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 6.6 - VARIATION OF OFFERS  

Division 1 - Market bids  

SECTION 649A  

649A   GENERAL  
A bidder may only vary the offers under a market bid in accordance with section 649B or 649C .

Note: ASIC may allow other variations under section 655A .

SECTION 649B  

649B   MARKET BIDS - RAISING BID PRICE  

The bidder may vary the offers under a market bid to increase the price offered to acquire securities under the market bid. They may not do so, however, during the last 5 trading days of the relevant financial market in the offer period.

SECTION 649C   MARKET BIDS - EXTENDING THE OFFER PERIOD  

649C(1)    

The bidder may extend the offer period. The extension must be announced to the relevant financial market at least 5 trading days of the market before the end of the offer period. However, the announcement may be made up to the end of the offer period if during those 5 trading days:

(a)    another person lodges with ASIC a bidder ' s statement for a takeover bid for securities in the bid class; or

(b)    another person announces a takeover bid for securities in the bid class; or

(c)    another person makes offers under a takeover bid for securities in the bid class; or

(d)    the consideration for offers under another takeover bid for securities in the bid class is improved.

The offer period is extended by having the extension announced to the relevant financial market.

Note: Section 624 provides for an automatic extension of the bid period in certain circumstances.

649C(2)    
On the day on which the announcement is made, the bidder must:

(a)    

give the target and the relevant market operator a notice setting out the terms of the announcement; and

(b)    lodge a notice setting out the terms of the announcement with ASIC.

649C(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 2 - Off-market bids (express variation by bidder)  

SECTION 650A   GENERAL  

650A(1)    
A bidder may only vary the offers under an off-market bid in accordance with section 650B , 650C or 650D .

Note: ASIC may allow other variations under section 655A .

650A(2)    
If the bidder varies the offer under an off-market bid in accordance with section 650B , 650C or 650D , the bidder must vary all unaccepted offers under the bid in the same way.

Note: Subsections 650B(2) and (3) deal with the effect of a variation on takeover contracts that have already resulted from acceptances of offers under the bid when the variation is made.

SECTION 650B   OFF-MARKET BIDS - CONSIDERATION OFFERED  

Improving the consideration offered

650B(1)    
The bidder may vary the offers made under the bid to improve the consideration offered:

(a)    by increasing a cash sum offered; or

(b)    by increasing the number of securities offered; or

(c)   by increasing the rate of interest payable under debentures offered; or

(d)    by increasing the amount or value of debentures offered; or

(e)    by increasing the number of unissued securities that may be acquired under options offered; or

(f)    by offering a cash sum in addition to securities; or

(g)    if the securities being acquired include shares to which rights to accrued dividends are attached - by giving the holders the right to:

(i) retain the whole or a part of the dividend; or

(ii) be paid an amount equal to the amount of the dividend;

in addition to the consideration already offered; or

(h)    offering an additional alternative form of consideration.

Note: If the bidder increases the consideration during the last 7 days of the offer period, subsection 624(2) extends the offer period by a further 14 days.

Effect of increase in consideration on offers already accepted

650B(2)    

Improving the consideration has the effects set out in the following table on the rights of a person who has already accepted an offer when the variation is made.

Effect of improving consideration	[ operative ]
	Improvement	Effect on person who has already accepted bid offer
1	improvement of the only form of consideration being offered	entitled to the improved consideration
2	2 or more forms of consideration offered and all forms improved by the same factor or percentage	entitled to the improvement in the form of consideration accepted
3	2 or more forms of consideration offered and improvement in the consideration is identical for all forms	entitled to the improvement in the form of consideration accepted
4	addition of a new form of consideration	entitled to make a fresh election as to the form of consideration to be taken
5	any other improvement	entitled to make a fresh election as to the form of consideration to be taken

650B(2A)    

The person is entitled to receive the improved consideration immediately, subject to the following paragraphs:

(a)    if the time for payment of the consideration in accordance with subsection 620(2) has not yet occurred, the person is not entitled to receive the improved consideration until that time;

(b)    if the person has to make an election before being entitled to the improved consideration, the person is not entitled to receive the improved consideration until the later of:

(i) the time when the election is made; and

(ii) the time applicable under paragraph (a).

Fresh election as to the form of consideration

650B(3)    
If a person who has already accepted an offer has the right to make a fresh election as to the form of consideration to be taken, the bidder must send the person as soon as practicable after the variation a written notice informing them about their right to make the election.

Note 1: Section 651B says how the election is to be exercised.

