On Friday 2 July, the Australian Government’s Takeovers Panel released the long awaited amendments to Guidance Note 20. We now have a launch date - the new Guidance Note comes into effect on 4 October 2021. Equity derivative positions will be required to be disclosed like substantial equity holdings, whether or not a control transaction is on foot:
- within two business days, if the long position of a person and their associates is over 5%, or moves 1% or more from its disclosed position, or falls below 5%, it must be disclosed, unless it has been put in place by a market maker to hedge another long position; or
- daily If the position is less than 5% but held by a bidder or their associates.
Disclosure to the company should be at least that information required for a substantial holding notice, although in any appropriate form, and include any caps, collars and hedging, as well as any short positions designed to offset the long position. The company is expected to release the disclosure to ASX.
The Panel also indicated a long position in excess of 20% is likely to be considered unacceptable, unless the taker has not attempted to influence the entity and would have had the benefit of a Chapter 6 exemption if the position was equity (eg a 3% creep).
Practically speaking, the market is now on notice of what the Panel regards as unacceptable and we would recommend taking this into account in considering your position(s) or proposed new positions.