EXPLANATORY STATEMENT
Statutory Rules 1983 NO. 318
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
COMPANIES (ACQUISITION OF SHARES) REGULATIONS (AMENDMENT)
Section 62 of the Companies (Acquisition of Shares) Act 1980 (“the Act”) provides in sub-section (1) that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Sub-section (2) of that section provides that the power of the Governor-General to make regulations shall be exercised only in accordance with advice that is consistent with resolutions of the Ministerial Council for Companies and Securities (“the Council”).
2. The Council was established under an agreement between the Commonwealth and the States, executed on 22 December 1978, (“the agreement”) that provides the framework for a co-operative Commonwealth-State scheme for a uniform system of law and administration in relation to company law and the regulation of the securities industry in the six States and the Australian Capital Territory.
3. Under sub-clause 45(1) of the agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purpose of the co-operative companies and securities scheme. Should the
Council approve any draft amending regulation which gives effect to such a proposal, the Commonwealth is then required, under sub-clause 45(2) of the agreement, to submit the draft regulation to the Federal Executive Council for making by the Governor-General.
4. The accompanying regulations are identical in form and substance to draft regulations approved by the Council.
5. The purpose of the accompanying regulations is:
(a) to change a reference in the Companies (Acquisition of Shares) Regulations (“the Regulations”) to “the Hobart Stock Exchange”; and
(b) to amend the note at the end of Form 7 in the Schedule of the Regulations as a consequence of an amendment made to section 43 of the Act by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (“the 1983 legislation”).
Reg 1 : Commencement
6. The accompanying regulations will come into operation on 1 January 1984. It is hoped that the 1983 legislation will also be able to be proclaimed on that date.
7. The accompanying regulations are expressed to be made in pursuance of section 4 of the Acts Interpretation Act 1901. That section provides that where an Act that does not come into operation immediately upon its enactment amends another Act in such a manner that the other Act, as amended, will confer power to make regulations then, unless the contrary intention appears, that power may be exercised before the amending Act comes into operation. Any regulations made in
pursuance of that power take effect on the day on which the amending Act comes into operation or on the day on which the regulations would have taken effect if the amending Act had been in operation when the regulations were made, whichever is the later.
Reg 2 : Declared stock exchanges for the purposes of the Act
8. Present regulation 4 of the Regulations declares “The Hobart Stock Exchange” to be one of the stock exchanges for the purposes of the Act. The accompanying regulations replace the reference to “The Hobart Stock Exchange” by a reference to “The Hobart Stock Exchange Limited”. The Hobart Stock Exchange Limited, a company limited by guarantee, has now taken over the operation of the stock exchange in Hobart which was previously conducted by a body corporate known as The Hobart Stock Exchange under The Hobart Stock Exchange Act 1891.
Reg 3: Amendment to Form 7 of the Regulations
9. Under sub-section 43(4) of the Act, where a bidder has become entitled to 90% of the voting shares in a target company during the course of a take-over, the bidder is required within one month to give a prescribed notice to the holders of non-voting shares, renounceable options or convertible notes (“the relevant holders”). The prescribed notice is Form 7 of the Regulations. This form notifies the relevant holders of their entitlements, pursuant to sub-section 43(6) of the Act, to require the bidder to acquire the shares, options or notes of the relevant holders within 3 months.
10. Sub-section 43(5) of the Act has been omitted by s.9 of the 1983 legislation and substituted with new sub-sections 43(5), (5A) and (5B). The effect of these amendments is:
(a) If the Form 7 notice proposes terms for acquisition, it must be accompanied by a report of an independent expert stating whether, in his opinion, the terms proposed are fair and reasonable (see sub-sections 43(5) and (5B)); and
(b) Where there are 2 or more experts’ reports, a copy of each report must accompany the notice (see sub-section 43(5A)).
