In January 2020, ASIC released consultation paper 326: Chapter 6 relief for share transfers using s444GA of the Corporations Act.
As noted in the consultation paper, Section s444GA allows shares of a company in administration to be transferred by an administrator as part of a deed of company arrangement (DOCA). The transfer may occur if shareholders consent or when the Court is satisfied it does not 'unfairly prejudice' the interests of shareholders. ASIC relief is required from the takeover provisions in Ch 6 to facilitate these transactions where a party is increasing their voting interest beyond the 20% threshold. ASIC is proposing to include guidance in Regulatory Guide 6 Takeovers: Exceptions to the general prohibition (RG 6) about when relief will be granted as well as other proposed changes to RG 6.
Key points from our submission include:
- Support for the requirement of an Independent Expert Report (IER) when the entity is listed or public and consider it may not be necessary for smaller unlisted proprietary limited organisations. We consider it important to balance the cost of an IER to creditors with the expected benefits to shareholders
- Administrators report to creditors could be used instead of IER in smaller voluntary administrations
- Importance of independence of preparer of an IER
Our submission was prepared in consultation with CA ANZ's Insolvency Management Committee (IMC) and was lodged with ASIC on the 28 February 2020.
We would like to thank CA ANZ's IMC for their contribution to this submission.