ASIC CLASS ORDER [CO 09/68]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 09/68] Prospectus and PDS relief for foreign scrip takeovers under subsections 741(1) and 1020F(1) of the Corporations Act 2001 (the Act).

Subsection 741(1) provides that ASIC may declare that Chapter 6D of the Act applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration.

Subsection 1020F(1) provides that ASIC may declare that Part 7.9 of the Act applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.

1. Background

A foreign scrip takeover is a foreign regulated takeover where securities or interests in a managed investment scheme form all or part of the consideration offered under the takeover.

In the absence of an applicable exemption, a prospectus or PDS is required if an offer of securities or interests in a managed investment scheme is made in Australia under a foreign scrip takeover.  The requirement to prepare a prospectus or PDS may deter bidders from extending foreign scrip takeovers to Australian investors.

2. Purpose of the class order

The purpose of Class Order [CO 09/68] is to provide conditional prospectus and PDS relief for securities and interests in managed investment schemes offered as consideration under certain foreign regulated takeovers where Australian residents hold no more than 10% of the bid class securities.

The Class Order is intended to facilitate participation by Australian investors in foreign scrip takeovers on the same basis as overseas investors where suitable safeguards are in place.

3. Operation of the class order

[CO 09/68] provides relief from the prospectus and PDS provisions in Parts 6D.2 and 6D.3 and sections 1012A, 1012B and 1012C for offers of securities or interests in managed investment schemes under foreign scrip takeovers where:

(a)         Australian residents hold no more than 10% of the bid class securities or interests (determined at a time, fixed by the bidder, in the 30-day period before offers are first made under the takeover);

(b)         the bid class securities or interests are quoted on an approved foreign market and the takeover is regulated in the jurisdiction of an approved foreign market;

Note: The scrip offered as consideration for the acquisition of bid class securities or interests does not have to be in a class that is quoted on an approved foreign market.

(c)         for a bid document provided to foreign offerees:

(i)                 an English version of the bid document; or

(ii)               if no English version of the bid document is available, the bid document in the language typically used by the target to communicate with holders of bid class securities or interests,

is given or made available to Australian offerees;

(d)         the offer made to Australian offerees is on terms that are at least as favourable as offers that are made to foreign offerees; and

(e)         the person relying on the relief takes all reasonable steps to ensure that the foreign scrip takeover is carried out in accordance with the relevant regulatory requirements.

Note: where a financial services licensee who is not an associate of the bidder wishes to rely on relief from s1012A, the requirement in paragraph (e) is replaced with a requirement that the licensee has no reason to suspect that the foreign scrip takeover is not made in accordance with the relevant regulatory requirements.

4. Consultation

The declarations in [CO 09/68] were the subject of public consultation in Consultation Paper 79 Disclosure relief for foreign scrip takeovers (CP 79), which foreshadowed this relief and was published on our website (at www.asic.gov.au). Submissions received were supportive of the proposed relief in CP 79.