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Proposed amendments to the Takeovers Code welcomed

April 19, 2017


Partners James Hawes, Don Holborow, Andrew Matthews, Michael Pollard
Special Advisors Peter Hinton

M&A and capital markets

Unlisted companies will need to meet a revenue and/or asset test before becoming subject to the Takeovers Code, under proposals released by the Takeovers Panel.

The Takeovers Panel has recommended changes be made to the Takeovers Code - the most fundamental change affects the application of the Code with respect to unlisted companies.

Currently, an unlisted company is subject to the Code if it has 50 or more shareholders and 50 or more share parcels on issue. Under the Panel's proposal, the Code would only apply to listed companies, and unlisted companies that meet the following thresholds: total revenue of $15 million or more, or total assets of $30 million or more.

The proposed changes are intended to reduce compliance costs for small-to-medium sized and start-up companies, and we believe they will greatly facilitate capital raisings (in particular, equity crowd-funded companies). We are pleased to see the Panel respond to market demand for change.

The Panel is also recommending a number of minor and technical amendments to the Code. The change to the definition of Code company will require an amendment to the Takeovers Act 1993.

For any advice relating to the proposed changes or takeovers generally, feel free to get in touch with one of our experts.