NCSC welcomes BIL judgment

Press, 13 September 1988, Page 27

NCSC welcomes BIL judgment

NZPA-AAP

Melbourne

The judgment on the 15-month wrangle over Brierley Investements’ (BIL) 40 per cent stake in Woolworths, Ltd, was an important clarification of takeover law, the National Companies and Securities Commission (NCSC) said. It has been suggested BIL could be forced to make a full bid for Woolworths.

The New South Wales Supreme Court found last week that BIL contravened the Companies Code by failing to make a full takeover bid for Woolworths when it increased its stake from 20 per cent by taking control of New Zealand investment company, Rainbow Corp.

“Today’s judgment makes clear that transactions in the shares of

Australian companies are subject to Australian law wherever the transactions take place,” NCSC chairman, Mr Henry Bosch, said in a statement.

If companies were able to acquire blocks of shares in Australian companies by purchasing foreign companies holding the shares, the intention of the code would be bypassed.

“In such circumstances control of Australian companies could pass without Australian shareholders having the opportunity to participate in the benefits,” he said.

The dispute over the Woolworths holding started in June, 1987, with an NCSC hearing, and court action began in October, 1987. After an application by the NCSC the case was

granted an expedited trial in March, but the threeday hearing did not begin until August 15. Mr Bosch used the delays involved in the case as an illustration of why the NCSC often chose behind-the-scenes deals to resolve disputes when he gave evidence at a Parliamentary committee hearing on takeovers in July.

He said use of the NCSC’s discretionary powers meant it could protect small shareholders without the expense and delay of court action.

“Perhaps in the end the court may come up with a much better course of action, but there seems to be no way that you can get courts to produce results within a time frame that’s commercially practical,” he said.