agm -why the need for this item?

Item 4 – Renewal of Proportional Takeover Provisions
A special resolution is being put to shareholders under
sections 136(2) and 648G of the Corporations Act to amend
the Company’s Constitution by renewing the existing Rule 7
of the Constitution. A special resolution must be passed by at
least 75% of the votes cast by shareholders of the Company
who being entitled to vote on the resolution do so at the
meeting in person, by Proxy or by submitting a direct vote.
Rule 7 formed part of the Constitution adopted by
shareholders in October 2000. Under its terms, and in
accordance with the Corporations Act, Rule 7 ceased to
apply in October 2003. Rule 7 was renewed for a further
3 year period by shareholders from November 2008 to
November 2011.
If renewed by shareholders at the meeting, the Rule will
operate for a three year period from the date of the meeting
(i.e. until 8 November 2014), subject to further renewal.
A copy of the Constitution can be obtained by contacting
the Company.
The Corporations Act requires the following matters to be
advised to shareholders in relation to a proposed resolution
to adopt proportional takeover bid provisions:
Proportional Takeover Bid
A proportional takeover bid is an off-market takeover bid
where the offer made to each shareholder is only for a
proportion of that shareholder’s shares (i.e. less than 100%).
Accordingly, if a shareholder accepts in full the offer under a
proportional takeover bid, the shareholder will dispose of the
specified portion of the shareholder’s shares in the company
and retain the balance of the shares. The Corporations Act
allows a company to include in its constitution a provision

which enables the company to refuse to register a transfer of
shares under a proportional takeover bid, unless a resolution
is first passed by shareholders approving the offer. This is
what Rule 7 is designed to achieve.
Effect of Proportional Takeover Provisions
If a proportional takeover bid is made, the directors must
ensure that a meeting is held more than 14 days before the
last day of the bid period, at which shareholders will consider
a resolution to approve the takeover bid. Each shareholder
has 1 vote for each fully paid share held. The vote is decided
on a simple majority, and will be binding on all individual
shareholders. The bidder and its associates are not allowed
to vote. If the resolution is not passed, no transfer will be
registered as a result of the takeover bid and the offer will
be taken to have been withdrawn. If the resolution is not
voted on, the bid is taken to have been approved. This in
effect, means that shareholders as a body may only prohibit
a proportional takeover bid by rejecting such a resolution.
The directors will have breached the Constitution if they fail
to ensure the requisite resolution is voted on. If the bid is
approved (or taken to have been approved), all valid transfers
must be registered. The proportional takeover approval
provisions do not apply to full takeover bids.
Reasons for Proposing the Resolution to Renew Rule 7
The directors consider the renewal of Rule 7 to be in the
interests of the Company. In the directors’ view, shareholders
should have the opportunity to vote on a proposed
proportional takeover bid. A proportional takeover bid for
the Company may enable effective control of the Company
to be acquired without shareholders having the opportunity
to dispose of all their shares. The shareholders could be at
risk of passing control to the bidder without payment of an
adequate control premium for all their shares, being locked
into a minority position in the Company or suffering loss if
the bid causes a decrease in the market value of the shares.
Rule 7 will prevent this situation occurring by permitting
shareholders to decide whether or not a proportional
takeover bid should be allowed to proceed.
Presently Proposed Acquisitions
As at the date of this notice, the directors are not aware of
any proposal by any person to acquire, or to increase the
extent of, a substantial interest in the Company.
Potential Advantages and Disadvantages
The potential advantages of the proportional takeover bid
provisions for the directors and shareholders respectively
of the Company are as follows:
• shareholders have the right to decide by majority vote
whether an offer under a proportional takeover bid should
proceed, which is likely to ensure that an intending bidder
structures its offer in a way which is attractive to a majority