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Soo, Say - Kit --- "Truth in Takeovers: A Discussion on the Policy and its Application in Australia" [2013] UNSWLawJlStuS 5; (2013) UNSWLJ Student Series No 13-05




There has been concern that the application of the ‘truth in takeovers’ policy by the Takeovers Panel is highly inconsistent with the policy’s provisions and rationale, prompting calls that no policy in practice exists and that codification is necessary.[1] This paper aims to uncover if and why such inconsistency has occurred through a three-stage process. The first stage involves a chronological analysis of the policy to identify its founding considerations and its practical purpose, and how these have evolved to the current policy. The second stage explores the Panel’s application in the various cases where ‘truth in takeovers’ has arisen, with reference to the observations in the previous section. Based on the findings from part two, the third section will offer a critique on the Panel’s application with comparative reference to the UK and US truth in takeovers regimes. The section will conclude with an evaluation of which direction the policy should take moving forward.

The purposes of the takeovers provisions as set out in Corporations Act 2001 (Cth) section 602 provide the fundamental benchmark for this paper’s analysis. They are as follows: the principle that the acquisition of control takes place in an efficient, competitive and informed market[2] (‘the Masel principle’[3]); the principle that shareholders are given sufficient information to assess the merits of a proposal[4] (‘the information principle’); and the principle that shareholders have a reasonable and equal opportunity to participate in the benefits arising from a proposal (‘the equal opportunity principle’).[5] The information and equal opportunity principles are collectively known as the ‘Eggleston principles’.[6]


A The history of ‘truth in takeovers’

The policy’s origin can be traced back to 1992 when Rossington Investments (‘Rossington’) made a bid for Australian Consolidated Investments. Rossington issued a statement that there would be no time extension and no price increase to the bid. However one week later it departed from this by purchasing shares on market at a higher price.[7] ASIC’s predecessor, the Australian Securities Commission (‘ASC’) intervened and ordered compensation be paid to shareholders who had sold at a lower price, stating Rossington had ‘little regard for the spirit of the Corporations Law’.[8] The ASC also stated that the remedial action of compensation ‘will set a benchmark against which the behaviour of future offerors will be measured.’[9] However this benchmark did note eventuate as the ASC soon released its first policy on truth in takeovers, which was rather strict.[10] The policy stated that the ASC expects offerors to stand behind and honour statements which are published to the market in the course of a takeover. It would prosecute or take civil action against those who do not, in order to ensure shareholders are afforded a reasonable and equal opportunity to participate in the benefit.[11] The policy was in place ‘to ensure that the market is at all times properly informed and to maintain the confidence of investors in the market.’[12] Clearly, since inception the policy has been concerned with upholding the Eggleston principles and through this, market integrity.

Despite this strict stance, ASIC failed to apply its own policy during the late 1990s, instead preferring a flexible approach that repeatedly allowed departures from last and final statements in favour of compensation.[13] This prompted criticism that ASIC was not prepared to adhere to its policy if it disadvantaged shareholders by preventing them from receiving an increased price, and that bidders were using last and final statements as part of their tactics, knowing that they could later depart and pay compensation if necessary.[14] By allowing a higher price, ASIC’s approach essentially favoured the ‘competitive’ element of the Masel principle.

After the Panel was re-constituted[15] ASIC held public consultations and released draft updates to the policy as then contained in Policy Statement 25 (‘PS 25’).[16] The updates were said to reflect legislative amendments, recent experience and current enforcement practice but did not signal a shift in the direction of ASIC’s policy.[17] On release of its revised PS 25 (now contained in Regulatory Guide 25[18]) Richard Cockburn, then ASIC Corporate Finance director, said ‘[w]e expect people to honour statements they make in the market.’[19] ASIC also stated it was part of a move to ‘raise standards of conduct in the market’ and that it would hold market participants to last and final statements.[20] On the face of it, the updates were signalling that ASIC would no longer act inconsistently with its policy and would ensure that market participants are held to their statements.

B The current policy

Regulatory Guide 25 (‘RG 25’) contains ASIC’s current policy on truth in takeovers. The policy is primarily concerned with ‘last and final statements’[21], which by definition are statements made by market participants that they will or will not do something in the course of a bid.[22]

The policy has four key elements. First, the policy states that market participants should be held to last and final statements, as with a promise.[23] Since such statements are made voluntarily, it is reasoned that parties should assume the risk for them.[24] Second, bidders cannot depart from a no-increase statement, even by offering compensation.[25] Compensation would simply allow a bidder to press holders into accepting early, and if that fails, increase the consideration later on.[26] Third, a market participant may depart from last and final statements if it has expressly reserved the right to do so by attaching a clear and unambiguous qualification.[27] This ensures that investors are not misled.[28] Finally, if a party departs from a last and final statement, it risks either regulatory action for contravening misleading and deceptive conduct provisions, or an application to the Takeovers Panel for a declaration of unacceptable circumstances.[29] At first glance, the policy is simple and provides clear, intuitive reasons for its existence.

