AUSTRALIA Law and Practice Contributed by: Alberto Colla, Keith Tan, Hugh McDonald and Dean Zinn, MinterEllison
Share Purchase This is when an individual or a company buys all or a majority of the shares in another company. On completion, the target company continues to own all of its operating assets, all of its intel - lectual property, and all of its regulatory licences and permits; it continues to hold the benefit and the burden of its contractual arrangements to employ all of its employees and to be exposed to its actual and contingent liabilities. There is a change in the upstream ownership of the shares and a reconstitution of the target’s board, which comprises nominees of the buyer. Typically, this change in control triggers a requirement to obtain consent from counterparties to the target’s material contracts and from regulatory authorities that have issued relevant licences and permits to the target company. Asset Purchase In an asset purchase, the buyer acquires spe - cific company assets rather than buying shares. The buyer typically also takes on an assign - ment or novation of key customer, supplier, or other material contracts and makes offers to re-employ the existing workforce. The buyer also typically assumes only specific liabilities of the company, such as accrued employee entitlements. Employees do not automatically transfer in an asset purchase. If, as is usually the case, the buyer wants to retain the exist - ing workforce, the employees’ employment with the seller company terminates, and the buyer makes new offers of employment. An asset pur - chase is often intended to deliver the same eco - nomic outcome for a buyer as a share purchase (namely, ownership and control of the target’s underlying business) but without exposure to the target company’s actual or contingent liabilities (eg, tax, litigation and regulatory compliance), beyond the specific liabilities that the buyer is willing to assume.
achieve economies of scale, diversify their operations, and enhance competitiveness. 1.3 Key Industries Transactions in the following four industries dominated the Australian M&A market in the past 12 months: • technology; • mining and minerals; • energy and resources; and • industrials. In particular, we saw significant demand for technology companies focused on cloud com - puting, data protection/storage, cyber security and generative artificial intelligence, mining and minerals companies focused on the develop - ment and extraction of gold, copper, aluminium and rare earth minerals, companies supplying and servicing renewable energy businesses and industrial companies supplying building materi - als to Australia’s housing and infrastructure sec - tors, buoyed by significant Government funding commitments. 2. Overview of Regulatory Field 2.1 Acquiring a Company In Australia, the legal avenues for acquiring a company fall into one of the four primary cat - egories outlined below. The first two are used for privately negotiated acquisitions of closely held companies and are regulated by the general law of contract, with limited statutory overlay. The last two are used to acquire widely held public companies, principally ones that are listed on the Australian Securities Exchange (ASX) and are highly regulated by statute and guidance pub - lished by regulators.
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