Note 2: Sections 648B and 648C provide for the manner in which documents may be sent to holders.

Strict liability offences

650B(4)    

An offence based on subsection (3) is an offence of strict liability.

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

SECTION 650C   OFF-MARKET BIDS - EXTENSION OF OFFER PERIOD  

650C(1)    
A bidder making an off-market bid may extend the offer period at any time before the end of the offer period.

650C(2)    
If the bid is subject to a defeating condition, the bidder may extend the offer period after the publication of the notice under subsection 630(3) only if one of the following happens after the publication:

(a)    another person lodges with ASIC a bidder ' s statement for a takeover bid for securities in the bid class;

(b)    another person announces a takeover bid for securities in the bid class;

(c)    another person makes offers under a takeover bid for securities in the bid class;

(d)    the consideration foroffers under another takeover bid for securities in the bid class is improved.

Note: Section 624 says how long the total offer period can be.

SECTION 650D   OFF-MARKET BIDS - METHOD OF MAKING VARIATION  

Variation to be made by notice to the target and holders

650D(1)    
To vary offers under an off-market bid, the bidder must:

(a)    prepare a notice that:

(i) sets out the terms of the proposed variation; and

(ii) if the bid is subject to a defeating condition and the proposed variation postpones for more than 1 month the time by which the bidder must satisfy their obligations under the bid - informs people about the right to withdraw acceptances under section 650E ; and

(b)    lodge the notice with ASIC; and

(c)    after the notice is lodged, give the notice to:

(i) the target; and

(ii) everyone to whom offers were made under the bid.

Note: Sections 648B and 648C provide for the manner in which documents may be sent to holders.

650D(2)    
A person must be sent a copy of the notice under subparagraph (1)(c)(ii) even if they have already accepted the offer. However, they need not be sent a copy if:

(a)    the variation merely extends the offer period; and

(b)    the bid is not subject to a defeating condition at the time the notice is given to the target.

650D(3)    
A notice under subsection (1) must be signed by:

(a)    if the bidder is, or includes, an individual - the individual; and

(b)    if the bidder is, or includes, a body corporate (other than a notified foreign passport fund) with 2 or more directors - not fewer than 2 of the directors who are authorised to sign the notice by a resolution passed at a directors ' meeting; and

(c)    if the bidder is, or includes, a body corporate (other than a notified foreign passport fund) that has only one director - that director.

650D(4)    
A copy of a notice given to a person under subparagraph (1)(c)(ii) must include a statement that:

(a)    a copy of the notice was lodged with ASIC on a specified date; and

(b)    ASIC takes no responsibility for the contents of the notice.

SECTION 650E   RIGHT TO WITHDRAW ACCEPTANCE  

650E(1)    
A person who accepts an offer made under an off-market bid may withdraw their acceptance of the offer if:

(a)    the bid is subject to a defeating condition; and

(b)    the bidder varies the offers under the bid in a way that postpones for more than 1 month the time when the bidder has to meet their obligations under the bid; and

(c)    the person is entitled to be given a notice of the variation under subsection 650D(1) .

650E(2)    
To withdraw their acceptance, the person must:

(a)    give the bidder notice within 1 month beginning on the day after the day on which the copy of the notice of the variation was received; and

(b)    return any consideration received by the person for accepting the offer.

650E(3)    

A notice under paragraph (2)(a) must:

(a)    comply with the conditions specified in regulations made for the purposes of this paragraph; or

(b)    if no such regulations are made - be in writing.

650E(4)    
To return consideration that includes securities, the person must:

(a)    

take any actions that are specified in regulations made for the purposes of this paragraph in relation to the return of those securities; or

(b)    

if no such regulations are made - give the bidder any transfer documents needed to effect the return of the securities.

650E(5)    
If the person withdraws their acceptance, the bidder must:

(a)    

take any actions that are specified in regulations made for the purposes of this paragraph in relation to the withdrawal of acceptance; and

(b)    return any documents that the person sent the bidder with the acceptance of the offer;

within 14 days after:

(c)    if the person does the things referred to in subsection (2) on the same day - that day; or

(d)    if the person does those things on different days - the last of those days.

650E(6)    
If under this section a person returns to a company any certificates (together with any necessary transfer documents) in respect of the securities issued by the company, the company must cancel those securities as soon as possible. Any reduction in share capital is authorised by this subsection.

650E(7)    

An offence based on subsection (5) or (6) is an offence of strict liability.