C The policy’s rationale

In order to reconcile this apparent simplicity with the concerns of the market, it is necessary to explore the policy’s underlying rationale. As outlined in the introduction, the benchmark for this assessment lies in the s 602 principles.[30] The policy itself specifically states that departures from last and final statements would create situations that offend the ‘equal opportunity principle’[31] and undermine both the ‘Masel principle’ and the ‘information principle’.[32] By disrupting an ‘informed market’, such departures also erode market integrity.[33]

Some initial observations can be made of these principles. The underlying policy objectives have remained largely unchanged from the recommendations of the Eggleston Committee in 1969.[34] Michael Hoyle noted that the ‘Eggleston principles’ are primarily concerned with distributive justice rather than economic efficiency.[35] Leigh Masel referred to this aspect as the ‘need to temper the power and efficiency of free market forces with notions of fairness, justice, and a degree of economic equality.’[36] In essence, the Eggleston principles are designed to secure a ‘fair go’ for all shareholders.[37] These principles were then supplemented by a ‘philosophical overlay’ created by Masel recognising the ‘desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market.’[38] Both principles were reaffirmed in the Corporate Law Economic Reform Program (CLERP) proposal paper, which identified two policy aims: market efficiency and market confidence.[39] Competition and information were considered to characterise an efficient market while investor protection and information were crucial to market confidence.[40] These were addressed by the Masel and Eggleston principles respectively. Notably, information is the common denominator for both principles.

It has been widely recognised that the efficiency-driven Masel principles at times conflicts with the egalitarian Eggleston principles.[41] Benedict Sheehy argues it is difficult to categorise the Eggleston principles as ‘efficient’ when considering the costs of disclosure and the mandatory bid rule.[42] James Mayanja takes the view that the Eggleston principles act as a disincentive to the overall level of hostile takeover activity by increasing inefficient transaction costs, which is ultimately counter-productive to the wider economy.[43] While these arguments raise valid points, they relate to the takeover process as a whole and the tension is different when considering truth in takeovers in isolation.

The key tension within this context is between the ‘competitive’ element of the Masel principle on the one hand, and the element of information inherent in both the Masel and Eggleston principles. The policy has to balance the desire to allow target shareholders the most competitive price against the need for investors to trade on an informed basis. If last and final statements are regularly departed from, it is feared investors will lose faith in the market because they are not properly informed. Interestingly, the policy rejects compensation even though it provides investor protection. For example, if a company issues a last and final offer of $X, an investor could accept even if they are uncertain whether there will be any future increase, knowing that if there is, the company will be forced to stick to its original price, or ordered to pay compensation to ensure the equal opportunity principle is abided with. Theoretically then, it why does it matter if investors trade on an uninformed basis if at the end of the day they are no worse-off? This point will be revisited in the critique section.


This section examines key cases involving truth in takeovers and the extent to which the Takeovers Panel (‘the Panel’) has consistently applied the policy, and if not, whether it has an otherwise consistent approach.

The Panel in Taipan Resources[44] was of the opinion that the truth in takeovers policy was ‘sound’.[45] It reaffirmed that parties must be explicit if they are merely making a statement of present intention and ‘palliatives’ such as compensation do not make coercive or misleading conduct acceptable.[46] However, it observed that the policy is not an absolute rule and a party will only be held to last and final statements if it is reasonable.[47] Thus the policy would appear to be a qualified rule, with the qualification of reasonableness. The Panel also listed the relevant considerations for declaring unacceptable circumstances.[48] These include the degree of precision in the statement, the presence or absence of a clear qualification, the acts of other persons, new circumstances arising, and any later statements by the bidder. The bidder in the case had made public statements that it would not waive a defeating condition. It applied to ASIC for relief to remove the condition but was refused, and after six weeks applied to the Panel for a review. The Panel affirmed ASIC’s decision that in the interests of an informed market it should be held to its statement[49], but noted that if it had appealed immediately following ASIC’s decision the result may have been different.[50]

In Normandy Mining[51] the Chairman and CEO of the bidder said in a television interview that ‘this is our final bid. And in terms of Australian Law, that’s a very definitive statement. We will not be raising our bid.’[52] A week later the company issued a notice of variation to extend the offer, which said ‘[a]lthough we have not declared the offer final, we have said that this offer is full and fair and that we have no basis upon which we could justify further increase in the offer.’[53] The bidder offered to correct this subsequent statement and did so through an ASX announcement and newspaper adverts, which the Panel regarded as satisfactory in dealing with the concerns that the market be adequately informed.[54]

