This is a service specifically targeted at the needs of busy non-executive Directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.

In this edition, we take a look at ASIC’s quarterly update, ASX’s proposed changes regarding corporate collective investment vehicles and key takeaways from the Takeovers Panel’s reasons for various decisions. In Over the Horizon, we consider the outlook for ASX over the coming weeks.


ASIC releases quarterly update for last quarter.  ASIC has released its update report for the October to December 2021 quarter.  In the report, ASIC reflects on its focus areas for the quarter, particularly with respect to its guidance on financial reporting disclosures around COVID-19 and ESG matters.  Additionally, after what has seemed like an eternity, this report notes the completion of ASIC’s investigations arising from the Hayne Royal Commission. See ASIC’s media release.

ASX commences consultation on proposed changes regarding Corporate Collective Investment Vehicles and more.  ASX has released a consultation paper seeking feedback on proposed changes to the ASX Listing Rules to facilitate ASX listing of corporate collective investment vehicles, notified foreign passport funds and New Zealand registered managed investment schemes making offers of securities.  Corporate collective investment vehicles are a new type of funds management vehicle that will operate via sub-funds.  As the ASX Listing Rules currently stand, these types of vehicles cannot be accommodated – therefore, ASX has identified the need for ‘significant rationalisation’ to the ASX Listing Rules which refer to (or draw a distinction between) listed companies and listed trusts so that they may appropriately apply to these vehicles.  The proposed changes, if effected, will serve to open up the ASX to more foreign listings as the rules in their current form do not provide for the registration of entities of these particular natures.  Public consultation is open until 18 March 2022.  See ASX’s media release.


Takeovers Panel receives application in relation to the affairs of Virtus Health Limited.  In last week’s edition of Boardroom Brief, we considered CapVest’s takeover bid for Virtus Health Ltd (Virtus), noting it provides a test case for the scope of exclusivity arrangements.  Later in the week, the Takeovers Panel received an application from BGH Capital Fund I (BGH) (the earlier bidder) in relation to the exclusivity arrangements for the CapVest bid. BGH submits that the process deed (which documents the exclusivity arrangements) gives rise to unacceptable circumstances and adversely impacts the competition of control of Virtus.  The application also reveals that the process deed introduces two break fees - $4 million payable to CapVest where Virtus enters into an agreement giving effect to a superior proposal or recommends another bid during the 6 months after the date of the process deed (regardless of whether that is binding) and $2 million payable to CapVest where it delivers a binding proposal to Virtus and Virtus elects not to proceed.  BGH seeks final orders that the process deed be amended to remove the absolute exclusivity provisions and provide it is instead subject to the customary “fiduciary out”.  The Panel has not yet decided whether to conduct proceedings.  See the Takeovers Panel’s media release

Takeovers Panel receives application and makes declaration of unacceptable circumstances in relation to the affairs of Bullseye Mining Limited. In January, the Takeovers Panel received an application from Hongkong Xinhe International Investment Company Limited (HXII) in relation to the affairs of Bullseye Mining limited (Bullseye).  Late last year, Bullseye and Emerald Resources NL (Emerald) entered into a bid implementation agreement and Emerald acquired a 19.45% pre-bid stake in Bullseye shares.  Emerald and Bullseye have subsequently lodged their respective bidder and target statements.  HXII submits, amongst other things, that the statements are deficient, Emerald breached section 606 of the Corporations Act as a result of its pre-bid acquisition and acquisition of a relevant interest by Bullseye directors as well as an undisclosed association between Emerald and each of the Bullseye directors.  HXII also submits Emerald and Bullseye failed to announce the execution of the bid implementation agreement at the time of execution and various contraventions of section 602(c) of the Corporations Act.  The Panel has today declared that the circumstances the subject of HXII’s application were unacceptable given there were a number of matters which had a limiting effect on the ability for a competing proposal for Bullseye to be made, including the inclusion of a warranty that Bullseye directors intended to accept the Emerald bid within 7 days of opening, the acceptance of the bid within that timeframe by each of the Bullseye directors, the delay between signing the agreement and the announcement disclosing that fact and Emerald acquiring its pre-bid stake after signing the agreement (but before the announcement about the agreement).  The Panel also determined that there were material information deficiencies in Bullseye’s target statement.  The Panel has ordered (amongst other things) that Emerald extend its bid and offer withdrawal rights to Bullseye shareholders, Bullseye and Emerald make supplementary disclosure (including with respect to the new withdrawal right) and requiring that Bullseye directors’ acceptances of the Emerald bid are cancelled if a superior proposal is made.  The Panel will release further reasons for its decision in due course. See the Takeover Panel’s media release.

Takeovers Panel accepts undertakings and declines to conduct proceedings in relation to the affairs of Wollongong Coal Limited. Wollongong Coal Limited (Wollongong) is a public unlisted company.  Late last year Wollongong undertook a rights issue as a result of which Jindal Steel & Power (Mauritius) Limited (Jindal Steel) increased its shareholding from 61% to 98.2% in Wollongong.  Jindal Steel then sent remaining Wollongong shareholders a compulsory acquisition notice proposing to acquire the remaining shares at $0.0001 per share accompanied by an Independent Expert Report prepared by BDO valuing the shares at nil.  The application submitted that the report does not consider the amount paid by Jindal in subscribing for its full entitlement under the rights issue.  The Panel has declined to undertake proceedings after accepting undertakings from BDO and Jindal Steel - BDO has undertaken to prepare a supplementary or replacement report considering how it took the matters referred to in section 667C(2) of the Corporations Act (including the value of the company and value of the class of securities) into account and to obtain an independent technical specialist report; and Jindal Steel has undertaken to withdraw its notice of compulsory acquisition.  See the Takeovers Panel’s media release.


ASX outlook. The close of last week saw ASX recover from the losses experienced in January – the largest since COVID-19 reared its head in early 2020.  The coming results season will likely see ASX listed companies provide the first insights into the impact of the various dynamics discussed in last week’s edition of Boardroom Brief on their operations.  Inflation and interest rates, in particular, are likely to dominate discussions: the tone of central banks across the globe has turned decidedly “hawkish” over the first few weeks of the year, and the RBA is looking increasingly isolated in maintaining its more “dovish” tone, albeit interest rate rises as early as August seem a distinct possibility.  With international borders likely to reopen soon, the Omicron wave subsiding (except in WA, where it is yet to arrive) and the Federal Election moving from shadow to full campaign mode in the next month or so, the remainder of the financial year promises to layer volatility on top of uncertainty, creating both risk and opportunity for corporate deal making.

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