Listed companies should brace themselves for an increase in
low-ball unsolicited offers to their Mum & Dad shareholders
before Parliament shuts down a loophole later in the year.
The Bill, designed to deny access to share registers for the
purpose of making unsolicited offers at below market value, was
unfortunately not passed into law before Parliament rose for the
Winter recess. With Parliament not due to meet again until 24
August (even if there is no election in the interim), the Bill is
unlikely to become law for several months.
This effectively gives low-ball offerors a window of opportunity
in which to get access to share registers. They may also be
encouraged by the recent decline in the stock market.
What can be done in the interim?
Companies that wish to protect their shareholders against
low-ball offers should contact us as soon as they are aware that a
predator is sniffing around. A program of legal vigilance and
shareholder education can then be devised to minimise the impact of
any unsolicited offer and to make life difficult for a
Although low-ball offers are not illegal, they are very tightly
regulated by the law.
At the very least, therefore, companies should insist that those
who intend to make a low-ball offer comply strictly with the
existing requirements of the Corporations Act - in relation to both
access to the share register and subsequent offers to
It is also advisable to inform shareholders of the downsides of
accepting a low-ball offer.
The company should also alert ASIC. Low-ball offers are a
serious concern to the corporate regulator. It has intervened on
numerous occasions when shareholders have been targeted in
this way. ASIC is also prepared to issue public warnings to retail
shareholders about low-ball offers.
In short, although low-ball offers will remain a fact of life -
and may increase - during the next few months, companies can take a
number of steps to minimise their effects and therefore protect the
interests of small shareholders.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).