The takeover rules are found in Chapter 6 of the Corporations Act 2001 (Cth) and are designed to ensure that all securityholders in listed entities or unlisted companies with more than 50 members are given a reasonable and equal opportunity to participate in proposed acquisitions and are given adequate information and time to consider proposals under which a person may acquire a substantial interest in the entity.

The Corporations Act essentially prohibits a person acquiring a relevant interest of 20% or more in the issued voting shares of a listed company, listed managed investment scheme or an unlisted company with more than 50 members without making a takeover offer in accordance with the requirements of Ch 6 of the Corporations Act 2001 (Cth). There are a number of exceptions to this requirement.

Other important thresholds under Chapter 6 include:

• when disclosure of substantial shareholdings is required; and

• when a bidder may initiate a compulsory acquisition of remaining securities following a takeover bid.

See Key thresholds and the takeovers prohibition and exceptions.

There are three types of takeover:

• off-market takeover;

• on-market takeover; and

• proportional takeover.

See Types of takeovers.

In making a takeover offer under Chapter 6 of the Corporations Act 2001 (Cth), a bidder is required to prepare a bidder’s statement which sets out the terms of the offer and other material information. The target then prepares a target’s statement. The Corporations Act contains a number of content requirements for each of these documents as well as timing requirements for their lodgement and despatch to the target’s securityholders. There are also requirements to update the information in bidder’s statements and target’s statements.

Although an independent expert report is not required in all circumstances, it is common for a target to commission an independent expert report and include it in the target’s statement.

See Takeover documents.

There are number of issues which arise in the context of takeovers including:

• due diligence by the bidder;

• the acquisition of a pre-bid stake in the target;

• what the bid price can be;

• the form of the bid consideration;

• the prohibition on providing collateral benefits;

• whether the bidder has adequate funding arrangements;

• limitations on the bidder withdrawing the offer;

• actions by the target which may frustrate the bid; and

• multiple parties combining to make a joint bid for the target.

See Issues in takeovers.