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Armson, Emma --- "An Empirical Study of the First Five Years of the Takeovers Panel" [2005] SydLawRw 35; (2005) 27(4) Sydney Law Review 665

An Empirical Study of the First Five Years of the Takeovers Panel


1. Introduction

In March 2005, the Takeovers Panel (‘the Panel’) reached its fifth anniversary of resolving takeover disputes in place of the courts. This development, implemented by the Corporate Law Economic Reform Program Act 1999 (Cth) (‘CLERP reforms’), brought about a fundamental change to the processes of dispute resolution in Australian takeover law. This article conducts a stock take of the Panel’s decisions in the first five years since the reforms. It analyses the decisions in relation to the nature of the matters and parties before the Panel, how those matters are conducted and the outcomes of the decisions. This raises a number of issues particularly as to the extent to which the CLERP reform goals of speed in decision-making and minimising tactical litigation have been achieved.

Takeovers play a critical role in corporate governance, as the threat of a takeover resulting in the replacement of existing management provides a strong incentive for directors to ensure that the company is operating efficiently.[1] A takeover involves a number of players with conflicting interests. The clearest example is the opposing aims of the shareholders of the company being taken over (‘target’) and the acquirer (‘bidder’) in regard to the price paid for the target shares and the amount of information provided. Another conflict involves the target company’s directors, who are likely to be concerned not to lose their position as a result of the takeover and yet are required to make a recommendation as to whether the target shareholders should accept the takeover.[2] In dealing with these conflicts, Australian corporate takeover regulation is not concerned with such policy issues as those relating to competition, foreign investment and specific industries including media, banking and insurance.[3] Rather, the purposes of the takeover provisions in Chapter 6 of the Corporations Act 2001 (Cth) are to ensure that the acquisition of control over the target takes place in an efficient, competitive and informed market[4] and that the bidder provides the target shareholders with reasonable time, enough information and a reasonable and equal opportunity for all shareholders to participate in any benefits under the takeover.[5] These purposes are implemented primarily through a prohibition against a person acquiring more than 20% of the voting power in a company,[6] with one of the key exceptions involving making a general offer to all target shareholders.[7] There are detailed legislative requirements in relation to such offers, including on the terms, timing and disclosure of information.[8]

The Panel was originally established in 1991[9] as a means of enforcing the purposes underlying the takeover provisions. That is, in addition to breaches of the law being brought before the courts, the Australian Securities Commission (later renamed the Australian Securities and Investments Commission or ‘ASIC’) had the power to apply to the Panel for a ‘declaration of unacceptable circumstances’ where a takeover did not comply with the purposes of the law. For the first decade of the Panel’s operation, the regulator exercised its power in only four cases.[10] Under the CLERP reforms, the Panel’s role was transformed by requiring any interested party to apply to the Panel instead of the courts in relation to a takeover bid during the bid period.[11] The Panel’s jurisdiction to make a declaration of unacceptable circumstances was also expanded to allow it to take into account contraventions of the takeover provisions,[12] although it cannot require a person to comply with the legislation.[13] Matters are decided by a ‘sitting Panel’ comprising three members. [14] An internal Panel review process for unacceptable circumstances matters was introduced with the CLERP reforms, with the Review Panel comprising another three members of the Panel and having similar powers to the original Panel.[15] The Panel was also given the role of reviewing ASIC decisions in relation to the exercise of ASIC’s broad takeover exemption and modification powers.[16]

In establishing a new system of takeover regulation focused upon the Panel, the CLERP reforms had four key aims. These were to inject legal and commercial specialist expertise into takeover dispute resolution,[17] provide ‘speed, informality and uniformity’ in decision-making, minimise ‘tactical litigation’ and free up court [18] Two of these aims are particularly relevant to the study in this article, resources.

namely speed in making decisions and minimising tactical litigation.[19] The purpose of the study is to analyse the Panel’s decisions in the first five years since the CLERP reforms from an empirical rather than qualitative perspective. An empirical overview of the Panel’s work over this important initial time period is likely to assist further scholarship in this area, given that the Panel has a significant decision-making role and there has not been a similar empirical study of its decisions to date.[20]

The analysis in this article is based upon a database constructed through reading all of the Panel’s decisions over the five years since 13 March 2000.[21] In that time, the Panel made 148 decisions in relation to some of the most important areas of takeover law.[22] These decisions have been divided into five time periods that each consist of a year.[23] The period in which a Panel decision falls is determined by the date of the publication of the reasons, which is the last important step taken by the Panel in relation to a matter. Part 2 of the article provides an overview of the Panel’s decisions over the five years and focuses upon the nature of the parties and applications before the Panel. Part 3 analyses the conduct of matters, particularly in relation to the timing and length of the Panel’s reasons for its decisions. Part 4 examines the outcomes of the Panel’s decisions, including the extent to which it makes declarations of unacceptable circumstances, orders and/ or instead accepts undertakings from the parties. Part 5 concludes with an analysis of the key overall trends relating to the Panel’s decisions.

