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Wednesday, 22 August 1984
Page: 178

(Question No. 728)


Senator Watson asked the Attorney-General, upon notice, on 27 March 1984:

(1) Is it possible that people telephoning shareholders of companies subject to take-over, at weekends or of an evening inducing people to sell their shares, is a breach of the Take-over Code.

(2) What steps, if any, can the National Companies and Securities Commission take to stamp out this practice if a breach has occurred.


Senator Gareth Evans —The answer to the honourable senator's question is as follows:

(1) and (2) The Takeover Code provides that it is an offence to make false or misleading statements, to offer benefits which are outside the terms of the takeover offer, or to make profit forecasts of either the target or bidding company without the consent of the NCSC. The Securities Industry Code provides that it is an offence to induce (or attempt to induce) someone to deal in securities by means of false, misleading, deceptive or dishonest conduct. While there is no express prohibition in the Takeover Code against a person telephoning shareholders of a target company in an attempt to induce them to sell their shares, if the inducement fell into one of these categories, the NCSC could prosecute for a breach of these provisions of either Code.

The particular practice referred to by the honourable senator was recently the subject of an order made by Mr Justice Needham in the New South Wales Supreme Court in relation to the take-over bid for Email Ltd. The order was made by consent of the parties and no reasons were given by the Court. Whilst the order does not prevent the bidder or his agents from telephoning Email shareholders, it restrains the callers from giving advice to the shareholders on the financial merits of the offer.