ASIC Class Order [CO 03/635]

Overview

The Australian Securities and Investments Commission Corporations Act 2001, enacted by the Australian Parliament, addresses the regulation of corporate activities within Australia, including takeover bids. The legislation was introduced to fill the need for a comprehensive regulatory framework that governs the conduct of corporations, ensuring transparency and fairness in corporate dealings. One specific issue the Act sought to address was the clarity and fairness in the information provided during takeover bids, particularly ensuring that the statements made by bidders and targets are accurate and not misleading. The legislative instrument F2007B00407, dated 22nd September 2003 and signed by Stephen Yen as a delegate of the Australian Securities and Investments Commission, provides an exemption under paragraph 655A(1)(a) of the Act. This exemption applies to statements that fairly represent an official person's statement or are correct and fair copies of public documents or previously published materials, provided they are unrelated to the takeover bid or the entities involved. This policy objective is to facilitate the accurate dissemination of information while avoiding unnecessary duplication and regulatory burdens during takeover activities.

Scope and Application

Under the Corporations Act 2001, paragraph 655A(1)(a) provides for an exemption concerning the disclosure requirements in subsections 636(3) and 638(5) of the Act for certain statements made by bidders and targets in the context of takeover bids. Specifically, this exemption applies to statements that are either fairly represented by an official person or are correct and fair copies of, or extracts from, public official documents or previously published materials. Importantly, these statements must not have been made or the documents published in connection with the takeover bid or in relation to the bidder, target, or any business, property, or person that is the subject of the bidder's or target's statement. This exemption is intended to alleviate some of the stringent disclosure obligations that might otherwise be imposed, provided the information presented is accurate and not directly connected to the takeover proceedings. The exemption applies nationally, covering all entities and persons involved in takeover activities within Australia, and is administered by the Australian Securities and Investments Commission.

Key Provisions

The Corporations Act 2001 (the "Act") includes provisions that govern corporate activities, including takeovers, by imposing various requirements on bidders and targets. Paragraph 655A(1)(a) of the Act, as modified by this legislative instrument, provides an exemption from certain sections of the Act under specific conditions. Specifically, subsections 636(3) and 638(5) of the Act, which pertain to the content and disclosure of bidder's or target's statements, are exempt if the statement includes or is accompanied by a statement that either fairly represents an official person's statement or is a correct and fair copy of, or extract from, a public official document or a previously published statement in a book, journal, or comparable publication. This exemption applies only if the statement or document was not created or published in relation to the takeover bid or the bidder, target, or any business, property, or person mentioned in the statement. This exemption imposes certain obligations on bidders and targets. They must ensure that any statements included in their bidder's or target's statements comply with the conditions set out in paragraph 655A(1)(a). This means that any official person's statement must be fairly represented, and any document or extract from a previously published statement must accurately reflect the original content and be unrelated to the takeover bid. This requirement ensures that the information presented is accurate and not misleading, maintaining the integrity of the takeover process. Failure to comply with the requirements of the Act, including the conditions set out in paragraph 655A(1)(a), can lead to significant consequences. The Act does not explicitly state the penalties for breach in this context, but generally, breaches of the Corporations Act can result in civil or criminal penalties. Civil penalties may include fines, injunctions, or orders for compensation, while criminal penalties may include fines and imprisonment, depending on the severity and intent behind the breach. The maximum penalties can vary widely based on the specific breach and the discretion of the court, but they are intended to deter non-compliance and enforce the integrity of corporate activities as governed by the Act.