Corporate Advisory Update – January 2016

February, 2016

In the Media

CIMIC, Sedgman tussle considered by Takeovers Panel

The Takeovers Panel is considering whether to “conduct proceedings” and investigate allegations against Spanish-owned CIMIC following a request from Sedgman, which alleged earlier this month on 20 January that the construction group breached the Corporations Act.

After launching a takeover bid to buy Sedgman for $1.07 per share in cash on January 13, it is alleged CIMIC did not provide enough information on its intention to reduce the value of its $1.07 offer by the value of dividends and attached franking credits “as reasonably assessed by it” when it released its initial bidder’s statement.

A decision on whether to conduct proceedings is usually made within a week after an application is received.  As of yet, no decision has been made.

ASIC’s new powers need to be spelt out

A seemingly harmless sentence from the government proposing to give ASIC power to “approve changes of licensee control” should not be waived through without questions being asked by the financial services industry.

There are potential risks in giving ASIC the power to approve mergers and takeovers, including the additional regulatory uncertainty to financial services M&A activity.  Further, the power goes against the role of ASIC to maintain, facilitate and improve the performance of the financial system.

In Practice and Courts

Extra details on crowd-sourced funding for small business

The Minister for Small Business and Assistant Treasurer has made a media release in relation to the draft regulations that provide additional detail to Australia’s new crowd‑sourced equity funding (CSEF) framework.

Submissions on the draft regulations will be accepted until 29 January 2016, and can be made via the Treasury website. Please click here to access the Treasury website.

The text of the Corporations Amendment (Crowd-Sourced Funding) Bill currently being considered by Parliament is available on the Australian Parliament website. Please click here to access the text.

For the full media release, please click here.

Cases

Trilogy Funds Management Limited v Sullivan (No 2) [2015] FCA 1452

Facts

The Court’s Decision

Trilogy’s claim was upheld and Wigney J found that the following contraventions of the Corporations Act were made by the directors:

  1. Breach of s601FD(1)(b) that they had failed to exercise the degree of care and diligence that a reasonable person would have exercised when approving the increase to the AGA facility limit;
  2. Breach of s601FD(1)(f) because they failed to take reasonable steps to ensure City Pacific complied with:
    1. The Corporations Act
    2. The Constitution; and
    3. The Compliance Plan;
  3. Breach of 601FD(1)(c) in that they failed to act in the best interests of the firm in approving the increase of the AGA facility limit.

For the full decision, please click here.

Contact Mills Oakley

To find out more about any of the information in this update, please contact:

warren-scott

Warren Scott | Partner
T: +61 3 9605 0984
E: wscott@millsoakley.com.au

daniel-livingston

Daniel Livingston | Partner 
T: +61 3 9605 0965
E: dlivingston@millsoakley.com.au

stuart-gibson

Stuart Gibson | Partner
T: +61 3 9605 0092
E: sgibson@millsoakley.com.au

warwick-painter

Warwick Painter | Partner
T: +61 2 8289 5808
E: wpainter@millsoakley.com.au

gavin-douglas

Gavin Douglas | Partner
T: +61 2 8289 5855
E: gdouglas@millsoakley.com.au

simon-champion

Simon Champion | Partner
T: +61 2 8289 7926
E: schampion@millsoakley.com.au

tim-cox

Tim Cox | Partner
T: +61 7 3228 0442
E: tcox@millsoakley.com.au

stephanie-rowland

Stephanie Rowland | Partner
T: +61 8 6167 9806
E: srowland@millsoakley.com.au

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