Corporations Act 2001

CHAPTER 6 - TAKEOVERS  

Note: This Chapter only applies to acquisitions of interests in a CCIV if the CCIV is a listed company: see Division 1 of Part 8B.7 .

SECTION 602  

602   PURPOSES OF CHAPTER  
The purposes of this Chapter are to ensure that:

(a)    the acquisition of control over:

(i) the voting shares in a listed company, or an unlisted company with more than 50 members; or

(ii) the voting shares in a listed body (other than a notified foreign passport fund); or

(iii) the voting interests in a listed registered scheme;

takes place in an efficient, competitive and informed market; and

(b)    the holders of the shares or interests, and the directors of the company or body or the responsible entity for the scheme:

(i) know the identity of any person who proposes to acquire a substantial interest in the company, body or scheme; and

(ii) have a reasonable time to consider the proposal; and

(iii) are given enough information to enable them to assess the merits of the proposal; and

(c)    as far as practicable, the holders of the relevant class of voting shares or interests all have a reasonable and equal opportunity to participate in any benefits accruing to the holders through any proposal under which a person would acquire a substantial interest in the company, body or scheme; and

(d)    an appropriate procedure is followed as a preliminary to compulsory acquisition of voting shares or interests or any other kind of securities under Part 6A.1 .

Note 1: To achieve the objectives referred to in paragraphs (a), (b) and (c), the prohibition in section 606 and the exceptions to it refer to interests in " voting shares " . To achieve the objective in paragraph (d), the provisions that deal with the takeover procedure refer more broadly to interests in " securities " .

Note 2: Subsection 92(3) defines securities for the purposes of this Chapter.

SECTION 602A   MEANING OF SUBSTANTIAL INTEREST  

602A(1)    
A reference in this Chapter to a substantial interest in a company, listed body (other than a notified foreign passport fund) or listed registered scheme is not to be read as being limited to an interest that is constituted by one or more of the following:

(a)    a relevant interest in securities in the company, body or scheme;

(b)    a legal or equitable interest in securities in the company, body or scheme;

(c)    a power or right in relation to:

(i) the company, body or scheme; or

(ii) securities in the company, body or scheme.

602A(2)    
A person does not have a substantial interest in the company, body or scheme for the purposes of this Chapter merely because the person has an interest in, or a relationship with, the company, body or scheme of a kind prescribed by the regulations for the purposes of this subsection.

602A(3)    

The regulations may provide that an interest of a particular kind is an interest that may constitute a substantial interest in a company, listed body (other than a notified foreign passport fund) or listed registered scheme for the purposes of this Chapter.

SECTION 603  

603   CHAPTER EXTENDS TO SOME LISTED BODIES THAT ARE NOT COMPANIES  
This Chapter applies to the acquisition of relevant interests in the securities of listed bodies that are not companies but are incorporated or formed in Australia in the same way as it applies to the acquisition of relevant interests in the securities of companies.

Note: Section 9 defines company and listed .

SECTION 604   CHAPTER EXTENDS TO LISTED REGISTERED SCHEMES  

604(1)    
This Chapter applies to the acquisition of relevant interests in the interests in a registered scheme that is also listed as if:

(a)    the scheme were a listed company; and

(b)    interests in the scheme were shares in the company; and

(c)    voting interests inthe scheme were voting shares in the company; and

(d)    a meeting of the members of the scheme were a general meeting of the company; and

(e)    the obligations and powers that are imposed or conferred on the company were imposed or conferred on the responsible entity; and

(f)    the directors of the responsible entity were the directors of the company; and

(g)    the appointment of a responsible entity for the scheme were the election of a director of the company; and

(h)    the scheme ' s constitution were the company ' s constitution.

Note 1: Paragraph (g): See subsection 610(2) .

Note 2: Section 9 defines voting interest in a managed investment scheme.

604(2)    

The regulations may modify the operation of this Chapter as it applies in relation to the acquisition of interests in listed registered schemes.

SECTION 605   CLASSES OF SECURITIES  

605(1)    
Takeover bids are made for securities within a particular class. Similarly, compulsory acquisition and buy-out rights operate on securities within a particular class.

605(2)    
For the purposes of this Chapter and Chapters 6A and 6C , securities are not taken to be different classes merely because:

(a)    some of the securities are fully-paid and others are partly-paid; or

(b)    different amounts are paid up or remain unpaid on the securities.

SECTION 605A  

605A   CHAPTER DOES NOT APPLY TO MCIs  

This Chapter does not apply to MCIs.

PART 6.2 - EXCEPTIONS TO THE PROHIBITION  

SECTION 611  

611   EXCEPTIONS TO THE PROHIBITION  

The following table sets out:

(a)    acquisitions of relevant interests in a company ' s voting shares that are exempt from the prohibition in subsection 606(1) ; and

(b)    acquisitions of relevant interests in a company ' s voting shares resulting from acquisitions of legal or equitable interests in securities of a body corporate that are exempt from the prohibition in subsection 606(2) .