In Australian Leisure[55] the Panel endorsed the policy but failed to apply it. The bidder, Bruandwo, made an announcement that its bid was going to expire on 7:00pm that day if it had not acquired a 20% relevant interest but if it did, it would raise the bid price.[56] There was also a further price increase stipulated if a 50% relevant interest was reached.[57] At 3:20pm on the day of the announcement Bruandwo applied to the Panel and was granted a one week extension of the offer period. The following day Bruandwo made a similar announcement that updated the market of the new dates, but also stated that it could raise the price regardless of whether the relevant interest had been reached, as long as Bruandwo was satisfied it would be reached.[58] So in essence, Bruandwo departed from its previous statement that it would not increase the bid price unless the stipulated relevant interests were acquired. A rival bidder, CMM, applied for a declaration of unacceptable circumstances and argued that the statement should only be changed to reflect the Panel’s interim order (in this case, the new dates).[59] The Panel commented that it was ‘essential’ that participants do not resile from last and final statements[60] but found that the interim order ‘fundamentally changed the landscape’ against which Bruandwo made the announcement, thus validating the departure.[61] Accordingly, events which fundamentally change the landscape of a last and final statement may warrant departure from that statement.

The Panel in Summit Resources[62] endorsed and applied the policy to the extent of declaring unacceptable circumstances, but made no orders. Summit Resources announced it was calling a meeting to pass resolutions approving the transfer of shares to Areva, who would be involved in marketing Summit’s uranium projects following the transfer.[63] At the time Summit was subject to an unconditional off-market scrip takeover bid by Paladin which had been rejected by the board for being too low.[64] Paladin then announced the consideration would be increased by 24% and that it would vote its shares in favour of Areva at the meeting. This revised Paladin bid was recommended by the Summit board, after which the number of acceptances markedly increased.[65] Soon after, Paladin departed from its statement and informed Summit it would not vote in favour of the Areva transaction. On this basis, Summit did not convene a meeting and applied to the Panel for a declaration of unacceptable circumstances.

The Panel endorsed the policy by calling it a ‘fundamental tenet of the Australian takeovers regime’ and noted ‘unwarranted departures’ were to be taken seriously.[66] It rejected Paladin’s argument that the recommendation of the bid was unforeseeable. However in doing so, it opened up the possibility that had the recommendation been unforeseeable, this may have constituted a warranted departure. It was also considered relevant that Paladin gave no clear qualifications nor acted inconsistently before departing from the statement. The case is especially interesting because despite calling the policy a ‘fundamental tenet’[67] and declaring unacceptable circumstances, no orders were made holding the bidder to its previous statements as the policy requires.[68] The Panel reasoned it could not ascertain which shareholders bought into the bid on the basis that it would vote in favour and those which did not.[69] An order of withdrawal rights was considered and dismissed on the basis that it had no evidence that any shareholders would actually avail themselves of it.[70] This seems like a weak argument for an order that could actually help alleviate the unacceptable circumstances.

The decisions in Rinker 02[71] and Rinker 02R[72], like Summit Resources, involve an endorsement of the policy without any application. The bidder, CEMEX, resiled from its best and final offer by allowing target shareholders to retain Rinker’s dividend, effectively increasing the price by $0.25 per share.[73] Three weeks later, ASIC applied to the Panel seeking a declaration of unacceptable circumstances and a compensation order. ASIC was essentially acting inconsistently with its own policy, which refuses to recognise compensation as an adequate remedy to the regulatory concerns.[74] The Panel declared unacceptable circumstances and agreed compensation was adequate. The reason for this may lie in the significant length of time between CEMEX’s departure and ASIC’s application (in which time acceptances had reached 70%).[75] The decision is a clear example of the tension outlined above between the competition element of the Masel principle and market integrity. Both ASIC and the Panel failed to apply the policy in favour of a higher price.

Ironically, one of the few cases where bidders were held to absolute statements occurred in a two decisions that did were not explicitly based on the truth in takeovers policy. In Qantas Airways 02[76] and Qantas Airways 02R[77] APA made an absolute statement that it would not extend its offer past 7:00pm on Friday 4 May 2007.[78] The time period lapsed, but a late acceptance later took APA over the 50% threshold which would have extended the offer.[79] APA argued that holding it to its absolute statement would give rise to unacceptable circumstances, but the Panel found there was no evidence on which such a declaration could be founded upon.[80] By holding APA to its statement, the Panel was correctly applying ASIC’s policy.

