The Panel has made a final decision on the application brought by Reliable Power Inc in relation to Reliable's off market cash takeover bid for Pinnacle VRB Limited and the announcement by Pinnacle on 29 March 2001, that it has granted a licence to Vanteck (VRB) Technology Corp to market, sell, manufacture and utilise Pinnacle's Vanadium Redox Battery technology within Canada, the United States, Central and South America (the Vanteck Transaction).
The Panel decided not to make a declaration or orders in relation to the Vanteck Transaction. It made a similar decision in relation to a further transaction announced on 11 April 2001, that Pinnacle has granted Int-A-Grid (UK) Ltd similar, sole and exclusive licence for the territories of Europe, Russia and the Middle East (the Int-A-Grid Transaction).
The Panel decided that because the Transactions were entered into after the announcement of Reliable's Bid and may trigger a defeating condition in the Bid, they may have the effect of depriving Pinnacle shareholders of access to benefits which they might have received under Reliable's Bid. For this reason, the Panel decided that the Transactions should be subject to approval by Pinnacle's shareholders.
The Panel based its decision on the policy of paragraph 602(c) of the Corporations Law which says that shareholders must have a reasonable and equal opportunity to share in any benefits accruing to them under a takeover bid. The Panel took the view that, during Reliable's Bid, the rights of Pinnacle's shareholders to determine the outcome of the Bid should prevail over the rights and duties of Pinnacle's directors to manage this aspect of Pinnacle's business. Given that the Transactions may result in Reliable ending its Bid, the Panel concluded that it was Pinnacle's shareholders who should decide whether the Transactions should proceed.
The Panel made this decision in response to the facts of this matter. The policy underlying this decision will need to be refined to make its application clear in other instances. In making this decision, the Panel has, however, has been careful to recognise that companies should not be paralysed simply due to the existence of a takeover bid.
The Panel decided to make no declaration or orders because:
- Pinnacle decided to convene a general meeting to seek shareholder ratification of the Vanteck and Int-A-Grid Transactions; and
- The sitting Panel in this matter did not want to impose a principle retrospectively on Pinnacle that had not been explicit at the time that Pinnacle's directors decided to enter into the Transactions.
The sitting Panel in this matter was Marian Micalizzi (sitting President), Louise McBride (Deputy President) and Robyn Ahern.
Director, Corporations and Securities Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3501