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CORPORATIONS ACT 2001 - SECT 609B

Another situation not giving rise to relevant interests--securities subject to escrow agreement in connection with initial public offer etc.

Bodies corporate

  (1)   A body corporate does not have a relevant interest in securities that are its own securities (the escrow securities ) merely because, under an agreement entered into by the body corporate with the holder of the escrow securities (the escrow agreement ), the body corporate applies restrictions on the disposal of the escrow securities by the holder.

  (2)   However, subsection   (1) applies only if:

  (a)   all of the following apply:

  (i)   the body corporate enters into the escrow agreement in connection with an offer of securities in the body corporate that are in a class of securities that are to be quoted on a prescribed financial market (the initial public offer );

  (ii)   the escrow securities are in the same class of securities as those that are offered under the initial public offer;

  (iii)   the escrow agreement is covered by subsection   (5); or

  (b)   both of the following apply:

  (i)   the escrow securities are issued as consideration for the acquisition of a business under a separate agreement between the body corporate and the vendor of the business;

  (ii)   the escrow agreement is covered by subsection   (5).

Underwriters, lead managers and joint lead managers

  (3)   A person does not have a relevant interest in the escrow securities merely because, under an agreement entered into by the person with the holder of the escrow securities in the ordinary course of the person's business as an underwriter, lead manager or joint lead manager, the person applies restrictions on the disposal of the escrow securities by the holder.

  (4)   However, subsection   (3) applies only if:

  (a)   the person enters into the agreement mentioned in that subsection in connection with the initial public offer; and

  (b)   the escrow securities are in the same class of securities as those that are covered by the initial public offer; and

  (c)   the agreement mentioned in that subsection is covered by subsection   (5).

Agreement requirements

  (5)   An agreement relating to the escrow securities is covered by this subsection if:

  (a)   the agreement does not restrict the exercise of voting rights attaching to the escrow securities; and

  (b)   in the case of a takeover bid (including a proportional takeover bid):

  (i)   the agreement allows each holder of the escrow securities to accept into the takeover bid where the holders of at least half of the bid class securities that are not subject to escrow have accepted into the bid; and

  (ii)   the agreement requires that the escrow securities be returned to escrow if the bid does not become unconditional; and

  (c)   the agreement allows the escrow securities to be transferred or cancelled as part of a merger by way of a compromise or arrangement under Part   5.1; and

  (d)   the agreement terminates no later than:

  (i)   if the person who entered into the agreement is the body corporate mentioned in subsection   (1)--2 years after the agreement is entered into; or

  (ii)   otherwise--1 year after the agreement is entered into; and

  (e)   if the agreement permits the holder to create a security interest in some or all of the escrow securities in favour of a person who does not have a relevant interest in the escrow securities because of subsection   609(1)--the agreement requires that the holder must not create a security interest in favour of the person unless the person has agreed in writing to take or acquire the security interest in the escrow securities subject to the terms of the agreement; and

  (f)   if the agreement permits the holder to transfer the holder's interests in the escrow securities to another person--requires that the holder must not do so if:

  (i)   the transfer would result in a change in the beneficial ownership of the escrow securities; or

  (ii)   the transfer would result in an extension in the period of the agreement; or

  (iii)   the transferee does not agree to be subject to the same restrictions on disposal of the escrow securities under the agreement.


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