Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 (76 of 2023)

Schedule 5   Rationalisation of ending ASIC instruments

Part 1   Acquisitions of relevant interests in voting shares

Corporations Act 2001

10   After section 609

Insert:

609A Another situation not giving rise to relevant interests - acceptance facility

Securities the subject of an acceptance facility

(1) A bidder for a takeover bid does not have a relevant interest in bid class securities merely because those securities are the subject of an acceptance, in relation to a facility, that is given to the operator of the facility if:

(a) the offer under the takeover bid for those securities has not been accepted; and

(b) the facility is covered by subsection (2); and

(c) in the case where bid class securities are quoted on a prescribed financial market - for every movement of at least 1% in the aggregate level of the bidder's voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility, the bidder provides to the relevant market operator, by 9.30 am on the next trading day after the movement, a notice (whether accompanying a notice required to be given under section 671B or otherwise) that meets the requirements of subsection (4) of this section; and

(d) in the case where bid class securities are not quoted on a prescribed financial market - the bidder lodges with ASIC a notice that meets the requirements of subsection (4) of this section within 2 business days after the aggregate level of the bidder's voting power and the votes attached to bid class securities the subject of acceptances in relation to the facility rise or fall above or below a percentage listed in subsection 654C(1).

Facility requirements

(2) The facility is covered by this subsection if:

(a) it is the only facility established by the bidder in relation to bid class securities; and

(b) the operator of the facility is not the bidder or an associate of the bidder; and

(c) the operator holds an Australian financial services licence that covers the provision of financial services of the kind necessary to operate the facility; and

(d) a participant in the facility may give the operator acceptances in relation to the facility; and

(e) the terms of the facility permit the operator to maintain custody of an acceptance in relation the facility given to the operator by a participant in the facility until:

(i) the participant withdraws the acceptance; or

(ii) any condition of a kind specified in subsection (3) that is specified in the facility is satisfied; and

(f) the terms of the facility provide that the facility:

(i) if the bid is unconditional - must be made available to all holders of bid class securities or persons on whose behalf bid class securities are held; or

(ii) otherwise - must be made available to all or specified holders of bid class securities or persons on whose behalf bid class securities are held; and

(g) in the case where bid class securities are quoted on a prescribed financial market - the terms of the facility provide that the operator of the facility must provide information about acceptances in relation to the facility to the bidder sufficiently regularly to enable the bidder to determine and disclose to the market operator every movement of at least 1% in the aggregate level of the bidder's voting power and the votes attached to securities the subject of acceptances in relation to the facility by 9.30 am on the next trading day after the movement; and

(h) in the case where bid class securities are not quoted on a prescribed financial market - the terms of the facility provide that the operator of the facility must provide information about acceptances in relation to the facility to the bidder sufficiently regularly to enable to the bidder to determine and disclose to the target any movement in the aggregate level of the bidder's voting power and the votes attached to securities the subject of acceptances in relation to the facility above or below a percentage listed in subsection 654C(1) within 2 business days after the movement; and

(i) the terms of the facility provide that all participants in the facility participate in the facility on the same terms.

Triggering conditions

(3) The following conditions are specified for the purposes of subparagraph (2)(e)(ii):

(a) a condition that, no later than the time that all acceptances in relation to the facility are processed, the bidder has:

(i) declared the bid free of all conditions; or

(ii) stated that the bidder will declare the bid free of all conditions;

(b) a condition that the securities in which the bidder and its associates have a relevant interest together with the securities that are the subject of the facility have exceeded a specified percentage of securities in the bid class;

(c) a condition that the bidder has notified the operator of the facility in writing that a condition in paragraph (a) or (b) has been satisfied.

