Listed Trust and Managed Investment Scheme Mergers: Panel Releases Draft Guidance [29/09/2003] The Takeovers Panel

Monday, 29 September 2003

LISTED TRUST AND MANAGED INVESTMENT SCHEME MERGERS:
PANEL RELEASES DRAFT GUIDANCE NOTE

The Panel today released for public comment a draft Guidance Note on mergers of listed unit trusts and other listed managed investment schemes.

The draft Guidance Note, which was foreshadowed in the Panel's decision in Colonial First State Group 01 [2002] ATP 15, discusses the Panel's views on "Trust Schemes", defined in the note as mergers and takeovers of listed trusts (including other kinds of listed managed investment schemes) by amending their constitutions (eg trust deeds). The Panel considers that Trust Schemes come within the Panel's power under Part 6.10 of the Corporations Act (Act).

The Panel notes that a dispute over whether a Trust Scheme would give rise to unacceptable circumstances may lead to an application to the Panel, but similar issues may also arise in the context of an application to ASIC for a modification of the Act to facilitate a Trust Scheme or in an application for review of an ASIC decision to grant or refuse such a modification.

The Panel indicates that there is no basis to assert that a takeover of a trust may only be conducted by way of a Chapter 6 takeover just because takeovers of trusts are now regulated under Chapter 6 of the Act. However, any merger should be done through a mechanism which is clearly effective, in a way that is harmonious with the principles and protections of Chapter 6 and not be a device to avoid the operation of any provision of Chapter 6.

The Guidance Note proposes guidelines on applying the principles in section 602 of the Act to prevent unacceptable circumstances occurring in relation to a takeover of a trust under a Trust Scheme. Conducting a Trust Scheme contrary to the Panel's guidelines may constitute unacceptable circumstances.

The Panel's note suggests specific guidance with respect to the:

  1. application to Trust Schemes of the relevant requirements of the Act, Regulations, and ASIC policy for a members' scheme of arrangement;
  2. documentation for a Trust Scheme including the need for an independent expert's report;
  3. appropriate voting practices for Trust Schemes;
  4. appropriate disclosure required in a notice of meeting for a Trust Scheme, which should correspond with that in the explanatory statement of a scheme of arrangement, or both the bidder's and the target's statement for a takeover bid under Chapter 6 and should also satisfy common law disclosure requirements;
  5. disclosure of collateral benefits, especially ones that involve inequality of treatment and the requirement for relevant undertakings;
  6. recording telephone calls to unit holders; and
  7. withdrawal of an announced Trust Scheme without good reason.

The draft Guidance Note is available on the panel's website at:
http://www.takeovers.gov.au/Content/consultation/consultaion.asp

Comments on the draft Guidance Note are invited by Friday 7 November 2003 and may be sent by post, fax or email to:

George Durbridge,
Director, Takeovers Panel
Level 47 Nauru House,
80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553 Fax: +61 3 9655 3511
george.durbridge@takeovers.gov.au