Under the Takeovers Code, reports from independent advisers are required in various circumstances. Rules 15 and 16 require such a report where a person seeks to acquire or have allotted to it voting securities in a Code company with the prior approval of an ordinary resolution of shareholders. Rule 21 requires the directors of a target company to obtain a report from an independent adviser on the merits of an offer. Rule 22 requires the offeror to obtain a report from an independent adviser where an offer is made for different classes of securities. Rule 57(1) requires an independent adviser to certify in some circumstances that the cash sum proposed as consideration for a compulsory acquisition of equity securities under the Code is fair and reasonable. 

An “independent adviser” means “an adviser whom the Panel considers is independent and who is approved by the Panel for the purposes of” the Takeovers Code.

The current policy of the Panel is to consider each application for approval on a case by case basis so that the Panel can be satisfied, on each occasion, that the adviser is appropriately qualified and experienced and sufficiently “independent”. The Panel will keep this policy under review and will not be bound by prior decisions.

A prior or existing relationship between the adviser and all relevant entities must be disclosed to the Panel but will not automatically disqualify the adviser from being approved. The Panel will wish to review the nature and extent of any prior or existing relationships before an approval can be given.

The following types of relationship are likely to lead the Panel to conclude that the proposed adviser is not sufficiently independent:

  • If the proposed adviser has been involved in giving strategic advice on the relevant transaction to any party.
  • If the proposed adviser is likely to financially benefit from the success or failure of the relevant transaction.
  • If the proposed adviser has an ongoing advisory role or is the current auditor for any party to the relevant transaction.
  • If the proposed adviser has an interest in any party to the relevant transaction.

Simply because the proposed adviser has, in the past, given advice to any party to the transaction, or has acted as auditor to any party to the transaction, will not automatically preclude that entity from being approved. The Panel will look at the facts and circumstances of each case.

Applications should be submitted by the proposed independent adviser. Applications for approval should ideally follow the outline set out below. It is not mandatory that the outline be followed, but it will ensure that all necessary information is provided and delays caused by an incomplete application are avoided.

Outline of application for approval as Independent Adviser

  • Name, address, place of business and contact details of applicant.
  • If the applicant is a company, the applicant’s place of incorporation should also be provided, together with background information as to the directors and shareholders of the applicant.
  • A statement certifying that the applicant’s professional liability insurance cover is adequate in relation to the size of the transaction.
  • A statement of the qualifications and expertise of the applicant, in the form the applicant expects it to appear in its report, together with, if a firm or company is the applicant, the names and curriculum vitae of the individuals who will be involved in preparing the report. This statement should include evidence of previous relevant experience demonstrating the applicant’s suitability for approval.
  • The rule under which the applicant has been asked to prepare a report.
  • The names of the persons instructing the applicant and any other key parties in the relevant transaction or series of transactions.
  • Disclosure of all past and present relationships between the applicant and the persons instructing the applicant and any other party to the transaction or series of transactions (including the directors and shareholders of any such parties), including statements as to the nature, extent and duration of those relationships.
  • Disclosure of any other advisory activities which the applicant is, or will be, undertaking in relation to this transaction, including details of the basis of remuneration for such activity. (Such activities might include, for example, the provision of an independent appraisal report under the listing rules.)
  • Disclosure of any direct or indirect pecuniary or other interest, including any success or contingency fee or remuneration, other than the applicant’s fee for providing the report. • Prior involvement in the transaction (particularly the formulation of it).
  • A request in writing from the person that is required to commission the independent adviser’s report that the applicant be approved.
  • A statement that the applicant has no conflict of interest that could affect the applicant’s ability to provide an unbiased report.
  • A statement as to the timeframe within which the applicant would like the Panel to respond.
  • If appropriate, the names of any Panel members the applicant considers might be conflicted from making a decision in respect of this matter and why the applicant considers this to be the case.

Applications may be delivered, sent or faxed to the Panel. A cheque for $675 should accompany (or follow) each application for approval. This represents the application fee of $100 prescribed under the Takeovers (Fees) Regulations 2001 and an advance of $500 in respect of fees and costs to be incurred, plus GST. The Takeovers (Fees) Regulations 2001 prescribe charging rates of $200 plus GST per hour for time spent by members of the Panel and $145 plus GST per hour for time spent by professional staff. You will be sent an account for costs, where required, at the conclusion of the Panel’s work. If the cost of work done at the prescribed rates does not exceed the $500 paid in advance, a refund will be made.

The Panel is aware that applications often need to be dealt with expeditiously and will endeavour to meet the applicant’s timeframe. Processing time depends on the nature and quality of the application and the resources available within the Panel when you apply. The Panel’s decision will be notified to the applicant as soon as possible after it is made. The Panel is also pleased to accept applications by email but does not regard this as an appropriate means for the communication of confidential information.

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