Kumarina and bidders voting in transfer schemes

Humphrey, John (2014) Kumarina and bidders voting in transfer schemes. Company and Securities Law Journal, 32(7), pp. 473-485.

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Transfer schemes are an alternative means of acquiring control of a company to making a takeover bid under the provisions in Ch 6 of the Corporations Act 2001 (Cth). The recent decision Re Kumarina Resources Ltd [2013] FCA 549 overturned long-standing practice in relation to a certain type of transfer scheme. If followed, the decision would allow a “bidder” to vote at scheme meetings where the scheme consideration for the acquisition of the target shares are shares in another company, and the scheme results in a merger. But the bidder is not allowed to vote where the scheme consideration is cash. The article points out the difficulties arising from this decision and argues that it should not be followed. In providing a “no objection” statement, the Australian Securities and Investments Commission (ASIC) has created uncertainty as to the approach it will take towards the bidders being allowed to vote at scheme meetings where the scheme consideration for the acquisition of target shares are shares in another company. The article also points out that in providing the no objection statement in Kumarina, ASIC appears to have ignored breaches of s 606(1) of the Corporations Act. There is a pressing need for ASIC to clarify its position and, in particular, whether or not it will provide a no objection statement in respect of future transfer schemes where a bidder (or its parent company) votes at the scheme meeting.

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ID Code: 78253
Item Type: Journal Article
Refereed: Yes
Keywords: transfer schemes, shareholder voting, corporations law
ISSN: 0729-2775
Subjects: Australian and New Zealand Standard Research Classification > LAW AND LEGAL STUDIES (180000) > LAW (180100) > Corporations and Associations Law (180109)
Divisions: Current > Research Centres > Commercial & Property Law Research Centre
Current > QUT Faculties and Divisions > Faculty of Law
Copyright Owner: Copyright 2014 Lawbook Co.
Deposited On: 02 Nov 2014 23:53
Last Modified: 09 Nov 2014 05:43

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