2. Matters

A. Number of Decisions

As demonstrated by Graph 1, the total of 148 Panel decisions (including those by a Review Panel) were distributed unevenly across the five year period.[24] The least number of decisions took place in the first year (20). Although it is possible that there may have been fewer applications in the first year due to parties’ lack of experience with the Panel’s role, they did not have the option of bringing matters to the courts instead during the course of a takeover bid.[25] Fluctuations in the number of applications may be influenced by changes in the level of takeover activity and the level of hostile bids. In any event, there was still five times the number of decisions in the first year than in the previous decade.[26] A similarly small number of decisions occurred in the third year (21). The peak period was the fourth year, in which there was more than double the number of decisions (44). By contrast, the figures for the second and fifth years (32 and 31 respectively) fell around the average. From the first five years, it would appear that there is likely to be a similar range of applications in the future (subject to fluctuations in takeover activity).

Graph 1: Number of Decisions


B. Parties

Overall, bidders made the highest number of applications to the Panel (46%), followed by the target[27] (35.1%), target shareholders (10.8%), other interested

persons (4.7%) and ASIC (3.4%).[28] As set out in Graph 2, there have been

significant changes to the proportion of applications by these different parties over time. Bidders dominated applications over the first two years, generating over half of the decisions in the first year and increasing to over three-quarters in the second year. The position was reversed in the final three years, when the target made the most applications (although not constituting a majority in any of these years).

Two possible influences on the decline in applications by bidders could be the decrease in the average number of bidders in each matter[29] and the extent to which decisions resulted in bidders making undertakings to the Panel. Given that nearly three-quarters of undertakings involved bidders,[30] it is possible that bidders may over time have become less enthusiastic about making applications to the Panel due to not getting outcomes that they might expect. This statistic would also appear to counter any perceptions that the Panel is more ‘friendly’ to bidders than other parties. A similar explanation may be possible for the corresponding increase in applications by a target. Another interesting development was the rise in the number of applications by target shareholders, which equalled those by the target in the final year. One contributing factor is likely to be the concentration of matters involving rights issues in the fourth and fifth years.[31] Such matters involve at least one target shareholder alleging that unacceptable circumstances exist in relation to a proposed or current issue of shares to an underwriter or significant shareholder. The general trend towards a more even distribution of applications between the different parties demonstrates an increased involvement in the Panel’s processes over time.

One of the clearest trends in relation to the parties involved in Panel matters has been a steady decrease in the number of bidders involved in each matter. This has been measured by determining how many bidders are referred to in the reasons for each Panel decision. Graph 3 charts the percentage of decisions in each year containing references to one or more bidders. The first year was the high point for decisions with more than one bidder (45%) and correspondingly the lowest point for decisions with one bidder (5 5%). In the fifth year, almost all of the decisions referred to one bidder (93.5%). Matters coming before the Panel over time have consequently been less likely to involve competition between bidders. Overall, there was a significant majority of decisions involving one bidder (78.4%), with most of the remaining decisions involving two bidders (20.9%) and one with three bidders (0.7%).

Graph 2: Applicants


Graph 3: Number of Bidders


There has also been a reversal in the predominant type of target in Panel matters over the five year period. Graph 4 sets out the annual percentages of decisions for which the target was a non-listed public company, listed public company or managed investment scheme.[32] For each of the first four years, the largest proportion of matters involved non-listed companies, with a peak of three-quarters of the decisions in the first year. However, the proportion of matters involving listed companies is the highest in the years with the most Panel decisions, becoming dominant in the fifth year (7 1%). This suggests that the Panel’s decisions are increasingly having an impact upon the general investing public. Overall, non-listed public companies were the target in the highest number of matters (50%), followed by listed companies (45.3%) and managed investment schemes (4.7%). The number of matters involving such schemes was relatively constant (generally comprising one to two matters a year).

Graph 4: Nature of Target


C. Applications

Takeover bids have been the focus of a significant majority of Panel matters over the five years (77.7%). However, the concentration in each year has been generally declining (with the exception of the second year, in which all of the matters involved takeover bids). There was a corresponding expansion in the range of matters before the Panel over time, especially in the fourth and fifth years. In

particular, there was an increase in applications based upon takeover issues apart from the technical requirements for a takeover bid in Chapter 6.[33] Acquisitions resulting from rights issues (particularly in relation to the effect of associated underwriting arrangements) have become a focus of interest in recent times, building from the first decision in the third year and two decisions in the fourth year, to six decisions in the final year.[34] A similar number of decisions focused upon either the 20% threshold in s606 of the Corporations Act or the exceptions in s611. There were also three matters each relating to the 20% threshold and the substantial shareholding provisions in Chapter 6C, circumstances arising from a share buy-back,[35] the voluntary administration provisions in Part 5.3A, and schemes of arrangement under Part 5.1.[36] Two other decisions focused primarily upon the substantial shareholding provisions and another upon break free arrangements.

