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In its decision in Eastern Field Developments Limited v Takeovers Panel [2019] FCA 311, the Federal Court has dismissed the application by Eastern Field Developments Limited for judicial review of the Review Panel’s decision in Finders Resources Limited 03R [2018] ATP 11. This means, that absent an appeal, Eastern Field may be required to acquire the shares of a substantial shareholder that publically stated that it would not accept Eastern Field’s takeover offer, but later did, in fact, accept the offer.

In brief

  • The Federal Court was not prepared to accept that the relief ordered by the Review Panel relating to the departure of Taurus Funds Management Pty Ltd (an 11% shareholder in Finders Resources Limited) from a non-acceptance statement was unreasonable.
  • As a result, the Review Panel’s orders will remain in place (with the exception of some variations to timing relating to its compensation orders). This means that Taurus’ acceptances of Eastern Field’s bid for Finders are not required to be permanently cancelled, and Eastern Field will be required to buy-out remaining minority shareholders after the offer period closes.
  • The decision confirms that the Panel has a wide discretion with respect to the appropriate orders that can be made following a finding of unacceptable circumstances. Relevantly, in the “truth in takeovers” context, the Panel is not bound by ASIC’s policy as set out in Regulatory Guide 25 (RG25), although the Court noted that RG25 is an important statement of ASIC policy as to what the regulator considers appropriate in general cases.
  • Eastern Field has not indicated whether it intends to appeal the Court’s decision. 


The factual background to the proceedings can be summarised as follows:

  • Taurus, an 11% shareholder in Finders, provided certain intention statements to Finders that it would not accept the Eastern Field offer, which were publicly disclosed by Finders (without relevant qualifications provided to Finders by Taurus, but which Taurus did not correct).
  • Taurus then subsequently accepted Eastern Field’s bid.
  • The initial Panel, on an application from ASIC, made a declaration of unacceptable circumstances, which included orders that the Taurus acceptances be cancelled.
  • Taurus then sought review of the initial Panel’s decision by the Review Panel, which affirmed the declaration of unacceptable circumstances but (by a majority of 2:1) made substitute orders.
  • The Review Panel’s substitute orders included an effective deferral of Eastern Field’s payment obligations in relation to the Taurus acceptances, rather than any permanent cancellation of the Taurus acceptances. The Review Panel orders also required Taurus to compensate shareholders who acquired shares at a premium to the offer price on the basis of Taurus’ non-acceptance statement, and would compel Eastern Field to issue buy-out offers to remaining minority shareholders at the end of the offer period. 

For a further discussion regarding the initial Panel and Review Panel proceedings, refer to More from the Takeovers Panel on shareholder intention statements, The Takeovers Panel finds a reason to enforce shareholder non-acceptance statement in Finders matter and Finders keepers? The long-running Finders Resources takeover saga

Grounds for review

In the Federal Court, Eastern Field argued that:

  • the Review Panel had not correctly addressed the requirements of section 657D(2) of the Corporations Act (which sets out the orders the Panel may make following a declaration of unacceptable circumstances);
  • the Review Panel decision not to cancel the Taurus acceptances was so unreasonable that no reasonable Takeovers Panel could have made it;
  • the Review Panel failed to take into account the prejudice to Eastern Field because it did not correctly approach the evidence which allegedly showed Eastern Field’s reliance on Taurus’ statements; and
  • the Review Panel’s conclusion that Eastern Field was not unfairly prejudiced by its orders was without basis or unreasonable. 

The Court’s reasoning

Justice McKerracher dismissed each ground of review in Eastern Field’s application.

In summary, his Honour found that Eastern Field fell “well short” of establishing that the Review Panel’s decision was unreasonable. His Honour was also satisfied that the Review Panel had taken into account all relevant considerations.

Section 657D(2) and unreasonableness

Justice McKerracher concluded that the Review Panel, in making its decision on the appropriate orders, had taken into account relevant matters required by section 657D(2) of the Corporations Act. These included a consideration of how the takeover would have proceeded if the unacceptable circumstances did not occur (in accordance with section 657D(2)(b)). His Honour also noted that the mere fact that the initial Panel and the Review Panel had ordered different relief did not render the Review Panel’s orders irrational or legally unreasonable.

In terms of other relevant considerations, Justice McKerracher confirmed that ASIC’s policy on “truth in takeovers” (as set out in RG25) is ultimately policy only. RG25, while important in understanding ASIC’s approach in general cases, is not binding on the Review Panel. As a result, in the context of unacceptable circumstances relating to a departure from a non-acceptance statement, there is no fundamental rule requiring the transfer of shares to be cancelled.

Unfair prejudice to Eastern Field

The Court did not accept Eastern Field’s contention that the Review Panel, in deciding not to permanently cancel Taurus’ acceptances, had failed to take into account any unfair prejudice to Eastern Field as required by section 657D(1) of the Corporations Act.

Eastern Field had argued it would suffer unfair prejudice as a result of the Review Panel orders because it:

  • would be required to acquire the Taurus shares, meaning it would not have sufficient funds to make a loan to Finders which Finders was likely to require;
  • would have to make compulsory buy-out offers to remaining minority shareholders;
  • would lose the benefit of foreign tax laws if it had to delist Finders; and
  • had acquired bid financing based on its reliance on Taurus not accepting.

Justice McKerracher noted that the first three allegations of unfair prejudice were always at least possibilities when Eastern Field made its takeover bid for 100% of Finders.

In terms of the fourth allegation, his Honour was comfortable that the Review Panel’s conclusion that Eastern Field had not relied on Taurus’ statements was reasonable. In Justice McKerracher’s view, the Review Panel had weighed the various factors for and against reliance having regard to its considerable expert experience in the field, and any review by the Court of whether the factors suggesting reliance were greater than the factors not suggesting reliance would be an attempt at impermissible merits review.


The Court’s decision confirms that a departure from an unqualified non-acceptance statement does not automatically require the Panel to permanently reverse the relevant acceptance, even where the Panel has made a declaration of unacceptable circumstances. Ultimately the Panel will have a wide discretion to make appropriate orders and is not bound by ASIC’s policy on “truth in takeovers” (which the Court noted was only a policy).

In complex fact scenarios where a variety of interests are at play (such as the Finders matter), it is appropriate that the Panel is afforded a degree of flexibility in determining how to deal with “truth in takeovers” issues that give rise to unacceptable circumstances in a way which balances the interests of all stakeholders involved.

Eastern Field has not indicated whether it intends to appeal the decision.

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