Whereas the Panel decisions discussed above focused on the bidder making last and final statements, in MYOB Ltd[81] the focus was on ‘acceptance intention statements’ from major shareholders. These are statements from shareholders that they will accept a certain bidder’s offer. It is an unusual case as it means those shareholders would be bound to that statement even if a higher rival bid emerged. The Panel made a declaration of unacceptable circumstances on the basis that the statement effectively gave the bidder a 34% relevant interest (the amount the institutional shareholders collectively held) which offended the Masel principle in s 602(a).[82] It was found the statement had an ‘anti-competitive’ effect of locking-up the MYOB shares so as to deter rival bidders, which meant that the acquisition of control did not take place in an efficient, competitive and informed market.[83] The Panel made orders releasing the shareholders from any commitment to accept for two weeks, thereby providing a sufficient opportunity for rival bidders.[84] The case is novel in that it was the holding to, rather than the departure from, absolute statements that created unacceptable circumstances. If the policy had been strictly complied with, the Masel principle would have been offended.

The decision in Ludowici[85] extended the reach of the policy to statements published by the media. The bidder, FLS, agreed with Ludowici to purchase its share for $7.20 via a scheme of arrangement, which included a right to match competing proposals.[86] Reuters published an article allegedly based on an interview with FLS’ CEO stating that this bid was final.[87] One week later The Australian published an article referring to the Reuters article.[88] At this point FLS issued a press release correcting the statements.[89] The Panel declared unacceptable circumstances on the basis that FLS’ failure to correct them in a timely manner created uncertainty in the market, offending the Masel principle.[90] Once again, the Panel felt compensation was sufficient to remedy the situation.[91] It took into account the fact that the words contained in the headline and introduction were not the CEO’s, and there was some ambiguity whether a ‘last and final statement’ was actually made.[92]

The recent case of Alesco[93] highlights the Panel’s unwillingness to make binding declarations on whether the policy will apply to future conduct. The bidder, Dulux, had made a last and final offer of $2.05 that required the Alesco board to declare $0.42 in fully franked dividends.[94] This offer would yield up to $0.18 in franking credits for a total notional bid consideration of $2.23 . The Alesco board rejected this offer and instead proposed a $2.05 offer incorporating a $0.75 fully franked dividend.[95] This would yield up to $0.32 in franking credits for an increased total notional bid consideration of $2.37. Alesco applied to the Panel, seeking an order that if the policy was enlivened by Dulux’s initial ‘best and final’ offer, it should not be prevented from entering into the new proposal. The Panel declined to making a binding declaration on the basis that the revised offer was not a ‘concrete proposal’, i.e. an agreed bid by Dulux.[96] The Panel did however hint that the policy would prevent the implementation of the second proposal.[97]

A Are there identifiable trends in the Panel’s application?

Ironically, the only consistent aspect of the Panel’s application is its inability to apply the policy on a consistent basis.[98] It is apparent that the Panel is willing to allow departures from last and final statements.[99] Nevertheless, one can identify a general theme concerning timing. The lapse of time may bring new circumstances which make it unreasonable to expect adherence to last and final statements.[100] Such new circumstances may fundamentally change the landscape of the statement, barring a finding of unacceptable circumstances as in Australian Leisure. If too much time lapses and acceptances reach a significant level, the Panel is inclined to allow a departure, as seen in the Rinker decisions. Finally the importance of time extends to correcting statements, and even an eight day lapse can result in a declaration being made.[101]


This critique will begin from the premise stated by Braddon Jolley that ‘[t]ruth in takeovers policy goes to market certainty and I don’t think there is market certainty – there is ambiguity.’[102] One way of viewing Australia’s truth in takeovers regime is on a spectrum between the strict UK code and the laissez faire policy of the US. The UK Takeovers Code binds bidders to last and final statements unless ‘wholly exceptional circumstances’ are present.[103] An example of such rigidity was CGNPC’s bid for Kalahari Minerals[104], whose principal asset was a 42.8% interest in Extract, a uranium exploration and development company. The parties had initially agreed that 290 pence per share was to be paid. However, the Fukushima earthquake in Japan subsequently occurred, severely affecting the price of uranium. The parties then re-negotiated a price of 270 pence per shape. The Panel disallowed the revised offer, as it was not a wholly exceptional circumstance. This was re-affirmed by the Hearing Committee.[105]

In stark contrast, the US considers statements made during a takeover bid as statements of intention, not promises.[106] Shareholders are forced to decide whether to accept the bid, knowing that bidders can change their intentions without any adverse consequences.[107] If the Australian approach moved to either the UK or US end of the spectrum, certainty will be achieved. Either the policy would be applied strictly in its absolute terms as in the UK, or no policy exists to bind bidders as in the US and the market reflects laissez faire economics. In the latter case shareholders would expect that bidders’ intentions can change.

