Challenges in

1. Takeovers Panel Challenges in 2001 Simon McKeon President

2. Challenges for the Panel • Relationships • Legal • Policy • Process • Consistency • Timeliness • Commerciality • Informality • Efficiency • Rulings • Cost • Members, Interested Parties, Executive • Post Mortems

3. Consistency • The Panel’s consistency in decision making and policy will be one of the main drivers for increased certainty and confidence for the market • We will continue to work diligently in 2001/2002 to maintain our consistency, especially with the increased number of Panel members

4. Consistency • Panel’s tools to aid consistency • Role of Executive • Panel Days • Policy Sub-committees • Published Reasons • Post Mortems • Market Liaison / Feedback

5. Timeliness • The Panel will not be a success unless it delivers timely decisions • Often, 90% right in a rapid time frame is preferable to being perfectly correct in a long time frame • Challenges • Finding time to fit proceedings into part-time members’ schedules • Managing information flows from combatants • Managing work load peaks for Executive staff • Delivering reasons

6. Commerciality • Has not been a significant problem • Challenges • inherent legalism of Chapter 6 • parties mainly converse with Panel through lawyers, rather than investment banks • high population of lawyers on Panel

7. Informality • Similar challenges to “Commerciality” • Assisted by positive attitudes of Panel members • Assisted by informal nature of Executive • Challenged by legalism of some parties, especially adversarial litigators

8. Efficiency • Assisted by: • need of part-time members to get back to day jobs • commercial lawyers of parties adapting to new environment • members’ commerciality/ informality • Hindered by: : • encroachment of part-time members’ day jobs • adversarial approach by some parties

9. Relationships The Panel is a body which operates in a necessarily complex legal and regulatory environment. Its success as an organisation and as a public regulator depends very much on the quality of its relations with other regulators (including offshore), market participants, the Courts and other stakeholders.

10. Relationships • Relationship with ASIC:As part of this programme,the Panel has entered into a Memorandum of Understanding with ASIC • Relationship with Courts: The Panel will be working very hard to ensure that we have a co-operative and effective relationship with the Federal and Supreme Courts. The privative clause in section 659B of the Law and its interpretation is clearly very important for the Panel’s future

11. Relationships • Relationship with market • Members come from, and are, the market • Openness of process • Publication of reasons • Post mortems • Consultation on rules and policies • Publication of policies • Market liaison seminars

12. Relationships • Relationship with Government • Minister FSR • Treasury • Opposition

13. Legal • Privative clause - s659B • Possibility of constitutional challenge • Draftsman has worked hard to avoid constitutional problem • Government would be heavily involved if challenge eventuated if and when it happens

14. Legal - Scope • Is there a role for further uses of the Panel? • Review of other ASIC Ch. 6 discretions (e.g. consent to withdrawal of bid) • Chapter 6 exemption and modification • Listing Rule waivers • Listing Rule breaches • Financial penalties for Listing Rule breaches

15. Policy • Proactive • will continue being pro-active in providing guidance on difficult issues through Panel policy documents before they get to the Panel as applications • deal with emerging market practices - break fees etc • provide guidance in areas of uncertainty - eg forecasts • Market’s views • will continue to seek the market’s views on which issues are important and are generating uncertainty

16. Published (Final) 1 Unacceptable Circs (reviewing) 2 Review of Decisions 3 Making Rules 4 Remedies & Enforcement 5 Restraining Documents Current Work Forecasts Frustrating Transactions Rulings Classes of Shares (internal advice) Costs Conflicts Policy • (Draft) • 1 Procedural Rules • 2 Break Fees

17. Advance Rulings • Some demand from the market • Strictly, no power: • devices to “construct”an application • Executive may give non-binding “views” based on experience and previous Panels • Very difficult on hypothetical, ex-parte or no-names bases • Significant legislative change if proposed • ASIC exemption power

18. Costs should not generate a special focus on costs/taxation amend s657D(2) to order costs where circumstances are not unacceptable Panel’s costs (related to funding) Costs - Funding • Funding • not related to work load • not funded by applications • overseas models

19. Members • We look forward to working with the new members of the takeovers and business community who have been appointed to the Panel to deal with our increasing workload • In Australia’s small business community, conflicts are always likely to restrict the number of members of the Panel who are available to sit on any particular matter, so our wider Panel membership is necessary

20. Challenges re members • Consistency with 43 members • Achieving single view with 43 members • that is not merely motherhood • that can be accepted by all • example is Break Fees Policy • Servicing the needs of members having a diverse range of takeovers experiences and geography • Maintaining interest with 43 members • Maintaining collegiality

21. Challenges re members • Challenges we have NOT had • dealing with egos • enthusiasm of members • commitment of members • availability of members • sitting on Panels • travelling to/sitting in conferences • sitting on policy sub-committees • attending Panel Days

22. Challenges for Members • Consistency • Timeliness - fitting in to day jobs • Commerciality of decisions • Hearings - practical difficulties • Costs • Exercising quite strong powers

23. Challenges for Parties • Applications • discharging burden of persuasion • raising actionable grounds (i.e. how are the circumstances unacceptable) • Commercial negotiation - not Court • Addressing business people - not judges • Timing

24. Challenges for Executive • Maintain the goodwill of Australia’s law firms and investment banks to continue to supply the Panel with excellent quality secondees • Maintain the Panel as a most desirable place for secondees to come for experience • Manage the issue of conflicts where secondees’ firms act for parties

25. Post-Mortems • Part of standard procedure with every matter • Executive discusses with parties (usually parties’ advisers) • Pro-forma works through all aspects of process, decision, reasons • Feedback • Sitting Panel • Wider Panel

26. Positive Feedback • Process • is assisting in fast-tracking dispute resolution • submissions in writing disturbs tactics of aggressive litigators • Conferences • Panel is controlling proceedings well • questioning seems appropriate • help to speed up the process • highlight Panel’s focus • Briefs • Briefs are clear, easy to understand and demonstrate a good understanding of the issues • appropriately ‘vetted’ the applications and focused on key issues • where new facts/submissions after Panel sets picture, a revised brief may be necessary to keep process on track

27. Positive Feedback • Deadlines • tight but not unreasonable, but watch impact on small firms and parties from West - 12 noon is ideal • Decisions and Orders • on the whole, fair and reasonable • commercially focused • orders have been practical and commercial • Reasons • explain the Panel’s decision well • well considered and thorough • but sometimes too slow

28. Major Issues • Keeping parties “in the loop” – ensuring: • parties have copies of all documents, including applications etc • parties are adequately notified of Panel’s decision and publication of reasons • parties are kept apprised of the timetable • Conferences • some parties still want more conferences - they want ability to test other parties’ evidence

29. Major Issues • Members • need for more expertise in specific areas? • Breach of confidentiality • Panel rules aren’t preventing dissemination of information from Panel proceedings • Panel needs to consider how it can enforce its rule • Adverse comments about parties in reasons • parties have opportunity to comment on errors of fact or unfair references

30. Major Issues • Multiple applications • Panel continually considers whether it can do anything to avoid multiple applications • costs might be a useful deterrent, but Panel only has limited powers • ASIC • parties confused over role of ASIC v role of Panel in giving exemptions/orders re: dispatch of documents • Panel v ASIC re: investigations - who is responsible? • different approaches by different Regional Offices

31. Takeovers Panel Challenges in 2001 Simon McKeon President