Decision in Relation to Isis Communications

Release number


The Panel advises that it has declined to make a declaration of unacceptable circumstances in response to an application on behalf of the directors of Radly Corporation Limited (Receivers and Managers Appointed). The application related to an agreement on 14 June 2002, by the receivers of Radly to sell 19.9% of the shares in Isis Communications Ltd, in equal shares to Investec Australia Pty Ltd and MGB Equity Growth Pty Ltd. Radly held 43% of the shares in Isis. The application was made on 27 June, 2002.

The Panel considered that the wording of the agreement may have caused a contravention of the Corporations Act by giving MGB and Investec a relevant interest in the remaining 23% of Isis held by the receivers. One clause of the agreement purported to require the receivers not to vote in favour of any resolutions that would materially alter the nature of Isis for the two week period between signing and completion of the sale of the 19.9% to MGB and Investec. The Panel was advised that the problem in the wording of the clause was noticed at the eleventh hour but the agreement was signed because of impending commercial deadlines. It nonetheless seems inappropriate to the Panel for the contract to have been signed in the face of a concern of this nature. However, the Panel received evidence, and accepted it, that the clause had no effect, and was never capable of doing so, as no meetings were, or could be, held during that period.

A further clause required the receivers to use their best endeavours to cause Isis to convene a meeting of to approve any further business, but it imposed no obligation on the receivers' voting or disposal of the remaining 23%.

Notwithstanding the Panel's concerns about the possible contravention of the Corporations Act resulting from the agreement, the Panel did not consider that the evidence supported a conclusion that the agreement had caused unacceptable circumstances.

Similarly, the Panel received evidence, and accepted it, that the agreement was never intended to restrict, and at no time restricted, the receivers' ability to dispose of the remainder of the Isis shares, nor was it intended to create or evidence any association between the parties.

The Panel reviewed the other elements of the agreement and the other aspects of the matter and decided that there were no other issues or circumstances the acceptability of which it should consider.

The Panel notes that the parties to the agreement, when it was suggested that parts of the agreement might be unacceptable, voluntarily deleted the relevant clauses. While not affecting its decision, the Panel welcomes the willingness of the parties to remove possible causes of contention.

The sitting Panel for the application is Alison Lansley (sitting President), Jeremy Schultz (sitting Deputy President) and Marian Micalizzi.

The Panel will advise when its reasons are published on its website.

Nigel Morris
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3501