Takeover Law Reforms in Australia and in China

g shareholders sell their shares during the bid. If the takeover relates to a particular class of shares then it is only the remainder of that class that may be acquired. Now, compulsory acquisitions can be made for all class of securities. The 75% rules are changed to be based on the value of shares subject to acquisition under the takeover, rather than numbers of shareholders. This overcomes the problem of a single shareholding being distributed among several people to deliberately increase the number of shareholders to oppose the bid. In addition, a person who has relevant interests in at least 90% by number of the securities in that class is able to achieve 100% control of that class. This helps companies overcome any limitations on acquisitions flowing from the Gambotto(3) decision. If 10% by value of the minority holders of any class dissented, the acquisition of that class would only be able to proceed with court approval of the fairness of the price. This reform is designed to make takeover easier and prevent greenmail, and will result in better and more efficient management of company groups and reducing the administrative and reporting requirements of associated companies. Where a parent company has compulsorily acquired outstanding minorities, there is more flexibility in distribution of funds between subsidiaries, the confidential information is better protected and conflicts of interest in dealings between group companies are avoid. However, it is also criticised as both unfair and unnecessary for hurting minority shareholders. The CLERP Act also makes significant reforms on the disclosure requirements for takeover offers. The disclosure rules are consistent with the fundraising disclosure rules and have regard to the extent to which reliable information is available and useful. A bidder has liability to make supplementary disclosures. The procedure rules relating to off-market bids and market bids are brought into line. Part A and Part C statements are merged into a bidder's statement and a target's statement replaces Part B and Part D statements. It is worth noting that the most striking and radical of the CLERP's proposals for takeover law reform was to introduce a mandatory bid rule. Acquisitions that would exceed the statutory threshold 20% would be allowed as long as that the acquisition was immediately followed by the announcement of a full takeover bid. The bid would be unconditional and for cash of an amount at least equivalent to the highest price paid by the bidder in the last four months. The CLERP believed that there were potentially significant benefits associated with introducing a mandatory bid.(4) It would promote certainty in the takeover process, cut down the bid costs for removal of an auction and smooth the bid process for minimisation of directors' defensive behaviour. It was expected that more bids would take place as a result of greater certainty of outcome, providing greater incentives for efficient management under the increased prospect of a takeover. However, it was inconsistent with the first three Eggleston Principles, and the removal of an auction would result in some reduction of market transparency. It would also harm the target shareholders because they would be forced to accept the same price that was offered in private negotiation. At last, the mandatory bid proposal was deleted from the CLERP Bill when it was opposed in the Senate. The reforms are potentially very important to the shape of takeover law and company law generally. As takeover is much easier and more efficient than before, the reforms also will promote efficient management and confident market, which will ultimately lead to greater wealth creation and better competitive capacity in globe market. Securities Law: takeover law reform and its impacts in China As a securities law-bridge.net/english/ target=_blank>lawyer identified by China Securities Regulatory Commission (CSRC) and