EXPLANATORY STATEMENT
STATUTORY RULES NO. 244 /84
ATTORNEY-GENERAL
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 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 Ministerial Council).
The Ministerial Council has resolved that the accompanying regulations should be made under the Act.
The purpose of the accompanying regulations is to make provision for the service of prescribed notices under sections
42 and 43 of the Act either personally or by post and for a new manner in which those notices are to be signed.
Details of the accompanying regulations are as follows:
Regulation 1 - Service of Notices
Section 42 of the Act contains provisions relating to acquisition of the shares of minority shareholders who do not accept take-over offers in respect of their shares. Sub-sections 42(2) and (3) allow a person who proposes to acquire all the shares in a company (and who has made offers under a take-over scheme or an on-market take-over announcement accordingly) to acquire compulsorily the shares of the remaining shareholders in certain circumstances, provided he gives the required acquisition notice to those shareholders within one month of the close of his bid. The prescribed notices for the purposes of sub-section 42(2) and (3) of the Act are Forms 3 and 4 in the Schedule to the Companies (Acquisition of Shares) Regulations - the Regulations (see regs. 10 and 11 of the Regulations).
Section 43 of the Act contains provisions to protect the rights of remaining shareholders and holders of options and convertible notes who have not accepted the bid for their holdings. Sub-section 43(1) provides that a person who, after making a take-over offer under a take-over scheme or an
on-market announcement, is entitled to more than 90% of the voting shares in a company, is required to notify the remaining shareholders. Those shareholders, by virtue of sub-sections 43(2) and (3), then have 3 months in which to require the persons to acquire their shares on the same terms as under the offer or on-market announcement. The prescribed notices for the purposes of sub-section 43(1) of the Act are Forms 5 and 6 in the Schedule to the Regulations (see regs. 12 and 13 of the Regulations). Where a bidder attains 90% of all the voting shares, he must, pursuant to sub-section 43(4), also give notice to the holders of non-voting shares, convertible notes and renounceable options. The prescribed notice for the purposes of sub-section 43(4) is Form 7 in the Schedule to the Regulations (see reg. 14 of the Regulations). There is no provision in sections 42 and 43 of the Act for the service of the above notices by post.
New regulation 15 in the Regulations specifies the manner in which the above notices may be served. The manner of service is either delivery of the notice to the relevant person personally or sending the notice by prepaid post addressed to the person at his usual or last known place of residence or business.
Regulation 2 - Schedule
Forms 3, 4, 5, 6 and 7 in the Schedule to the Regulations, referred to above, are required to be signed in the same manner as a Part A statement is required to be signed by
principal executive officer of the corporation or each of those corporations. Where the offeror is or includes a natural person or natural persons, the present signature requirements will continue to apply.
Overview
The Companies (Acquisition of Shares) Regulations (Amendment) 2004 was enacted to amend the Companies (Acquisition of Shares) Regulations 1984, clarifying the manner in which prescribed notices must be served under sections 42 and 43 of the Companies (Acquisition of Shares) Act 1980. The Act was introduced to address the gap in the regulatory framework concerning the service of notices to shareholders during a takeover bid, which previously lacked specific provisions for service by post. The regulations were issued by the Attorney-General under the authority granted by section 62 of the Act and were made in accordance with resolutions of the Ministerial Council for Companies and Securities. The policy objective behind these amendments was to ensure that the prescribed notices could be served either personally or by post, thus providing greater flexibility and efficiency in the communication process for both the offeror and the shareholders involved in a takeover bid.
Scope and Application
The Companies (Acquisition of Shares) Regulations (Amendment) addresses the procedural aspects of share acquisition notices under the Companies (Acquisition of Shares) Act 1980, specifically focusing on the service and signing of prescribed notices. These regulations apply to all entities and individuals involved in share acquisition transactions as outlined in sections 42 and 43 of the Act. The Act's jurisdiction is national, applying across Australia as it is a Commonwealth Act. The regulations do not exclude any specific persons, entities, or industries, but rather extend to all who are subject to the requirements of the Act concerning the acquisition of shares. The new regulations allow for the service of notices either personally or by prepaid post, providing flexibility in how these notices must be delivered to affected shareholders. Furthermore, the regulations modify the signature requirements for these notices, aligning them with the signing requirements for a Part A statement by the principal executive officer of the corporation, while maintaining the existing signature requirements for natural persons. This amendment ensures that the procedural aspects of the Act are clearly defined and can be effectively implemented.
Key Provisions
The key provisions of the Companies (Acquisition of Shares) Regulations (Amendment) involve amendments to the service of acquisition notices and the manner in which these notices are signed. Regulation 1 provides that the prescribed notices under sections 42 and 43 of the Companies (Acquisition of Shares) Act 1980 (the Act) can be served either personally or by prepaid post, which is a new provision not previously included in the Act (Reg. 15). This regulation ensures that the notices can be delivered either directly to the shareholders or by mail, expanding the methods by which the notices can be effectively communicated. Regulation 2 amends the signature requirements for the notices listed in the Schedule to the Regulations (Forms 3, 4, 5, 6, and 7). These forms now must be signed in the same manner as a Part A statement, which means they should be signed by the principal executive officer of the corporation or each of those corporations. If the offeror includes a natural person or natural persons, the existing signature requirements will continue to apply.
The obligations imposed by these regulations on the parties involved include the requirement to serve the acquisition notices either personally or by prepaid post within the specified timeframes as outlined in the Act. The notices must be sent within one month of the close of the bid for shares under section 42, and within specific periods after attaining a majority stake under section 43 (Regs. 10-14). Furthermore, these notices must be signed appropriately in line with the new regulations, ensuring that they meet the legal requirements for enforceability and validity.
Failure to comply with these regulations can result in civil or criminal consequences, depending on the severity of the breach. For instance, not serving the notices within the specified periods may lead to legal challenges from shareholders who feel their rights have been infringed. Additionally, if the notices are not signed correctly, they may be deemed invalid, which could result in the take-over bid being contested. The penalties for such breaches, however, are not explicitly stated in the regulations themselves but would generally fall under the penalties provided by the Companies Act or other relevant legislation.