The Australian Takeovers Panel Two Years On

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The Australian Takeovers Panel Two Years On

2 May 2002

The Australian Takeovers Panel - two years on

History of the Panel

  • 1969 Eggleston Committee 2nd Interim Report
  • 1981 CASA - NCSC section 60 power
  • 1991 Corporations Law
    • Panel power to declare unacceptable conduct or acquisition
  • 2000 CLERP
    • section 659B Dispute resolution role

History of the panel

Volume

  • NCSC - 11 s60 declarations 1981-1990
  • ASC - 4 applications to the Panel 1991-2000
  • Post Clerp
    • 2000 - 22
    • 2001 - 30
    • 2002 - 5
  • Comparison with court volume?

Volume

Philosophy of the Panel

  • What?
    • "the main forum for resolving disputes about a takeover until the bid period has ended" (s 659AA)
    • Commercial resolution of disputes
    • Finding out what's wrong and fixing it
    • Getting a takeover back on track
      • in real time

Philosophy of the Panel

Philosophy of the Panel

  • Why?
    • Flexibility, speed & certainty
    • Avoid tactical litigation and legalism
    • Reduce costs

And

  • Raise standards of documentation & behaviour generally
  • Ensure clarity and equality of information as between shareholders and in the marketplace
  • Encourage equal treatment of shareholders

Philosophy of the Panel (continued)

  • How?
    • Primary body dealing with takeover matters during a bid (s659B)
    • Court proceedings can only be initiated by ASIC or Government during a bid (s659B)
    • Court can stay its proceedings during a takeover bid (s659B(2))
    • Only money damages awarded after Panel declines application (s659C)
    • Review ASIC decisions (s656A)

Philosophy of the Panel

Philosophy of the Panel (continued)

The Panel can make

  • a declaration of unacceptable circumstances (s657A)
  • a wide range of orders (s657D & s657E)
  • rules to clarify or supplement Chapter 6 (s658C)
  • procedural rules for its proceedings (s195 ASIC Act)
  • decisions on ASIC modifications

Powers of the Panel

Powers of the Panel

Unacceptable Circumstances (s657A)

  • The circumstances must
    • relate to the "affairs of the company"
    • be unacceptable
      • having regard to their effect on
        • the control, or potential control, of that company or another company or
        • an acquisition of a substantial interest in that company or another company; or
      • because they constitute or give rise to a contravention of Chapter 6, 6A, 6B or 6C

Unacceptable Circumstances

  • Focus is first upon circumstances not first on conduct
    • Panel will look to the effects of the circumstances and may later look at the intention or conduct of the person who caused the circumstances to arise
  • Focus is not primarily on legality
  • Focus on Eggleston Principles
  • Panel must consider the public interest

Unacceptable Circumstances (s657A)

Unacceptable Circumstances (continued)

Who can apply?

  • Previously only ASIC 4
  • Now, any interested person
    • Bidder 24
    • Rival Bidder 11
    • Target 16
    • Shareholders 3
    • ASIC 3
    • Other 1

Who can apply?

Current Members Jan 2002 (45)

Current members Jan 2002

Executive

  • Director
  • Counsel
  • Legal Secondees
  • Office Manager
  • Support, Policy, Liaison, Preparation
  • Not delegates
  • Lvl 47, 80 Collins St, Melbourne 3000

Executive

Panel Matters 2000 - (22)

  • Infratil/AIF Nos. 1&2
  • Email/Smorgon Nos 1-3
  • IAMA/Futuris
  • Pinnacle No 1
  • Brickworks/GPG Nos 1&2
  • QCT/Metcoal
  • Advance/Mirvac
  • St Barbara/Taipan
  • Ashton/De Beers
  • Taipan 1 - 6
  • Pinnacle 2
  • Realestate.com.au
  • Taipan 7

Panel matters 2000

Panel Matters 2001 - (30)

  • Pinnacle 03
  • Taipan 8
  • Taipan 9
  • Taipan 10
  • Vincorp
  • Pinnacle 04
  • Namakwa 01
  • Pinnacle 05
  • Namakwa 02
  • Taipan11
  • Pinnacle 06
  • Pinnacle 07
  • Alpha
  • Namakwa 03 & 04
  • Pinnacle 08
  • ALG
  • Bigshop 01, 02, 03
  • Pinnacle 09 & 09(b)
  • Pinnacle 10 & 11
  • Normandy 1 - 6
  • Broncos 01 & 2

Panel Matters 2001

Panel Matters 2002 - (6)

  • Broncos 03
  • Normandy 07
  • Focus Technologies
  • Broncos 04
  • Pasminco
  • Precious Metals Australia
  • Ballarat Goldfields

Panel Matters 2002

Analysis - Type of Applications

  • Review of ASIC Decisions 6
    • Affirmed 3 - Overturned 2 - Current 1
  • Unacceptable Circumstances 41
  • Review of Panel Decisions 9
    • Affirmed 6 - Varied 3
  • ASIC Referral 2

Analysis - Type of Applications

Grounds for Unacceptable Circumstance Applications

  • efficient competitive informed market - 24
  • identity of acquirer - 1
  • reasonable time to consider - 1
  • adequate information in documents - 26
  • equality of opportunity - 6
  • Other - 10