Consistent with its primary role, the vast majority of all Panel decisions related to applications for a declaration of unacceptable circumstances (72.3%).[37] This figure is even higher when taking into account the applications to a Review Panel (12.8%), which also involved unacceptable circumstances matters.[38] The remaining types of applications were for interim orders only (8.1%), review of ASIC takeover decisions (8.1%)[39] and to vary an undertaking (0.7%). Graph 5 demonstrates that there have not been any clear trends with respect to the different types of applications over the five years. Although not consistent, there has been an overall increase in the number of unacceptable circumstances matters over time, from the lowest point in the first year (65%) to dominating matters in the fifth year (90.3%). On the other hand, the distribution of Review Panel matters has been erratic, with one in the first year and the highest concentrations in the second and fourth years (18.8% and 15.9% respectively). Applications for ASIC review and interim orders were similarly uneven in their distribution, with both peaking in the first year.

One of the key features of the Panel’s operations to date has been the proportion of applications that are related to at least one other Panel decision. For example, there were 12 separate decisions in relation to the control of Pinnacle VRB Limited. Graph 6 sets out the annual percentages of decisions that relate to at least

one other Panel decision involving control of the same entity.[40] Overall, a significant majority of all decisions fall into this category (69.6%). As only a small proportion of all decisions are by a Review Panel in relation to another Panel decision (12.8%), this means that over half of all decisions involved different applications concerning control of a common entity. There was a particular concentration of such matters in the initial period following the CLERP reforms, with the first and second years experiencing the highest proportion of related Panel decisions (85% and 93.8% respectively).

Graph 5: Type of Application


These statistics raise the question whether the CLERP reforms have merely resulted in ‘tactical litigation’[41] under the old regime being replaced by multiple applications to the Panel. Indeed, the benefits of the Panel (particularly its informal and efficient processes) would appear to provide lower barriers than a court to numerous applications being made in relation to the same entity. There have consequently been a number of long-running battles between the parties to a takeover played out in multiple applications to the Panel, with the most extreme example being the Anaconda matters.[42] Although it is clearly undesirable to have Panel resources unnecessarily tied up in processing different applications that could be decided together, it can, on the other hand, be more efficient to deal with some matters in a staged approach, whereby some of the issues do not need to be decided until a later time (if at all). In response to the level of multiple applications,

the Panel changed its procedural rules in June 2004 to give it greater flexibility in dealing with related applications in the one proceeding.[43] Matters have also been conducted more efficiently through the use of the same Panel members for related (non-Review Panel) matters,[44] and the ability to dismiss an application without conducting proceedings.[45] Significantly, it does not appear that the concentration of related applications is in itself adversely affecting the timing of the Panel’s decisions. Indeed, although there is not an exact correlation between the figures, the years in which there are the highest proportion of related applications correspond with the years with the lowest average time periods between application and reasons (compare figures for the first and second years in Graph 6 and Table 1).

Graph 6: Related Decisions


3. Conduct of Matters

Consistent with its goal of ensuring timely resolution of disputes,[46] the Panel’s decisions have almost always been solely based upon written submissions.[47] This is in stark contrast to the reliance on oral submissions by courts and the corresponding body to the Panel in the United Kingdom, the Panel on Takeovers and Mergers.[48] The Australian Panel only used conferences for oral argument in relation to a small proportion of decisions (5.4%), which all occurred in the first three years since the CLERP reforms.[49] This shows that, over time, the Panel has found conferences to be unnecessary and has adopted a practice of not relying upon oral submissions. On the other hand, parties have been represented by commercial lawyers in the vast majority of all Panel matters. The Panel has generally granted consent for such representation,[50] with a significant majority of decisions referring either to the Panel having granted consent, or to at least one of the parties’ solicitors (72.3%). This indicates that the Panel has, as a general rule, found it more expeditious to have commercial lawyers representing their clients in Panel matters, likely due to their familiarity with the transactions involved and their background in commercial matters rather than a focus upon litigation.

Timeliness of decision-making is one of the key goals of the Panel’s operations. Over the five year period, it took the Panel on average just over two weeks (17.3 days)[51] after the application to announce a decision, another month and a half (45.7 days) before the reasons were published and a total of around two months (63 days) from the start to the end of this process. However, there are significant differences in the timing from year to year. Table 1 sets out the average number of days between the application and decision, decision and reasons, and application and reasons, and compares these to the average word count for each year.[52] Starting with the average time between application and decision, it is interesting to note that there is the greatest amount of variation in the years in which the Panel made the least number of decisions. As with the other time periods, the lowest average time between application and decision occurred in the first year. Apart from the varying levels of complexity of the issues involved, a potential factor influencing this result may have been the relatively high number of related applications.[53] Although there was only one more decision in the third year, it had the highest average number of days between the application and decision (and the lowest proportion of related applications).

