FEDERAL COURT OF AUSTRALIA SSG Investments Pty Ltd v Australian National Industries Ltd [1999] FCA 12 CORPORATIONS – takeover bid – fourteen day period reduced by ASIC variation to one day – whether Part A statement served one day before offers sent – whether Part A statement registered the day before service on target company WORDS AND PHRASES – "registered" Corporations Law ss 637, 639(2), 644, 647(1)(a), 730, 743 Diamond Rose NL v Striker Resources NL (1998) 28 ACSC 749 distinguished SSG INVESTMENTS PTY LTD v AUSTRALIAN NATIONAL INDUSTRIES LIMITED NO. V 3004 of 1999 HEEREY J 7 JANUARY 1999 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 3004 of 1999 IN THE MATTER OF AUSTRALIAN NATIONAL INDUSTRIES LIMITED (ACN 000 066 071) BETWEEN: SSG INVESTMENTS PTY LTD (ACN 085 490 526) Applicant AND: AUSTRALIAN NATIONAL INDUSTRIES LIMITED Respondent JUDGE: HEEREY J DATE OF ORDER: 7 JANUARY 1999 WHERE MADE: MELBOURNE THE COURT DECLARES THAT: 1. The Part A statement of the applicant dated 13 December 1998 was validly served on Australian National Industries Limited on 15 December 1998 and that such service did not contravene s 644(1) of the Corporations Law. 2. The Part A statement of the applicant dated 13 December 1998 to shareholders of Australian National Industries Limited on and from 16 December 1998 did not contravene s 637(1) of the Corporations Law. 3. The Part A statement of the applicant dated 13 December 1998 was registered by the Australian Securities and Investments Commission on 14 December 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 3004 of 1999 IN THE MATTER OF AUSTRALIAN NATIONAL INDUSTRIES LIMITED (ACN 000 066 071) BETWEEN: SSG INVESTMENTS PTY LTD (ACN 085 490 526) Applicant AND: AUSTRALIAN NATIONAL INDUSTRIES LIMITED Respondent JUDGE: HEEREY J DATE: 7 JANUARY 1999 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The applicant SSG Investments Pty Ltd (SSG), a member of the Smorgon Steel Group, has launched a takeover bid for the respondent Australian National Industries Ltd (ANI). The bid is supported by the directors of ANI who have unanimously recommended its acceptance by shareholders. There is a rival bidder, namely Evans Deakin Industries Limited (EDI). Certain questions have arisen as to the validity of some of the steps taken by SSG. It has brought this application seeking declarations that no contravention of the Corporations Law have occurred or alternatively relief under s 743. 2 EDI is aware of this application, but has taken no steps to intervene. It has today sent a fax to the solicitors for SSG reiterating its allegation of contraventions. The Australian Securities and Investments Commission (the Commission) has taken part by counsel in the hearing. Its case is that there were contraventions, but it neither supports nor opposes the application for relief. ANI makes no submissions on whether or not there have been contraventions but supports the application for relief. 3 The events giving rise to these issues are as follows. On Sunday, 13 December 1998 SSG lodged with the Commission at 10.55 pm a document purporting to be a Part A statement. By previous arrangement, the lodgment occurred at the home of an officer of the Commission, Mr George Durbridge. 4 On the following day, Monday the 14th, it was discovered that there were deficiencies in the Part A statement. The deficiencies fell into two categories. First, there were errors of a typographical and formatting nature. There was also a sentence which SSG wished to add: "Nevertheless, some commodities prices may have reached the floor, particularly for uranium, oil, nickel and aluminium." Replacement pages correcting these matters were given to the Commission and accepted by it. 5 Secondly, the statement omitted annexures C1 to C4. It had been assumed mistakenly by the solicitors for SSG that these annexures, which were modifications by the Commission, had been approved on the 13th. Those annexures were, on the 14th, completed and physically attached to the document. By the close of business on the 14th there was in existence a complete copy of the Part A statement in the form that was subsequently served on ANI, and, with one immaterial exception, served on shareholders. 6 The Part A statement that was in evidence bears the imprint of two rubber stamps and some handwriting. On the top right hand corner appears (handwriting in italics): "LODGED DATE: 13.12.1998 Peter Holan DELEGATE OF THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION" 7 On the top left hand corner is: "DEEMED REGISTERED DATED: [*] 12.1998 Peter Holan DELEGATE OF THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION 8 The figure [*] appears to be a 3 altered to a 4. 9 On Tuesday the 15th at 10 am SSG served the Part A statement on ANI. On Wednesday the 16th at 3.30 pm offers, together with the Part A statement, were posted to some 1200 ANI shareholders living in the Northern Territory and country New South Wales. These offerees were about five per cent of shareholders. They held about 0.9 per cent of issued shares. Offers to the remaining shareholders were despatched over the ensuing days. 10 Section 637(1) of the Corporations Law relevantly provides: "The offeror must have, … not earlier than 28 days and not later than 14 days before the day on which the offers are sent, served on the target company: (a) a Part A statement relating to the offers …" 11 By a notice dated 14 December 1998 the Commission, with the consent of ANI and pursuant to s 730 of the Corporations Law, modified or varied the requirements of ss 637(1), 639(2) and 647(1)(a) of the Corporations Law – "so that the reference to '14 days' in each of those provisions were a reference to the number of days specified in Schedule C." 12 Schedule C of the notice specified "one day". 13 The reason for this variation was that the EDI offer closed on 18 December and SSG and the directors of ANI thought it desirable that shareholders should have the details of both offers available to them. 14 The two alleged contraventions can be identified for convenience as the s 637(1) and s 644(1) contraventions. The s 637(1) contravention alleged is that the Part A statement was not served on ANI one day before the offers were sent; the Part A statement was served on the 15th and the offers were sent on the 16th. Section 637(1) (as modified) had, it is said, the effect of requiring at least one clear day between service of the statement and sending of the offers. 