Ann: Notice of Annual General Meeting/Proxy Form, page-19

Scarpa - from the outset let me say I consistently appreciate your balanced and incisive commentary in the ADN forum and those of other companies - but in this instance I must respectfully disagree.

I have already elaborated on the bases for the proposed resolutions in my 2 posts above and do not intend to reproduce those matters here.

However, by way of further commentary:

1. The basis for resolution 8 is couched as being, on balance, for the protection and in the interests of shareholders in the context of a take-over / change of control transaction.

Not to put to put too fine a point on it, in my opinion the proposed resolution (and the change it seeks to implement) seeks to avoid a situation whereby ADN’s shareholders could potentially be shafted via an off-market proportional take-over bid without: (a) appropriate transparency; and (b) the support of a simple majority of all shareholders through a vote.

I have already quoted from the Explanatory Notes above, but again:

”This means that control of the Company may pass without members having the chance to sell all their sharesto the bidder. It also means the bidder may take control of the Company without paying an adequate amount for gaining control.”

If the company’s actual intended purpose of the resolution was instead about facilitating potential joint venture arrangements on a corporate transactional level then the Notice of AGM and Explanatory Notes for resolution 8 would, on one view, border on (if not be outright) misleading:

”The Board of Directors considers that the potential advantages for members of the proportional takeover approval provisions outweigh the potential disadvantages.

At the date this statement was prepared, no Director is aware of a proposal by a person to acquire, or to increase, a substantial interest in the Company.”

The relevant section 648G of the Corporations Act 2001 can be found here:

http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s648g.html

Sub-section (5) makes it clear that, among other matters, that in providing a notice of resolution in which it is proposed that proportional take-over provisions be included in the company constitution the company must send a statement that:

”explains the reasons for proposing the resolution and sets out the factual matters and principles underlying those reasons;”

Let me say that I personally do not consider for one moment that ADN’s board is attempting to mislead its shareholders in any way and indeed is adopting a prudent course here.

2. You have noted the apparent statistical
rarity of proportional take-overs and a number of others in this forum have commented historically on the seemingly low percentage incidence of “hostile” take-overs of publicly listed companies in Australia.

I am sure these accounts of the facts are accurate.

However, what I would respectfully suggest is missing from that observation and likely the historic data is an analysis of the corporate governance documentation of the relevant companies - i.e I assume “hostile” changes of control generally fail where, among other matters, the company’s constitutional documents are in order.

I take the view that ADN’s board is appropriately seeking to take a step in effect to “plug a hole” (where it currently has a company constitution that actually pre-dates the commencement of the Corps legislation that has been in place since about 2001) that might otherwise leave it prone to situations that could be less than ideal from the perspective of the majority of its shareholders.

In other words, my view is that ADN’s Annual General Meeting date of 26 November 2020 cannot come around soon enough.

3. In any event, it is not clear to me what link you see between proportional take-over provisions and joint venture arrangements, and why you take the view the proposed resolution suggests that ADN is more open to joint venture arrangements (presumably that involve another company taking an equity stake in ADN)?

Again, all of the above commentary is in my personal opinion and for the purposes of intellectual discussion only. Best wishes.