Table 1: Average Time Periods and Word Count

Average days
application and
Average days
decision and
Average days
application and
Average word

The greatest fluctuations in timing occurred in relation to the time period between the announcement of the decisions and the publication of reasons. Indeed, the average number of days increased at a significantly increasing rate from the first to the fourth years. However, there was a substantial improvement in the fifth year, bringing the average time period back to around the levels achieved in the second year. The longest time for the publication of reasons occurred in the fourth year, in which there were the most decisions. Although the proportion of related Panel applications for that year was only slightly below the average,[54] it would appear that the total of 14 decisions in relation to Anaconda Nickel Ltd[55] played a significant part in the delay in publishing reasons in the fourth year. This was due to the fact that 19 Anaconda applications were received in a relatively short time period.[56] Of the 23 decisions over the five years taking more than 102 days from the application to the publication of reasons,[57] a significant majority of these (82.6%) occurred in the fourth year and just over half of them (52.2%) were Anaconda matters.

The average times from the application to reasons were significantly affected by the delays in publishing reasons in the third and fourth years. Another factor in the overall timing would appear to be the average length of the substantive part of the reasons for Panel decisions (averaging 4995.3 words over the five years). It is interesting to note that the yearly fluctuations in the average time between applications and reasons mirror the fluctuations in the average length of those reasons (see Table 1). Although the word count does not necessarily reflect the complexity of a particular matter, it does affect the amount of time needed to finalise the reasons for the decision. Consistent with this, the years with the lowest

average word counts for the reasons also have the lowest average times between application and reasons (and this also applies in reverse).

This analysis reveals that the timeliness in providing decisions (and particularly reasons) generally worsened over time. However, the overall statistics improved significantly in the fifth year, demonstrating the importance placed on timing by the Panel. Indeed, as one of the aims of the CLERP reforms was to provide speed in decision-making,[58] the Panel’s effectiveness in meeting this goal is crucial to its success. This will continue to be a challenge for the Panel given the cyclical nature of takeover work in light of the economic cycle and the resulting concentration of matters at particular times rather than a relatively even workload. It is also important to take sufficient time to decide complex matters, such as those involving the development of new principles.[59] In this, the Panel’s Guidance Notes play a significant role in directing the parties to takeovers and sitting Panels to the factors that would be expected to be taken into account in the decision-making process.[60]

4. Outcomes

The bulk of the Panel’s decisions over the five year period related to matters involving an allegation of unacceptable circumstances (93.9%).[61] As set out in Graph 7, just under a third of all unacceptable circumstances matters (including Review Panel decisions) did not result in any substantive outcome, either due to the matter being withdrawn or adjourned, the Panel declining to conduct proceedings, or the Panel declining the application following its proceedings.[62] A similar proportion of matters resulted in a declaration of unacceptable circumstances and/or at least one type of order. Interestingly, the greatest proportion of unacceptable circumstances matters were declined either before or after proceedings in light of an undertaking made by at least one of the parties.[63]

A quarter of all unacceptable circumstances matters resulted in either an interim order and/or an order following a declaration (‘final order’), with more than a fifth leading to a declaration of unacceptable circumstances. There were slightly more final orders (16.5%) than interim orders (14.4%), with only a small proportion of unacceptable circumstances matters resulting in costs orders (4.3%).[64] As set out in Graph 8, the proportion of such matters in each year leading to a declaration of unacceptable circumstances increased significantly (from 5% in the first year to 25.8% in the fifth year). Similarly, Graph 8 reveals an overall increase in the extent to which the Panel made final orders in unacceptable circumstances matters, from none in the first year to the highest proportion of decisions in the fifth year (19.4%). These statistics highlight how the Panel has applied stronger remedial action in matters over time. The expansion in the use of declarations and orders suggests that parties can expect that the Panel will be more likely to take such action as was the case immediately following the implementation of the CLERP reforms.

Graph 7: Outcome in Unacceptable Circumstances Matters


In contrast to the numerous unacceptable circumstances matters, there were only 12 Panel decisions reviewing ASIC takeover decisions (8.1%) and another 19 decisions by a Review Panel in relation to an earlier Panel decision concerning unacceptable circumstances (12.8%). The outcomes in matters reviewing ASIC and Panel decisions were varied. In relation to the former, ASIC decisions were affirmed in the majority of matters (5 8.3%), with the remaining ones either set aside (25%) or varied (16.7%). Review Panels affirmed the decisions of the earlier Panel in just under half of the matters (42.1%). However, such decisions reach a majority when taking into account decisions where the original decision was affirmed with changes to undertakings or disclosures (15.8%). The remaining decisions were either varied (36.8%) or set aside (5.3%).