In coming to a solution it is important to bear in mind that every approach emerges from its own unique circumstances. For example, the US market dynamics are such that target boards practically have the upper hand through devices like poison pills, staggered boards, and general frustrating actions.[108] An appropriate assessment of the Australian position therefore requires revisiting the underlying principles.[109] Notions of fairness embodied in the Eggleston principles accord with the UK regime whereas the efficiency-driven Masel principle accords more with the US regime. Identifying which principle should be prioritised will influence which direction the Australian regime should move towards.

While the Eggleston principles reflect an Australian ideal of a ‘fair go’[110], there are compelling reasons why the Masel principle should be favoured in the truth in takeovers context. First, the Eggleston principles were created in a different economic context from today, one with less oversight and replete with stock manipulation, insider trading and other abuses.[111] Although these still exist today, greater surveillance has shifted the focus of regulators from equity to efficiency. Tony Greenwood observed that they were a product of Sir Richard Eggletston’s ‘equity jurisprudence rather than an economic analysis of the law which has since become fashionable.’[112] This economic influence was reflected in the sweeping review undertaken by CLERP.[113] In contrast, and to move to the second point, the present economic context is one of increasing globalisation.[114] One aspect of globalisation is the integration of markets and greater price efficiency. Mannolini observes that financial and legal advisers are increasingly importing mergers and acquisition practices from the world’s most advanced capital markets in order to accommodate for the growing number of cross-border transactions.[115] Since Australia is primarily a capital-importing economy (with an inward-outward foreign direct investment ratio of approx. 1.45:1[116]) it is necessary to have an appropriate legal regime that not only accords with world standards, but attracts foreign investment because of it.[117] If the US is a proxy for the world’s most advanced economy, then its focus on market economics and deregulation is at odds with the Eggleston principles. In fact, there is a view that capital markets which are more liquid (and are hence more efficient) require less regulation due to the market acting as an appropriate protection mechanism.[118]

Third, to the extent that the Eggleston principles are retained on the grounds of market confidence[119], the lack of supporting data significantly undermines the justification of this ground as a lynchpin of takeover regulation. Jeffrey Lawrence’s empirical study[120] revealed that market confidence is affected significantly more by macroeconomic performance than by the content and level of regulation.[121] If this perspective is taken, the preferred regime is one which encourages actions that benefit the wider economy. One generally accepted contributor is hostile takeover activity.[122] The theory states that one way to increase overall wealth in the economy is to increase the efficiency of assets.[123] Hostile takeovers can achieve this by displacing poor managers with superior ones. A regime that prioritises a competitive price is facilitating the efficient transfer of control by ensuring shareholders receive a price which they are willing to sell at. The target company is then owned by superior management that can better use its assets to serve the wider economy. The end result is that shareholders receive the highest price for their shares, the efficient use of the target’s assets benefits the wider economy, and a greater macroeconomic performance will increase market confidence.

In addition, a looser regulatory regime attracts foreign investment which adds liquidity and efficiency to the market and as a result, bolsters the market’s protection mechanism. Recall ‘The policy’s rationale’ section questioned whether, if compensation was provided, departures from last and final statements really harmed investors. In reality, compensation may be the protection that gives investors the confidence to trade in uncertainty.

These arguments however, are not suggesting that the Australian truth in takeovers regime should mimic the US. Regardless of whether the Eggleston principles make economic sense, they are firmly entrenched in Australian takeover regulation and this unique quality should be recognised and respected. This paper instead suggests that ASIC’s policy should be amended in several respects and that the Panel should not waver in its application of it. First, the policy should outline considerations which would establish a prima facie case for a last and final statement that if resiled from would be deemed unacceptable and the maker held to it. The considerations listed in Taipan Resources may provide a useful starting point (see Appendix A). Second, the policy should recognise exceptions to this general rule. One important exception would be no-increase statements. Because of the economic context of these situations and the preference for a competitive price, the policy should recognise that compensation is an adequate remedy if such statements are departed from. The policy should limit bidders to only one departure to minimise the potential administrative cost of shareholders in applying for compensation. Two related exceptions which the policy should also provide for are (i) considerable lapse of time between departure and application to the Panel and (ii) intervening circumstances. This places the incentive on those affected to bring an early application. If significant time passes such that acceptance levels have markedly increased (as was the case in Rinker decisons) then this would allow for departure. Further, if intervening circumstances occur which fundamentally change the landscape of the bid, as found in Australian Leisure, this would also warrant a departure. The Panel should apply this policy firmly to avoid calls that there is ambiguity in its application.