Note: Some of the items in the table cover only activities in relation to the company itself (items 7, 8, 12 and 13) while the other items cover acquisitions in that company that may occur through activities in relation to other companies.

Acquisitions that are exempt	[ operative ]
	Takeover bids
	Acceptance of takeover offer
1	An acquisition that results from the acceptance of an offer under a takeover bid.
	See also section 612.
	On-market purchase during bid period
2	An acquisition in relation to bid class securities that results from an on-market transaction if:
	(a)	the acquisition is by or on behalf of the bidder under a takeover bid; and
	(b)	the acquisition occurs during the bid period; and
	(c)	the bid is for all the voting shares in the bid class; and
	(d)	the bid is unconditional or subject only to one or both of the following:
		(i)	a condition that relates to the occurrence or non-occurrence of an event referred to in subsection 652C(1) or (2) ;
		(ii)	a condition that is required under subsection 625(3) .
	See also sections 612 and 613 .
	On-market purchase of convertible securities during bid period
3	An acquisition of bid class securities that results directly from the exercise of rights attached to convertible securities if:
	(a)	the acquisition is by or on behalf of the bidder under a takeover bid; and
	(b)	the bidder acquired a relevant interest in the convertible securities through an on-market transaction during the bid period; and
	(c)	the bid is for all the voting shares in the bid class; and
	(d)	the bid is unconditional or subject only to one or both of the following:
		(i)	a condition that relates to the occurrence or non-occurrence of an event referred to in subsection 652C(1) or (2) ;
		(ii)	a condition that is required under subsection 625(3) .
	See sections 612 and 613.
	Acceptance of scrip offered as takeover consideration
4	An acquisition that resultsfrom the acceptance of:
	(a)	an offer under a takeover bid if the voting shares are included in the consideration for offers under the bid; or
	(b)	an offer that results in an acquisition to which item 5 applies.
	See also section 612.
	[ CCH Note: There is no Item 5 in the section 611 table. ]
	Nature of acquirer
6	An acquisition that results from the exercise by a person of a power, or the appointment of a receiver, or receiver and manager, under an instrument or agreement creating or giving rise to a security interest if:
	(a)	both of the following apply:
		(i)	the person ' s ordinary business includes the provision of financial accommodation by any means;
		(ii)	the person took or acquired the security interest in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms; or
	(b)	all of the following apply:
		(i)	the person took or acquired the security interest for the benefit of another person;
		(ii)	the person ' s ordinary business, or the other person ' s ordinary business, includes the provision of financial accommodation by any means;
		(iii)	the person took or acquired the security interest in relation to financial accommodation provided by the other person in the ordinary course of their business of the provision of financial accommodation by any means and on ordinary commercial terms.
	In this item, a reference to a security interest includes a reference to a negative pledge.
	Approval by resolution of target
7	An acquisition approved previously by a resolution passed at a general meeting of the company in which the acquisition is made, if:
	(a)	no votes are cast in favour of the resolution by:
		(i)	the person proposing to make the acquisition and their associates; or
		(ii)	the persons (if any) from whom the acquisition is to be made and their associates; and
	(b)	the members of the company were given all information known to the person proposing to make the acquisition or their associates, or known to the company, that was material to the decision on how to vote on the resolution, including:
		(i)	the identity of the person proposing to make the acquisition and their associates; and
		(ii)	the maximum extent of the increase in that person ' s voting power in the company that would result from the acquisition; and
		(iii)	the voting power that person would have as a result of the acquisition; and
		(iv)	the maximum extent of the increase in the voting power of each of that person ' s associates that would result from the acquisition; and
		(v)	the voting power that each of that person ' s associates would have as a result of the acquisition.
	Target newly formed
8	An acquisition that results from an issue of securities of the company in which the acquisition is made if the company has not started to carry on any business and has not borrowed any money.
	Manner of acquisition
	3% creep in 6 months
9	An acquisition by a person if:
	(a)	throughout the 6 months before the acquisition that person, or any other person, has had voting power in the company of at least 19%; and
	(b)	as a result of the acquisition, none of the persons referred to in paragraph (a) would have voting power in the company more than 3 percentage points higher than they had 6 months before the acquisition.
	Rights issues
10	An acquisition that results from an issue of securities that satisfies all of the following conditions:
	(a)	a company offers to issue securities in a particular class;
	(b)	offers are made to every person who holds securities in that class to issue them with the percentage of the securities to be issued that is the same as the percentage of the securities in that class that they hold before the issue;
	(c)	all of those persons have a reasonable opportunity to accept the offers made to them;
	(d)	agreements to issue are not entered into until a specified time for acceptances of offers has closed;
	(e)	the terms of all the offers are the same.
	This extends to an acquisition by a person as underwriter to the issue or sub-underwriter.
	See section 615.
	Dividend reinvestment etc.
11	An acquisition that results from an issue of:
	(a)	shares in a company to existing holders of shares in the company under a dividend reinvestment plan or bonus share plan; or
	(b)	interests in a managed investment scheme to existing holders of interests in the scheme under a distribution reinvestment plan or switching facility;
	if the plan or facility is available to all members.
	Disregard any unavailability to foreign holders in determining whether the plan or facility is available to all members.
	Initial public offering (IPO) fundraising
12	An acquisition that results from an issue, under a disclosure document or a CSF offer document, of securities in the company in which the acquisition is made if:
	(a)	the issue is to a promoter; and
	(b)	the document disclosed the effect that the acquisition would have on the promoter ' s voting power in the company; and
	(c)	no other disclosure document or CSF offer document has previously been issued or published by or on behalf of the company.
	Underwriting of fundraising
13	An acquisition that results from an issue, under a disclosure document or a CSF offer document, of securities in the company in which the acquisition is made if:
	(a)	the issue is to a person as underwriter to the issue or sub-underwriter; and
	(b)	the document disclosed the effect that the acquisition would have on the person ' s voting power in the company.
	Acquisition through listed company
14	An acquisition that results from another acquisition of relevant interests in voting shares in a body corporate included as a primary listing in the official list of:
	(a)	a declared financial market; or
	(b)	a foreign body conducting a financial market that is a body approved in writing by ASIC for the purposes of this item.
	Wills etc.
15	An acquisition through a will or through operation of law.
	Forfeiture of shares
16	An acquisition that results from an auction of forfeited shares conducted on-market.
	Compromise, arrangement, liquidation or buy-back
	Part 5.1 compromise or arrangement
17	An acquisition that results from a compromise or arrangement approved by the Court under Part 5.1.
	Section 507 arrangement
18	An acquisition that results from an arrangement entered into by a liquidator under section 507.
	Buy-back
19	An acquisition that results from a buy-back authorised by section 257A.
	Proprietary companies that have CSF shareholders
19A	An acquisition of a relevant interest in issued voting shares in a proprietary company if:
	(a)	the company has one or more CSF shareholders; and
	(b)	all the other requirements (if any) prescribed by the regulations for the purposes of this paragraph are met.
	Regulations
20	An acquisition made in a manner or in circumstances prescribed by the regulations. The circumstances may include acquisitions of relevant interests in voting shares in a specified body or class of bodies.

