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11-151AD ASIC addresses unacceptable takeover circumstances
ASIC today announced it has entered into enforceable undertakings concerning the proposed takeover of NSX Ltd by FEX Equity Markets Pty Ltd (FEX Equity).
The parties to the enforceable undertakings are:
- the bidder, FEX Equity;
- the parent company of the bidder, Financial and Energy Exchange Limited (FEX);
- WSE Investment Fund No.2 Pty Ltd (WSE) and Taranaki Investments Pty Ltd (Taranaki), companies connected to an employee of FEX.
ASIC commenced an investigation into the takeover based on concerns about an association between key shareholders and FEX, and ASIC was of the view that unacceptable circumstances existed in relation to the affairs of NSX.
ASIC was concerned there was an association between FEX, WSE and Taranaki for the purposes of the takeover provisions, with the result that 12.9 per cent of shares held by WSE and Taranaki were acquired in contravention of the 20 per cent limit set out in s606 of the Corporations Act.
ASIC was concerned that FEX, WSE and Taranaki’s voting power increased as a result of these acquisitions to 38.07 per cent. ASIC was also concerned that FEX, WSE and Taranaki failed to comply with the substantial holding notice provisions in s671B of the Act.
The undertakings reflect the agreement reached. ASIC's action is consistent with its focus on ensuring that markets are fair and efficient.
The undertakings affect the shares in NSX held by WSE and Taranaki. They include that:
- those shares will not be voted on the special resolution to amend NSX’s constitution to be held at the extraordinary general meeting of NSX scheduled for 28 July 2011;
- those shares must not be accepted into the takeover unless at least 50 per cent of non-associated shareholders have accepted into the takeover;
- those shares must be accepted into a higher unmatched rival offer if one emerges; and
- those shares must be disposed of if the current bid for NSX does not proceed;
FEX Equity agreed to issue a supplementary bidders statement outlining ASIC's concerns and undertakings given.
ASIC has reserved its rights in relation to the conduct, except court proceedings for contravention under s606 or s671B or commencing Takeover Panel proceedings concerning the conduct.
ASIC has accepted a variation to the enforceable undertaking given by WSE on 27 July 2011.
In May 2012 ASIC was advised by WSE that while it had disposed of almost 7 million NSX shares (approximately 70% of its NSX shareholding), it still had 2,672,067 NSX shares remaining.
The variation gives WSE additional time to dispose of all its remaining NSX shares.