Notice requirements

(4) For the purposes of paragraphs (1)(c) and (d), a notice meets the requirements of this subsection if the notice:

(a) sets out the aggregate number and percentage of bid class securities:

(i) in which the bidder and its associates have a relevant interest; and

(ii) which are subject of acceptances in relation to the facility; and

(b) discloses the breakdown between the 2 categories in subparagraphs (a)(i) and (ii) of this subsection; and

(c) includes a statement setting out the preconditions for the operator of the facility releasing the acceptances and warning that the acceptances may be withdrawn by participants in the facility at any time until the preconditions are met.

Definitions

(5) In this section:

acceptance , in relation to a facility, means an instrument that comprises:

(a) a participant in the facility's completed acceptance of a bidder's offer for bid class securities; or

(b) a participant in the facility's instructions to another person who holds bid class securities on behalf of the participant to accept a bidder's offer for bid class securities.

participant , in a facility, means:

(a) a holder of bid class securities who is specified in the facility; or

(b) a person who is specified in the facility and on whose behalf bid class securities are held.

609B Another situation not giving rise to relevant interests - securities subject to escrow agreement in connection with initial public offer etc.

Bodies corporate

(1) A body corporate does not have a relevant interest in securities that are its own securities (the escrow securities ) merely because, under an agreement entered into by the body corporate with the holder of the escrow securities (the escrow agreement ), the body corporate applies restrictions on the disposal of the escrow securities by the holder.

(2) However, subsection (1) applies only if:

(a) all of the following apply:

(i) the body corporate enters into the escrow agreement in connection with an offer of securities in the body corporate that are in a class of securities that are to be quoted on a prescribed financial market (the initial public offer );

(ii) the escrow securities are in the same class of securities as those that are offered under the initial public offer;

(iii) the escrow agreement is covered by subsection (5); or

(b) both of the following apply:

(i) the escrow securities are issued as consideration for the acquisition of a business under a separate agreement between the body corporate and the vendor of the business;

(ii) the escrow agreement is covered by subsection (5).

Underwriters, lead managers and joint lead managers

(3) A person does not have a relevant interest in the escrow securities merely because, under an agreement entered into by the person with the holder of the escrow securities in the ordinary course of the person's business as an underwriter, lead manager or joint lead manager, the person applies restrictions on the disposal of the escrow securities by the holder.

(4) However, subsection (3) applies only if:

(a) the person enters into the agreement mentioned in that subsection in connection with the initial public offer; and

(b) the escrow securities are in the same class of securities as those that are covered by the initial public offer; and

(c) the agreement mentioned in that subsection is covered by subsection (5).

Agreement requirements

(5) An agreement relating to the escrow securities is covered by this subsection if:

(a) the agreement does not restrict the exercise of voting rights attaching to the escrow securities; and

(b) in the case of a takeover bid (including a proportional takeover bid):

(i) the agreement allows each holder of the escrow securities to accept into the takeover bid where the holders of at least half of the bid class securities that are not subject to escrow have accepted into the bid; and

(ii) the agreement requires that the escrow securities be returned to escrow if the bid does not become unconditional; and

(c) the agreement allows the escrow securities to be transferred or cancelled as part of a merger by way of a compromise or arrangement under Part 5.1; and

(d) the agreement terminates no later than:

(i) if the person who entered into the agreement is the body corporate mentioned in subsection (1) - 2 years after the agreement is entered into; or

(ii) otherwise - 1 year after the agreement is entered into; and

(e) if the agreement permits the holder to create a security interest in some or all of the escrow securities in favour of a person who does not have a relevant interest in the escrow securities because of subsection 609(1) - the agreement requires that the holder must not create a security interest in favour of the person unless the person has agreed in writing to take or acquire the security interest in the escrow securities subject to the terms of the agreement; and

(f) if the agreement permits the holder to transfer the holder's interests in the escrow securities to another person - requires that the holder must not do so if:

(i) the transfer would result in a change in the beneficial ownership of the escrow securities; or

(ii) the transfer would result in an extension in the period of the agreement; or

(iii) the transferee does not agree to be subject to the same restrictions on disposal of the escrow securities under the agreement.