Panel urges Government to close takeover-law loophole

The Takeovers Panel is calling on the Government to use the Business Law Reform Bill to address loopholes in takeover law.

The panel is concerned about takeovers - such as Transpacific Industries' $870 million acquisition of Waste Management this year - which use mergers or "schemes of arrangement" to circumvent the Takeovers Code and take full control of a company with the support of just 75 per cent of shareholders.

The takeovers code requires 90 per cent of shareholders to accept a bid for a predator to take full control.

In a submission to a parliamentary committee looking at the Business Law Reform Bill, the panel called for the bill to be used to make amendments to the Companies Act which would close the loophole.

The panel did not comment on the present contents of the proposed bill.

The loopholes meant shareholders were deprived of Takeovers Code protections, chairman John King said in June.

The amendments would mean companies planning an amalgamation would have to obtain approval from the panel so it could take into account the code's principles.

Courts would also have to take into account the code's principles before approving any scheme of arrangement, and the recommendations of the panel.