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19 June 2006
The Takeovers Panel is seeking public comment on the use of schemes of arrangement and amalgamations to merge or acquire code companies. A code company is a listed company or a company with 50 or more shareholders and assets of $20m or more.
"The media and the market have expressed concerns on the use of schemes and amalgamations under the Companies Act to merge or acquire a code company," Chairman John King said. "The Panel shares those concerns."
The current relationship between the Code and the Act can result in a change of control of a code company under a scheme or amalgamation without shareholders having the rights and protections they have under the Code.
"This is undesirable," John King said. "Companies should be able to choose which process they use to merge with or gain control of a code company. But the rights and protections of code company shareholders should follow consistent principles under all processes."
The Panel has published a discussion paper seeking the views of market participants.
It will then recommend changes to the law on the use of schemes and amalgamations.
The paper considers amending the Code and the Companies Act so that:
To achieve this the Panel suggests that:
The discussion paper is on the Panel's website. Submissions close on 30 June 2006.
"The paper raises important policy issues and I urge interested parties to make submissions," John King said.