ASIC has today released updated regulatory guidance to formalise its policy on when we will give Chapter 6 relief for share transfers under s444GA of the Corporations Act. This follows our review of submissions received in response to CP 326 Chapter 6 relief for share transfers using s444GA of the Corporations Act.
Section 444GA allows shares of a company in administration to be transferred by an administrator as part of a deed of company arrangement.
Our updated guidance is set out in:
- Regulatory Guide 6 (RG 6) Takeovers: Exceptions to the general prohibition; and
- Regulatory Guide 111 (RG 111) Content of Expert Reports.
Our guidance explains that before we will give Chapter 6 relief for share transfers under s444GA we will generally require:
- explanatory materials to be provided to shareholders, including an Independent Expert Report (IER) prepared on a non-going concern basis in accordance with RG 111 Content of Expert Reports demonstrating that shareholders have no residual equity in the company; and
- the IER to be prepared by an independent expert (other than the administrator) in accordance with RG 112 Independence of experts.
Background
Since 2014, ASIC has received more than 15 applications for Chapter 6 relief in matters involving s444GA share transfers via a deed of company arrangement (DOCA). As these transfers involve expropriation of shares from shareholders, often for no consideration, many of these have resulted in shareholders exerting their rights to object in Court.
Updated guidance will provide further clarity to stakeholders about when we will give Chapter 6 relief and will assist them when preparing for s444GA transactions.
In January 2020, ASIC released CP 326 seeking comments on proposals to update regulatory guidance to reflect our informal policy regarding s444GA share transfers via a DOCA.
ASIC received one confidential and 14 non-confidential responses to CP 326 from a range of stakeholders, including professional bodies, law firms, professional services firms, experts and administrators.