The Corporations and Markets Advisory Commission (CAMAC)
recently released its recommendations on a number of proposed
changes to the operation of members' schemes of
CAMAC has undertaken a broad review of the current provisions
dealing with members' schemes, formulating a number of
recommendations to improve the operation of the current scheme
CAMAC has recommended the following significant reforms:
Abolish the "headcount test" for companies with share
capital, with the voted shares test to remain (CAMAC acknowledged
the unworkability of a similar change for companies limited by
Allow incorporation of documents by reference and introducing a
"clear, concise and effective" requirement for
information included in a scheme document to make sure that
shareholders are able to readily understand these materials.
Give the court a range of powers to fix defects and otherwise
deal with scheme provisions that are currently inflexible,
including powers to:
approve a scheme even if the classes have been wrongly
constituted for the purposes of class voting;
order that a company's constitution be altered without
shareholders having to separately approve the alteration; and
dispense with some or all of the share capital reduction
provisions where appropriate.
Repeal the takeover avoidance provision in section 411(17)(a)
of the Corporations Act 2001.
Extend scheme provisions to cover managed investment schemes
(whether listed or unlisted).
Introduce a short-form merger procedure for companies within
wholly-owned corporate groups.
Importantly, CAMAC also recommended a broader review aimed at
harmonising liability and due diligence defences for information
disclosures generally. As part of this, CAMAC acknowledged there is
a case for the extension of the "due diligence defence"
to scheme documents. This would be a welcome step towards
consistency in protections afforded to directors in the context of
Should the Government adopt CAMAC's recommendations, the
current regime governing members' schemes will become more
flexible, ultimately increasing the attractiveness of schemes as an
alternative to takeovers.
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