Commonwealth Numbered Acts

FIRST CORPORATE LAW SIMPLIFICATION ACT 1995 No. 115 of 1995 - SCHEDULE 1

                         SCHEDULE 1                       Section 3

New share buy-backs Division
Division 4B-Share buy-backs
    206A    Purpose

    206B    The company's power to buy back its own shares

    206C    Buy-back procedure-general

    206D    Buy-back procedure-shareholder approval if the 10% in

12 months limit exceeded
    206E    Buy-back procedure-special shareholder approval for

selective buy-back
    206F    Buy-back procedure-lodgment of offer documents with

the ASC
    206G    Notice of intended buy-back

    206H    Buy-back procedure-disclosure of relevant information

when offer made
    206I    Acceptance of offer and transfer of shares to the

company
    206J    Buy-back procedure-notice to ASC of cancellation of

shares
    206K    Signposts to other relevant provisions

Division 4B-Share buy-backs 206A Purpose
This Division states the rules to be followed by a company when buying back
its own shares. These rules are designed to protect the interests of
shareholders and creditors by:

   (a)  addressing the risk of buy-back activity leading to the company's
        insolvency

   (b)  seeking to ensure fairness between the company's shareholders

   (c)  requiring the company to disclose all material information. 206B The
        company's power to buy back its own shares
A company may buy back its own shares (other than redeemable preference
shares) if it follows the procedures laid down in this Division. Note 1: A
company may include provisions in its articles that preclude the company
buying back its own shares or impose restrictions on the exercise of the
company's power to buy back its own shares. Note 2: For the redemption of
redeemable preference shares see section 192. 206C Buy-back procedure-general

(1) The following table specifies the steps required for, and the sections
that apply to, the different types of buy-back. Procedures (and sections
applied)
odd lot
employee share scheme
within 10/12 limit
over 10/12 limit
on-market
within 10/12 limit
over 10/12 limit
equal access scheme
within 10/12 limit
over 10/12 limit
selective buy-back ordinary resolution (206D)
    -     -     yes   -     yes   -     yes   -
special/unanimous resolution (206E)
    -     -     -     -     -     -     -     yes
lodge offer documents with ASC (206F)
    -     -     -     -     -     yes   yes   yes
14 days notice (206G)
    -     yes   yes   yes   yes   yes   yes   yes
disclose relevant information when offer made (206H)
    -     -     -     -     -     yes   yes   yes
cancel shares (206I)
    yes   yes   yes   yes   yes   yes   yes   yes
notify ASC of cancellation (206J)
    yes   yes   yes   yes   yes   yes   yes   yes
Note: Subsections (2) and (3) of this section explain what an equal access
scheme is. The 10/12 limit is the 10% in 12 months limit laid down in
subsections (4) and (5). See section 9 for definitions of "odd lot buy-back",
"employee share scheme buy-back", "on-market buy-back" and "selective
buy-back".

(2) Equal access scheme
An equal access buy-back scheme is a scheme that satisfies all the following
conditions:

   (a)  the offers under the scheme relate only to ordinary shares

   (b)  offers are to be made to every person who holds ordinary shares to buy
        back the same percentage of their ordinary shares

   (c)  all of those persons have a reasonable opportunity to accept the
        offers made to them

   (d)  buy-back agreements are not entered into until a specified time for
        acceptances of offers has closed

   (e)  the terms of all the offers are the same.

(3) In applying subsection (2), disregard:

   (a)  any difference in consideration attributable to the fact that the
        offers relate to shares having different accrued dividend entitlements

   (b)  any difference in consideration attributable to the fact that the
        offers relate to shares on which different amounts are paid up or on
        which different amounts remain unpaid

   (c)  any difference in the offers introduced solely for the purpose of
        avoiding shareholders being left with odd lots

   (d)  any difference in the exact percentage of shares bought back
        introduced solely for the purpose of ensuring that only whole numbers
        of shares are bought back.

(4) 10/12 limit
The 10/12 limit for a company proposing to make a buy-back is 10% of the
smallest number, at any time during the last 12 months, of votes attaching to
voting shares of the company.

(5) Exceeding the 10/12 limit
A proposed buy-back would exceed the 10/12 limit if the number of votes
attaching to:

   (a)  all the voting shares in the company that have been bought back during
        the last 12 months; and

   (b)  the voting shares that will be bought back if the proposed buy-back is
        made; would exceed the 10/12 limit. 206D Buy-back
        procedure-shareholder approval if the 10% in 12 months limit exceeded

(1) Ordinary resolution required
If section 206C applies this section to a buy-back, the terms of the buy-back
agreement must be approved before it is entered into by a resolution passed at
a general meeting of the company, or the agreement must be conditional on such
an approval.

(2) Information to accompany the notice of meeting
The company must include with the notice of the meeting a statement setting
out all information known to the company that is material to the decision
whether to vote in favour of the resolution. However, the company does not
have to disclose information if it would be unreasonable to require the
company to do so because the company had previously disclosed the information
to its shareholders.

(3) Documents to be lodged with the ASC
Before the notice of the meeting is sent to shareholders, the company must
lodge with the ASC a copy of:

   (a)  the notice of the meeting; and

   (b)  any document relating to the buy-back that will accompany the notice
        of the meeting sent to shareholders. 206E Buy-back procedure-special
        shareholder approval for selective buy-back

(1) Selective buy-back requires special or unanimous resolution
If section 206C applies this section to a buy-back, the terms of the buy-back
agreement must be approved before it is entered into by either:

   (a)  a special resolution passed at a general meeting of the company with
        no votes being cast in favour of the resolution by any person whose
        shares are proposed to be bought back or their associates; or

   (b)  a resolution agreed to by all ordinary shareholders at a general
        meeting; or the agreement must be conditional on such an approval.

