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The Takeovers Panel relies on parties to be candid and cooperative. In a recent matter, the Panel found some parties were lacking in this respect and issued a firm rebuke.  

In brief

  • The Takeovers Panel aims for the timely and cost-effective completion of matters while obtaining the best available information.
  • To achieve these objectives, the Panel relies on the cooperation of parties and their legal advisers in being forthcoming with relevant information in a timely manner and being direct in their dealings with the Panel.
  • In a recent matter, the Panel was highly critical of a party and its law firm for not adhering to these standards.

Takeovers Panel issues rare rebuke

The Panel recently issued a rare rebuke to participants in Panel proceedings which it considered had not acted appropriately.

The matter related to The Market Herald Limited (TMH), the Perth-based ASX-listed owner of HotCopper, Gumtree, CarsGuide, AutoTrader and other digital information services.

In the TMH matter, a dispute arose in relation to whether certain shareholders were associates and whether there had been failures of disclosure and breaches of the 20% rule in the takeovers legislation. As with most matters in which there is an allegation of undeclared associations between shareholders, the facts of the matter were complex. The matter took several months to hear (February to May) and resulted in a set of reasons and orders (issued in late August) which were 75 pages long (perhaps a record for a Panel matter).

The Panel found against a number of shareholders and made wide-ranging orders requiring the sale of certain shares, corrective disclosures, restrictions against further acquisitions by certain persons, a requirement for TMH to seek two new independent directors (one of whom is to be chairman) and orders for TMH and the major shareholder to pay $80,000 in costs. (Another record?)

The purpose of this short note is not to go over the basis for the Panel’s conclusions about associations (even though those aspects are very interesting in their own right). Instead, I want to highlight a broader point about the Panel processes.

The Takeovers Panel was intended to provide an efficient method for resolving disputes in takeover bids and other change of control situations. Its efficiency depends on candour and an element of goodwill from participants in the proceedings. Importantly, the Panel is a peer-review body. The members are part-time. While they focus on Panel issues when sitting on a Panel, they all have other jobs. Anything that drags out proceedings unnecessarily is likely to be counterproductive.

The same is true for the Panel executive. It is a small team with typically a lot on its plate. Making life easy for the Panel is usually a winning strategy. That does not mean that a party’s interests should be sacrificed just to help the Panel get through its workload, but the two are not necessarily mutually exclusive. For example, a short submission which gets to the point will generally be more effective than a lengthy submission covering the same ground, as will making concessions and being full and frank in responses.

So what happened in the TMH proceedings that led to a rebuke from the Panel?

The Panel said (at [279]) that:

As a commercial tribunal, the Panel aims for the timely and cost-effective completion of matters while obtaining the best available information. In order for it to achieve these objectives, the Panel relies on the cooperation of parties and their legal advisers in being forthcoming with relevant information in a timely manner and being direct in their dealings with the Panel. Here, we believe that some of the parties and their legal advisers were uncooperative and showed a lack of candour that prolonged proceedings unnecessarily, as detailed below. We were also disappointed that the legal advisers for TMH would not meaningfully engage with us on our concerns regarding their leave to appear, other than to deny any potential overlap and dismiss repeatedly the existence of any ‘legal or commercial conflict’ arising from their concurrent representation of TMH in these proceedings and Mr Gavin Argyle and GAB in a separate matter against Mr Sanger.

Specific concerns identified included:

  • Redaction of minutes of board meetings produced in response to a request without first seeking the Panel’s consent (as required by the Procedural Rules).
  • Representations by a party and its legal adviser that the redacted sections of the minutes were ‘not relevant’ to the proceedings. After the Panel considered the redacted sections, it considered those sections were ‘directly relevant’ and that the representations made were misleading.
  • Refusal by TMH to the Panel’s request to allow the former managing director to answer the Panel’s questions (required as the former managing director owed a duty of confidentiality to TMH). TMH claimed this was on legal advice. That resulted in the Panel having to convene a conference and summons the former managing director to answer the Panel’s questions. The Panel said that, as the proceedings are subject to confidentiality obligations, it was unclear why TMH believed it was in the best interests of TMH shareholders not to allow the former managing director to answer the questions. This delayed the proceedings and added to the parties’ costs.
  • The law firm for TMH was concurrently advising a shareholder of TMH in relation to loans that shareholder had made to the former managing director. This was not disclosed when TMH sought consent for the law firm to represent it in the proceedings. The shareholder and the former managing director were both heavily involved in the Panel proceedings (and with different interests). The law firm submitted that it did not have a ‘legal or commercial’ conflict. The Panel considered that it had a broader interest and that the separate loan matter created the ‘potential’ for misuse. The Panel said it would have expected (at the least) more candour from the law firm. It was concerned the law firm failed to acknowledge its clear shortcomings in dealing with the Panel.
  • The need to go back several times to get what was regarded as basic information. For example, a request for contact information for two shareholders (both family members of the major shareholder) required the Panel to issue a formal direction after the company failed to provide the information after a week had gone by.
  • TMH provided over 400 pages of documents in response to a request. The Panel said many of these could have been provided in response to an earlier enquiry, some of it was not relevant and all of it was uncatalogued (!). TMH submitted that the ‘request for the documents should have been worded more specifically in order to capture those documents’. The Panel was not impressed and said it expected a reasonable and more candid approach from parties.


The TMH matter is a reminder of the Panel’s expectations about how parties will behave in proceedings. While I was not involved in the TMH matter, I don’t think the Panel is being unreasonable at all. Having been a member of the Panel for 12 (fun-filled) years, I know that cooperativeness and candour is essential to the smooth working of Australia’s takeover dispute resolution body. It is not that hard.

Key contacts

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Rodd Levy

Partner, Melbourne

Rodd Levy

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