Acquiring companies or assets in the Commonwealth of Australia is normally referred to as unregulated M&A transactions. What this means is that deals like these aren't regulated by the listing rules of stock exchanges; nor are they governed by the CA 2001 (with the exception of certain provisions). Therefore, concluding M&A deals in the Commonwealth of Australia is mainly governed by the principles of contract law.
Selling shares in the Commonwealth of Australia requires providing proof of transfer of ownership (e.g. a written confirmation of a transfer, minutes or share certificates) & updating a shareholder register. Selling assets in the Commonwealth of Australia means that title to property is transferred upon the signing of an M&A agreement in the Commonwealth of Australia.
Normally, purchasers get to select which liabilities/assets they wish to acquire; this frequently determines what kind of transaction it’s going to be (i.e. one involving the sale of shares or one involving the sale of assets).
Australia: M&A Regulation
The two main organizations charged with overseeing M&A transactions in the Commonwealth of Australia are the ACCC & FIRB. The former is responsible for preventing conclusion of M&A deals in the Commonwealth of Australia if they result in substantial reduction of competition in the market. To stop that from happening, the ACCC can request that the Federal Court issue fines, injunctions or terminations.
FDI in the Commonwealth of Australia requires obtaining approval from the FIRB. If an M&A deal in the Commonwealth of Australia threatens Australia’s national interests, the FIRB can request prohibition of any acquisition of Australian companies’ assets by foreigners. If it doesn’t grant its approval, the countrys’ Treasury can terminate an M&A transaction or apply penalties (including criminal ones).
If selling or purchasing a business in the Commonwealth of Australia requires obtaining the FIRB or ACCC’s approval, a corresponding clause must be included in an M&A agreement.
Concluding an M&A Deal in the Commonwealth of Australia: Consent of 3rd Parties
Apart from getting shareholders’ consent, conducting an M&A transaction in the Commonwealth of Australia requires obtaining approval from a number of 3rd parties (e.g. suppliers & contractors).
Purchasing private equity in the Commonwealth of Australia requires obtaining a permit from the ASIC. Getting one requires filing an application within twenty eight days after a company’s details were changed. Normally, those include:
- changes in equity participation;
- changes in a holding company’s senior management;
- changes in a registered office or main place of business of the company.
Any changes in a company’s senior management must also be reported to the ATO. A report to this effect is to be submitted within twenty eight days after such changes have taken place. Changes resulting from acquisition of an Australian company (or shares thereof) must also be reported, especially if they relate to changes in licensing or registration terms.
Australia: DD of an M&A Deal
By performing DD of an Australian company, buyers confirm:
- ownership of a company’s assets/shares;
- legal structure;
- terms of financial obligations;
- contractual terms;
- possession & use of IT;
- IP & real estate;
- labor agreements;
- litigation & regulatory compliance.
Normally, purchasers carry out their own DD, which is usually more detailed than the information provided by sellers.
Looking to purchase an Australian company? Need advice on M&A regulation in the Commonwealth of Australia? Why not reach out to IQ Decision UK?