Takeovers Panel jurisdiction limited

The Takeovers Panel has commented on the decision of the Full Court of the Federal Court in Australian Pipeline Limited  v Alinta Limited [2007] FCAFC 55 relating to the Panel's declaration of unacceptable circumstances by Alinta in acquiring a relevant interest in stapled securities in Australian Pipeline Trust in breach of section 606 of the Corporations Act in June and August 2006.

The Federal Court (Finkelstein J dissenting) declared that section 657A(2)(b) of the Corporations Act 2001 is invalid. The Court discussed the operation of section 657A(2)(a) but did not find it to be invalid. The Federal Court found that section 657A(2)(b) which seeks to confer on the Takeovers Panel the judicial power of the Commonwealth, was in contravention of Chapter 3 of the Constitution of Australia.

On the basis that the declaration of invalidity made by the Federal Court is limited to section 657A(2)(b), and the Federal Court made no declaration in relation to section 657A(2)(a),the Panel considers that it is not prevented from operating in reliance on section 657A(2)(a).

Following the decision of the Federal Court the Panel will decline to accept applications which seek a declaration of unacceptable circumstances based on section 657A(2)(b) or which make allegations of contraventions of the Corporations Act.

see 3 May update