Summary of Major Guidance Notes The Takeovers Panel

Summary of major Guidance Notes

The Panel publishes a number of Guidance Notes. The more important of these include Guidance Notes 1, 4, 7, 12, 17, 18, 20 and 21. Summaries of these guidance notes are set out below.

Guidance Note 1: Unacceptable Circumstances

Guidance Note 1 is intended to assist market participants to understand the Panel's approach to making a declaration of unacceptable circumstances. It provides an overview of the Panel's powers and the circumstances in which the Panel may declare circumstances unacceptable. See Guidance Note 1.

Guidance Note 4: Remedies General

Guidance Note 4 sets out the Panel's approach to remedies generally. It sets out the types of orders the Panel can make if it makes a declaration of unacceptable circumstances and discusses interim orders. See Guidance Note 4.

Guidance Note 7: Lock-up Devices

Guidance Note 7 outlines the Panel's approach to lock-up devices (or deal protection measures), including break fees, no-shop, no-talk and other restriction agreements and asset lock-ups. It applies in control transactions, including takeovers. The policy bases for this note are that lock-up devices may

  • inhibit the acquisition of control over voting shares taking place in an efficient, competitive and informed market or
  • deny holders of the relevant class of shares a reasonable and equal opportunity to participate in the benefits of a proposal under which a person may acquire a substantial interest.

See Guidance Note 7.

Guidance Note 12: Frustrating Action

Guidance Note 12 outlines the Panel's approach to "frustrating actions". A frustrating action is an action by a target, whether taken or proposed, by reason of which a bid may be withdrawn or lapse or a potential bid is not proceeded with. A ‘potential bid' is a genuine potential bid communicated to target directors publicly or privately which is not yet a formal bid under Chapter 6.

See Guidance Note 12.

Guidance Note 17: Rights Issues

Guidance Note 17 was prepared to assist market participants understand the Panel's approach to rights issues which have, or are likely to have, an effect on control or the acquisition of a substantial interest in the company. In considering whether a rights issue gives rise to unacceptable circumstances, the Panel looks at the effect of the rights issue against the principles in s602.

See Guidance Note 17.

Guidance Note 18: Takeover Documents

Guidance Note 18 sets out the Panel's approach to takeover documents. It sets out the general circumstances that the Panel may consider to be unacceptable in relation to "wrap" information1 and broker valuations in takeover documents. See Guidance Note 18.

Guidance Note 20: Equity Derivatives

The Panel's approach to disclosure of equity derivatives is set out in Guidance Note 20. It includes measures that may help reduce the risk of unacceptable circumstances in relation to equity derivatives. The Panel recognises that there is a significant market for equity derivatives and does not want to interfere where equity derivatives are not used in ways that under the policy of chapter 6. See Guidance Note 20.

Guidance Note 21: Collateral Benefits

The Panel's approach to collateral benefits is contained in Guidance Note 21. Unacceptable circumstances will be likely to exist whenever a bidder provides a security holder something of value which it does not offer to other security holders. The Guidance Note articulates factors that the Panel will take into account in considering collateral benefits.

See Guidance Note 21.


1 The marketing section at the front of a bidder's statement.