Panel plans a future

The Takeovers Panel has concluded that its operations should be able to continue effectively despite a Federal Court ruling last month that cast doubt on its future.

The panel said this week it was confident that it would be able to deal with “the vast majority of disputes concerning takeovers”.

“The panel considers that very few, if any, persons will be left without a forum for resolution of their disputes following the Federal Court’s decision,” it said in a statement.

The federal government established the panel in 2000 for the express purpose of keeping takeover disputes out of the courts.

Applications to the panel are heard by a three-member panel of industry peers, typically lawyers and investment bankers, who deal with disputes in a timely and cost effective manner.

However, the panel has faced legal challenges, and last month’s ruling by the full court of the Federal Court was feared by some to be a knockout blow.

The court was ruling on a dispute that emanated from Alinta Ltd’s purchase of units in Australian Pipeline Trust.

In making its decision, the federal court evaluated the sections of the Corporations Act that underpin the activities of the panel.

In many cases, including the Alinta matter, the panel has ruled that takeover activity is unacceptable because it breaches the takeovers chapters of the Corporations Act.

The federal court decided that the panel was not entitled to make that decision, because the relevant sections of the Corporations Act sought to confer on the panel the judicial power of the Commonwealth, in contravention of the Australian constitution.

As a result of the court decision, the panel will have to rely on a second section of the Corporations Act, which enables it to rule that takeover activity is unacceptable because of its effect on control or potential control of a company.

Clayton Utz partner Mark Paganin, who is a member of the panel, said historically the majority of applications had been on this basis and would therefore be unaffected.

The panel said it would no longer accept applications that are based on or allege breaches of the Corporations Act.