15 Sub-sections 644(1), (2), (3) and (5) relevantly provide: "(1) A person shall not serve a statement that purports to be a Part A statement on a target company unless: (a) a copy of the statement … [has] been registered by the Commission within the 21 days ending on the day immediately before the day on which the statement is served. (2) Subject to subsections (3) and (4), the Commission shall register the copies. (3) The Commission shall refuse to register the copies if: (a) it appears that the statement or the proposed offer does not comply, or that neither complies, with the requirements of this Law; or (b) the Commission is of the opinion that the statement or the proposed offer contains, or that both contain, matter that is false in a material particular or materially misleading. … (5) If, by 5 p.m. on the next day (being a day on which the office of the Commission at which the copies were lodged is open to the public) after the day on which the copies were lodged: (a) the Commission has neither registered, nor refused to register, the copies; and (b) the offeror has not, by notice to the Commission, withdrawn the copies; the copies shall be deemed to have been registered by the Commission at that time." 16 It is said that the statement was not "registered" until the 15th. In its final form it was not lodged until the 14th and by operation of s 644(5) it was deemed to be registered on the following day. This was the same day that the Part A statement was served on ANI and thus registration did not occur in a 21 day period ending on the day before the day of service. (i) The s 637(1) contravention 17 In the limited time available I do not propose to canvass the alternative constructions discussed in argument. In my opinion, the earliest of the SSG offers, that is to say those posted at 3.30 pm on Wednesday, 16 December, were not "sent" for the purposes of s 637(1) until they would have been received in the ordinary course of post. Since the offerees were resident in the Northern Territory and country New South Wales, I infer that this event would not have occurred until the 17th or later which on any view was more than one day after service of the part A statement on ANI at 10 am on the 15th. 18 By s 636(2) the offers had to be sent "in an approved manner". That meant "the prescribed manner": s 607(2)(c). By reg 6.1.01, the prescribed manner included prepaid ordinary post. By s 109Y, service is taken to have been effected at the time the offers would have been delivered in the ordinary course of post. I appreciate that in Diamond Rose NL v Striker Resources NL (1998) 28 ACSR749 at 752, Lee J took a different view in the context of s 657(1). However, the present setting raises somewhat different policy considerations. 19 The policy behind s 637 is to prevent an offeror putting the offer in the hands of shareholders of the target company before the directors of that company have had the opportunity to give an informed assessment of the bid. Thus what is critical is the time between service on the target and receipt of the offers and accompanying Part A statement by the shareholders. (ii) The s 644(1) contravention 20 In my opinion the Part A statement was "registered" by the Commission on the 14th. The term "register" is not defined in the Corporations Law. I was not directed to any law or practice which governs the internal recording and approval processes by which the Commission deals with Part A statements, or any other documents. 21 In the circumstances I think the Part A statement must be taken as having been "registered" when, having been physically received, it was finally accepted by the Commission as being in accordance with the requirements of the Corporations Law. That state of affairs had occurred by at the latest the end of the 14th. It was not a "deemed" registration under s 644(5). Deeming is a legal conclusion which follows as a matter of the operation of law in specified circumstances. The Commission cannot itself "deem" something by unilateral fiat. 22 However, by the end of the 14th the Commission had effectively approved the Part A statement in the form that was later served on ANI and later sent to shareholders, in the latter case with one exception not now material. The Commission had recorded its approval on the document and conveyed that approval in written form to SSG. Presumably, although the evidence does not disclose precisely how, the Commission retained some form of record of that approval. In the circumstances, this amounted to registration. 23 I should add that I do not think registration occurred on the 13th. What was lodged there was simply not the Part A statement that was subsequently served. That being so, s 644(5) could not operate to create a deemed registration on the 14th. (iii) Relief under s 743 24 In the circumstances, relief under s 743 is not necessary. However, had I reached a different view on the two contravention issues, I would have had no hesitation in granting that relief. 25 The contraventions, if they occurred, were of a technical and minor nature. They did not have any adverse effect on anybody, as far as I can see. In particular they did not affect ANI which approved the SSG bid and did not want time for further consideration. They did not affect EDI which does not wish to sell its shares to SSG. Nor were the other shareholders of ANI affected. 26 The dominant feature of this case is the modification which reduced the usual period between service of the Part A statement and sending of offers from fourteen days to one day. What is ordinarily an essential element of the takeover regime became a purely nominal period. It would have made no practical difference if the period was reduced to one hour. 27 There will be a declaration in terms of paragraphs 1, 2 and 3 of the application. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey J. Associate: Dated: 7 January 1999 Counsel for the Applicant: Dr C Pannam QC with Mr P J Cosgrave and Mr P Solomon Solicitors for the Applicant: Arthur Robinson & Hedderwicks Counsel for the Respondent: Mr K Hargrave QC with Mr T G R Parker Solicitors for the Respondent: Allen Allen and Hemsley Counsel for Australian Securities and Investments Commission Mr C Scerri QC Solicitor for Australian Securities and Investments Commissioin Mr P Hiland Date of Hearing: 7 January 1999 Date of Judgment: 7 January 1999