One further point should be made regarding the Panel’s power to issue advanced rulings declaring unacceptable circumstances. This is a ruling by the Panel that a future course of action would amount to a declaration of unacceptable circumstances. The result of Alesco essentially means parties must ‘countenance a train wreck’[124] before finding out whether their conduct is permissible. While the proposed changes to the policy would provide greater certainty, it is inevitable that cases arise where a bidder is unsure whether a departure will be allowed. The Panel should be given express power to issue advanced declarations of unacceptable circumstances where there is no breach of law. It is believed market participants would strongly welcome such a reform.[125] It would also tie in well with the purpose of the Takeovers Panel as providing an efficient, effective, and speedy resolution to disputes.[126]


In conclusion, it is in the interests of Australia’s takeover regime to achieve greater certainty, or at least more consistency, by shifting towards the US regime while still maintaining the fundamental principles which underpin Australian takeover law. Prioritising a competitive price facilitates the efficient transfer of control through takeovers, benefiting the wider economy. Such a shift would attract foreign capital, increase market liquidity and in the process enhance efficiency and the market’s inherent protection mechanisms. ASIC should implement this shift by amending its truth in takeovers policy in key respects, and the Panel should apply it consistently across all cases. This includes creating a general rule where makers will be held to last and final statements when certain criteria are met. The policy should then contain specified exceptions to this rule. In the context of no-increase statements it is suggested that ASIC and the Panel should recognise compensation as an adequate remedy. Other exceptions would include the lapse of time and intervening circumstances. The Panel would then need to firmly apply the policy according to its words in order to avoid market criticism that there is no truth in takeovers policy, or at least no application of it. Finally, the Panel should be given express powers to make advanced rulings declaring future unacceptable circumstances which would allow parties to conduct affairs without fear of contravening the policy.


Panel decision
Declaration of unacceptable circumstances?
Orders made / result
Key considerations / relevant facts
Taipan Resources NL 06 [2000] ATP 15
Affirmed ASIC’s decision to refuse relief for waiving defeating condition
- Degree of precision in statement
- Presence/absence of clear qualification
- Acts of other persons
- New circumstances arising
- Later statements by bidder
Normandy Mining 07 [2002] ATP 2
Unnecessary – Bidder offered to correct statement through ASX announcement / newspaper advert
None made – concerns adequately addressed
- Bidder’s willingness to issue corrective statement
Australian Leisure & Hospitality Group Ltd 03 [2004] ATP 25
No declaration made
No order made – allowed departure
- Interim Panel intervention fundamentally changed landscape of second announcement
Summit Resources [2007] ATP 9
Declared unacceptable circumstances
No orders made – allowed departure
- Could not separate between shareholders who acted on statement and those who did not
- Opened up possibility of unforeseeability warranting departure
Rinker Group Limited 02 [2007] ATP 17
Rinker Group Limited 02R [2007] ATP 19
Declared unacceptable circumstances
Ordered compensation
- ASIC sought compensation
- Considerable time (approx. three weeks) lapse before ASIC applied to Panel
- Bid acceptances had already reached 70% by application date
Qantas Airways 02 [2007] ATP 6
Qantas Airways 02R [2007] ATP 7
No declaration made
No orders made – held to absolute statement regarding bid closing time
- Bidder arguing that being held to last and final statement would produce unacceptable circumstances
MYOB Limited [2008] ATP 27
Declared unacceptable circumstances
Released shareholders from acceptance commitment for two weeks to allow for rival bidders
- Focus was on shareholder acceptance intention statement
- Holding shareholders to absolute statement had anti-competitive consequences
Ludowici Limited [2012] ATP 3
Declared unacceptable circumstances
Ordered compensation
- Statements made in media allegedly quoting interview with bidder
- One week lapse between publication and correction announcement held to be too long
- Article headline and introductory words not bidder’s own
- Ambiguity as to whether last and final statement in fact made
Alesco Corporation Limited 03 [2012] ATP 18
Declined to make binding declaration but hinted that policy would prevent proposal from being implemented
No orders made
- No concrete proposal; application sought whether declaration would be made if it went ahead
- Increased bid consisted of same cash consideration, but higher non-cash consideration (franking credits)

[1] James Eyers, ASIC role in takeovers raises concern, 17 January 2012, The Australian Financial Review

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[2] Corporations Act 2001 (Cth) s 602(a).

[3] This principle was authored by Leigh Masel, who at the time was chairman elect of the National Companies and Securities Commission (NCSC); see Michael Hoyle, ‘An Overview of the Role, Functions and Powers of the Takeovers Panel’, in Ian Ramsay (ed), The Takeovers Panel and Takeovers Regulation in Australia, (2010), 44-45.

[4] Corporations Act 2001 (Cth) s 602(b).

[5] Corporations Act 2001 (Cth) s 602(c).

