On 7 September 2006 the Federal Treasurer announced the release of an exposure draft of the Corporations Amendment (Takeovers) Bill 2006 (the Bill). The Bill contains changes to the Corporations Act 2001 (Act) intended to bolster the powers of the Takeover Panel (the Panel).
The proposed reforms are aimed to address concerns about the Panel's powers and jurisdiction under the Act. Concerns were raised following recent Federal Court decisions in respect of Swiss commodities trader, Glencore International AG, and its stake in Austral Coal, the subject of a bid by the Centennial Coal Company. The concerns are that the Panel will not be able to effectively perform its role, as intended by Federal Parliament, as a result of the interpretation of the Act in the Glencore decisions.
Some of the key outcomes of the Bill, if enacted, include:
introduction of definition of "substantial interest" to enable the Panel to deal with new tactics used in takeovers
allowing the Panel to declare circumstances to be unacceptable having regard to the purposes of the takeovers rules as set out in s602 of the Act (ie. that the acquisition of control over shares takes place in an efficient, competitive and informed market; that target shareholders and directors have reasonable time and enough information to consider the proposal; and that all holders of shares have reasonable and equal opportunity to participate in benefits accruing to the holders through any proposal under which a person would acquire a substantial interest in the target)
enabling the Panel to take action to prevent likely future effects of circumstances brought before it, rather than having to wait for the effects to have occurred, by allowing the Panel to take account of what the Panel is satisfied to be the past, present or likely future effects of circumstances
enabling the Panel to protect the rights and interest of persons affected by unacceptable circumstances more effectively by allowing the Panel to make orders it deems appropriate, where the Panel is satisfied that such rights or interests have been, are being, will be or are likely to be affected by unacceptable circumstances
introduction of time limits for review proceedings so that the time limit for the Panel to make a declaration when reviewing the decision of another Panel starts from the time the application for review is filed, not from the time the original application is filed.
The closing date for comments on the Bill is 5 October 2006.
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