David Bushy, Boardroom Radio
Ron Smooker, Partner, Corporate Advisory / M&A, Clayton Utz
Ron Smooker explains the new restrictions on accessing company share registers to Boardroom.
To listen to the radio interview, please click here
DAVID BUSHBY We're speaking with Ron Smooker. He's a partner in the Corporate Advisory and M&A Practice Group for Clayton Utz in Melbourne. Welcome Ron.
RON SMOOKER Good afternoon
DAVID BUSHBY Ron new laws have just been tabled in Parliament to restrict access to share registers in order to crack down on the use of these registers to make low-ball offers to buy shares from unsuspecting retail investors. Can you run us through the changes?
RON SMOOKER Look there's been a long-standing concern about the misuse of personal information on company registers, not just restricted to the use for low-ball offers.
The principal effect of the amendments to the Corporations Act are to make it clear that there are legitimate and illegitimate purposes for gaining access to the registers.
An illegitimate purpose will be things like a charity using the register to look for donations, people accessing the registers for information about the personal wealth of the shareholders, brokers using it as a means to solicit clients, and of course the making of offers to purchase shares other than in a takeover.
The way the new regime will work is the person seeking access to the register has to lodge an application with the company setting out, amongst other things, the purpose for which they want to have a look at the register. If this purpose includes an illegitimate purpose then the company can refuse access to that person.
DAVID BUSHBY So for those whose job it is to grant or deny access to those registers, how does this affect that decision process? How do they make that call?
RON SMOOKER Yeah look, the job suddenly got a bit more difficult.
Currently, they've got a simple decision tree. If somebody lodges an access request and they pay the fee then the company has to give them access to the register of members.
The new provisions introduced some subjectivity and some conditionality around that. They have to have a good look at the application, work out what purpose the access is being sought for and if it's an legitimate purpose they then have to make the decision as to whether or not to grant access.
The companies and the people that make these decisions will need to have some fairly clear guidelines and there is going to be some serious training needed so that the staff actually can make the right decisions because obviously if they make the wrong decision there's always the possibility of litigation.
DAVID BUSHBY And Ron just finally could these restrictions pose any difficulties from a takeovers perspective?
RON SMOOKER As a matter of law, no because access to the registers for the purposes of takeover is a legitimate purpose.
Of course, there probably are some practical difficulties. A bidder whose looking to make a hostile bid for a company may not be that comfortable with disclosing to either the company or the world that the reason they're looking at the register is so they can make the takeover bid.
There's going to have to be some deft footwork to get around that but it really is a tactical issue that just needs to be borne in mind.
DAVID BUSHBY Indeed some great insights there. We'll leave it there for now and thank you again for your time today Ron.
RON SMOOKER It's a pleasure, thank you.
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