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The Australian Takeovers Panel Two Years On

2 May 2002

History of the Panel

• 1969 Eggleston Committee 2nd Interim Report
• 1981 CASA - NCSC section 60 power
• 1991 Corporations Law
  • Panel power to declare unacceptable conduct or acquisition
• 2000 CLERP
  • section 659B Dispute resolution role

Volume

• NCSC - 11 s60 declarations 1981-1990
• ASC - 4 applications to the Panel 1991-2000
• Post Clerp
  • 2000 - 22
  • 2001 - 30
  • 2002 - 5
• Comparison with court volume?

Philosophy of the Panel

• What?
  • "the main forum for resolving disputes about a takeover until the bid period has ended" (s 659AA)
  • Commercial resolution of disputes
  • Finding out what's wrong and fixing it
  • Getting a takeover back on track
    • in real time

Philosophy of the Panel

• Why?
  • Flexibility, speed & certainty
  • Avoid tactical litigation and legalism
  • Reduce costs

And

• Raise standards of documentation & behaviour generally
• Ensure clarity and equality of information as between shareholders and in the marketplace
• Encourage equal treatment of shareholders

• How?
  • Primary body dealing with takeover matters during a bid (s659B)
  • Court proceedings can only be initiated by ASIC or Government during a bid (s659B)
  • Court can stay its proceedings during a takeover bid (s659B(2))
  • Only money damages awarded after Panel declines application (s659C)
  • Review ASIC decisions (s656A)

Philosophy of the Panel

The Panel can make

• a declaration of unacceptable circumstances (s657A)
• a wide range of orders (s657D & s657E)
• rules to clarify or supplement Chapter 6 (s658C)
• procedural rules for its proceedings (s195 ASIC Act)
• decisions on ASIC modifications

Powers of the Panel

Unacceptable Circumstances (s657A)

• The circumstances must
  • relate to the "affairs of the company"
  • be unacceptable
    • having regard to their effect on
      • the control, or potential control, of that company or another company or
      • an acquisition of a substantial interest in that company or another company; or
    • because they constitute or give rise to a contravention of Chapter 6, 6A, 6B or 6C

• Focus is first upon circumstances not first on conduct
  • Panel will look to the effects of the circumstances and may later look at the intention or conduct of the person who caused the circumstances to arise
• Focus is not primarily on legality
• Focus on Eggleston Principles
• Panel must consider the public interest

Unacceptable Circumstances (s657A)

Who can apply?

• Previously only ASIC 4
• Now, any interested person
  • Bidder 24
  • Rival Bidder 11
  • Target 16
  • Shareholders 3
  • ASIC 3
  • Other 1

Current Members Jan 2002 (45)

Executive

• Director
• Counsel
• Legal Secondees
• Office Manager
• Support, Policy, Liaison, Preparation
• Not delegates
• Lvl 47, 80 Collins St, Melbourne 3000

Panel Matters 2000 - (22)

• Infratil/AIF Nos. 1&2
• Email/Smorgon Nos 1-3
• IAMA/Futuris
• Pinnacle No 1
• Brickworks/GPG Nos 1&2
• QCT/Metcoal
• Advance/Mirvac
• St Barbara/Taipan
• Ashton/De Beers
• Taipan 1 - 6
• Pinnacle 2
• Realestate.com.au
• Taipan 7

Panel Matters 2001 - (30)

• Pinnacle 03
• Taipan 8
• Taipan 9
• Taipan 10
• Vincorp
• Pinnacle 04
• Namakwa 01
• Pinnacle 05
• Namakwa 02
• Taipan11
• Pinnacle 06
• Pinnacle 07
• Alpha
• Namakwa 03 & 04
• Pinnacle 08
• ALG
• Bigshop 01, 02, 03
• Pinnacle 09 & 09(b)
• Pinnacle 10 & 11
• Normandy 1 - 6
• Broncos 01 & 2

Panel Matters 2002 - (6)

• Broncos 03
• Normandy 07
• Focus Technologies
• Broncos 04
• Pasminco
• Precious Metals Australia
• Ballarat Goldfields

Analysis - Type of Applications

• Review of ASIC Decisions 6
  • Affirmed 3 - Overturned 2 - Current 1
• Unacceptable Circumstances 41
• Review of Panel Decisions 9
  • Affirmed 6 - Varied 3
• ASIC Referral 2

Grounds for Unacceptable Circumstance Applications

• efficient competitive informed market - 24
• identity of acquirer - 1
• reasonable time to consider - 1
• adequate information in documents - 26
• equality of opportunity - 6
• Other - 10

