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Wednesday, 23 May 1973
Page: 2479

Mr Ian Robinson (COWPER, NEW SOUTH WALES) - My question is directed to the Treasurer. Is it true, as has been reported, that a foreign company, the East Asiatic Co. Ltd, has obtained a controlling interest in the timber company Kauri Holding Ltd despite offers by the Australian firm A. V. Jennings Industries (Australia) Ltd to buy the offered shares at the equivalent price to that paid by East Asiatic? Did the Treasurer or the Department of the Treasury approve this transaction as was stated by the parties concerned? If so, will the Treasurer say how this approval is to be reconciled with the Government's alleged concern to keep Australian companies out of foreign hands?

Mr CREAN - This case shows that there are distinct weaknesses both in the foreign take-over legislation and also, in my view, in the stock exchange regulations in Victoria. Despite the belief of most people that Kauri Holdings Ltd was an Australian company it was already a foreign company insofar as at least IS per cent of its share holding was held abroad, because 33 per cent of the equity in Kauri Holdings was held by Boise Cascade Corporation. Unfortunately the Companies (Foreign Take-overs) Act does not have provisions covering the takeover of a foreign company by another foreign company. I think this points to the need to rewrite the Act. In many respects the Act has been a very effective piece of legislation despite the haste with which it was constructed. It has enabled us to stop one or two takeovers which otherwise might have been consummated and it has prevented a lot of takeovers from taking place. But in this case unfortunately I think the Australian company which made the offer made it too late. The company made it after our examination had shown that we had no power in this case. But I think that what has been done reflects somewhat upon the directors of Kauri Holdings Ltd because what has happened is that 67 per cent or two-thirds of the shareholders have been effectively locked out of any decision as far as the takeover was concerned. This, as I indicated points to deficiencies, both in the Commonwealth law in regard to foreign takeovers and in the way that stock exchange regulations operate in Victoria.

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