Summary of major Panel guidance notes

The Panel publishes a number of Guidance Notes. The more important of these include Guidance Notes 1, 4, 7, 12, 17, 18, 19, 20 and 21. Summaries of these Guidance Notes are set out below.

Guidance Note 1: Unacceptable Circumstances

Guidance Note 1 is intended to assist market participants to understand the Panel's approach to making a declaration of unacceptable circumstances. It provides an overview of the Panel’s powers and the circumstances in which the Panel may declare circumstances unacceptable. The Panel aims to correct unacceptable circumstances as quickly and as cost-effectively as possible.

See Guidance Note 1.

Guidance Note 4: Remedies General

Guidance Note 4 sets out the Panel’s approach to remedies generally. It sets out the types of orders the Panel can make if it makes a declaration of unacceptable circumstances and discusses interim and final orders.

Interim orders can be to the same effect as final orders, can operate for up to 2 months and do not require a declaration of unacceptable circumstances to be made first.

If the Panel makes a declaration of unacceptable circumstances, it may make final orders:

  • to protect rights or interests affected by the unacceptable circumstances or
  • to ensure (as far as possible) that a bid proceeds as if the unacceptable circumstances had not occurred.

The Panel may not make an order directing a person to comply with a requirement of Chapter 6, 6A, 6B or 6C.

See Guidance Note 4.

Guidance Note 7: Deal Protection

Guidance Note 7 has been prepared to assist market participants understand the Panel’s approach to deal protection devices sought by bidders, including break fees, no‑shop, no‑talk and no due diligence restrictions, notification obligations, matching rights and other arrangements which have the effect of fettering the actions of a target. It applies to takeover bids, schemes of arrangement and other control transactions.

Generally, the principles discussed in this note are relevant regardless of whether the arrangement is entered into in respect of a non‑binding proposal or a binding proposal.

The main policy basis for this note is that deal protection devices may inhibit the acquisition of control over voting shares or interests taking place in an efficient, competitive and informed market. In certain circumstances, other principles in s602 may also be relevant.

See Guidance Note 7.

Guidance Note 12: Frustrating Action

Guidance Note 12 outlines the Panel’s approach to “frustrating actions”. A frustrating action is an action by a target, whether taken or proposed, by reason of which a bid may be withdrawn or lapse or a potential bid is not proceeded with. A ‘potential bid’ is a genuine potential bid communicated to target directors publicly or privately which is not yet a formal bid under Chapter 6. The following actions may be frustrating actions (assuming they breach a bid condition or allow a bid to be withdrawn under s652C):

  • significant issuing or repurchasing of shares (or convertible securities or options)
  • acquiring or disposing of a major asset, including making a takeover bid
  • undertaking significant liabilities or changing the terms of a debt
  • declaring a special or abnormally large dividend
  • significant change to company share plans or
  • entering into joint ventures.

The policy basis for this Guidance Note is that it is shareholders who should decide on actions that may interfere with the reasonable and equal opportunity of the shareholders to participate in a proposal or inhibit the acquisition of control over their voting shares taking place in an efficient, competitive and informed market.

See Guidance Note 12.

Guidance Note 17: Rights Issues

Guidance Note 17 was prepared to assist market participants understand the Panel's approach to rights issues which have, or are likely to have, an effect on control or the acquisition of a substantial interest in the company. In considering whether a rights issue gives rise to unacceptable circumstances, the Panel looks at the effect of the rights issue against the principles in s602.

See Guidance Note 17.

Guidance Note 18: Takeover Documents

Guidance Note 18 has been prepared to assist market participants to understand the Panel's approach to information in takeover documents, including the bidder’s statement and target’s statement and to create more accessible takeover documents. The policy bases for this Guidance Note are that information that is deficient or not readily accessible to the target audience may inhibit the acquisition of control over voting shares taking place in an efficient, competitive and informed market or deny holders of the relevant class of shares enough information to enable them to assess the merits of the proposal.

The Guidance Note also provides an example of a takeover document summary to assist market participants.

See Guidance Note 18.

Guidance Note 19: Insider Participation in Control Transactions

Guidance Note 19 has been prepared to assist market participants understand the Panel’s approach to situations where there is involvement or potential involvement by an insider (as defined in the Guidance Note) with a bidder in a takeover bid or potential bid for a target. The Panel’s primary concerns in those situations are to ensure that consideration by the target board and management of the bid, and any competing proposal, is undertaken free from any actual influence, or appearance of influence, from participating insiders and any disclosure of target company confidential information to the bidder or potential bidder is subject to appropriate controls. This Guidance Note sets out where the Panel may declare circumstances arising from such situations to be unacceptable having regard to the principles in s602.

See Guidance Note 19.

Guidance Note 20: Equity Derivatives

The Panel's approach to disclosure of equity derivatives is set out in Guidance Note 20. It includes measures that may help reduce the risk of unacceptable circumstances in relation to equity derivatives. The Panel recognises that equity derivatives are valuable trading and risk management products. The Panel recognises that there is a significant market for equity derivatives and does not want to interfere where equity derivatives are not used in ways that undermine the policy of Chapter 6.

See Guidance Note 20.

Guidance Note 21: Collateral Benefits

The Panel's approach to collateral benefits is contained in Guidance Note 21. Unacceptable circumstances will be likely to exist whenever a bidder provides a security holder something of value which it does not offer to other security holders. The Guidance Note articulates factors that the Panel will take into account in considering collateral benefits, but is not exhaustive. Whether a collateral benefit gives rise to unacceptable circumstances will depend on all the circumstances.

See Guidance Note 21.