Time to buy a few IMO...for the fun and games to come...T/Over...

Time to buy a few IMO...for the fun and games to come...


T/Over Provisions
Corporations listed on the Australian Stock Exchange and unlisted corporations with more than 50 shareholders are subject to the takeovers provisions of Chapter 6 of the Corporations Act. As a result, a person can only acquire more than 20% of the voting control of such a corporation by following one of the procedures specified by Chapter 6, principally: • a takeover bid (akin to a tender offer); or • a scheme of arrangement (requesting a shareholder vote on the takeover) In effect, what this means is that – with only very limited exceptions – a bidder cannot move above 20% without making a formal offer to all the shareholders in the corporation. Equally important, the 20% threshold applies to pre-bid agreements such as call options and voting agreements. A bidder can amass a 19.9% stake in a corporation through a combination of stock purchases and binding commitments from existing shareholders, but cannot tie up any more than 20%. Other provisions of Chapter 6 also affect limit a bidder’s ability to manoeuvre: • the bid price offered to shareholders cannot be less than the highest price paid in acquiring the pre-bid stake during the four months before the bid; • any voting interests above 5% have to be disclosed to the market; • once a bid is publicly announced, the bidder is legally required to proceed with it, unless the bid is overtaken by unforeseen circumstances which make it unreasonable to continue. Since public disclosure of a 5% stake is likely to spark rumours of a takeover bid and hence push up the target corporation’s stock price, many bidders delay acquiring a pre-bid stake until shortly before the bid itself is formally announced. The use of nominees to “hide” pre-bid stakes is also discouraged. Under the Act a corporation can trace the beneficial ownership of shares through a chain of nominees. Failure by any nominee to provide the required information may result in a court order for the forced sale of the shares.