On 21 June 2013, the Australian Securities and Investments
Commission (ASIC) released four new Regulatory Guides, which update
and consolidate the bulk of its guidance about takeovers. The new
Regulatory Guides cover:
takeover bids (Regulatory Guide 9)
exceptions to the 20% takeover threshold (Regulatory Guide
relevant interests and substantial holdings (Regulatory Guide
compulsory acquisitions and buy-outs (Regulatory Guide
They are designed to make ASIC guidance in this important area
of corporate regulation more transparent and relevant for the
market. The new Regulatory Guides replace 17 former Regulatory
Guides and are a welcome clarification of ASIC's approach to
the regulation of takeovers.
In conjunction with the release of these new Regulatory Guides,
ASIC has issued 11 new class orders which modify relevant
provisions of the Corporations Act 2001 (Corporations
The key points arising out of the updated guidance are outlined
ASIC has provided updated and more detailed guidance about how a
relevant interest in securities may arise, including where a person
has a "negative" power over disposal or voting rights,
and where a relevant interest is derived through a chain of bodies
More detail is provided about the application of the
"relevant interest" concept in specific scenarios, such
as securities lending arrangements and call and put warrants.
Substantial Holding Notices
ASIC has provided detailed and welcome guidance about the
requirements for completing and filing substantial holding notices.
Where multiple agreements contribute to a substantial holding
(being a relevant interest of 5% or more), a copy of all documents
setting out the terms of each agreement must accompany the
Regulatory Guide 5 includes a warning that the obligation to
disclose full details of the relevant arrangements cannot be
avoided by entering into preliminary agreements which omit
substantive details of the overall transaction that have been
negotiated. This is on the basis that a formal written agreement
will be finalised after the immediate substantial holding
disclosure requirement has been discharged.
Exceptions to the 20% Takeover Threshold
Regulatory Guide 6 includes policy guidance from ASIC:
confirmation that it may give relief for a substantial holder
to rely on the 3% creep exception, but only where the holder has
been diluted to below 19% within the preceding six months and did
not have the opportunity to participate in the diluting issue of
details on the factors ASIC will consider in determining
whether a rights issue or underwriting arrangement may constitute
unacceptable circumstances, including where the arrangement is
designed to enable a holder or underwriter to obtain control of a
ASIC has provided more guidance about how it administers the
prohibition on collateral benefits in takeover bids, including:
a modification to the Corporations Act so that the prohibition
on collateral benefits applies during the bid period (rather than
the offer period)
guidance about ASIC's approach to determining whether a
benefit is "likely to induce" acceptance of a bid.
Disclosure of the Bidder's Intentions
ASIC has provided further detail about the requirement to
disclose a bidder's intentions, including the extent to which
alternative intentions must be disclosed, and the need to consider
all potential outcomes of the bid.
ASIC has issued new guidance and class order relief on the use
of acceptance facilities, confirming that a bidder does not acquire
a relevant interest in securities as a result of a holder tendering
into an acceptance facility. Bidders will also be able to establish
acceptance facilities that are only open to specified holders (such
as institutional investors) where the bid is conditional.
There is also guidance on case-by-case relief that ASIC may
offer for acceptance facilities that do not meet the class order
Subject to certain conditions, ASIC has extended its policy to
provide relief for joint bids structured as schemes of arrangement
on conditions equivalent to those imposed on joint bids structured
as takeovers .
ASIC has issued class order relief for takeover bids so that a
bidder need not disclose the details of each accepting target
holder, and attach copies of the bidder's statement, for each
substantial holding notice lodged.
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.
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