[Last updated: 1 January 2025, unless otherwise noted]

2.1 Main legal framework

Public company control transactions, whether by takeover bid or scheme of arrangement, are highly regulated in Australia.

The main source of regulation of takeover offers is Chapter 6 of the Corporations Act, 2001 (Cth) (the "Corporations Act") as modified and interpreted by the exercise of broad discretionary powers vested in the Australian Securities and Investments Commission ("ASIC") (the Australian corporate regulator) and the Takeovers Panel (a specialist tribunal that resolves takeover disputes).

A public company takeover can also be implemented by way of a "scheme of arrangement", which is a court-approved form of transaction between a company and its shareholders. The main source of regulation for schemes of arrangement is Chapter 5 of the Corporations Act, together with ASIC policy on disclosure principles and other matters and oversight by the court (state Supreme Court or the Federal Court).

The most common takeover structures in Australia are off-market takeover bids, on-market takeover bids and court-approved schemes of arrangement. These takeover structures are discussed in further detail in Section 4.

This guide focuses on the acquisition of shares in a listed public company. The same rules and principles will generally apply to interests in a listed managed investment scheme (such as units in a unit trust). However, only companies can use schemes of arrangement, and managed investment schemes have to use a special kind of "trust scheme".

2.2 Other rules and principlesOther rules and principles that may be relevant to a takeover offer in Australia include:

• competition rules set out in the Competition and Consumer Act 2010 (Cth) which are administered by the Australian Competition and Consumer Commission (the "ACCC");

• foreign investment rules set out in the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the accompanying regulations, where proposed acquisitions requiring approval are regulated by the Treasurer of the Commonwealth of Australia with assistance from the Foreign Investment Review Board ("FIRB"); and

• other rules specific to an industry (such as banking, broadcasting, aviation and gaming) which may regulate control transactions.

The listing rules of the Australian Securities Exchange ("ASX") do not separately regulate takeovers in any major way. This means that non- Australian companies that are listed on the ASX will generally be regulated only by the law of their home jurisdiction, and will not be subject to Australian takeover regulation.

2.3 Supervision and enforcement by the regulatory bodies

Takeovers in Australia are principally regulated by ASIC, with takeover disputes largely being determined by the Takeovers Panel. The courts play a central role in takeover offers conducted by way of scheme of arrangement, but otherwise have a limited role in takeovers.

ASIC is a government body which supervises the operation of companies and securities law including takeovers. It is responsible for monitoring compliance with the Corporations Act and has wide powers to investigate the conduct and share trading activities of parties involved in a takeover, among other things. ASIC also has broad facilitative, regulatory and enforcement powers, and has the power to modify and grant relief from the takeover rules.

The Takeovers Panel is a non-judicial body and is the principal forum for resolving takeover disputes. It has the power to declare circumstances unacceptable and to make remedial orders on a principles-based determination, without requiring there to be a breach of law.

2.4 Fundamental principles

The following principles set out the objectives of the takeover provisions in the Corporations Act:

• that the acquisition of control of a public company takes place in an efficient, competitive and informed market;
  • that the shareholders and directors of a public company:
  • know the identity of any person who proposes to acquire a substantial interest in the public company;
  • have a reasonable time to consider the proposal; and
  • are given enough information to assess the merits of the proposal;

• that, as far as practicable, the public company's shareholders should all have a reasonable and equal opportunity to participate in any benefits accruing to the entity's shareholders through the proposal; and

• that an appropriate procedure is followed as a preliminary to compulsory squeeze-out of the minority shareholders under the Corporations Act.

2.5 Foreign investment regulations

Foreign investments in Australian entities, businesses and land are regulated by the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and related legislation and Australia's Foreign Investment Policy (Policy). The FIRB administers the legislation and Policy and assists the Treasurer of the Commonwealth of Australia ("Treasurer") to make decisions on foreign investment proposals submitted for approval.

A "foreign person" that proposes to invest in an entity, business or land in Australia must apply for approval (typically referred to as "FIRB approval") if the transaction involves a "notifiable action". If the transaction involves a "significant action" (but not a notifiable action) it is not mandatory to seek approval but the Treasurer may prohibit or reverse the transaction if it is contrary to Australia's national interest. There is no specific definition of "national interest" in the legislation, although the Policy provides some guidance. Whether an investment by a foreign person involves a notifiable action and/or a significant action depends on the nature of the investment and, in most cases, the extent of the interest acquired and the value of the investment or the relevant entity or business.

In general, proposals to acquire an interest of 20% or more in any Australian business valued at over A$330 million (or the higher threshold of A$1,427 million for agreement country investors from Chile, China, Japan, Korea, Singapore, New Zealand and the United States) require prior approval.

All foreign government investors also require approval to acquire a direct interest in an Australian entity or an Australian business or to start a new Australian business, regardless of the value of the investment.

Restrictions also apply to the investment by foreign investors in real estate (including commercial and residential land), agribusiness and agricultural land. In addition, investments in certain sectors are subject to more stringent requirements, including investments in the telecommunications, media, transport and defense sectors. For example, an investment of 5% or more in an entity or business in the media sector will require FIRB approval, regardless of value.

All applications to FIRB must be made online and incur a fee which varies depending on the size of the proposed transaction.

We recommend that any foreign person seeking to make an investment in an Australian asset or entity carefully considers the application of FATA prior to entering into any transaction.

2.6 Proposed reforms

There are currently no significant proposed reforms to the takeover rules in Australia.

ASIC issues and regularly updates regulatory guides to provide informal direction as to how it normally interprets and applies relevant provisions of the Corporations Act. In addition, the Takeovers Panel issues guidance notes on various takeover issues that may give rise to unacceptable circumstances and publishes its reasons for decisions on its website.