Decision In Relation to Anzoil NL

Release number


The Panel advises that it has decided to make a declaration of unacceptable circumstances in relation to an application received from Anzoil NL on 29 October 2002. The application sought a declaration of unacceptable circumstances and interim and final orders in relation to an alleged contravention by IGM Group Limited and Capersia Pte Ltd of section 606 of the Corporations Act (Act) and an alleged association with either or both of IMG and Capersia by another shareholder of Anzoil, Dormley Pty. Ltd.

The Panel has decided the following:

  • IGM (22.3%) and Capersia (3.3%) became associates of one another, and each acquired a relevant interest over each other's shares in Anzoil (in total 25.6%) in breach of section 606 of the Act, by entering into a Share Sale Agreement on 23 August 2002. This is because completion under the Share Sale Agreement was conditional on a nominee of Capersia being appointed to the Anzoil board, with both parties being required to use their best endeavours to satisfy the condition;
  • Although the parties to the Share Sale Agreement purported to terminate the agreement, it appears to the Panel that they maintained the association formed on 23 August in seeking to change the composition of the board of Anzoil;
  • Dormley became associated with one or both Capersia and IGM with the intention of influencing the composition of the board of Anzoil.

Given that the requisitions and nominations by IGM and Capersia for changes to the board of Anzoil were initiated as part of the agreement which generated the unacceptable circumstances, and that Dormley became associated with one or both of Capersia and IGM, the Panel considers that none of Dormley, IGM or Capersia ought to nominate persons for the forthcoming Annual General Meeting of Anzoil (the AGM). The Panel therefore orders that:

  1. those requisitions and nominations should not proceed;
  2. Anzoil may not accept any nominations or act on any requisitions for appointment to the board of Anzoil by IGM, Capersia, Dormley, and any of their respective related bodies or officers (the Associated Parties), unless such nomination or requisition is received after the AGM or 20 December 2002, whichever is the earlier (the Relevant Date); and
  3. Anzoil may not appoint as a director at or before the Relevant Date any person who has, at any time before the date of the order, been nominated for appointment to the board of Anzoil by any of the Associated Parties.

The Panel wishes to make it clear that these orders are a reflection on the process of arriving at the nominations to which the application related, rather than any reflection on the integrity of the persons nominated.

The Panel also notes that:

  • The AGM of Anzoil should proceed as quickly as possible, and the Panel will not make any orders delaying it further;
  • Divestiture of shares or voting rights appears too severe an order by the Panel in the circumstances of this matter, and the Panel has not granted any orders of this nature sought by Anzoil;
  • Parties are free to nominate persons for the board of Anzoil at future meetings of Anzoil after the AGM;
  • IGM, Capersia, Dormley and their associates are free to vote at the AGM;
  • The orders will last until the AGM or 20 December 2002, whichever is earlier.

Where parties enter into transactions for the acquisition of a significant interest in shares in a listed Australian company and control of the company is clearly a reason for entering the transaction, inadvertence or lack of knowledge of Australian takeovers law is unlikely to be an acceptable excuse for a breach of the law. The Panel is concerned that neither IGM nor Capersia, when confronted with the nature of the breach committed, was prepared to accept that the breaches had occurred, or appeared to consider them material. Accordingly, the Panel was unable to place the weight that the parties may have wished it to, on the statutory declarations provided to it in response to its initial discussion of resolution of the proceedings with the parties.

The Panel further noted that in these circumstances, that the fact that appointment to the Anzoil board of a Capersia nominee was a condition to the completion of the contract did not avoid the parties becoming associates of each other and acquiring voting power over each others' shares.

ASIC has published a Policy Statement (PS 128) to assist shareholders who collectively own more than 20% coming together to discuss and decide on voting on corporate governance issues without breaching the law. However, the agreement between IGM and Capersia had all of the objectionable characteristics outlined in paragraph 6 of ASIC's Policy Statement, i.e.:

  • Capersia offered IGM a significant premium over the existing market price for the parcel of shares;
  • The agreement related to disposal of a material parcel of shares;
  • IGM was bound to vote its shares in support of the Capersia board nomination; and, in addition,
  • The agreement and its terms were not clearly disclosed to the market.

The Panel has also advised parties that while they are free to discuss their voting intentions, and are free to propose changes to the Anzoil board going forward, they have been given clear guidance as to what will be unacceptable circumstances. Parties are free to bring any further application to the Panel if material evidence of any further unacceptable circumstances arise in relation to the affairs of Anzoil.

The sitting Panel for this application is Carol Buys (sitting President), Kevin McCann and Celia Searle.

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