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

SECTION 650F   FREEING OFF-MARKET BIDS FROM DEFEATING CONDITIONS  

650F(1)    
If the offers under an off-market bid are subject to a defeating condition, the bidder may free the offers, and the takeover contracts, from the condition only by giving the target a notice declaring the offers to be free from the condition in accordance with this section:

(a)    if the condition is that the bidder may withdraw unaccepted offers if an event or circumstance referred to in subsection 652C(1) or (2) occurs in relation to the target - not later than 3 business days after the end of the offer period; or

(b)    in any other case - not less than 7 days before the end of the offer period.

650F(2)    
The notice must:

(a)    state that the offers are free from the condition; and

(b)    specify the bidder ' s voting power in the company.

650F(3)    
The notice must be:

(a)    

if the securities in the bid class are quoted - given to the relevant market operator; and

(b)    if those securities are not quoted - lodged with ASIC.

650F(4)    

An offence based on subsection (3) is an offence of strict liability.

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

SECTION 650G  

650G   CONTRACTS AND ACCEPTANCES VOID IF DEFEATING CONDITION NOT FULFILLED  

All takeover contracts, and all acceptances that have not resulted in binding takeover contracts, for an off-market bid are void if:

(a)    offers made under the bid have at any time been subject to a defeating condition; and

(b)    the bidder has not declared the offers to be free from the condition within the period before the date applicable under subsection 630(1) or (2) ; and

(c)    the condition has not been fulfilled at the end of the offer period.

A transfer of securities based on an acceptance or contract that is void under this section must not be registered.

Division 3 - Off-market bids (automatic variations)  

SECTION 651A   OFF-MARKET BID - EFFECT ON BID CONSIDERATION OF PURCHASES MADE OUTSIDE BID  
Effect of purchases outside bid on offers made under the bid

651A(1)    
The offers made under an off-market bid, and the takeover contracts, are varied under this section if:

(a)    the bidder purchases securities in the bid class outside the bid during the bid period; and

(b)    the consideration for that purchase consists solely of a cash sum; and

(c)    either:

(i) the consideration, or 1 of the forms of consideration, payable under the bid consists of a cash sum only and the consideration referred to in paragraph (b) is higher than the cash sum payable for the securities under the bid; or

(ii) a cash sum only is not the consideration, or 1 of the forms of consideration, payable under the bid.

Note 1: Section 9 defines takeover contract

Note 2: The effect of section 623 is that the purchase outside the bid has to be made through an on-market transaction (see subsection 623(1) and paragraph 623(3)(b) ).

Effect on unaccepted cash offers

651A(2)    
If:

(a)    one of the forms of consideration offered to a person under an off-market bid is a cash sum only; and

(b)    the person has not accepted the offer before the purchase outside the bid occurs;

the cash sum is taken to be increased to the highest outside purchase price before the offer is accepted.

Effect on cash offers already accepted

651A(3)    
The consideration payable for each security covered by a takeover contract arising from the acceptance of an offer for a cash sum only is increased to the highest outside purchase price. If the person who accepted the offer has already received the whole or any part of the consideration under the contract, they are entitled to receive the increase in consideration immediately.

Effect on non-cash offers accepted at any time during bid period

651A(4)    
If:

(a)    a person accepts an offer under a bid at any time during the bid period; and

(b)    the consideration paid or provided, or to be paid or provided, under the takeover contract arising from the acceptance of the offer does not consist of a cash sum only;

then:

(c)    the person may elect to take as consideration for each security covered by the takeover contract a cash sum equal to the highest outside purchase price instead of the consideration they originally accepted; and

(d)    the bidder must give the person a written notice of their right to make the election within 14 days after the end of the offer period.

Note: Section 651B says how the election is to be exercised.

651A(5)    

An offence based on subsection (4) is an offence of strict liability.

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

SECTION 651B   HOW TO MAKE AN ELECTION FOR NEW FORMS OF CONSIDERATION  

651B(1)    
An election under section 650B or 651A to take a new form of consideration must be made:

(a)    by written notice to the bidder; and

(b)    within 1 month after the person receives the notice from the bidder of their right to make the election.

651B(2)    
The person becomes entitled to the new form of consideration if they:

(a)    make the election; and

(b)    return to the bidder:

(i) any consideration they have already received; and

(ii) any necessary transfer documents.

SECTION 651C   RETURNING SECURITIES AS PART OF ELECTION  

651C(1)    
If under section 651B a person returns to a company any certificates (together with any necessary transfer documents) in respect of the securities issued by a company, the company must cancel those securities as soon as possible.

651C(2)    

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

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