11. The accompanying regulations amend the Note to Form 7 to take account of these amendments made by the 1983 Bill.
Overview
The Companies (Acquisition of Shares) Regulations (Amendment) Statutory Rules 1983 No. 318 were enacted to amend existing regulations in the context of the Companies (Acquisition of Shares) Act 1980. These amendments were necessary to reflect changes brought about by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983, which introduced new requirements for bidder notices to holders of non-voting shares, renounceable options, or convertible notes during a takeover bid. The amendments were issued by the authority of the Attorney-General and follow the advice of the Ministerial Council for Companies and Securities, established under an agreement between the Commonwealth and the states to facilitate a uniform system of law and administration in company law and securities regulation. The primary objective of these regulations is to update references and notices to align with the changes in the name of the Hobart Stock Exchange and to ensure that bidder notices comply with the new expert report requirements.
The regulations became effective on 1 January 1984, allowing for the timely application of the legislative changes. They were made under the authority of the Acts Interpretation Act 1901, which permits the exercise of regulatory powers before the amending Act comes into force. The regulations replace references to "The Hobart Stock Exchange" with "The Hobart Stock Exchange Limited" to reflect the corporate transition and modify the notice requirements in Form 7 to incorporate the new independent expert report obligations as stipulated in the 1983 amendments.
Scope and Application
The Companies (Acquisition of Shares) Regulations (Amendment) Statutory Rules 1983 NO. 318 are designed to bring the regulations into alignment with recent legislative changes and operational shifts in the securities industry. These regulations apply to entities and individuals involved in the acquisition of shares in companies, specifically targeting those who must adhere to the notice and reporting requirements under the Companies (Acquisition of Shares) Act 1980. The regulations govern the conduct of bidders in take-over scenarios and the obligations of stock exchanges, thereby impacting companies and financial entities operating within Australia. Geographically, the regulations have a national reach, affecting all states and territories in Australia as they pertain to the uniform system of company law and securities regulation established under the Ministerial Council for Companies and Securities. The regulations exclude any entities or conduct not directly related to the acquisition of shares in compliance with the specified statutory requirements. The amendments made by these regulations do not introduce new exclusions but rather refine existing regulatory obligations to reflect changes in the legislative framework and operational structures of stock exchanges.
Key Provisions
The Companies (Acquisition of Shares) Regulations (Amendment) Statutory Rules 1983 No. 318, issued under the authority of the Attorney-General, primarily modify existing regulations concerning the acquisition of shares by companies. Regulation 2 alters the reference to "The Hobart Stock Exchange" in the Companies (Acquisition of Shares) Regulations to "The Hobart Stock Exchange Limited", reflecting the change in the legal entity operating the stock exchange. Regulation 3 updates Form 7, the prescribed notice that must be given to certain shareholders when a bidder has acquired 90% of the voting shares of a target company. This amendment ensures that the notice now requires an independent expert's report on the fairness and reasonableness of the proposed terms of acquisition, as well as a copy of each report if multiple experts are involved, in line with changes to the underlying Act made by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983.
These regulations impose several obligations on parties involved in share acquisitions. Firstly, they mandate that any bidder who has acquired 90% of the voting shares in a target company must provide the remaining shareholders, who hold non-voting shares, renounceable options, or convertible notes, with a notice (Form 7) detailing their entitlements under the Act. This notice must be delivered within one month of the bidder acquiring the 90% threshold. Secondly, the notice must be accompanied by a report from an independent expert stating whether the terms proposed for the acquisition are fair and reasonable. If there are multiple expert reports, all must be included with the notice. These requirements aim to ensure transparency and fairness in the acquisition process, protecting the interests of minority shareholders.
Breaches of these regulations may have legal consequences. While the explanatory statement does not explicitly outline specific offences or penalties, violations of the Companies (Acquisition of Shares) Act 1980 or its regulations can generally result in civil or criminal penalties. For instance, failure to provide the required notice or the expert report could lead to legal actions by affected shareholders seeking redress. Additionally, under the parent Act, individuals or companies found to be in breach of its provisions may face fines or other penalties as determined by the courts. The exact penalties would depend on the nature and severity of the breach, as well as relevant jurisdictional statutes.