Graph 8: Declarations, Final Orders and Undertakings


One of the distinctive features of the Panel’s operations has been the frequent practice of accepting undertakings, in contrast to making declarations of unacceptable circumstances and/or orders. This is consistent with the Notes to the Panel Rules, which indicate that parties are encouraged ‘to reach an agreed resolution to the matter wherever possible’[65] and that the Panel is generally willing to accept undertakings (in which case it would not normally make a declaration of unacceptable circumstances or orders).[66] Over the five year period, just under half of all unacceptable circumstances matters involved the Panel accepting an undertaking from one or more parties (43.9%).[67] Although there was a general increase in the use of undertakings over time, there was no consistent trend. As demonstrated in Graph 8, the proportion of decisions involving undertakings was the smallest in the first year (25%) and peaked in the third and fifth years (57.1% and 45.2% respectively).

The distribution of undertakings to the Panel by different parties was unexpected. A significant majority of the undertakings involved bidders (72.1%), compared to half that number involving the target (36.1%). In contrast, target shareholders (8.2%) and other parties (3.3%) were involved in a smaller proportion of the undertakings. The significant extent to which bidders made undertakings to the Panel is surprising in light of the predominance of applications by bidders.[68] Indeed, the level of undertakings required of bidders may have been a factor in the decline in bidders’ applications over time.[69]

5. Conclusion

There are a number of significant trends arising from this empirical analysis of the Panel’s first five years since the CLERP reforms. A number of these relate to the role of bidders in Panel matters. First, bidders made the highest number of applications to the Panel. However, although bidders dominated applications in the first two years, a larger proportion of matters were instigated by targets and target shareholders in later years. Second, there has been a steady decline over the five years in the number of bidders that are referred to in each Panel decision. It is possible that this reflects a change in the general profile of parties involved in takeovers over the last five years. Third, bidders have provided a substantial majority of the undertakings accepted by the Panel. This is particularly interesting in light of the fact that bidders made the most applications. However, the proportion of undertakings made by targets has steadily increased over time.

Overall, three key features of the Panel’s operations over the five year period have been the high proportion of applications in relation to control of the same entity, the Panel’s reliance upon written submissions and its predominant use of undertakings in place of formal declarations and orders. Although the number of related applications might be considered to constitute a new form of tactical litigation, the time frames involved in a takeover may make it more efficient to deal with issues separately as they arise.[70] It is also interesting to note that the lowest average time periods from application to reasons occur in the first two years, in which there were the highest proportions of related applications. In relation to the reliance upon written submissions, those matters that do involve oral argument in the form of a conference were in the first three years. This suggests that the Panel has, over time, found it unnecessary to rely upon such conferences and more efficient to use written submissions. Finally, a significant proportion of all decisions resulted in the Panel accepting undertakings rather than making declarations of unacceptable circumstances and/or orders. However, the highest proportion of declarations and final orders occurred in the last year, confirming an upward trend in stronger remedial responses by the Panel to matters involving unacceptable circumstances.

This study raises a number of issues for the future, particularly in light of the CLERP reform aims of speed in decision-making and minimising tactical litigation.[71] With respect to the former, the Panel will need to continue its efforts in limiting the time taken to provide decisions and reasons. Its ability to achieve this goal will be an important factor in determining the extent to which the Panel reforms have been a success. Although it is likely that the level of applications to the Panel will continue to be around the range already experienced (subject to major fluctuations in takeover activity), the tendency for matters to be concentrated at particular points in time makes the Panel’s task more difficult. In addition, repeated applications concerning control of the same entity tie up Panel resources. Given that the CLERP reforms were designed to inhibit tactical litigation, this suggests the need for further research including comparisons with the previous role of the courts. However, there will inevitably be some tactical use of the Panel as lawyers and their clients can be expected to act strategically.

The Panel will continue to face numerous obstacles in fulfilling the central role that it now plays in the takeover regulatory framework. It operates within a complex commercial environment, with matters typically involving parties with conflicting interests and significant financial stakes. In addition to having regard to detailed legislative requirements, the Panel must apply general policy criteria to a broad range of factual circumstances. Over time, the Panel has changed its approach to improve efficiency in decision-making.[72] The significant reduction in the time taken to provide reasons in the final year is an illustration of its determination in this regard. It can be expected that the Panel will continue to adapt to meet these and future challenges.

[*] Senior Lecturer, Faculty of Law, The University of Sydney, Australia. I thank Roslyn Moloney for her research assistance in relation to the construction of the database that formed the basis of this article, and George Williams for his helpful comments on earlier drafts. The article has also benefited from comments made when it was delivered as an earlier version at the Corporations Workshop conducted by the Business Law Section of the Law Council of Australia on 2 July 2005.

