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.
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.
Guidance Note 7: Lock-up Devices
Guidance Note 7 outlines the Panel’s approach to lock-up devices (or deal protection measures), including break fees, no-shop, no-talk and other restriction agreements and asset lock-ups. It applies in control transactions, including takeovers. The policy bases for this note are that lock-up devices 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 a reasonable and equal opportunity to participate in the benefits of a proposal under which a person may acquire a substantial interest.
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 A frustrating action is an action by a target, whether taken or proposed, by reason of which a bid may be withdrawn or lapse or a potential bid is not proceeded with.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.
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.
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.
Guidance Note 19: Insider Participation in Control Transactions
Guidance Note 19 has been prepared to provide takeover market participants with guidance on situations where there is involvement or potential involvement by the management, directors or external advisers of a target company with the bidder in a takeover bid or potential bid for the target company. 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.
Guidance Note 20: Equity Derivatives
The Panel's approach to disclosure of equity derivatives is set out in Guidance Note 20.1 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.
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.
- 1The Panel has published its Public Consultation Response Statement to revised Guidance Note 20 which attaches a copy of the final revised Guidance Note. The revised Guidance Note 20 will only come into effect upon giving market participants three months’ notice