Corporations Amendment (Takeovers) Bill 2007
14 February 2007
House: House of Representatives
28th day after the date of
proposes amendments to the Corporations Act 2001 to
improve the operation of the Takeovers Panel.
The Takeovers Panel was originally established
in 1991. It was originally called the Corporations and Securities
Panel. Its powers were quite different to the current Takeovers
Panel. Until 1999 the Panel was used in only four cases.
As a result of the Corporations Law Economic
Reform Program, the Corporations and Securities Panel was renamed
the Takeovers Panel and its powers and functions were significantly
altered. The renamed Takeovers Panel commenced operation in 2000.
It is now the main body to hear disputes concerning a takeover
whilst a takeover bid is in progress.
The Takeovers Panel is created by the
Australian Securities and Investments Commission Act 2001
and it is invested with powers under the Corporations Act
2001. The Corporations Amendment (Takeovers) Bill 2007 makes
amendments to the Corporations Act to address issues raised by the
Federal Court in Glencore International AG v Takeovers
Panel(1) and Glencore International AG v
Takeovers Panel(2), about the operation of the
Under section 657A of the Corporations Act,
the Panel may declare circumstances to be unacceptable having
regard to their effect on the acquisition or proposed acquisition
by a person of a substantial interest in the company or another
Substantial interest is not defined in the
Act. The Bill, in item 2, proposes to insert a
definition of substantial interest into the Act. Included in that
definition is a power for regulations to be made to specify matters
that would be classified as a substantial interest .
The Parliamentary Joint Committee on
Corporations and Financial Services inquired into the proposed
amendments contained within the Bill. The inquiry
report(3) noted that some submissions to the inquiry
expressed concern that the proposed definition may create
confusion.(4) The report did however note that the Bill
had been amended to include a regulation making power (the
regulation making power was not contained in the draft Bill that
witnesses had commented upon). The report also noted that the
Explanatory Memorandum includes a commentary which provides
guidance to the Panel and its stakeholders regarding what would
constitute a substantial interest .(5)
Item 3 of the Bill proposes
to amend paragraph 657A(2)(a) of the Act so that the Panel can make
an unacceptable circumstance declaration where circumstances may
have future consequences that fall within sub-paragraph
657A(2)(a)(i) or (ii). The Explanatory Memorandum explains that
this amendment means that the Panel can make a declaration before
any effect has actually occurred .(6)
Item 4 amends the current
657A(2)(b) so that when determining whether a circumstance is
unacceptable, the Panel can consider the objects of Chapter 6
Takeovers , which are set out in section 602 of the Act.
Proposed paragraph 657A(2)(c) is a recasting of
current paragraph 657A(2)(b) to include future and possible future
contraventions of the takeovers provisions in the Corporations
The powers of the Panel to make orders are set
out in section 657D of the Corporations Act. Item
6 of the Bill proposes to amend paragraph 657D(2)(a) so
that the Panel can make orders for the benefit of persons who are
not only affected (this is the current law) but also persons that
will be or are likely to be affected by the
circumstances at issue. The orders can be global in nature rather
than specifically tailored to each individual.
This is a small Bill which addresses some of
the issues raised by the Federal Court in two recent court
decisions Glencore International AG v Takeovers
Panel(7) and Glencore International AG v
Takeovers Panel.(8) The amendments seek to improve
the operation of the Takeovers Panel.
 FCA 1290.
 FCA 274.
The report can be found at the following address
[27 March 2007].
Parliamentary Joint Committee on Corporations and Financial
Services, Corporations Amendment (Takeovers) Bill 2006 [Exposure
Draft], February 2007, p. 11 12.
ibid., p. 13.
Corporations Amendment (Takeovers) Bill 2007, Explanatory
Memorandum, p. 5.
 FCA 1290.
 FCA 27
This paper has been prepared to support the work of the
Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Parliamentary Library, nor do they constitute professional
Published by the Parliamentary Library, 2007.