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 in the 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 6.4 - FORMULATING THE TAKEOVER OFFER  

Division 1 - General  

SECTION 617   SECURITIES COVERED BY THE BID  

Off-market bid

617(1)    
An off-market bid must relate to securities:

(a)    

in a class of securities (the bid class); and

(b)    that exist or will exist as at the date set by the bidder under subsection 633(2).

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

617(2)    
If other securities exist or will exist at that date that:

(a)    will convert, or may be converted, to securities in the bid class; or

(b)    confer rights to be issued securities in the bid class;

the bid may extend to securities that come to be in the bid class during the offer period due to a conversion or exercise of the rights.

Note: The bidder's statement must say if the bid is extended in this way (see paragraph 636(1)(j) ).

Market bid

617(3)    
A market bid must relate to securities:

(a)    

in a class of quoted securities (the bid class); and

(b)    that exist or will exist at any time during the offer period.

SECTION 618   OFFERS MUST BE FOR ALL OR A PROPORTION OF SECURITIES IN THE BID CLASS  

Off-market bid

618(1)    
An offer for securitiesunder an off-market bid must be an offer to buy:

(a)    all the securities in the bid class; or

(b)    a specified proportion of the securities in the bid class.

The proportion specified under paragraph (b) must be the same for all holders of securities in the bid class.

Off-market bid - non-marketable parcels

618(2)    

If accepting an offer under an off-market bid for quoted securities would leave a person with a parcel of the securities that is less than a marketable parcel (within the meaning of the rules of the relevant financial market), the offer extends to that parcel.

Market bid

618(3)    
An offer for securities under a market bid must be an offer to buy all the securities in the bid class.

SECTION 619   GENERAL TERMS OF THE OFFER  

Off-market bid

619(1)    
All the offers made under an off-market bid must be the same.

Note: The offers may include alternative forms of consideration (see section 621 ).

619(2)    
In applying subsection (1), disregard the following:

(a)    any differences in the offers attributable to the fact that the number of securities that may be acquired under each offer is limited by the number of securities held by the holder;

(b)    any differences in the offers attributable to the fact that the offers relate to securities having different accrued dividend or distribution entitlements;

(c)    any differences in the offers attributable to the fact that the offers relate to securities on which different amounts are paid up or remain unpaid;

(d)    any differences in the offers attributable to the fact that the bidder may issue or transfer only whole numbers of securities as consideration for the acquisition;

(e)    any additional cash amount offered to holders instead of the fraction of a security that they would otherwise be offered.

Foreign holders

619(3)    
If the consideration for the bid includes an offer of securities, the securities do not need to be offered to foreign holders of the target ' s securities if under the terms of the bid:

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

(b)    the bidder must transfer to the nominee:

(i) the securities that would otherwise be transferred to the foreign holders who accept the bid for that consideration; 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.

SECTION 620   OFF-MARKET BID (OFFER FORMALITIES)  

620(1)    
Each offer under an off-market bid must:

(a)    be in writing; and

(b)    have the same date; and

(c)    provide that, unless withdrawn, it will remain open until the end of the offer period (see section 624); and

(d)    state how, and when, the bidder is to satisfy their obligations.

620(2)    
Each offer must provide that the bidder is to pay or provide the consideration for the offer:

(a)    if the bidder is given the necessary transfer documents with the acceptance - by the end of whichever of the following periods ends earlier:

(i) 1 month after the offer is accepted or, if the offer is subject to a defeating condition, within 1 month after the takeover contract becomes unconditional

(ii) 21 days after the end of the offer period; or

(b)    if the bidder is given the necessary transfer documents after the acceptance and before the end of the bid period - within 1 month after the bidder is given the necessary transfer documents; or

(c)    if the bidder is given the necessary transfer documents after the acceptance and after the end of the bid period - within 21 days after the bidder is given the necessary transfer documents.

Note: Subsection 630(1) requires an offer that is subject to a defeating condition to specify a date for declaring whether the condition has been fulfilled or not.

620(3)    
The offer may provide that the bidder may avoid the takeover contract if the bidder is not given the necessary transfer documents within 1 month after the end of the offer period.

Division 2 - Consideration for the offer  

SECTION 621   CONSIDERATION OFFERED  
Off-market bid - general

621(1)    
A bidder making an off-market bid for securities may offer any form of consideration for the securities, including:

(a)    a cash sum; or

(b)    securities (including shares, debentures, interests in a managed investment scheme or options); or

(c)    a combination of a cash sum and securities.

Note: Sections 650B and 651A deal with variations of the consideration offered under the bid.

Market bid - cash only

621(2)    

As the offers under a market bid for securities are made through a declared financial market, the bidder must offer to acquire the securities for a cash sum only for each security.

Note: Section 649B deals with variations of the price offered under the bid.

All bids - minimum consideration if bidder purchased securities in the 4 months before the bid

621(3)    
The consideration offered for securities in the bid class under a takeover bid must equal or exceed the maximum consideration that the bidder or an associate provided, or agreed to provide, for a security in the bid class under any purchase or agreement during the 4 months before the date of the bid.

