Overview

ASIC Class Order [CO 09/68] was enacted to provide relief from certain prospectus and Product Disclosure Statement (PDS) requirements under the Corporations Act 2001, facilitating Australian participation in foreign scrip takeovers. This class order was introduced to address the problem of potential deterrence for bidders to extend foreign scrip takeovers to Australian investors due to the requirement of preparing a prospectus or PDS. The order aims to allow Australian investors to participate on the same basis as overseas investors, provided that certain safeguards are in place. The relief applies to foreign scrip takeovers where Australian residents hold no more than 10% of the bid class securities and other conditions are met, such as the securities being quoted on an approved foreign market and the takeover being regulated in that jurisdiction. The policy objective is to ensure that Australian investors receive the same terms and conditions as their overseas counterparts while maintaining compliance with relevant regulatory requirements.

Scope and Application

The ASIC Class Order [CO 09/68], made under the Corporations Act 2001, provides relief from certain disclosure requirements for foreign scrip takeovers involving securities or interests in managed investment schemes offered as consideration, aiming to facilitate Australian investors' participation in these takeovers under specific conditions. The relief applies to offers where Australian residents hold no more than 10% of the bid class securities or interests, provided that the bid class securities are quoted on an approved foreign market, the takeover is regulated in the jurisdiction of that market, and the bid document is made available to Australian offerees in English or the language typically used by the target to communicate with holders of bid class securities. Additionally, the offer to Australian investors must be on terms at least as favourable as those offered to foreign investors, and reasonable steps must be taken to ensure the takeover complies with relevant regulatory requirements. This Class Order extends to the Commonwealth of Australia and applies to any person or entity involved in the specified transactions, ensuring that Australian investors are not disadvantaged in foreign scrip takeovers while maintaining appropriate regulatory safeguards.

Key Provisions

The main operative sections of ASIC Class Order [CO 09/68] are intended to provide conditional relief from the prospectus and Product Disclosure Statement (PDS) requirements for securities and interests in managed investment schemes offered under certain foreign scrip takeovers. Specifically, section 1 of the Class Order outlines the circumstances under which relief is granted: this includes situations where Australian residents hold no more than 10% of the bid class securities (subsection 3(a)), the securities are quoted on an approved foreign market and the takeover is regulated in the jurisdiction of an approved foreign market (subsection 3(b)), and certain disclosure provisions are met (subsection 3(c) and (d)). Section 2 of the Class Order specifies that the person relying on the relief must take reasonable steps to ensure the takeover is conducted in accordance with relevant regulatory requirements (subsection 3(e)). The Class Order imposes several obligations on the parties or entities it governs. Firstly, bidders must determine the percentage of Australian residents holding bid class securities within a fixed 30-day period before making offers under the takeover (subsection 3(a)). Secondly, bidders must ensure that an English version of the bid document, or the bid document in the language typically used by the target to communicate with holders of bid class securities or interests, is provided to Australian offerees (subsection 3(c)). Thirdly, bidders must offer Australian offerees terms that are at least as favourable as those offered to foreign offerees (subsection 3(d)). Finally, bidders must take all reasonable steps to ensure that the foreign scrip takeover is carried out in accordance with the relevant regulatory requirements (subsection 3(e)). The Class Order does not explicitly outline offences, penalties, or consequences for breach. However, non-compliance with the obligations and requirements outlined in the Class Order could potentially result in legal action being taken by ASIC under the Corporations Act 2001. Such action could include the imposition of civil penalties, fines, or other enforcement measures. Additionally, failure to comply with the regulatory requirements of the jurisdiction in which the takeover is regulated could result in legal action being taken by the relevant regulatory authority in that jurisdiction. It is important to note that the maximum penalties for breaches of the Corporations Act 2001 and other relevant legislation will depend on the specific circumstances of the breach and the severity of the offence.