Case: Glencore International AG v Takeovers Panel [2005] FCA 1290
Outcome: referred to
The Takeovers Panel was established under s 171 of the Australian Securities and Investments Commission Act 1989 (Cth) and continued in existence under the Australian Securities and Investments Commission Act 2001 (Cth), as described in Schedule 3 to the Financial Services Reform Act 2001 (Cth) ('the Panel'). The proceeding should be understood in the context of the Court's orders of 14 September 2005, made in Glencore International AG &amp; Anor v Takeovers Panel &amp; Ors [2005] FCA 1290. 3 The questions in the proceeding depend upon the effect of certain transactions described as ' cash settled equity swaps '. A cash settled equity swap is an arrangement between an investor and a bank whereby the bank agrees to pay the investor an amount equal to the difference between the value of a given number of equity securities at the time of the closing out of the swap and the value of those equity securities at the time when the arrangement was entered into. Under such an arrangement the investor does not acquire any interest in any equity securities and the investor has no right to call for delivery of equity securities or to require the bank to undertake any action involving the acquisition, holding or disposal of equity securities. Closing out of, and settlement under, such a swap will, depending on the terms of the arrangement, be either at the option of one party or be automatic. Of course, it would always be open to the parties to close out a swap by mutual agreement at any time. In order to hedge its risk under such an arrangement, a bank might buy the relevant equity securities. 4 The fourth respondent, Austral Coal Limited ('the Company'), is a miner of coking coal in southern New South Wales. It sells coking coal both domestically and internationally. The second respondent, Centennial Coal Company Limited ('Centennial'), is also a miner and marketer of coal. At relevant times, shares in the Company and Centennial were listed for quotation on Australian Stock Exchange Limited ('ASX'). 28 Chapter 6 of the Act is concerned with ' Takeovers '. Part 6.1 is concerned with Prohibited acquisitions of relevant interests in voting shares and Part 6.2 deals with Exceptions to the prohibition . Parts 6.3 to 6.9 regulate the making and acceptance of takeover offers. Part 6.10 deals with the review of, and intervention in, the conduct of takeovers by the Commission and by the Panel. 29 The pivotal provision of the Act in relation to the regulation of takeovers is s 606. Relevantly, s 606(1) prohibits a person from acquiring a relevant interest in issued voting shares in a company if, because of the transaction, that person's, or someone else's, voting power in the company increases: &#8226; from 20 per cent or below to more than 20 per cent; or &#8226; from a starting point that is above 20 per cent and below 90 per cent. 30 Section 608(1) provides that a person has a relevant interest in shares if that person: &#8226; is the holder of the shares; &#8226; has power to exercise, or control the exercise of, a right to vote attached to the shares; or &#8226; has power to dispose of, or control the exercise of a power to dispose of, the shares. Section 608(2) provides for extended circumstances in which 'power' and 'control' may arise for the purposes of determining whether a person has a relevant interest in securities.