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• whether the headcount test should be amended or repealed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which relates to schemes that have been proposed for the purpose of avoiding the takeover provisions, should be repealed or amended.

• 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.

CAMAC will prepare its report following consideration of submissions received.

Copies of the Discussion Paper

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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