621(4)    
For the purposes of subsection (3) , the consideration offered or provided for a security is:

(a)    if the consideration offered or provided is a cash sum only - the amount of that cash sum; or

(b)    if the consideration offered or provided does not include a cash sum - the value of that consideration; or

(c)    if the consideration offered or provided is a cash sum and other consideration - the sum of the amount of the cash sum and the value of the other consideration.

The value of consideration that is not a cash sum is to be ascertained as at the time the relevant offer, purchase or agreement is made.

621(5)    
If:

(a)    a person agrees to buy a security in a company; and

(b)    the agreement provides that the price payable for the security is a price specified in the agreement but may be varied in accordance with the terms of the agreement;

any variation in price under the agreement is to be disregarded in working out, for the purposes of subsection (3) , the price agreed to be paid for the security under the agreement.

SECTION 622   ESCALATION AGREEMENTS  
Benefits linked to bids and proposed bids not allowed

622(1)    
A person who makes or proposes to make a takeover bid for securities, or their associate, contravenes this section if:

(a)    a person acquires a relevant interest in securities in the bid class within the 6 months before the bid is made or proposed; and

(b)    at any time whatever, the bidder, proposed bidder or associate gives or agrees to give a benefit to, or receives or agrees to receive a benefit from:

(i) a person who had a relevant interest in any of the paragraph (a) securities immediately before the acquisition; or

(ii) an associate of a person who had a relevant interest in any of those securities at that time; and

(c)    the benefit is attributable to the acquisition or matters that include the acquisition; and

(d)    the amount or value of the benefit is, or is to be, determined by reference to or to matters that include either of the following:

(i) the amount or value of the consideration for the securities under the bid or proposed bid;

(ii) the amount or value of the consideration for which the bidder or proposed bidder acquires, offers or proposes to offer to acquire, securities in the bid class during the offer period (whether or not under the bid) or under Chapter 6A .

Strict liability offences

622(1A)    

An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

Contravening agreements void

622(2)    
An agreement is void to the extent that it purports to provide for:

(a)    a person to give a benefit to a person; or

(b)    a person to receive a benefit from a person;

in contravention of subsection (1) .

SECTION 623   COLLATERAL BENEFITS NOT ALLOWED  

623(1)    
A bidder, or an associate, must not, during the offer period for a takeover bid, give, offer to give or agree to give a benefit to a person if:

(a)    the benefit is likely to induce the person or an associate to:

(i) accept an offer under the bid; or

(ii) dispose of securities in the bid class; and

(b)    the benefit is not offered to all holders of securities in the bid class under the bid.

623(1A)    

An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

623(2)    
For the purpose of this section, a person does not receive a benefit that is not offered under a takeover bid merely because the person sells bid class securities on-market and the takeover bid is an off-market bid or a conditional bid.

623(3)    
This section does not prohibit:

(a)    the variation of a takeover offer as provided by sections 649A to 650D ; or

(b)    an acquisition of securities through an on-market transaction; or

(c)    simultaneous takeover bids for different classes of securities in the target.

Division 3 - The offer period  

SECTION 624   OFFER PERIOD  

Offer period set in offer

624(1)    
The offers under a takeover bid must remain open for the period stated in the offer. The period must:

(a)    start on the date the first offer under the bid is made; and

(b)    last for at least 1 month, and not more than 12 months.

However, the offer may be withdrawn during that period under section 652B .

Note: Sections 649C (market bids) and 650C (off-market bids) deal with variation of the offer period.

Automatic extension of offer period if bidder reaches 50% or consideration increased in last week

624(2)    
If, within the last 7 days of the offer period:

(a)    for an off-market bid - the offers under the bid are varied to improve the consideration offered; or

(b)    in any case - the bidder's voting power in the target increases to more than 50%;

the offer period is extended so that it ends 14 days after the event referred to in paragraph (a) or (b). The bidder must give the target and everyone who has not accepted an offer under the bid written notice that the extension has occurred within 3 days after that event.

Note: The consideration for a market bid cannot be increased in the last 5 trading days of the offer period (see section 649B ).

Strict liability offences

624(3)    

An offence based on subsection (2) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

Division 4 - Conditional offers  

SECTION 625   CONDITIONAL OFFERS - GENERAL  

Market bids

625(1)    
Offers under a market bid must be unconditional.

Off-market bids may generally be conditional

625(2)    
Offers under an off-market bid may be subject to conditions that are not prohibited by sections 626 to 629 .

625(3)    
If:

(a)    the consideration offered is or includes securities; and

(b)    

the offer or the bidder's statement states or implies that the securities are to be quoted on a financial market (whether in Australia or elsewhere);

the following rules apply:

(c)    the offer is subject to a condition that:

(i) an application for admission to quotation will be made within 7 days after the start of the bid period; and

(ii) permission for admission to quotation will be granted no later than 7 days after the end of the bid period;

(d)    the offer may not be freed from this condition.