[1] See, for example, Commonwealth Treasury, Corporate Law Economic Reform, Proposals for Reform, No 4, Takeovers – Corporate Control: A Better Environment for Productive Investment (Canberra, 1997) (hereafter CLERP 4), 7–8; Jonathan Farrer ‘Reforming Australia’s Takeover Defence Laws: What Role for Target Directors’ (1997) 8 AJCL 1 at 2–6, 9–10; James Mayanja, ‘Reforming Australia’s Takeover Defence Laws: What Role for Target Directors? A Reply and Extension’ (1999) 10 AJCL 162 at 162–164. However, recent studies suggest that there are inefficiencies in the market for corporate control in Australia: see Alan Dignam, ‘The Takeovers Panel, the Market Efficiency Principle and the Market for Corporate Control – An Empirical Study’ (2005) 23 C&SLJ 58; Darren Henry, ‘Directors’ Recommendations in Takeovers: An Agency and Governance Analysis’ (2005) 32 J of Bus Fin & Accounting 129.

[2] Corporations Act 2001 (Cth) s638(3) (hereafter Corporations Act). Indeed, a study based upon an econometric analysis of takeover bids announced for Australian Stock Exchange (ASX) listed companies from 199 1–2000 found that the outcome of recommendations by target directors on whether shareholders should accept the takeover offer did not depend upon the magnitude of the bid premium, but rather was affected by factors including the level of the directors’ personal shareholdings and the effect of the takeover on their personal wealth: see Henry, above n1 at 138, 148, 150, 155–156.

[3] See CLERP 4, above n1 at 5.

[4] It has been argued that this purpose cannot be fulfilled due to current inefficiencies in the market for corporate control in Australia, with the two main concerns identified being significant concentrations of ownership in ASX listed companies and the requirement for approval for foreign ownership interests above 15%: see Dignam, above n1 at 61–64.

[5] Corporations Act at s602. Known as the ‘Eggleston principles’, the latter purposes originate from the Company Law Advisory Committee, Second Interim Report: Disclosure of Substantial Shareholdings and Takeovers Bids (1969). For a discussion of the history behind the Report, see Tony Greenwood, ‘In Addition to Justin Mannolini’ (2000) 11 AJCL 308. For a critique of these principles, see, for example, Justin Mannolini, ‘Convergence or Divergence: Is there a Role for the Eggleston Principles in a Global M&A Environment?’ (2002) 24 Syd LR 336 at 336–340, 360; James Mayanja, ‘The Equal Opportunity Principle in Australian Takeover Law and Practice: Time for Review?’ (2000) 12 AJCL 1 at 16, 18; Benedict Sheehy, ‘Australia’s Eggleston Principles In Takeover Law: Social and Economic Sense?’ (2004) 17 AJCL 218.

[6] This does not apply where a company has 50 or fewer members and its shares are not traded on the stock exchange, but extends to certain indirect forms of investments (managed investment schemes) that are so traded: see Corporations Act at ss604, 606.

[7] Corporations Act at s6 11, item 1.

[8] See, for example, Corporations Act at Pt 6.46.6.

[9] The Panel was originally called the Corporations and Securities Panel, and was renamed in 2001: see Takeovers Panel, New Name for the Takeovers Panel (Press Release TP01/87, 11 October 2001).

[10] On the pre–CLERP Panel, see, for example, Emma Armson, ‘AAT Review of the ASC’s Decision to Apply or Not to Apply to the Corporations and Securities Panel’ (1994) 12 C&SLJ 439; Nicole Calleja, ‘Furthering the Objectives of the Corporations Law Takeover Provisions: Will Simplification Help?’ (1997) 15 C&S LJ 208; Michael Gething & Kimberley Ould, ‘The Wesfi Takeovers Panel Application: Lessons for the Future’ (2000) 18 C&S LJ 351; John Green, ‘An Australian Takeover Panel – What Do We Want? A Panel Poll and Critique’ (1989) 7 C&S LJ 6; John M Green & Stephen Brent, ‘Takeovers: Breathing More Life into the Corporations and Securities Panel’ (1997) 15 C&S LJ 3 19; Barbara Mescher, ‘Regulation of Takeovers by the Corporations and Securities Panel: The Occurrence of Unacceptable Circumstances’ (1994) 4 AJCL 90; G F K Santow & George Williams, ‘Taking the Legalism Out of Takeovers’ (1997) 71 ALJ 749; George Williams, ‘The Corporations and Securities Panel: What Future?’ (1994) 12 C&S LJ 164.