[6] Company Law Advisory Committee to the Standing Committee of Attorney-Generals, Second Interim Report, February 1969, Commonwealth Parliamentary paper no 43 of 1969 (‘Eggleston Report’), [16].

[7] See Braddon Jolley and Jaclyn Riley-Smith, Truth in Takeovers – ‘No; ifs; no buts’ in Jennifer G Hill and RP Austin (eds), The Takeovers Panel After 10 Years, (2011), 66.

[8] ASC, ‘Rossington Holdings Pty Ltd Takeover Bid for ACIL’ (Media Release, 92/86, 21 May 1992).

[9] Ibid.

[10] ASC, Superseded Policy Statement 25 – Takeovers: false and misleading statements, issued 4 June 1992.

[11] Ibid, [SPS 25.20-22].

[12] Ibid.

[13] E.g. Consolidated Press’ bid for Hoyts Cinemas (1999), OMV’s bid for Cultus Petroleum (1999), Adsteam Marine’s bid for Holyman (1999), Atkins Carlyle’s bid for Parbury (2000). See Braddon Jolley, above n 7, 67-70.

[14] Braddon Jolley, above n 7, 70.

[15] Following the enactment of the Corporate Law Economic Reform Program (‘CLERP’) Act on 13 March 2000 the Panel became the main forum for resolving disputes about a takeover bid, and the basis on which it was empowered to make a declaration was substantially expanded. See Michael Hoyle, above n 3, 51-52.

[16] ASIC, ‘ASIC Calls for Comment on ‘Truth in Takeovers’ (Information Release 02/06, 20 March 2002).

[17] Ibid.

[18] As of 1 July 2007, all Policy Statements became known as Regulatory Guides.

[19] ASIC, ‘ASIC Updates ‘Truth in Takeovers’ Policy’ (Media Release, 02/305, 22 August 2002).

[20] Ibid.

[21] Ibid.

[22] ASIC, Regulatory Guide 25 ‘Takeovers: false and misleading statements’, 22 August 2002, RG 25.2.

[23] Ibid, RG 25.9.

[24] Ibid, RG 25.12.

[25] Ibid, RG 25.23.

[26] Ibid, RG 25.23.

[27] Ibid, RG 25.35.

[28] ASIC, above n 19.

[29] ASIC, Regulatory Guide 25 ‘Takeovers: false and misleading statements’, 22 August 2002, RG 25.4.

[30] Corporations Act 2001 (Cth) s 602.

[31] ASIC, Regulatory Guide 25 ‘Takeovers: false and misleading statements’, 22 August 2002, RG 25.10.

[32] Ibid, RG 25.11.

[33] Ibid.

[34] Eggleston Report, above n 6.

[35] Michael Hoyle, above n 3, 87.

[36] Leigh Masel, ‘The National Companies and Securities Commission and the Capital Markets’ address, Australian Finance Conference, Canberra, 2 June 1981, quoted in Chris Maxwell, ‘The New Takeover Code and the NCSC: Policy Objectives and Legislative Strategies for Business Regulation’ [1982] UNSWLawJl 6; (1982) 5 University of New South Wales Law Journal 93, 98.

[37] See Justin Mannolini, ‘CLERP and Takeover Law Reform – Politics Trumping Principle?’ (1999) 10 Australian Journal of Corporate Law 193.

[38] Tony Greenwood, ‘In addition to Justin Mannolini’ (2000) 11 Australian Journal of Corporate Law 308, 309.

[39] Treasury, Corporate Law Economic Reform Program (CLERP) Proposals for Reform Paper No 4: Takeovers (Canberra: AGPS, 1997) (‘CLERP 4’), 7-10.

[40] Ibid.

[41] See Justin Mannolini, above n 37.

[42] Benedict Sheehy, ‘Australia’s Eggleston Principles in Takeover Law: Social and Economic Sense?’ (2004) 17 Australian Journal of Corporate Law 218, 221.

[43] James Mayanja, The Equal Opportunity Principle in Australian Takeovers Law and Practice: Time for Review?’ (2000) 12 Australian Journal of Corporate Law 1, 2.

[44] Taipan Resources NL 06 [2000] ATP 15 (‘Taipan Resources’).

[45] Ibid, [37].

[46] Ibid, [35-36].

[47] Ibid, [38].

[48] Ibid, [35], [38].

[49] Ibid, [46].

[50] Ibid, [41].

[51] Normandy Mining Limited 07 [2002] ATP 2 (‘Normandy Mining’).

[52] Ibid, [12].

[53] Ibid, [9].

[54] Ibid, [23].

[55] Australian Leisure & Hospitality Group Ltd 03 [2004] ATP 25 (‘Australian Leisure’).

[56] Ibid, [6].

[57] Ibid.

[58] Ibid, [24]-[25].

[59] Ibid, [26]-[27].

