oceanwide moving to 30%

The significance of the recent announcement of Oceanwide moving to 30% raises several alternatives of how this can occur in accordance with varies governing bodies.

Based on some information that has been collected below, there are only 2 ways that this can occur.

1. By shareholder resolution at a special or annual meeting. This would entail a placement.

2. By a propotional takeover offer say to all holders for a percentage of there holding. Those share holders would be given the opportunity to cash out a proportion of there holding about 1 for every 8 held.

A combination of the the two above choices would also be available.

By virtue of Waynes statement that Oceanwide intents to possibly move to 30%, it could be interpreted as a legitimate "Defensive Take-Over Position" .

If a bid was to emerge from an unknown third party the placement could proceed as an effective blocking mechanism, this could be tested.

The level of control selected under Australian law as the trigger for the takeover legislation is 20% of voting power in a company .
The key provision is section 606 of the Corporations Act. This section prohibits an acquisition of shares in a company if, after the acquisition

-any person's voting power in the company would increase beyond the 20%
threshold; or

-any person's voting power in a company that is above 20% and below 90%
increases.



The takeover rules do not apply where voting power remains below the 20% level after an acquisition, although other rules, such as those requiring declaration of substantial shareholdings (which exceed 5%), are relevant.
There are a number of important gateways which allow a person to exceed the 20% level.

Permitted gateways include:

-an off-market takeover bid made to all shareholders which may be for all or a nominated proportion of their shareholding;

-an unconditional on-market takeover bid on the ASX;

-"creeping" acquisitions of not more than 3% of voting shares in every six months, by a person already holding at least 19% of voting power in the company;

-acquisitions approved by ordinary resolution of shareholders who are unassociated with the parties to the transaction; and

-indirect acquisitions of shares in a downstream company, resulting from the authorised acquisition of shares in an upstream ASX listed company or a company which is listed on an approved foreign stock exchange.



In addition, the Australian Securities and Investments Commission (ASIC) has broad discretionary powers of exemption and modification, to ensure that the takeover rules operate flexibly and fairly.

Some important percentage thresholds



-below 5% -ASIC, public companies and the responsible entities can trace beneficial ownership in shares , even where voting power is below the 5% level;

-5%-substantial holding level which requires the holder to give information to a company, and the ASX; over 10%- holder can block compulsory acquisition which requires voting power of 90% to be held;

-15%-notification may be required under the Foreign Acquisitions and Takeovers Act if the bidder is a "foreign person"

-over 25%-can block special resolutions of the company ;

-50%-voting control of the target;

-75%-holder can ensure special resolutions are passed;

-85%-holder must give notice of substantial holding and the company must notify shareholders that, at 90%, the person can compulsorily acquire the remaining securities;

-90%- general, confers the ability to compulsorily acquire remaining securities in target; and

for certain regulated industries and companies, acquisitions prohibited over
varying thresholds.



Proportional bids


Offers can be made to acquire part only of the target's shares, but such an offer must be made for a specified proportion of each member's shares. Such offers are rare. Pro-rata partial bids, namely offers to acquire a specified percentage of the target's shares, with over-acceptances pro-rated, are prohibited in Australia.
It is common for the constitution of a listed company to require that shareholder approval be obtained before a proportional bid can proceed.



Oceanwide could not move from 19.92% to 30% on-market unless it was done via the "creep provision"

It can be somewhat annoying that a lot of mis-information on this forum as to what major shareholders can and can not do.

I hope this clears up some confusion.



Cheers