Guidance Update

Published 9 September 2019

The Panel has recently published a new Guidance Note on Compulsory Acquisition, as well as updated its guidance on:

  • Defensive Tactics; and
  • Schemes of Arrangement.

Compulsory Acquisition

The Panel has recently received a number of queries relating to the compulsory acquisition process. Accordingly, the Panel has published a new Guidance Note on Compulsory Acquisition. This guidance note will help explain the compulsory acquisition process during a Code regulated takeover offer. In particular, the Guidance Note sets out:

  • information regarding the notices that must be sent by the dominant owner to various parties after a person becomes a dominant owner;
  • how the consideration payable on compulsory acquisition is determined; and
  • shareholders’ ability to challenge the consideration payable on compulsory acquisition.

Schemes of Arrangement

The Panel has approved changes to the Guidance Note on Schemes of Arrangement for schemes of arrangement that involve only immaterial changes in the holding or control of voting rights in a Code company. For example, this may be the case with pro-rata returns of capital where there are very minor changes as a result of rounding or corporate restructures, where a new holding company is inserted at the top of the corporate group.

The Panel is conscious that its process for issuing no-objection statements and letters of intention (which is primarily designed to apply to schemes that materially affect the voting control of a Code company) can be streamlined for transactions of this nature. Accordingly, the Panel may, on a case-by-case basis, consider dispensing with some of the disclosure requirements which would otherwise be expected by the Panel before issuing a no-objection statement or letter of intention.

Defensive Tactics

The Panel is aware that offerors, at times, have faced difficulties and delays in obtaining information from targets in order to determine whether consent will be required under the Overseas Investment Act 2005, and/or to apply for such consent.

The Panel confirms that the target’s failure to provide this information may constitute defensive tactics under the Code. The Guidance Note on Defensive Tactics has been updated to clarify when the failure of a target to provide such information may be a prohibited defensive tactic.

In addition, the Guidance Note has been updated by the deletion of paragraph 3.13, which sets out examples of actions which may be unrelated to an offer (and which accordingly could potentially be actions approved by the Panel under rule 39(c)). The guidance in this paragraph was outdated. For example, rule 25(1A) has come into force since this guidance was first prepared. The Panel will exercise its discretion under rule 39(c) on a case by case basis.