[60] Ibid, [49]

[61] Ibid, [51].

[62] Summit Resources Ltd [2007] ATP 9 (‘Summit Resources’).

[63] Ibid, [2].

[64] Ibid, [11].

[65] Ibid, [18].

[66] Ibid, [22].

[67] Ibid, [22].

[68] Ibid, [5].

[69] Ibid, [43].

[70] Ibid, [38].

[71] Rinker Group Limited 02 [2007] ATP 17 (‘Rinker 02’).

[72] Rinker Group Limited 02R [2007] ATP 19 (‘Rinker 02R’).

[73] Ibid, [2].

[74] ASIC, Regulatory Guide 25 ‘Takeovers: false and misleading statements’, 22 August 2002, RG 25.23

[75] See Braddon Jolley, above n 7, 77.

[76] Qantas Airways Limited 02 [2007] ATP 6 (‘Qantas Airways 02’).

[77] Qantas Airways Limited 02R [2007] ATP 7 (‘Qantas Airways 02R’).

[78] Ibid, [4].

[79] Ibid.

[80] Ibid, [52].

[81] MYOB Limited [2008] ATP 27 (‘MYOB Ltd’).

[82] Ibid, [36]-[37]

[83] Ibid, [39].

[84] Ibid, [52].

[85] Ludowici Limited [2012] ATP 3 (‘Ludowici’).

[86] Ibid, [4]-[5].

[87] Ibid, [6].

[88] Ibid, [7].

[89] Ibid, [8].

[90] Ibid, [42].

[91] Ibid, [50].

[92] Ibid, [49].

[93] Alesco Corporation Limited 03 [2012] ATP 18 (‘Alesco’).

[94] Ibid, [5].

[95] Ibid, [10].

[96] Ibid, [31].

[97] Ibid, [33].

[98] See Appendix A below for a comparative table of the Panel’s decisions thus far discussed.

[99] See above discussions on Australian Leisure, Summit Resources, Rinker, and Ludowici.

[100] Taipan Resources NL 06 [2000] ATP 15, [38].

[101] Ludowici Limited [2012] ATP 3.

[102] Joyce Moullakis, ASIC defends ‘truth in takeovers’ rules, 29 March 2012, The Australian Financial Review, <>.

[103] The Panel on Takeovers and Mergers (UK), The City Code on Takeovers and Mergers (10th ed, 2011), Rules 2.4(c), 31.5, 32.2.

[104] See Bryan Frith, British truth in takeovers regime trips up Kalahari, 5 May 2011, The Australian,

<> .

[105] The Takeover Panel Hearing Committee, ‘Reasons for the Hearings Committee’s Decision’, Panel Statement 2010/11, 25 May 2011.

[106] Ronald Barusch, Dealpolitik: Who Needs ‘Truth in Takeovers’? Not the U.S., 9 May 2012, <> .

[107] Ibid.

[108] Ibid.

[109] ASIC, Regulatory Guide 25 ‘Takeovers: false and misleading statements’, 22 August 2002, RG 25.10, 25.11; Corporations Act 2001 (Cth) s 602.

[110] Justin Mannolini, ‘Convergence or Divergence: Is there a Role for the Eggleston Principles in a Global M&A Environment?’ [2002] SydLawRw 16; (2002) 23(3) Sydney Law Review 336, 339.

[111] See Benedict Sheehy, above n 42, 218.

[112] Tony Greenwood, above n 38, 338.

[113] Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998 (Cth), [2.6], [2.10].

[114] See Justin Mannolini, above n 110, 339.

[115] Ibid, 342.

[116] OECD, Foreign direct investment: outward and inward stocks statistical data (2012), OECD <>

[117] See Justin Mannolini, above n 110, 342.

[118] Frank Easterbrook, ‘International Corporate Differences: Markets or Law?’ (1997) 9 Journal of Applied Corporate Finance 23, 29.

[119] CLERP 4, above n 39, 7.

[120] Jeffrey Lawrence, ‘Market Confidence and Securities Regulation: Empirical Insights’ (Working Paper, Centre for Corporate Law and Securities Regulation, University of Melbourne, 1996).

[121] Jeffrey Lawrence, ‘The Economics of Market Confidence: (Ac)Costing Securities Market Regulations’, (2000) 18 Companies and Securities Law Journal 171, 188 - 195.

[122] CLERP 4, above n 39, 7.

[123] Benedict Sheehy, above n 42, 220.

[124] Andrew Rich, Update on ‘truth in takeovers’ in Dulux / Alesco bid (11 October 2012), Herbert Smith Freehills

<> .

[125] Ibid.

[126] Explanatory Memorandum, Corporate Law Economic Reform Program Bill 1998, [3.44].

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