Simpler Regulatory System: takeover rules changes

The Corporations Legislation Amendment (Simpler Regulatory System) Bill 2007 when passed will make amendments to the takeovers provisions in the Corporations Act.

Removal of telephone monitoring during takeover bids
The provisions of the Corporations Act that require the recording, storing, destroying, accessing and copying of the recordings of telephone conversations with retail shareholders during takeover bids are repealed.

The purpose of the subdivision was to ensure that security holders did not receive information from the takeover bidder or target that could be considered misleading.

The existing provisions have not increased the protection of security holders and impose significant costs on the parties involved.

The repeal of the telephone monitoring requirements will take effect on the day of Royal Assent.

85 per cent notices
The provisions of the Corporations Act that require the disclosure of an 85 per cent holding are repealed.

The provisions were enacted to provide holders of securities with an advanced warning that the majority holder is approaching the 90 per cent limit, at which the majority holder can compulsorily acquire their securities.

However, it is often the case that the minority are already aware of the majority holder’s position.  For listed entities, other mechanisms in the Corporations Act will mean that the information is already publicly disclosed.

The repeal of the 85 per cent notice requirement will take effect on the day of Royal Assent.