Grounds for Unacceptable Circumstance Applications

Analysis - Outcomes

Analysis - Outcomes

  • Application
  • Convene three members
    • conflicts, availability, experience, etc
  • Review - Reg 20 threshold
  • Brief - Panel defines the landscape
  • Submissions & Rebuttals - Parties
  • Further questions from Panel
    • Conference, Supplementary brief
  • Decision - Reasons
  • Orders
  • Post Mortem

Process

Process

  • Published
    • 1 Unacceptable Circumstances
    • 2 Review of Decisions
    • 3 Making Rules
    • 4 Remedies and Enforcement
    • 5 Restraining Documents
    • 6 Break Fees
    • Procedural Rules
  • Current Work
    • Forecasts
    • Costs
    • Frustrating Action

Policy

  • Conflicts
  • Rulings
  • Funding Arrangements

Policy

  • Web page containing
    • policies
    • procedures
    • decisions
  • Post mortems after matters to get feedback
  • Panel workshops and discussions to ensure consistency
  • Liaison with practitioners

Panel Initiatives

Panel Initiatives

Implications of Panel for Takeovers

  • Eggleston focus
    • if strictly legal focus - you just don't get it
  • No strategic delay
  • More negotiating with bidder/target
  • Commercial resolutions
  • Will require better disclosure
  • No draconian penalties
  • Perhaps more schemes of arrangement

Implications of Panel for Takeovers

Future challenges for the Panel

  • Consistency
    • Panel days, three members, post mortems
  • Workload
  • Constitutional challenge
  • Jurisdictional interrelation with courts
    • chipping away
  • Power
  • Scope

Future challenges for the Panel

Conclusion

  • To be fully effective the Panel must enjoy the support of the whole business community - Senator Chapman 12/5/99
  • The Panel will be a test of the goodwill of the business community in Australia in taking some responsibility for its own actions - Mr Joe Hockey MP 3/6/99

Conclusion

  • Name Organisation Location
  • Mr Simon McKeon, Macquarie Bank Limited Melbourne (President)
  • Ms Robyn Ahern Company Director Perth
  • Ms Ilana Atlas Westpac Banking Corporation Ltd Sydney
  • Ms Eliz. Alexander AM PricewaterhouseCoopers Melbourne
  • Justice Bob Austin Supreme Court of NSW Sydney
  • Dr Annabelle Bennett SC Sydney Bar Sydney
  • Mr Michael Burgess University of South Australia Adelaide
  • Mr Tony Burgess Deutsche Bank Melbourne
  • Ms Carol Buys AMP Consulting P/L Sydney
  • Mr Denis Byrne Denis Byrne & AssociatesP/L Brisbane
  • Mr Peter Cameron Credit Suisse First Boston Sydney
  • Ms Luise Elsing Australian Stock Exchange Sydney
  • Ms Kathleen Farrell Freehills Sydney
  • Mr David Gonski Morgan Stanley Dean Witter Sydney

Members

Members

  • Ms Teresa Handicott Corrs Chambers Westgarth Brisbane
  • Mr Brett Heading McCullough Robertson Brisbane
  • Ms Meredith Hellicar Company Director Sydney
  • Mr Braddon Jolley Freehills Sydney
  • Mr John King NZ Takeovers Panel Auckland
  • Dr Tro Kortian University of Sydney Sydney
  • Ms Alison Lansley Mallesons Stephen Jaques Melbourne
  • Ms Irene Lee Company director Sydney
  • Mr Kevin McCann Allens Arthur Robinson Sydney
  • Ms Alice McCleary Deloitte Touche Tohmatsu Adelaide
  • Ms Marie McDonald Blake Dawson Waldron Melbourne
  • Ms Maria Manning Queensland Cotton Brisbane
  • Ms Louise McBride Delloitte Touche Tohmatsu Sydney
  • Ms Marian Micalizzi Company Director Brisbane
  • Mr Simon Mordant Caliburn Partnership P/L Sydney

Members

Members (continued)

  • Ms Robyn Pak-Poy Minter Ellison Adelaide
  • Mr Chris Photakis KPMG Corporate Finance P/L Sydney
  • Prof Ian Ramsay The University of Melbourne Melbourne
  • Mr Scott Reid JPMorgan Sydney
  • Ms Maxine Rich Consultant Sydney
  • Ms Fiona Roche Estates Development Co. Perth
  • Mr Trevor Rowe Salomon Smith Barney Sydney
  • Justice Kim Santow Supreme Court of NSW Sydney
  • Mr Jeremy Schultz Finlaysons Adelaide
  • Ms Jennifer Seabrook Gresham Partners Perth
  • Ms Celia Searle Wickham Chambers Perth
  • Mr Leslie Taylor Commonwealth Bank of Aust. Sydney
  • Mr Michael Tilley Merrill Lynch International Melbourne
  • Mrs Nerolie Withnall Company Director Brisbane
  • Ms Karen Wood BHP Billiton Melbourne
  • Mr Peter Young ABN-AMRO Sydney

Members

Members (continued)