Corporations Act 2001

CHAPTER 6A - COMPULSORY ACQUISITIONS AND BUY-OUTS  

SECTION 660A  

660A   CHAPTER EXTENDS TO SOME LISTED BODIES THAT ARE NOT COMPANIES  

This Chapter extends to the acquisition of securities of listed bodies that are not companies but are incorporated or formed in Australia in the same way as it applies to the acquisition of securities of companies.

Note 1: Section 9 defines company and listed .

Note 2: This Chapter only applies to the acquisition of securities in a CCIV if the CCIV is a listed company: see section 1240E .

SECTION 660B   CHAPTER EXTENDS TO LISTED REGISTERED SCHEMES  

660B(1)    
This Chapter extends to the acquisition of interests in a registered scheme that is also listed as if:

(a)    the scheme were a company; and

(b)    interests in the scheme were shares in the company; and

(c)    voting interests in the scheme were voting shares in the company.

660B(2)    
If Part 6A.1 applies to a scheme at the end of the bid period for a takeover, that Part continues to apply to the scheme in relation to the takeover bid even if the scheme ceases to be listed.

660B(3)    
If Part 6A.2 applies to a scheme when a compulsory acquisition notice under section 664C is lodged, that Part (including Division 2 of that Part) continues to apply to the scheme in relation to the notice even if the scheme ceases to be listed.

660B(4)    

The regulations may modify the operation of this Chapter as it applies in relation to the acquisition of interests in listed registered schemes.

SECTION 660C  

660C   CHAPTER DOES NOT APPLY TO MCIs  

This Chapter does not apply to MCIs.

PART 6A.2 - GENERAL COMPULSORY ACQUISITIONS AND BUY-OUTS  

Division 1 - Compulsory acquisition of securities by 90% holder  

SECTION 664A   THRESHOLD FOR GENERAL COMPULSORY ACQUISITION POWER  

90% holder - holder of 90% of securities in particular class

664A(1)    
A person is a 90% holder in relation to a class of securities of a company if the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% of the securities (by number) in that class.

90% holder - holder with 90% voting power and 90% of whole company or scheme

664A(2)    
A person is also a 90% holder in relation to a class of securities of a company if:

(a)    the securities in the class are shares or convertible into shares; and

(b)    the person ' s voting power in the company is at least 90%; and

(c)    the person holds, either alone or with a related body corporate, full beneficial interests in at least 90% by value of all the securities of the company that are either shares or convertible into shares.

Note: Subsection 667A(2) provides that the expert ' s report that accompanies the compulsory acquisition notice must support the paragraph (c) condition.

90% holder may acquire remainder of securities in class

664A(3)    
Under this section, a 90% holder in relation to a class of securities of a company may compulsorily acquire all the securities in that class in which neither the person nor any related bodies corporate has full beneficial interests if either:

(a)    the holders of securities in that class (if any) who have objected to the acquisition between them hold less than 10% by value of those remaining securities at the end of the objection period set out in the notice under paragraph 664C(1)(b) ; or

(b)    the Court approves the acquisition under section 664F .

If subsection (2) applies to the 90% holder, the holder may compulsorily acquire securities in a class only if the holder gives compulsory acquisition notices in relation to all classes of shares and securities convertible into shares of which they do not already have full beneficial ownership.

Note: Subsection 92(3) defines securities for the purposes of this Chapter.

664A(4)    
This section has effect despite anything in the constitution of the company whose securities are to be acquired.

664A(5)    
This Part does not apply to shares that give the shareholder, as a shareholder, a right to occupy or use real property that the company owns or holds under lease, whether the right is a lease or licence or a contractual right.

664A(6)    
The 90% holder ' s power to compulsorily acquire securities under a notice given under section 664C ends if the 90% holder contravenes section 664D by offering benefits outside the terms proposed in the compulsory acquisition notice under section 664C .

SECTION 664AA  

664AA   TIME LIMIT ON EXERCISING COMPULSORY ACQUISITION POWER  

The 90% holder in relation to a class of securities of a company may compulsorily acquire securities in that class under section 664A only if the holder lodges the compulsory acquisition notice for the acquisition with ASIC under paragraph 664C(2)(a) within whichever of the following periods ends last:

(a)    the period of 12 months that started on 13 March 2000; or

(b)    the period of 6 months after the 90% holder becomes the 90% holder in relation to that class.

SECTION 664B   THE TERMS FOR COMPULSORY ACQUISITION  

664B(1)    
The 90% holder may acquire the securities in the class for a cash sum only and, subject to subsection (2) , must pay the same amount for each security in the class acquired.

664B(2)    

The 90% holder may pay different amounts for the securities in the class acquired if the differences are attributable to either or both of the following:

(a)    the fact that there are differences in the accrued dividend or distribution entitlements of the securities;

(b)    the fact that there are differences in the amounts paid up, or that remain unpaid, on the securities.

