under s 657A within three months after the
circumstances occur, or one month after the application under s 657C for the declaration was made, whichever
ends last. The court may extend the period on application by the Panel: s 657B.
The Takeovers Panel may make an order under subs 657A(2) if it has declared circumstances to be unacceptable
under s 657A. It must not make an order if it is satisfied that the order would unfairly prejudice any person. The
Takeovers Panel must give certain parties (each person to whom a proposed order relates, each party to the
proceedings and ASIC) an opportunity to make submissions before an order is made: s 657D(1).
14.3 Order requiring compliance with Corporations Act
The Takeovers Panel may make any order (including a remedial order but not including an order directing a
person to comply with a requirement of Chapter 6, 6A, 6B or 6C) that it thinks appropriate to protect the rights or
interests of any person affected by the circumstances: s 657D(2)(a).
The Takeovers Panel can make an order to ensure that a takeover bid or proposed takeover bid in relation to
securities proceeds (as far as possible) in a way that it would have proceeded if the circumstances had not
occurred: s 657D(2)(b). The Takeovers Panel can specify in greater detail the requirements of an order: s
657D(2)(c).
The Takeovers Panel can determine who is to bear the costs of the parties to the proceedings before the Panel:
s 657D(2)(d). An order may be made regardless of whether the Takeovers Panel has previously made an order in
relation to the declaration. The Takeovers Panel may also make any ancillary or consequential orders that it thinks
appropriate: s 657D(2). The Takeovers Panel may vary, revoke or suspend an order. Before doing so, it must give
an opportunity to make submissions in relation to the matter to each person to whom the order is directed, each
party to the proceedings in which the order was made, and ASIC: s 657D(3).
The Takeovers Panel must give a copy of the order, and a written statement of its reasons for making the order, to
each party to the proceedings, each person to whom the order is directed if they are not a party, and ASIC. The
company must also be served with the order and the written statement of reasons where an order relates to
specified securities of a company. The Takeovers Panel must also publish the order in the Gazette. The order
takes effect as soon as it is made: s 657D(4).
The Takeovers Panel may make a remedial order (defined in s 9) that:
 declares that an exercise of the voting or other rights is disregarded: s 657D(5)
 cancels or declares voidable an agreement or offer relating to a takeover bid, or a proposed takeover bid
or any other agreement or offer in connection with the acquisition of securities or other relevant interests
in securities: s 657D(6).
14.4 Interim orders
The Takeovers Panel, or the president of the Takeovers Panel, may make an interim order (s 657D(2)), which
must not exceed two months (s 657E(1)), and which can be made even if there is no declaration or no application
for a declaration under s 657A.
14.5 Internal panel reviews
A decision of the Takeovers Panel under s 657C may be subject to an internal review by the Panel. An application
for an internal review may be made by any party to the proceedings, or ASIC: s 657EA(1), but the consent of the
president of the Panel must be obtained where the decision is not to make a declaration under s 657A or not to
make an order under s 657D or s 657E: s 657EA(2).
After conducting a review, the Takeovers Panel may vary the decision reviewed, set aside the decision reviewed,
or set aside the decision reviewed and substitute a new decision. In conducting the review, the Takeovers Panel
has the same power to make a declaration under s 657A, or an order under s 657D or s 657E, as it has when it is
considering an application under s 657C: s 657EA(4).
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14.6 References by courts
A court that is hearing proceedings in relation to a decision of the Takeovers Panel made on an application under
s 657C may refer the decision to the Takeovers Panel for review: s 657EB(1). After conducting a review, the
Takeovers Panel may vary the decision reviewed, set aside the decision reviewed, or set aside the decision
reviewed and substitute a new decision. The Panel has the same powers to make a declaration under s 657A, or an
order under s 657D or 657E, as it has when it is considering an application under s 657C: s 657EB(2).
14.7 Contravention of panel order
A person who contravenes an order made under s 657D or s 657E of the Corporations Act commits an offence of
strict liability: ss 657F(1) and (2).
If a person contravenes, or proposes to engage in conduct that would contravene, an order made by the Takeovers
Panel under ss 657D or 657E, the court may make any orders it considers appropriate to secure compliance. The
court may also make an order directing a person to do, or to refrain from doing, a specified act: s 657G(1). An
application for an order may only be made by ASIC, the president of the Takeovers Panel, a person to whom the
Takeovers Panel’s order relates, or a person who was a party to the proceedings: s 657G(2).
14.8 ASIC may publish report
ASIC may publish a report, statement or notice in relation to an application it has made to the Panel: s 657H(1).
The report, statement or notice must state that the application has been made, and name the company. The report,
statement or notice may be published in any way that ASIC thinks appropriate and need not be in writing: s
657H(3).
14.9 Frivolous or vexatious proceedings
If the Panel is satisfied that an application is made to it is satisfied that the application is frivolous or vexatious, it
may dismiss the application: s 658A(1)(a). If appropriate, the Takeovers Panel may direct that the person must
not, without leave of the Panel, make a subsequent application: s 658A(1)(b).
14.10 Evidentiary value of findings of fact
A finding of fact recorded in an order by the Panel, or a written statement of the Panel’s reasons, is proof of the
fact in the absence of evidence to the contrary: s 658C(1). A certificate signed by the president of the Panel that
states a finding of fact made in proceedings before the Panel is proof of the fact in the absence of evidence to the
contrary: s 658C(2).
14.11 Takeover Panel Rules
The president of the Panel may, after consultation with other members and considering the purposes of Chapter 6,
make rules not inconsistent with the Act or the Regulations, to clarify or supplement the operation of the
provisions of Chapter 6: s 658C(1). A rule must be in writing and published in the Gazette and given to the
minister and ASIC: s 658C(3). The minister may disallow the whole or part of a rule: s 658C(4). If there is an
inconsistency between a rule made under s 658C and an exemption given, or declaration made, by ASIC
under s 655A, the rule made under s 658C prevails to the extent of the inconsistency: s 658D. The court must
give the person against whom the order is sought, and any aggrieved person, an opportunity to be heard before
giving directions: s 658C(5). The court may give a direction only on application by ASIC, the president of the
Panel or an aggrieved person: s 658C(6).
Rules have also been made under s 195 of the ASIC Act to govern procedure in Takeovers Panel proceedings.
The rules ensure that, wherever possible, decisions of the Takeovers Panel are made on written submissions and
evidence. Material can be sent electronically to the Takeovers Panel.
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COURT POWERS
Sections 659B and 659C make the panel the main forum for resolving disputes about a takeover bid during the
bid period: s 659AA. However, the panel may refer questions of law to the court: s 659A.
The only persons who may commence court proceedings in relation to a takeover bid or a proposed takeover bid
before the end of the bid period, are ASIC, a minister of the Commonwealth, State and Territory, as well as public
officers and bodies corporate which are established by law: s 659B(1).
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Where court proceedings have commenced in relation to a takeover bid or proposed takeover bid (or which would
have an effect on the progress of a takeover bid), the court may stay such proceedings until the end of the bid
period: s 659B(2).
Nothing in s 659B affects the jurisdiction of the High Court under s 75 of the Commonwealth Constitution: s
659B(5).
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