[11] Corporations Act at ss657C, 659AA659C. On the post–CLERP Panel, see, for example, Emma Armson, ‘Handing the Corporate Reins to Creditors: The Role of the Takeovers Panel in the Pasminco Administration’ [2002] UNSWLawJl 37; (2002) 25 UNSWLJ 651; Nicole Calleja, The New Takeovers Panel — A Better Way? (2002); Rowan Cross, ‘The Takeovers Panel Three Years On: Should We Ever Go Back to the Courts?’ (2003) 21 C&SLJ 367; Emmanuel Hadjidakis, ‘The Takeovers Panel: From Toothless Tiger to Sleeping Tiger? Will the Courts Now Advance?’ (2002) 20 C&S LJ 59; Jennifer Hill, ‘Back to the Future? Bigshop 2 and Defensive Tactics in Takeovers’ (2002) 20 C&S LJ 126; Michael Hoyle, ‘Some Observations on the Takeovers Panel’ (2002) 20 C&S LJ 183; Rodd Levy, ‘Pinnacle 8: New Duties for Target Directors’ (2001) 19 C&SLJ 329; Barbara Mescher, ‘Powers of the Takeovers Panel and their Effect upon ASIC and the Court’ (2002) 76 ALJ 119; Erin Walsh, ‘Judging The Takeovers Panel’ (2002) 20 C&S LJ 435.

[12] Corporations Act at s657A(2)(b). The Panel may also take into consideration any circumstances having an effect on the control of a company, and its jurisdiction extends to an acquisition of a substantial interest, a share capital reduction or a share buy–back: see Corporations Act at s657A(2)(a), Pt 2J.1 Divs 1, 2.

[13] Corporations Act at s657D(2). This limitation is designed to avoid the Panel exercising judicial power contrary to Chapter III of the Commonwealth of Australia Constitution Act 1900 (Imp) (hereafter the Constitution): see Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245; Attorney–General (Cth) v Breckler (1999) 197 CLR 83. The Federal Court of Australia recently rejected arguments that the Panel exercised judicial power under subsections 657A(1) & 657D(1) of the Corporations Act: see Glencore International AG & Anor v Takeovers Panel & Ors [2005] FCA 1290 at [54]–[56]. As a result of these constitutional limitations, the legislation provides for court enforcement of Panel orders and rules: Corporations Act at ss657F657G, 658C(5)–(6). Orders must not unfairly prejudice any person: see Corporations Act at s657D(1); Emma Armson, ‘The Australian Takeovers Panel and Unfair Prejudice to Third Parties’ (2004) 16 AJCL 187.

[14] See Australian Securities and Investments Commission Act 2001 (Cth) s184(1) (hereafter ASIC Act).

[15] See Corporations Act at s657EA; ASIC Act at s184. Panel decisions are also subject to review by the courts: see Administrative Decisions (Judicial Review) Act 1977 (Cth) ss3, 5; Judiciary Act 1903 (Cth) s39B; the Constitution s75; Re AMP Shopping Centre Trust (No 1) (2003) 45 ACSR 496 at 516 (Taylor P, Seabrook DP & R Ahern).

[16] Corporations Act at ss655A, 656A–B. This role was previously undertaken by the Administrative Appeals Tribunal.

[17] The Panel’s current 47 part-time members are solicitors, company administrators, consultants, investment or other bankers, investment or corporate advisors, judges, barristers and academics: see Takeovers Panel, About the Panel: <> (16 June 2005). They are appointed by the Federal Government based upon their knowledge or experience in at least one of the fields of business, administration of companies, financial markets, financial products and services, law, economics and accounting: ASIC Act at s172(4).

[18] CLERP 4, above n1 at 32. See also Explanatory Memorandum accompanying the Corporate Law Economic Reform Program Bill 1998 (Cth) at 28.

[19] For a discussion of the aims of injecting legal and commercial specialist expertise and informal decision-making, see, for example, Emma Armson, ‘The Australian Takeovers Panel: Commercial Body or Quasi-Court?’ [2004] MelbULawRw 19; (2004) 28 MULR 565. The article analyses the processes adopted by the Panel in the context of its commercial role and approach to making decisions.

[20] For a rare example of empirical analysis of the Panel’s decisions, see Armson, above n19.

[21] Where appropriate, the data has been supplemented using information on the Panel’s website, Takeovers Panel: <> (26 June 2005) and, in relation to whether the target is listed, the website of the ASX: <> (27 June 2005).

[22] This total comprises each decision published with a separate ATP citation: see Takeovers Panel, Decisions: <> (26 June 2005). That is, the following are counted as four separate decisions: Pinnacle (No 10) [2001] ATP 21; Pinnacle (No 10) [2001] ATP 21a and BreakFree (Nos 3–4) (2003) 49 ACSR 337.

[23] That is, the first year comprises 13 March 2000 to 12 March 2001 (inclusive), with subsequent

years following a similar pattern up to and including 12 March 2005.

[24] See above nn21–23 and accompanying text.

[25] See Corporations Act at s659B.

[26] See text accompanying n10 above.

[27] Where a matter does not involve a takeover, this term refers to an entity that is subject to an acquisition or where control of the entity is otherwise in issue: see Corporations Act at s657A(2).