SECTION 664C   COMPULSORY ACQUISITION NOTICE  

Compulsory acquisition notice

664C(1)    
To compulsorily acquire securities under section 664A , the 90% holder must prepare a notice in the prescribed form that:

(a)    sets out the cash sum for which the 90% holder proposes to acquire the securities; and

(b)    specifies a period of at least 1 month during which the holders may return the objection forms; and

(c)    informs the holders about the compulsory acquisition procedure under this Part, including:

(i) their right to obtain the names and addresses of the other holders of securities in that class from the company register; and

(ii) their right to object to the acquisition by returning the objection form that accompanies the notice within the period specified in the notice; and

(d)    gives details of the consideration given for any securities in that class that the 90% holder or an associate has purchased within the last 12 months; and

(e)    discloses any other information that is:

(i) known to the 90% holder or any related bodies corporate; and

(ii) material to deciding whether to object to the acquisition; and

(iii) not disclosed in an expert ' s report under section 667A .

664C(2)    
The 90% holder must then:

(a)    lodge the notice with ASIC; and

(b)    give each other person (other than a related body corporate) who is a holder of securities in the class on the day on which the notice is lodged with ASIC:

(i) the notice; and

(ii) a copy of the expert ' s report, or of all experts ' reports, under section 667A ; and

(iii) an objection form; and

(c)    give the company copies of those documents; and

(d)    

give copies of those documents to the relevant market operator if the company is listed.

Note: Everyone who holds the securities on the day on which the notice is lodged with ASIC is entitled to notice. Under subsection 664E(1) , anyone who acquires the securities during the objection period may object to the acquisition.

Time for dispatching notice to holders

664C(3)    
The 90% holder must dispatch the notices under paragraph (2)(b) on the day the 90% holder lodges the notice with ASIC or on the next business day.

664C(4) - (5)    

(Repealed by No 69 of 2023, s 3, Sch 1[50] and [ 51] (effective 15 September 2023).)

Notice not to be withdrawn

664C(6)    
The 90% holder may not:

(a)    withdraw a notice under this section; or

(b)    if the 90% holder has given a notice under this section in relation to those securities and the objection period for that notice has not ended - give another notice under this section in relation to securities.

SECTION 664D   BENEFITS OUTSIDE COMPULSORY ACQUISITION PROCEDURE  

664D(1)    
If the 90% holder gives a notice under section 664C to compulsorily acquire securities, the 90% holder or an associate must not offer, give or agree to give a benefit to a person during the objection period if:

(a)    the benefit is likely to induce the person, or an associate of the person, to:

(i) dispose of securities in that class; or

(ii) not object to the acquisition of those securities under the notice; and

(b)    the benefit is not provided for in the notice.

664D(2)    
If the 90% holder proposes to give a notice under section 664C to acquire securities within the next 4 months, the 90% holder or an associate must not offer, give or agree to give a benefit to a person if:

(a)    the benefit is likely to induce the person, or an associate of the person, to:

(i) dispose of securities in that class; or

(ii) not object to the acquisition of those securities under the notice; and

(b)    the benefit is not proposed to be provided for in the notice.

664D(3)    
If the 90% holder gives a notice under section 664C to compulsorily acquire securities, the 90% holder or an associate must not give a benefit to a person:

(a)    within 1 month after the end of the objection period (see subsection 664F(2) ); or

(b)    during any proceedings by the Court to determine an application under subsection 664F(1) by the 90% holder;

if:

(c)    the benefit is likely to induce the person, or an associate of the person, to:

(i) not object, or pursue an objection, to the acquisition of those securities under the notice; or

(ii) dispose of securities in that class; and

(d)    the benefit is not offered to all holders of securities in that class under the notice.

664D(3A)    

An offence based on subsection (1) , (2) or (3) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

664D(4)    
This section does not prohibit simultaneous notices under section 664C to compulsorily acquire different classes of securities in the company.

SECTION 664E   HOLDER ' S RIGHT TO OBJECT TO THE ACQUISITION  

664E(1)    

A person who holds securities covered by the compulsory acquisition notice may object to the acquisition of the securities by signing an objection form and giving it to the 90% holder. The objection:

(a)    relates to all securities that are covered by the notice and are held by the person at the end of the objection period; and

(b)    cannot be withdrawn.

664E(2)    

The 90% holder must lodge with ASIC a copy of any objection form given under subsection (1) as soon as practicable after it is given.

664E(3)    
As soon as practicable after the end of the objection period, the 90% holder must:

(a)    prepare a list that sets out:

(i) the names of people who hold securities covered by the compulsory acquisition notice and have objected to the acquisition; and

(ii) details of the securities they hold; and

(b)    lodge the list with ASIC; and

(c)    give a copy of the list to the company; and

(d)    

if the company is listed - give a copy to the relevant market operator.

