EXPLANATORY STATEMENT
STATUTORY RULES 1982 NO. 130
Issued by the authority of the Attorney-General
AMENDMENT OF THE COMPANIES (ACQUISITION OF SHARES) REGULATIONS
On 22 December 1978 the Commonwealth and the States executed a Formal 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. The Agreement is set out in the Schedule to the National Companies and Securities Commission Act 1979 (NCSC Act). The purpose of the NCSC Act is to establish the National Companies and Securities Commission (NCSC).
Under clause 32 of the Formal Agreement, the NCSC is to have responsibility for the entire area of policy and administration with respect to company law and the regulation of the securities industry, subject to directions by the Ministerial Council for Companies and Securities. The Ministerial Council consists of Commonwealth and State Ministers responsible for administering the law relating to companies and the regulation of the securities industry, or their delegates, or Ministers acting in their office. (Formal Agreement, clauses 19 and 20).
Under sub-clause 45(1) of the Formal Agreement, the Ministerial Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purposes of the co-operative scheme. Should the Ministerial 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.
The Companies (Acquisition of Shares) Act 1980 regulates the acquisition of shares by a person who holds between 20% and 90% of the voting shares of a company, or whose holding would increase to more than 20% after an acquisition. The Companies (Acquisition of Shares) Regulations set out the forms, notices, and other matters required under the Companies (Acquisition of Shares) Act 1980.
The purpose of the accompanying Regulation is to prescribe matters and reports for the purposes of paragraph 16(2A)(a) of the Companies (Acquisition of Shares) Act 1980. This Regulation is consequent upon Part IV of the Companies (Acquisition of Shares) Amendment Act (No.2) 1981, which amends section 16 of the Companies (Acquisition of Shares) Act 1980 by inserting sub-section 16(2A). Part IV of the Companies (Acquisition of Shares) Amendment Act (No.2) 1981 does not come into operation until the date on which the Companies Act 1981 comes into operation. The Ministerial Council has agreed that 1 July 1982 will be the commencement date of the Companies Act 1981.
The effect of the Regulation is that, in addition to the information referred to in Part A of the Schedule to the Companies (Acquisition of Shares) Act 1980, a Part A statement will be required to set out certain prescribed matters and contain certain prescribed reports where the statement relates to an offer to acquire shares where the consideration is or includes shares or debentures. These prescribed matters and reports are similar to those referred to in sub-paragraphs 1(e)(i) and (ii) of Part A of the Schedule to the Companies (Acquisition of Shares) Act 1980. Sub-paragraphs 1(e)(i) and (ii) will be omitted from the Act as a consequence of the repeal of the Fifth Schedule to the ACT Companies Ordinance 1962 upon the commencement of the Companies Act 1981.
The Ministerial Council has passed the following resolution:
“Resolved pursuant to clause 45 of the Formal Agreement that the draft Companies (Acquisition of Shares) Regulations (Amendment). (S.R. 111/82) being as set out in the print dated 13 May, 1982, be approved.”
Overview
The Companies (Acquisition of Shares) Regulations (Amendment) 1982, issued under the authority of the Attorney-General, were enacted to address a gap in the requirements for disclosure in cases where a company is offering shares or debentures as part of the consideration in an acquisition. This amendment follows the implementation of 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, as established by the National Companies and Securities Commission Act 1979. The policy objective behind this regulation is to ensure that shareholders receive adequate information about the nature and value of the consideration being offered in share acquisition transactions, thereby promoting transparency and protecting the interests of shareholders. The Ministerial Council for Companies and Securities approved this draft regulation, which was then submitted to the Federal Executive Council for making by the Governor-General.
Scope and Application
The Companies (Acquisition of Shares) Regulations (Amendment) 1982 amends the Companies (Acquisition of Shares) Regulations to prescribe additional information that must be included in Part A statements when a bid for shares involves securities as consideration. The Regulations apply to persons and entities involved in the acquisition of shares in companies, particularly those increasing their shareholding from below to above the 20% threshold, or those already holding between 20% and 90% of a company's voting shares. The scope of the Regulations extends across the Commonwealth and the states and territories involved in the co-operative scheme under the National Companies and Securities Commission Act 1979. The Regulations do not explicitly state any exclusions or thresholds but focus on ensuring that relevant disclosures are made when securities are part of the consideration for the acquisition of shares. The Regulations' application can be extended or modified through subordinate instruments approved by the Ministerial Council and subsequently submitted to the Federal Executive Council for making by the Governor-General.
Key Provisions
The main operative sections of the Companies (Acquisition of Shares) Regulations, as amended, require the submission of a Part A statement to the relevant authority whenever a person proposes to acquire shares in a company where the consideration is or includes shares or debentures. This statement must include certain prescribed matters and reports, in addition to the information required under Part A of the Schedule to the Companies (Acquisition of Shares) Act 1980 (section 16(2A)(a)). These additional prescribed matters and reports are intended to ensure transparency and provide relevant information to stakeholders, particularly in cases where shares or debentures are part of the consideration for the acquisition.
The Regulations impose specific obligations on parties involved in an acquisition of shares, particularly those who hold between 20% and 90% of the voting shares of a company or whose holding would increase to more than 20% as a result of the acquisition. They must ensure that the Part A statement is complete and accurate, detailing the prescribed matters and reports. These obligations extend to the disclosure of financial information, the status of the securities offered, and any material changes that may affect the value of the consideration. The Regulations also mandate the filing of the statement with the relevant authorities within a specified timeframe to facilitate the review and approval process.
Breaches of the Companies (Acquisition of Shares) Regulations may result in both civil and criminal consequences. Under section 1311E of the Corporations Act 2001, a person who contravenes a provision of the Regulations may be subject to a pecuniary penalty, the maximum being 5,000 penalty units for a corporation and 100,000 penalty units for an individual, depending on the severity and intent of the breach. Additionally, the Australian Securities and Investments Commission (ASIC) may seek court orders for injunctions or other remedies to enforce compliance. In serious cases, individuals involved in the breach could also face criminal charges, which may result in fines or imprisonment, further underscoring the importance of adherence to the Regulations.