[28] See Corporations Act at s657C(2).

[29] See text in following paragraph.

[30] See text preceding n68 below.

[31] See below n34 and accompanying text.

[32] See above n6.

[33] See above nn7–8 and accompanying text.

[34] These matters involve the application of the takeover exceptions for certain rights issues and their underwriting arrangements: see Corporations Act at s61 1, items 10 and 13. See also text accompanying n31 above.

[25] See above n12. One of the decisions focusing upon a rights issue also involved a share buy-back, which had immediately preceded the proposed rights issue: see text accompanying n34 above.

[36] For a detailed analysis of the issues arising from the interaction between the scheme of arrangement and takeover provisions in the Corporations Act, see Tony Damian & Andrew Rich, Schemes, Takeovers and Himalayan Peaks: The Uses of Schemes of Arrangement to Efect Change of Control Transactions (2004).

[37] This figure includes applications that also sought interim orders and three matters involving both unacceptable circumstances and review of ASIC decisions (2%).

[38] See Corporations Act at ss657EA(1), 657C(1), 657A, 657D, 657E.

[39] This figure includes three matters also involving unacceptable circumstances.

[40] See above n12.

[41] See above n18 and accompanying text.

[42] See below n55 and accompanying text.Regulations) r16(1)(a); Takeovers Panel, Rules for Proceedings 2001 (Cth) (hereafter Panel Rules) r2.6.

[43] Australian Securities and Investments Commission Regulations 2001 (Cth) (hereafter ASIC

[44] There have only been a few exceptions to this approach: see, for example, Re Taipan Resources NL (No 8) (2001) 38 ACSR 102; Re Taipan Resources NL (No 9) (2001) 38 ACSR 111; Re Skywest Ltd (Nos 1 & 2) (2004) 50 ACSR 72.

[45] See below text accompanying n62 and Graph 7.

[46] This is consistent with the CLERP aims, which are reflected in the ASIC Regulations and Panel Rules: above n18 and accompanying text; ASIC Regulations at rr13, 16(2)(c); Panel Rules at r1.3.

[47] See ASIC Regulations at rr38(1)–(2), 39(2)–(3), 40; Panel Rules at rr1.3(a), 10.

[48] See Emma Armson, ‘Models for Takeover Dispute Resolution: Australia and the UK’ (2005) 2J of Corp L Studies 401 at 420–421.

[49] See, for example, Infratil (No 2) (2000) 18 ACLC 696; Email (No 3) (2000) 18 ACLC 708; ReVincorp Wineries (2001) 38 ACSR 584; Re Pinnacle (No 5) (2001) 39 ACSR 43; Re Pinnacle (No 8) (2001) 39 ACSR 55; Re Pinnacle (Nos 9 & 9B) (2001) 40 ACSR 56 (No 9B).

[50] See ASIC Act at s194.

[51] These and the below figures include non-business days.

[52] The word count includes all text in the reasons except for any catchwords, headnotes or appendices.

[53] See text accompanying n40 above and Graph 6.

[54] Ibid.

[55] These matters involved the highest number of different decisions in relation to the control of the same company.

[56] See Takeovers Panel, ‘Anaconda – Panel Publishes Reasons in Anaconda 01 to 19’ (Press Release TP03/67, 15 July 2003).

[57] As set out in Table 1, this was the longest average time taken for any year (in the fourth year).

[58] See above text accompanying n18.

[59] See, for example, Emma Armson, ‘The Frustrating Action Policy: Shifting Power in the Takeover Context’ (2003) 21 C&S LJ 487.

[60] See Takeovers Panel, Guidance: <> (16 September 2005).

[61] This figure comprises all decisions except for the nine decisions that only involved review of ASIC takeover decisions: compare n39 and accompanying text.

[62] There was also an application for consent to vary an undertaking, which is not depicted in Graph 7.

[63] These figures include matters that were dismissed as a result of formal undertakings under s201A of the ASIC Act at or as a result of disclosures or other action acceptable to the Panel.

[64] See Corporations Act at ss657D(2), 657E. The final order statistics include the outcome following the decision in Re AMP Shopping Centre Trust (No 2) (2003) 45 ACSR 524.

[65] Notes to Panel Rules at r14.

[66] Notes to Panel Rules at r13.1.

[67] This figure includes where parties made undertakings in addition to the Panel making a declaration of unacceptable circumstances and/or orders.

[68] See text following Graph 1. It is also interesting to note in this context the decline in the number of bidders referred to in each matter: see text preceding Graph 2.

[69] See text following n28 above.

[70] However, the Panel’s ability to combine related applications into the one set of proceedings reflects the efficiencies that can result from this: see above n43 and accompanying text.

[71] See above n18 and accompanying text.

[72] For example, a number of changes were made to the Panel Rules in June 2004: see, for example, Armson, above n19.

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