664E(4)    
If people who hold at least 10% of the securities covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, the 90% holder must give everyone to whom the compulsory acquisition notice was sent under section 664C :

(a)    a notice that the proposed acquisition will not occur; or

(b)    a notice that the 90% holder has applied to the Court for approval of the acquisition under section 664F ;

within 1 month after the end of the objection period.

664E(5)    

An offence based on subsection (2) , (3) or (4) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

SECTION 664F   THE COURT ' S POWER TO APPROVE ACQUISITION  

664F(1)    
If people who hold at least 10% of the securities covered by the compulsory acquisition notice object to the acquisition before the end of the objection period, the 90% holder may apply to the Court for approval of the acquisition of the securities covered by the notice.

664F(2)    
The 90% holder must apply within 1 month after the end of the objection period.

664F(3)    
If the 90% holder establishes that the terms set out in the compulsory acquisition notice give a fair value for the securities, the Court must approve the acquisition of the securities on those terms. Otherwise it must confirm that the acquisition will not take place.

Note: See section 667C on valuation.

664F(4)    
The 90% holder must bear the costs that a person incurs on legal proceedings in relation to the application unless the Court is satisfied that the person acted improperly, vexatiously or otherwise unreasonably. The 90% holder must bear their own costs.

SECTION 664G  

664G   SIGNPOST - COMPLETING THE ACQUISITION OF THE SECURITIES  

See section 666A for how to complete the acquisition.

Division 2 - Compulsory buy-out of convertible securities by 100% holder  

SECTION 665A   100% HOLDER MUST OFFER TO BUY OUT HOLDERS OF CONVERTIBLE SECURITIES  

665A(1)    
A person is a 100% holder of securities in a class if the person, either alone or with a related body corporate, holds full beneficial interests in all the securities in the class.

665A(2)    
A 100% holder in relation to a class of securities (the main class ) who becomes a 100% holder through compulsory acquisitions under this Part must offer to buy out the holders of securities in another class that are convertible into main class securities in accordance with sections 665B and 665C . This subsection does not apply to securities if a notice is given in relation to the securities under section 661B , 662B or 664C .

Note: For when securities are convertible into main class securities, see the definition ofconvertible securities in section 9 .

665A(3)    

An offence based on subsection (2) is an offence of strict liability.

Note: For strict liability , see section 6.1 of the Criminal Code .

SECTION 665B   100% HOLDER TO TELL HOLDERS OF CONVERTIBLE SECURITIES OF THEIR RIGHT TO BE BOUGHT OUT  

Notice to holders of convertible securities

665B(1)    
The 100% holder must:

(a)    prepare a notice in the prescribed form that:

(i) states that the person giving the notice has acquired all the securities in the main class; and

(ii) sets out the information that was included in the compulsory acquisition notice given in relation to securities in the main class under paragraphs 664C(1)(d) and (e); and

(iii) sets out the cash sum for which they are willing to acquire the convertible securities; and

(iv) informs the holder of convertible securities about their right to be bought out under this Part; and

(b)    lodge the notice with ASIC; and

(c)    give each other person who is a holder of convertible securities on the day on which the notice is lodged with ASIC:

(i) the notice; and

(ii) a copy of the expert ' s report, or all experts ' reports, under section 667A ; and

(d)    give a copy of the documents to the company that issued the securities; and

(e)    

give a copy of the documents to each relevant market operator on the same day as it is lodged with ASIC if the company is listed.

Note 1: Subparagraph (a)(iv) - Section 667A deals with the contents of an expert's report.

Note 2: The notice is to be given to everyone who holds convertible securities on the day on which the notice is lodged with ASIC. Under section 665C , anyone who holds the securities after that day may require the 100% holder to acquire the securities.

Time for dispatching notice to holders

665B(2)    
The 100% holder must dispatch the notices and reports under paragraph (1)(c) :

(a)    within 1 month after they become the 100% holder; and

(b)    on the day the 100% holder lodges the notice with ASIC or on the next business day.

The notices cannot be withdrawn.

665B(3) - (4)    
(Repealed by No 69 of 2023, s 3, Sch 1[54] and [ 55] (effective 15 September 2023).)

SECTION 665C   RIGHT OF HOLDERS OF CONVERTIBLE SECURITIES TO BE BOUGHT OUT  

665C(1)    
Within 1 month after notice under section 665B is given in relation to convertible securities, the holder of the convertible securities may give the 100% holder a notice requiring the 100% holder to acquire the securities.

665C(2)    
The notice by the holder of convertible securities gives rise to a contract between the holder and the 100% holder for the sale of the securities on:

(a)    terms agreed to by the 100% holder and the holder of the convertible securities; or

(b)    the terms determined by the Court on application by the holder of the convertible securities.

665C(3)    
If the Court makes a determination under paragraph (2)(b) in relation to the terms of sale for a holder ' s convertible securities of a particular class, the determination applies to all holders of convertible securities in that class who have applications to the Court pending for a determination under that paragraph in relation to the terms of sale of their convertible securities.

Division 3 - Notice that person has become 85% holder of a class of securities