Challenges inChallenges in

Takeovers Panel

Simon McKeonPresident

20012001

TakeoversPanel

RelationshipsLegalPolicy

ProcessConsistencyTimelinessCommercialityInformalityEfficiency

RulingsCostMembers, Interested Parties, ExecutivePost Mortems

Challenges for the Panel

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ConsistencyThe Panel’s consistency in decision making and policy will be one of the main drivers for increased certainty and confidence for the market

We will continue to work diligently in 2001/2002 to maintain our consistency, especially with the increased number of Panel members

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ConsistencyPanel’s tools to aid consistency

Role of ExecutivePanel DaysPolicy Sub-committees Published ReasonsPost MortemsMarket Liaison / Feedback

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TimelinessThe Panel will not be a success unless it delivers timely decisions

Often, 90% right in a rapid time frame is preferable to being perfectly correct in a long time frameChallenges

Finding time to fit proceedings into part-time members’ schedulesManaging information flows from combatantsManaging work load peaks for Executive staffDelivering reasons

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Commerciality

Has not been a significant problem

Challengesinherent legalism of Chapter 6parties mainly converse with Panel through lawyers, rather than investment bankshigh population of lawyers on Panel

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Informality

Similar challenges to “Commerciality”

Assisted by positive attitudes of Panel members

Assisted by informal nature of Executive

Challenged by legalism of some parties, especially adversarial litigators

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EfficiencyAssisted by:

need of part-time members to get back to day jobscommercial lawyers of parties adapting to new environmentmembers’ commerciality/ informality

Hindered by: :encroachment of part-time members’ day jobsadversarial approach by some parties

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Relationships

The Panel is a body which operates in a necessarily complex legal and regulatory environment. Its success as an organisation and as a public regulator depends very much on the quality of its relations with other regulators (including offshore), market participants, the Courts and other stakeholders.

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RelationshipsRelationship with ASIC: As part of this programme, the Panel has entered into a Memorandum of Understanding with ASIC

Relationship with Courts: The Panel will be working very hard to ensure that we have a co-operative and effective relationship with the Federal and Supreme Courts. The privative clause in section 659B of the Law and its interpretation is clearly very important for the Panel’s future

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Relationships

Relationship with marketMembers come from, and are, the marketOpenness of process Publication of reasons Post mortemsConsultation on rules and policiesPublication of policies Market liaison seminars

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Relationships

Relationship with GovernmentMinister FSR

Treasury

Opposition

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Legal Privative clause - s659B

Possibility of constitutional challengeDraftsman has worked hard to avoid constitutional problemGovernment would be heavily involved if challenge eventuated if and when it happens

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Legal - Scope

Is there a role for further uses of the Panel?

Review of other ASIC Ch. 6 discretions (e.g. consent to withdrawal of bid)Chapter 6 exemption and modification

Listing Rule waivers

Listing Rule breaches

Financial penalties for Listing Rule breaches

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PolicyProactive

will continue being pro-active in providing guidance on difficult issues through Panel policy documents before they get to the Panel as applicationsdeal with emerging market practices - break fees etcprovide guidance in areas of uncertainty - eg forecasts

Market’s viewswill continue to seek the market’s views on which issues are important and are generating uncertainty

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PolicyPublished(Final)1 Unacceptable Circs

(reviewing)2 Review of Decisions3 Making Rules4 Remedies & Enforcement5 Restraining Documents

Current WorkForecastsFrustrating TransactionsRulingsClasses of Shares (internal advice)CostsConflicts

(Draft)1 Procedural Rules2 Break Fees

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Advance RulingsSome demand from the market

Strictly, no power:devices to “construct”an applicationExecutive may give non-binding “views” based on experience and previous Panels

Very difficult on hypothetical, ex-parte or no-names bases

Significant legislative change if proposed

ASIC exemption power

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Costs - FundingCosts

should not generate a special focus on costs/taxationamend s657D(2) to order costs where circumstances are not unacceptable Panel’s costs (related to funding)

Fundingnot related to work loadnot funded by applicationsoverseas models

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MembersWe look forward to working with the new members of the takeovers and business community who have been appointed to the Panel to deal with our increasing workload

In Australia’s small business community, conflicts are always likely to restrict the number of members of the Panel who are available to sit on any particular matter, so our wider Panel membership is necessary

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Challenges re membersConsistency with 43 membersAchieving single view with 43 members

that is not merely motherhoodthat can be accepted by all

example is Break Fees Policy

Servicing the needs of members having a diverse range of takeovers experiences and geographyMaintaining interest with 43 membersMaintaining collegiality

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Challenges re membersChallenges we have NOT had

dealing with egos

enthusiasm of members

commitment of members

availability of members• sitting on Panels • travelling to/sitting in conferences• sitting on policy sub-committees• attending Panel Days

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Challenges for Members

ConsistencyTimeliness - fitting in to day jobsCommerciality of decisions

Hearings - practical difficultiesCostsExercising quite strong powers

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Challenges for PartiesApplications

discharging burden of persuasionraising actionable grounds (i.e. how are the circumstances unacceptable)

Commercial negotiation - not Court

Addressing business people - not judges

Timing

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Challenges for Executive

Maintain the goodwill of Australia’s law firms and investment banks to continue to supply the Panel with excellent quality secondees

Maintain the Panel as a most desirable place for secondees to come for experience

Manage the issue of conflicts where secondees’ firms act for parties

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Post-MortemsPart of standard procedure with every matterExecutive discusses with parties (usually parties’ advisers)Pro-forma works through all aspects of process, decision, reasonsFeedback

Sitting PanelWider Panel

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Processis assisting in fast-tracking dispute resolutionsubmissions in writing disturbs tactics of aggressive litigators

ConferencesPanel is controlling proceedings wellquestioning seems appropriatehelp to speed up the process highlight Panel’s focus

BriefsBriefs are clear, easy to understand and demonstrate a good understanding of the issuesappropriately ‘vetted’ the applications and focused on key issueswhere new facts/submissions after Panel sets picture, a revised brief may be necessary to keep process on track

Positive Feedback

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Deadlinestight but not unreasonable, but watch impact on small firms and parties from West - 12 noon is ideal

Decisions and Orderson the whole, fair and reasonable commercially focusedorders have been practical and commercial

Reasonsexplain the Panel’s decision well well considered and thoroughbut sometimes too slow

Positive Feedback

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Keeping parties “in the loop” – ensuring: parties have copies of all documents, including applications etcparties are adequately notified of Panel’s decision and publication of reasonsparties are kept apprised of the timetable

Conferencessome parties still want more conferences - they want ability to test other parties’ evidence

Major Issues

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Breach of confidentialityPanel rules aren’t preventing dissemination of information from Panel proceedingsPanel needs to consider how it can enforce its rule

Adverse comments about parties in reasons

parties have opportunity to comment on errors of fact or unfair references

Major IssuesMembers

need for more expertise in specific areas?

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ASICparties confused over role of ASIC v role of Panel in giving exemptions/orders re: dispatch of documentsPanel v ASIC re: investigations - who is responsible?different approaches by different Regional Offices

Major Issues

Multiple applicationsPanel continually considers whether it can do anything to avoid multiple applicationscosts might be a useful deterrent, but Panel only has limited powers

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Challenges inChallenges in

Takeovers Panel

Simon McKeonPresident

20012001