Note: Section 1325A provides that a Court may make a remedial order if the condition is not satisfied.

SECTION 626   MAXIMUM ACCEPTANCE CONDITIONS IN OFF-MARKET BIDS  
Maximum acceptance conditions not allowed

626(1)    
Offers under an off-market bid must not be subject to a maximum acceptance condition. A maximum acceptance condition is one that provides that the offers will terminate, or the maximum consideration offered under the bid will be reduced, if one or more of the following occur:

(a)    the number of securities for which the bidder receives acceptances reaches or exceeds a particular number; or

(b)    the bidder's voting power in the company reaches or exceeds a particular percentage; or

(c)    the percentage of securities the bidder has relevant interests in reaches or exceeds a particular percentage of securities in that class.

626(2)    
For the purposes of subsection (1) , it does not matter:

(a)    how the condition is expressed; or

(b)    how a particular number or percentage was, or is to be, determined; or

(c)    whether or not a particular number or percentage is specified in the condition and, if it is so specified, how it is expressed.

626(3)    
For the purposes of subsection (1) , an offer under an off-market bid terminates if:

(a)    the offer lapses, is withdrawn or otherwise ceases to have effect; or

(b)    a binding takeover contract will not result from an acceptance of the offer; or

(c)    an obligation of the bidder will not arise under the takeover contract; or

(d)    the takeover contract is rescinded; or

(e)    the bidder is entitled to rescind the takeover contract; or

(f)    the bidder is relieved of an obligation arising under the takeover contract.

SECTION 627  

627   DISCRIMINATORY CONDITIONS NOT ALLOWED FOR OFF-MARKET BIDS  
Offers under an off-market bid must not be subject to a condition that allows the bidder to acquire, or may result in the bidder acquiring, securities from some but not all of the people who accept the offers. It does not matter how the condition is expressed.

SECTION 628  

628   CONDITIONS REQUIRING PAYMENTS TO OFFICERS OF TARGET NOT ALLOWED IN OFF-MARKET BIDS  

An offer to a person under an off-market bid must not be made subject to a condition that requires the person to approve or consent to a payment or other benefit to an officer or employee of the target or a related body corporate:

(a)    as compensation for loss of; or

(b)    as consideration in connection with retirement from;

any office or employment in connection with the management of the target or of a related body corporate. A purported requirement of this kind is void.

SECTION 629   CONDITIONS TURNING ON BIDDER ' S OR ASSOCIATE ' S OPINION NOT ALLOWED IN OFF-MARKET BIDS  

629(1)    
Offers under an off-market bid must not be subject to a defeating condition if the fulfilment of the condition depends on:

(a)    the bidder ' s, or an associate ' s, opinion, belief or other state of mind; or

(b)    the happening of an event that is within the sole control of, or is a direct result of action by, any of the following:

(i) the bidder (acting alone or together with an associate or associates);

(ii) an associate (acting alone or together with the bidder or another associate or associates of the bidder).

A purported condition of this kind is void.

Note: Section 9 defines defeating condition . Sections 630 , 650F and 650G deal with defeating conditions.

629(2)    

For the purposes of paragraph (1)(b) :

(a)    the target; and

(b)    a subsidiary of the target;

are taken not to be associates of the bidder if they would otherwise be an associate merely because of paragraph 12(2)(a) .

SECTION 630   DEFEATING CONDITIONS  

Off-market bid may include defeating conditions

630(1)    
Offers under an off-market bid may be made subject to a defeating condition only if the offers specify a date (not more than 14 days and not less than 7 days before the end of the offer period) for giving a notice on the status of the condition.

630(2)    
If the offer period is extended by a period:

(a)    the date for giving the notice is taken to be postponed for the same period; and

(b)    as soon as practicable after the extension, the bidder must give a notice that states:

(i) the new date for giving the notice of the status of the condition; and

(ii) whether the offers have been freed from the condition and whether, so far as the bidder knows, the condition has been fulfilled on the date the notice under this subsection is given.

Bidder to give notice of status of defeating condition near end of offer period

630(3)    
On the date determined under subsection (1) or (2) , the bidder must give a notice that states:

(a)    whether the offers are free of the condition; and

(b)    whether, so far as the bidder knows, the condition was fulfilled on the date the notice is given; and

(c)    the bidder's voting power in the target.

The bidder must comply with this subsection whether or not the bidder has given a notice under subsection (4) or 650F(1) .

Note: The offers may be freed of the condition by a declaration by the bidder under subsection 650F(1) .

Bidder to give notice if defeating condition fulfilled

630(4)    
If the condition is fulfilled (so that the offers become free of the condition) during the bid period but before the date for publishing the notice on the status of the condition, the bidder must publish as soon as practicable a notice that states that the condition has been fulfilled.

630(5)    
A notice under this section is given by:

(a)    giving the notice to the target; and

(b)    

for quoted bid class securities - giving the notice to the relevant market operator; and

(c)    for unquoted bid class securities - lodging the notice with ASIC.

Strict liability offences

630(6)    

An offence based on subsection (2) , (3) or (4) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .