The recent Alinta and Australian Pipeline Limited decision of the Full Court of the Federal Court (the Court) has resulted in uncertainty as to the powers of the Takeovers Panel (the Panel) to adjudicate disputed matters between takeover parties.
Under the Corporations Act 2001 (Cth), the Panel can make declarations of ‘unacceptable circumstances’:
Regarding the control or potential control of a company, or the acquisition of a substantial interest (section 657A(2)(a)).
Regarding a contravention of the takeovers law (section 657A(2)(b)).
In the Alinta decision, the Court found that section 657A(2)(b) was invalid. Non-judicial bodies (of which the Panel is one) are not permitted to make decisions based on whether there has been a contravention of the law as that would amount to an exercise of judicial powers reserved for the courts and other judicial bodies.
The Court also discussed the operation of section 657A(2)(a), but did not have to decide whether this section was invalid, although a majority of the Court thought that it may be. The Panel’s view is that its powers under this section remain intact and it has advised applicants to frame applications within the terms of section 657A(2)(a) where possible. The contrary view is that the Panel’s powers under section 657A(2)(a) have also been materially affected by the Alinta decision such that the circumstances in which it can now adjudicate are severely limited.
The Government has flagged its intention to appeal the decision to the High Court, a process likely to take several months. In the meantime, the Panel’s powers have been compromised which may in turn affect the efficient regulation of takeovers in Australia.
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