Corporations Act 2001
CCH note - modifying legislative instruments: The application of Ch 6 is affected by the following legislative instruments that commenced or were amended on or after 1 January 2022: the ASIC Corporations (Takeover Bids) Instrument 2023/683; the ASIC Corporations (Warrants: Relevant Interests and Associations) Instrument 2023/687; the ASIC Corporations (Replacement Bidder ' s and Target ' s Statements) Instrument 2023/688; and the ASIC Corporations (Relief to Facilitate Admission of Exchange Traded Funds) Instrument 2024/147.
For other legislative instruments or class orders before 1 January 2022 that affect the application of Ch 6, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
Note: This Chapter only applies to acquisitions of interests in a CCIV if the CCIV is a listed company: see Division 1 of Part 8B.7 .
Bodies corporate
609B(1)
A body corporate does not have a relevant interest in securities that are its own securities (the escrow securities ) merely because, under an agreement entered into by the body corporate with the holder of the escrow securities (the escrow agreement ), the body corporate applies restrictions on the disposal of the escrow securities by the holder.
609B(2)
However, subsection (1) applies only if: (a) all of the following apply:
(i) the body corporate enters into the escrow agreement in connection with an offer of securities in the body corporate that are in a class of securities that are to be quoted on a prescribed financial market (the initial public offer );
(ii) the escrow securities are in the same class of securities as those that are offered under the initial public offer;
(b) both of the following apply:
(iii) the escrow agreement is covered by subsection (5) ; or
(i) the escrow securities are issued as consideration for the acquisition of a business under a separate agreement between the body corporate and the vendor of the business;
(ii) the escrow agreement is covered by subsection (5) .
Underwriters, lead managers and joint lead managers
609B(3)
A person does not have a relevant interest in the escrow securities merely because, under an agreement entered into by the person with the holder of the escrow securities in the ordinary course of the person ' s business as an underwriter, lead manager or joint lead manager, the person applies restrictions on the disposal of the escrow securities by the holder.
609B(4)
However, subsection (3) applies only if: (a) the person enters into the agreement mentioned in that subsection in connection with the initial public offer; and (b) the escrow securities are in the same class of securities as those that are covered by the initial public offer; and (c) the agreement mentioned in that subsection is covered by subsection (5) .
Agreement requirements
609B(5)
An agreement relating to the escrow securities is covered by this subsection if: (a) the agreement does not restrict the exercise of voting rights attaching to the escrow securities; and (b) in the case of a takeover bid (including a proportional takeover bid):
(i) the agreement allows each holder of the escrow securities to accept into the takeover bid where the holders of at least half of the bid class securities that are not subject to escrow have accepted into the bid; and
(c) the agreement allows the escrow securities to be transferred or cancelled as part of a merger by way of a compromise or arrangement under Part 5.1 ; and (d) the agreement terminates no later than:
(ii) the agreement requires that the escrow securities be returned to escrow if the bid does not become unconditional; and
(i) if the person who entered into the agreement is the body corporate mentioned in subsection (1) - 2 years after the agreement is entered into; or
(e) if the agreement permits the holder to create a security interest in some or all of the escrow securities in favour of a person who does not have a relevant interest in the escrow securities because of subsection 609(1) - the agreement requires that the holder must not create a security interest in favour of the person unless the person has agreed in writing to take or acquire the security interest in the escrow securities subject to the terms of the agreement; and (f) if the agreement permits the holder to transfer the holder ' s interests in the escrow securities to another person - requires that the holder must not do so if:
(ii) otherwise - 1 year after the agreement is entered into; and
(i) the transfer would result in a change in the beneficial ownership of the escrow securities; or
(ii) the transfer would result in an extension in the period of the agreement; or
(iii) the transferee does not agree to be subject to the same restrictions on disposal of the escrow securities under the agreement.
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