(2) Information to accompany the notice of meeting
The company must include with the notice of the meeting a statement setting
out all information known to the company that is material to the decision
whether to vote in favour of the resolution. However, the company does not
have to disclose information if it would be unreasonable to require the
company to do so because the company had previously disclosed the information
to its shareholders.

(3) Documents to be lodged with the ASC
Before the notice of the meeting is sent to shareholders, the company must
lodge with the ASC a copy of:

   (a)  the notice of the meeting; and

   (b)  any document relating to the buy-back that will accompany the notice
        of the meeting sent to shareholders.

(4) The ASC may exempt a company from the operation of this section. The
exemption:

   (a)  must be in writing; and

   (b)  must be granted before the buy-back agreement is entered into; and

   (c)  may be granted subject to conditions. 206F Buy-back procedure-lodgment
        of offer documents with the ASC
If section 206C applies this section to a buy-back, the company must lodge
with the ASC, before the buy-back agreement is entered into, a copy of:

   (a)  a document setting out the terms of the offer; and

   (b)  any document that is to accompany the offer. 206G Notice of intended
        buy-back

(1) If section 206C applies this section to a buy-back, the company must
satisfy the lodgment requirement in subsection (2) at least 14 days before:

   (a)  if the buy-back agreement is conditional on the passing of a
        resolution under subsection 206D(1) or 206E(1)-the resolution is
        passed; or

   (b)  if it is not-the agreement is entered into.

(2) The company satisfies the lodgment requirement when it lodges with the
ASC:

   (a)  documents under subsection 206D(3) or 206E(3) or section 206F; or

   (b)  a notice that the company intends to carry out the buy-back. Note 1: A
        company that has to lodge documents under section 206D, 206E or 206F
        needs to lodge a notice under paragraph (2)(b) only if it wants for
        some reason to have less than 14 days between lodging the section
        206D, 206E or 206F documents and entering into the buy-back agreement
        or the passing of the resolution. Note 2: The company may specify a
        buy-back under paragraph (2)(b) in any way. It may, for instance,
        choose to lodge a notice covering buy-backs to be carried out:
. under a particular scheme; or
. as part of particular on-market buy-back activity. 206H Buy-back
procedure-disclosure of relevant information when offer made
If section 206C applies this section to a buy-back, the company must include
with the offer to buy back shares a statement setting out all information
known to the company that is material to a shareholder's decision whether to
accept the offer. 206I Acceptance of offer and transfer of shares to the
company

(1) Effect of acceptance of the buy-back offer on share rights
Once a company has entered into an agreement to buy back shares, all rights
attaching to the shares are suspended. The suspension is lifted if the
agreement is terminated.

(2) Shares transferred to the company and cancelled
A company must not deal in shares it buys back. An agreement entered into in
contravention of this subsection is void.

(3) Immediately after the registration of the transfer to the company of the
shares bought back, the shares are cancelled. This cancellation does not
reduce the company's nominal share capital. 206J Buy-back procedure-notice to
ASC of cancellation of shares
Within 1 month after registering the transfer, the company must lodge with the
ASC a notice that states:

   (a)  the number of shares transferred; and

   (b)  the class of shares transferred; and

   (c)  the consideration paid for the shares. 206K Signposts to other
        relevant provisions
The following table sets out other provisions of the Law that are relevant to
buy-backs. section 588G section 1317HA
liability of directors on insolvency
Under the combined operation of these sections, the
directors may have to compensate the company if the company
is, or becomes, insolvent when the company enters into the
buy-back agreement. section 1324
injunctions to restrain contravention
Under this section, the Court may grant an injunction
against conduct that constitutes or would constitute a
contravention of the Law. section 733
ASC intervention (application to the Panel) Under this
section, the ASC may apply to the Corporations and
Securities Panel for a declaration if it appears to the ASC
that unacceptable circumstances have or may have occurred in
relation to a share buy-back. If the Panel makes a
declaration it may exercise a range of powers under section
734. section 42A section 632A
application of takeover provisions
These sections deal with the application of Chapter 6 to
buy-backs. section 205
consequences of failure to follow procedures-the company and
the officers
If a company fails to follow the procedures in the buy-backs
Division, the company contravenes this section and the
officers who are involved in the contravention commit an
offence. subsection 206(1A)
consequences of failure to follow procedures-the transaction
This subsection provides that a failure to follow the
procedures does not affect the validity of the buy-back
transaction itself. sections 1001A-1001D
continuous disclosure provisions
Under these sections, a disclosing entity is required to
disclose information about its securities that is material
and not generally available. Part 3.2A
benefits to related parties to be disclosed
Under this Part, a financial benefit to a director or other
related party, that could adversely affect the interests of
members of a public company or diminish or endanger its
resources, must be approved by a general meeting before it
is given. section 162
provisions in articles
This section deals with the way in which a company's
articles may restrict the exercise of the company's powers
and the consequences of a failure to observe these
restrictions. section 197
variation of class rights
This section deals with the variation of rights attached to
a class of shares. This variation may be governed by the
provisions of the company's memorandum and articles.