Compulsory acquisition under Pt. 6A.2 and its implications for minority shareholders

Article Abstract:

(Author abstract) The Corporate Law Economic Reform Program Act 1999 (Cth) introduced Pt. 6A.2 into the Corporations Act 2001 (Cth). Part 6A.2 contains a general power for compulsory acquisition of minority interests by a majority shareholder ("Pt. 6A.2 power"). The Pt. 6A.2 power is intended to "balance ther interests of facilitating changes to corporate ownership with the need to protect the rights of minority shareholders" (Corporate Law Economic Reform Program Bill 1998 (Cth), Expalantory Memrandum, para [7.30]) and discourage minority shareholders from demanding a price for their securities that is above fair value ("greenmailing"). This article briefly discusses the philosophical justifications used by proponents of both minority interests and majority interests in realtion to compulsory acquisition. The central contention of this article is that shares are a form of financial investment that should be capable of forcible expropriation in return for adequate consideration and that the formulation of the Pt. 6A.2 power should achieve the legislature's intention of facilitating the transfer of corporate ownership and discouraging "greenmail". Finally, this article considers the manner in which the courts have construed the concept of "fair value" and contends that the prevailing interpretation may be inconsistent with the intention of the legislature.

Legal issues & crime, Government regulation (cont), Government regulation, Legal/Government Regulation, Minority stockholders, Greenmail

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(Australian competition policy.) (Editorial)

Article Abstract:

The Australian Prime Minister has announced a new review of laws about corporate competition. The inquiry into the Trade Practices Act is late coming, and this has made many sceptical about the Government's seriousness. Adding to this atmosphere of doubt has been the Government's lack of attention to important issues in corporate law. Enforcement of current laws by the Australian Securities Commission rather than additional laws such as the proposed Related Party provisions to the Corporation Law is what the Commonwealth needs.

Editorial

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The ACCC and the Westpac/Bank of Melbourne merger

Article Abstract:

The Australian Competition and Consumer Commission ruled against the merger of the Westpac Bank and Bank of Melbourne in 1997, stating the merger would substantially lessen competition within Victoria's banking and finance industries. Even if the merger had proceeded, the banks faced major differences in prices and costs. Entry into retail banking in Victoria is more free than commercial banking.

Banking industry, Australia, Mergers, acquisitions and divestments

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