Analysis - Outcomes

• Application
• Convene three members
  • conflicts, availability, experience, etc
• Review - Reg 20 threshold
• Brief - Panel defines the landscape
• Submissions & Rebuttals - Parties
• Further questions from Panel
  • Conference, Supplementary brief
• Decision - Reasons
• Orders
• Post Mortem

Process

• Published
  • 1 Unacceptable Circumstances
  • 2 Review of Decisions
  • 3 Making Rules
  • 4 Remedies and Enforcement
  • 5 Restraining Documents
  • 6 Break Fees
  • Procedural Rules
• Current Work
  • Forecasts
  • Costs
  • Frustrating Action

Policy

• Conflicts
• Rulings
• Funding Arrangements

• Web page containing
  • policies
  • procedures
  • decisions
• Post mortems after matters to get feedback
• Panel workshops and discussions to ensure consistency
• Liaison with practitioners

Panel Initiatives

Implications of Panel for Takeovers

• Eggleston focus
  • if strictly legal focus - you just don't get it
• No strategic delay
• More negotiating with bidder/target
• Commercial resolutions
• Will require better disclosure
• No draconian penalties
• Perhaps more schemes of arrangement

Future challenges for the Panel

• Consistency
  • Panel days, three members, post mortems
• Workload
• Constitutional challenge
• Jurisdictional interrelation with courts
  • chipping away
• Power
• Scope

Conclusion

• To be fully effective the Panel must enjoy the support of the whole business community - Senator Chapman 12/5/99
• The Panel will be a test of the goodwill of the business community in Australia in taking some responsibility for its own actions - Mr Joe Hockey MP 3/6/99

• Name Organisation Location
• Mr Simon McKeon, Macquarie Bank Limited Melbourne (President)
• Ms Robyn Ahern Company Director Perth
• Ms Ilana Atlas Westpac Banking Corporation Ltd Sydney
• Ms Eliz. Alexander AM PricewaterhouseCoopers Melbourne
• Justice Bob Austin Supreme Court of NSW Sydney
• Dr Annabelle Bennett SC Sydney Bar Sydney
• Mr Michael Burgess University of South Australia Adelaide
• Mr Tony Burgess Deutsche Bank Melbourne
• Ms Carol Buys AMP Consulting P/L Sydney
• Mr Denis Byrne Denis Byrne & AssociatesP/L Brisbane
• Mr Peter Cameron Credit Suisse First Boston Sydney
• Ms Luise Elsing Australian Stock Exchange Sydney
• Ms Kathleen Farrell Freehills Sydney
• Mr David Gonski Morgan Stanley Dean Witter Sydney

Members

• Ms Teresa Handicott Corrs Chambers Westgarth Brisbane
• Mr Brett Heading McCullough Robertson Brisbane
• Ms Meredith Hellicar Company Director Sydney
• Mr Braddon Jolley Freehills Sydney
• Mr John King NZ Takeovers Panel Auckland
• Dr Tro Kortian University of Sydney Sydney
• Ms Alison Lansley Mallesons Stephen Jaques Melbourne
• Ms Irene Lee Company director Sydney
• Mr Kevin McCann Allens Arthur Robinson Sydney
• Ms Alice McCleary Deloitte Touche Tohmatsu Adelaide
• Ms Marie McDonald Blake Dawson Waldron Melbourne
• Ms Maria Manning Queensland Cotton Brisbane
• Ms Louise McBride Delloitte Touche Tohmatsu Sydney
• Ms Marian Micalizzi Company Director Brisbane
• Mr Simon Mordant Caliburn Partnership P/L Sydney

Members

• Ms Robyn Pak-Poy Minter Ellison Adelaide
• Mr Chris Photakis KPMG Corporate Finance P/L Sydney
• Prof Ian Ramsay The University of Melbourne Melbourne
• Mr Scott Reid JPMorgan Sydney
• Ms Maxine Rich Consultant Sydney
• Ms Fiona Roche Estates Development Co. Perth
• Mr Trevor Rowe Salomon Smith Barney Sydney
• Justice Kim Santow Supreme Court of NSW Sydney
• Mr Jeremy Schultz Finlaysons Adelaide
• Ms Jennifer Seabrook Gresham Partners Perth
• Ms Celia Searle Wickham Chambers Perth
• Mr Leslie Taylor Commonwealth Bank of Aust. Sydney
• Mr Michael Tilley Merrill Lynch International Melbourne
• Mrs Nerolie Withnall Company Director Brisbane
• Ms Karen Wood BHP Billiton Melbourne
• Mr Peter Young ABN-AMRO Sydney

Members