Explanatory Memorandum
(Circulated by the authority of the Parliamentary Secretary to the Treasurer, The Hon Chris Pearce, MP)1 - Outline
1.1 This Bill implements legislative amendments to the provisions of the Corporations Act 2001 (the Act) that relate to the Takeovers Panel (the Panel). It is designed to allow the Panel to continue to act in an effective, efficient and expeditious manner, as the primary forum for resolving disputes during takeover bid periods, relying on the specialist expertise of its members, so that the outcome of any takeover bid can be resolved by the target shareholders on the basis of its commercial merits.
1.2 The fundamental objective underlying the takeovers law is to ensure that the purposes set out in section 602 of the Act are achieved, and in particular that the acquisition of control over the voting shares or voting interests in companies ('companies' here includes listed bodies and listed managed investment schemes) takes place in an efficient, competitive and informed market.
1.3 The Panel requires broad and flexible powers to perform the role envisaged for it, which includes being 'the main forum for resolving disputes about a takeover bid until the bid period has ended' in accordance with those principles.
1.4 Two decisions relating to the Panel,
Glencore International AG v Takeovers Panel
[2005] FCA 1290
and
Glencore International AG v Takeovers Panel
(the Glencore cases), have interpreted the limits of the jurisdiction of the Panel, as set out in the current legislation. As a result of those cases, concerns were raised that it may be open to read the Panel's powers and jurisdiction in the current legislation in a way that is too narrowly formulated to enable the Panel to perform effectively the role envisaged for it by Parliament.
1.5 In particular there were concerns that:
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- the interpretation of the term 'substantial interest' in the decisions, based on existing defined provisions, may prevent the Panel from being able to deal with new and developing interests and tactics in relation to takeovers;
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- the Panel may not be able to act to prevent the effects of unacceptable circumstances (even if clearly apprehended), but rather, may need to wait until those effects, and the consequent harm, have actually occurred;
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- the Panel may not be able to address all the circumstances which impair or affect the efficient, competitive and informed market for control of voting securities in companies; and
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- under the interpretation set out in the Glencore cases, the Panel's power to make orders to protect the rights or interests of persons affected by unacceptable circumstances may be too confined, with the result that the Panel may not be able to properly address the effects that the circumstances have on the interests of those persons.
1. 6 The Corporations Amendment (Takeovers) Bill 2007 responds to those concerns and also addresses concerns about the limits of the orders the Panel can make and the time-limit for concluding a review of a Panel decision.
Financial impact statement
1. 7 This Bill should not have a financial impact for the Commonwealth because it will not involve any Government expenditure. The Bill should not impose any additional compliance costs, paperwork burden or tasks on anyone.