INTRODUCTION
During a takeover, a shareholder will have a choice as to whether they vote in favour of the takeover and accept the bidder’s offer or to hold onto their shares. By opting for the latter, the shareholder may find that they become a minority interest if the takeover is successful. This may not benefit them and the bidder. The shareholder may be isolated and experience a fall in value of their investment. The Corporations Act provides a mechanism whereby this potential conflict can be avoided.
Chapter 6A of Corporation Act gives a person a right to compulsorily acquire securities under certain circumstances, depending on the level of person’s interest in the relevant class of securities or at the relevant entity overall
Compulsory
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1.Compulsory acquisition following a takeover bid.
2.General compulsory acquisition.
Compulsory Acquisition following a takeover bid
A bidder may compulsorily acquire any remaining securities in the bid class at the end of a takeover bid, if it has met the relevant threshold
• The bidder holds relevant interest in 90% the bid class securities at the end of the bid and
• The bidder has acquired 75% of the securities that the bidder made offers under the bid.
Post bid compulsory acquisition on the basis of threshold test must commence within one month after the end of the offer period.
General Compulsory Acquisition
Under General Compulsory Acquisition, any person can compulsorily acquire all of securities to which that person has full beneficial interest or all of securities in every class of share or securities that is convertible into share if the person
• Has 90% or more voting power in the company; and
• Holds full beneficial interest in 90% or more of the securities in the company.
The rights attaching to compulsory acquisition under s664A expires if the commencement of acquisition process doesn’t take
This section will identify Target's proposed acquisition terms, price, financing, and potential negotiation strategies. This segment will also include price / earnings ratios, book value, current market value, and liquidation based on the supporting financial data. Also in this part will be a discussion of the general and specific risks inherent in an acquisition strategy. Background Information on Target According to www.targetcorp.com, Target is an upscale discount retail chain that sells quality products at attractive prices, and prides itself on clean, spacious, and guest-friendly stores.
Longevity – All the general partners and a majority of the limited partners must agree to dissolve.
Eckbo and Masulis (1992) open their paper by explaining the decline in rights issues and the surge in firm commitments. To show this Eckbo and Masulis use a sample of 1,249 equity offers between 1963-1981.
In the Introduction of the article of the author Lynn A. Stout pointed out the two arguments in regard to shareholder primacy that were made by Adolph A. Berle and Merrick Dodd.
The securities Act of 1933 has basic objectives, to require investors to receive financial and o...
Over the years, the sole pursuit of managerial capitalism, the basis of the Stockholder Theory, in its unconstrained manner through deception and manipulation has resulted in the promulgation of laws to protect the interests of stakeholders...
(ii) in the case of the property acquired in the exchange, the 2-year period beginning on the date of such acquisition.
Shareholder’s agreements are contractual documents that work as a complement to the constituent documents and that are usually kept secret. They include clauses which intend to level the rights between majority and minority shareholders, so that no single block (majority shareholders) can adopt decisions that would bind or undermine the other block (minority shareholders). These clauses are the rearrangement of voting rights, appointment rights or exit rights, for example.
First is purchase own shares or holding company shares means that, the director is prohibited from purchase their own shares or holding company shares. If the director do that, the company does not liable to that offence but only the director liable to that offence. This action are stated in section 67(3) in company act 1965 that said, “if there is any contravention of this section, the company is not guilty of an offence but each officer who is in default shall be guilty of an offence against this Act”. There are penalty to that director if they are doing such action. The penalty are imprisonment for five years o...
Chang, S. Suk, D. Failed takeovers, methods of payment, and bidder returns, Financial Review. 33 (2), May 1998.
Alternatively, the company may avert a hostile takeover by issuing further shares to a friendly company. While this strategy has been used in the past, the exercise of this strategy has been limited by the statute as well as courts.
Birmingham Corporation, a local government authority, was looking for a compulsory acquisition of land which operated by a subsidiary company, Birmingham Waste Co Ltd. The owner of the land is Smith, Stone & Knight. Birmingham Waste Co Ltd was a wholly owned subsidiary of Smith, Stone & Knight.2 However, Birmingham Corporation refused to apportion compensation for disturbance of business to Birmingham Waste Co Ltd. Birmingham Corporation claimed that the subsidiary company did not own the land and not entitled to the compensation claim. The court, Atkinson J (Judge) held that the subsidiary company acted as an agent of the holding company and Birmingham Corporation must pay for the compensation. Nevertheless, Atkinson J had formulated six criteria that must be fulfilled to verify the agency relationship. By giving an example of the situation, King Sdn.Bhd is a subsidiary company of Queen Sdn.Bhd. King occupies premises which owns by Queen. King is carrying on the business on behalf of Queen. The government decides to purchase the premise as a compulsory for another purpose of use. Therefore, Queen claims for the compensation due to the disturbance of the acquisition for the premises which is occupied by King now. However, the government authority refuses to make a claim to King as King is holding less than one year of the land tenancy, King is not entitled to the compensation according to the relevant legislation. In fact, King is acted as an agent and conducting the business on behalf of Queen. Therefore, Queen can sue the authority for the compensation claim due to disturbance of business. Queen is entitled to the compensation as the subsidiary (King) is merely an agent of its parent
The Companies Act, 2013 defines “share” as a share in the share capital of a company. A person holding the shares of a company, whose name features in the records of a depository as a beneficial owner, is a member of the company. Raising capital through the issue of shares in the primary market is one of the key avenues for a company, so as to invest for the growth of the company. In the context of allotment and issue of shares, both the public and private companies need to comply with a host of legal requirements.
It is easy for companies which are listed at the security exchange markets to be able to do things like acquisitions by the use of the quoted shares as currency. The investors are able to weigh the worth of the business by the value of the company’s shares in the market.
Consideration is an aspect of the concept of mutuality underlying the law contract, and it is each party in contract bargains with and gives in exchange for return promise or performance of other party. In this case the consideration is an executory and the price $1,900 is has a legal value so the consideration is sufficient and the original price that Tony would like to sale is $1,900 and Emma received this price so the consideration is adequate. Therefore, there is a valid