SECTION 612  

612   EFFECT OF NON-COMPLIANCE WITH TAKEOVER RULES FOR EXCEPTIONS 1 TO 4  
The exceptions in items 1 to 4 of the table in section 611 do not apply to a takeover bid if the bid is carried out in contravention of:

(a)    section 618 (full or proportionate bid); or

(b)    section 619 (offers to be the same); or

(c)    subsection 621(3) (minimum price); or

(d)    subsection 624(1) (minimum offer period); or

(e)    sections 625 to 630 (conditional offers); or

(f)    items 2, 3 and 6 in the table in subsection 633(1) (procedural steps for off-market bid); or

(g)    items 3, 4 and 6 in the table in section 635 (procedural steps for market bid).

SECTION 613  

613   BIDDER NOT TO EXERCISE VOTING RIGHTS IF FAILURE TO SEND BIDS FOR OFF-MARKET ACQUISITION - EXCEPTION 2 OR 3  
If the exception in item 2 or 3 of the table in section 611 applies to an acquisition on-market during a takeover bid, the bidder is not entitled to exercise the voting rights attached to the shares if:

(a)    the bid is an off-market bid; and

(b)    the bidder fails to send offers under the bid within 28 days after giving the bidder ' s statement to the target.

SECTION 615   TREATMENT OF FOREIGN HOLDERS UNDER EQUAL ACCESS ISSUE - EXCEPTION 10  

Terms of offers relating to all foreign holders of securities

615(1)    
The exception in item 10 of the table in section 611 applies even though the conditions set out in the item are not satisfied in respect of foreign holders of the company ' s securities if, under the terms of the offers:

(a)    the company must appoint a nominee for foreign holders of the company ' s securities who is approved by ASIC; and

(b)    the company must transfer to the nominee:

(i) the securities that would otherwise be issued to the foreign holders who accept the offer; or

(ii) the right to acquire those securities; and

(c)    the nominee must sell the securities, or those rights, and distribute to each of those foreign holders their proportion of the proceeds of the sale net of expenses.

Terms of offers relating to specified foreign holders of securities

615(2)    

The exception in item 10 of the table in section 611 applies even though the conditions set out in the item are not satisfied in respect of foreign holders of the company ' s securities that are specified in the offers if, under the terms of the offers:

(a)    the company must appoint a nominee for the specified foreign holders of the company ' s securities who is approved by ASIC; and

(b)    the company must issue to the nominee:

(i) the securities that would otherwise be issued to the specified foreign holders who accept the offer; or

(ii) the right to acquire those securities; and

(c)    the nominee must sell the securities, or those rights, and distribute to each of the specified foreign holders their proportion of the proceeds of the sale net of expenses.