AUSTRALIA Law and Practice Contributed by: Alberto Colla, Keith Tan, Hugh McDonald and Dean Zinn, MinterEllison
4.5 Filing/Reporting Obligations The Takeovers Panel expects disclosure when - ever the long position of a person and their associates is 5% or more, and if so, where that position changes by at least 1% or falls below 5% (in line with the equivalent position with physical holdings as described in 4.2 Material Shareholding Disclosure Threshold ). In November 2024, the Commonwealth Treasury released a consultation paper, including a draft bill, regarding changes to Chapters 6 and 6C of Australia’s Corporations Act to enhance the substantial holding and tracing notice regimes, which, amongst other things, govern the disclo - sure of beneficial ownership for listed entities. If the proposed reforms are implemented as cur - rently drafted, there will be a substantial increase in the number of market participants required to disclose their material shareholdings. This includes banks and funds that trade in equities and derivatives without any intention of gaining control, as well as foreign-registered compa - nies listed on Australian markets. It remains to be seen whether the proposed reforms, as cur - rently drafted, will be enacted. 4.6 Transparency Whether or not the holder of a long position is contemplating a control transaction, the Takeo - vers Panel expects disclosure of all long posi - tions over 5%. This promotes an efficient, com - petitive and informed market. Where a derivative position exceeds 20%, the Takeovers Panel considers that this may constitute unacceptable circumstances unless the holder of the position is not attempting to influence control of the com - pany and would otherwise be able to rely on the 3% creep exception under the Corporations Act.
As discussed above, the Commonwealth Treas - ury has proposed reforms requiring enhanced disclosure of equity derivative positions. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal An ASX-listed target must only disclose a deal when a definitive agreement is signed. This disclosure should attach a copy of the defini - tive agreement so that all market participants (including potential competing bidders) can assess the full terms, conditions, and deal pro - tection arrangements agreed upon by the target. ASX’s guidance confirms that a target company is not required to disclose the receipt of a non- binding indicative proposal, provided it remains confidential. By their nature, these proposals are subject to due diligence and further negotiation. Therefore, ASX considers that they are insuffi - ciently definite to warrant disclosure. Despite this, the Takeovers Panel expects dis - closure of the material terms of any deal pro - tection arrangements at the non-binding indica - tive proposal stage, where those arrangements include an obligation on the target to: • notify the prospective acquirer of the iden - tity of a competing bidder or the terms of its competing proposal; or • recommend a transaction if the prospective acquirer makes a binding proposal on terms consistent with its indicative proposal (or if a material cost reimbursement fee would be payable by the target if the target board failed to recommend a binding proposal on the same or better terms than the indicative proposal).
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