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Law Council of Australia

Business Law Section

Takeovers Panel consultation paper on Guidance Note 19

On 14 December 2023, the Takeovers Panel (Takeovers Panel or Panel) published a consultation paper inviting comments on its draft revised ‘Guidance Note 19—Insider Participation in Control Transactions (Revised Guidance Note). This submission has been prepared by the Corporations Committee of the Business Law Section of the Law Council of Australia (the Committee) in response to that consultation paper.

Unless otherwise stated, all references to paragraph and footnote numbers in this submission are references to the paragraph and footnote numbers in the Revised Guidance Note.

As noted in the Consultation Paper, when Guidance Note 19 was introduced in 2007, it was in the context of a significant increase in private equity bids at that time (which had been relatively uncommon prior to then). Not only was the Guidance Note in response to this increase in private equity bids, it also sought to address a number of hypothetical scenarios which might arise in the future, and which may have been of concern.

For example, in addition to dealing with the position of a director or member of senior management who has an agreement, arrangement or understanding with the bidder or its associates in relation to the bid, the Guidance Note sought to cover a range of other hypothetical scenarios, such as conflicted advisers or former advisers, former directors, etc.

This tended to complicate the definitions of ‘insider’ and ‘participating insider’, and to complicate the core principles underlying the guidance, namely, that consideration by the target board and/or senior management of a bid or control proposal should occur without influence from the bidder or any competing bidder, and that provision of the target’s confidential information should be under the control of the board, rather than any senior management who may have some relationship with the bidder.


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