RESOLUTION 6 –The Company’s Constitution contains a rule relating to proportional takeovers, which is required by the Corporations Act to be approved by Shareholders every 3 years. The Constitution was adopted at the 2014 AGM and the 3-year rule will result in the provisions being automatically omitted from the Constitution on 20 November 2017. Detailed information is provided to allow Shareholders to make an informed decision on whether to support or oppose the Resolution. This information is set out below. The reason for the proportional takeover approval provisions In a proportional takeover bid, the bidder offers to buy only a proportion of each Shareholder’s shares in the Company. This could result in control of the Company passing to a bidder without Shareholders having the chance to sell all their shares to the bidder, or a bidder may take control of the Company without paying a proper price. The Directors consider it is in the best interest of Shareholders to have a proportional takeover approval provision included in the Constitution. The effect of the proportional takeover approval provisions Clause 33 of the Constitution adopted at the 2014 AGM contained the proportional takeover approval provisions. It states that if a proportional takeover bid is made, the Directors must ensure that a general meeting is convened at least 14 days before the last day of the bid period. The proportional takeover bid must be approved by Shareholders, with at least 50% of votes cast supporting the proportional takeover. Each person who holds bid class shares (as at the end of the day on which the first offer under the bid was made) is entitled to vote on the resolution. The bidder and its associates are excluded from voting. If the proportional takeover bid is not approved by Shareholders, then no transfers of shares under the bid will be registered and the proportional takeover offer will be taken to be withdrawn. If Shareholders do not vote to approve the bid, then the bid will be taken to have been approved. If Shareholders approve the bid, then all legally valid transfers must be registered. The proportional takeover approval provisions do not apply to full takeover bids – that is, they do not in any way restrict a bidder from making a bid for all of the Shares in the Company. No person to acquire or increase its substantial interest As at the date this statement was prepared, none of the Directors of the Company are aware of a proposal by a person to acquire, or to increase the extent of, a substantial interest in the Company. Review of proportional takeover approval provisions The Directors do not consider that the proportional takeover provisions that have been in the Constitution had any directly observable advantages or disadvantages for Directors or Shareholders. While the proportional takeover provisions were in effect, there were no takeover bids made for the Company, either proportional or otherwise. Consequently, there are no actual examples against which to review the advantages or disadvantages of the existing proportional takeover approval provisions contained in Clause 33 of the Constitution. The Directors are not aware of any potential takeover that was discouraged by Clause 33 of the Constitution. The provisions may nevertheless have had similar effects to those explained in the potential advantages and disadvantages section below. Potential advantages and disadvantages The Directors do not consider that the proportional takeover approval provisions have any potential advantages or disadvantages for them. The potential advantages of the proportional takeover approval provisions for Shareholders of the Company are: a) Shareholders will have the right to decide by majority vote whether a proportional takeover bid should proceed; b) the provision may help Shareholders avoid being locked in as a minority; Page 13 of 14 c) the provision may prevent a bidder gaining control of the Company without paying a proper price and in fact increases Shareholder bargaining power which may ensure that any proportional takeover offer is properly priced; and d) knowing the view of the majority of Shareholders may assist individual Shareholders with deciding whether to accept or reject the offer, if it is approved. The potential disadvantages of the proportional takeover approval provisions for Shareholders of the Company are: a) it may discourage proportional takeover bids being made for Shares in the Company; b) Shareholders may lose an opportunity to sell some of their Shares at a premium; and c) the probability of a proportional takeover bid succeeding may be reduced. Renewal every 3 years The Corporations Act requires that the proportional takeover approval provisions of the Constitution be renewed every 3 years. This 3 year period commences after the last Shareholder approval of the provisions. The Constitution was adopted at the 2014 AGM and the existing provisions will cease to be included in the Constitution on 20 November 2017. If Resolution 6 is approved by Shareholders, the proportional takeover approval provisions will continue in effect for 3 years after the date of the resolution. The Directors consider that the potential advantages for Shareholders of the re-inclusion of proportional takeover approval provisions in the Constitution for the next 3 years outweigh any potential disadvantages. Recommendation The Board unanimously recommends the approval of the alteration of the Constitution to re-include the proportional takeover approval provisions
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