26 June 2008

CAMAC has published a discussion paper on Members’ schemes of arrangement.

Schemes of arrangement are a commonly used mechanism under the Corporations Act for achieving structural change within a company or a corporate group. They can be tailored to novel or complex corporate structures or be used for major group reconstructions. Members’ schemes are increasingly used instead of takeover bids to achieve a change of corporate control.

The Advisory Committee was asked by the former Government to consider whether the ‘headcount’ test for shareholder approval of members’ schemes (namely a majority in number of shareholders voting on the scheme) should be removed. The Committee considered that this issue might best be considered in the context of a wider review of whether the provisions for members’ schemes operate in an effective and appropriate manner, and with appropriate safeguards, to facilitate corporate restructuring.

The paper includes a review of factors that may influence the choice between schemes, takeover bids and reductions of share capital to effect a change of corporate control.

The paper invites submissions on a range of issues, including:

• whether the disclosure requirements for schemes should be amended to assist greater understanding by shareholders, for instance, by introducing a ‘clear, concise and effective’ disclosure requirement for the explanatory statement
• whether the procedure for determining classes of shareholders should be changed to permit earlier and binding determinations
• whether the headcount test should be amended or repealed
• whether ASIC should have modification powers for schemes comparable to those for takeover bids
• whether s 411(17), which relates to schemes that have been proposed for the purpose of avoiding the takeover provisions, should be repealed or amended.

The paper also considers whether the provisions for members’ schemes:

• should accommodate holders of options over unissued shares or convertible notes
• should be extended to listed or unlisted managed investment schemes
• should be simplified for mergers within wholly-owned corporate groups
• should be adapted for use in schemes opposed by the target company.

The Committee is calling for submissions on the discussion paper by 26 September 2008.

CAMAC will prepare its report following consideration of submissions received.

Copies of the Discussion Paper

Click here to view or download the Discussion Paper (PDF file, 554 KB)

To receive a bound copy, please send your postal details to: mailto:camac@camac.gov.au Request for submissions The Advisory Committee invites submissions on any aspect of the matters covered in this paper. Please email your submission, in Word format, to: mailto:john.kluver@camac.gov.au Please forward your submissions by Friday 26 September 2008. All submissions, unless marked confidential, will be made available at http://www.camac.gov.au/ Further information For any further information, please contact John Kluver, Executive Director, by phone on (02) 9911 2950 or by email to: mailto:john.kluver@camac.gov.au