The Panel advises that it has today published its reasons for decision in the first applications that it received in relation to the Colonial First State Property Trust Group (Colonial Funds).
The Panel advised on 12 September 2002 that it had accepted undertakings in relation to the proposal (Merger Proposal) for the merger of the Colonial Funds with the Commonwealth Property Office Fund (Commonwealth Fund) and the Gandel Retail Trust (Gandel Fund). The Panel said that on the basis of the undertakings it had decided not to make a declaration of unacceptable circumstances in response to applications by Mirvac Funds Ltd. (Mirvac) as the responsible entity for Mirvac Property Trust (Mirvac Fund) made on 29 August and 2 September 2002. It also decided not to vary the decision made by ASIC to grant a modification of Item 7 of section 611 (Item 7) of the Corporations Act (Act) to facilitate the Merger Proposal.
The Panel received undertakings from:
- the Responsible Entity for the Colonial Fund in relation to disclosure issues in the notice of meeting for the meetings proposed to be held in the Colonial Funds to consider the Merger Proposal; and
- unitholders associated with the Commonwealth Bank of Australia affirming their obligations to act in the best interests of the persons on whose behalf they hold or control the units, given the potential for conflict of interest that the related nature of the various fund management entities in the Merger Proposal generates.
The Panel did not accept the proposition put forward by Mirvac that the merger of the Colonial Funds with the Commonwealth and Gandel Funds should not proceed by way of resolutions under section 601GC and Item 7 of the Act. It also advised that it considered that the Merger Proposal as formulated had deficiencies, which were dealt with by the undertakings.
The Panel considered that there were some material deficiencies in the explanatory statement accompanying the notice of meeting which was sent to the unitholders in the Colonial Funds. Accordingly, the Panel invited the Colonial Responsible Entity to undertake to send a supplementary notice to unitholders in the Colonial Funds clarifying the issues of concern to the Panel. The Commonwealth Responsible Entity did so.
FUTURE POLICY / PRECEDENT VALUE OF THIS DECISION
The Panel noted that the issues raised in this application go to some fundamental questions as to the mechanism of mergers of Managed Investment Schemes by "Schemes of Arrangement". The Panel considers that these issues should be considered in a broader context than simply the facts of this application, and that the process of consideration should be open to public consultation. Accordingly, it will forward these issues to a working group to develop appropriate policy in this area. The Panel invited ASIC to make the working group a joint project. ASIC has agreed to participate in an initial scoping meeting to discuss the terms of reference of the proposed working group and to enable it to consider whether it is appropriate for ASIC to participate in such a group. The public policy process, combined with the special facts of this matter, will very likely limit the value of this decision as precedent.
The sitting Panel for the application is Professor Ian Ramsay (sitting President), Karen Wood (sitting Deputy President) and Jennifer Seabrook.
Director, Takeovers Panel
Level 47 Nauru House
80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3501