CANBERRA, Australia -- The federal government has unveiled an ambitious reform of its legislation affecting company takeovers and fund-raising.
Reforms, to be introduced in Parliament, are designed to make Australia's corporate sector a stronger global player. They also appear to be in step with the government's overall deregulatory thrust.
One key provision would ease divestment rules for majority shareholders attempting to sell. In the new plan -- which might have stock price implications -- the government would allow controlling shareholders to sell holdings of more than 20% to a bidder in one transaction. In this case, the bidder would have to make an immediate cash offer for all other shares.
Current rules allow sellers to divest only up to 20% in one transaction. Remaining holdings have to be sold in subsequent offers.
Under the new proposal, buyers who obtain more than 20% of a company's capital would still have to bid for the remainder.
The reforms also would limit litigation in disputes over takeovers. Specifically, disputes would have to be adjudicated initially by corporations and a securities panel, which -- similar to the U.K. model -- is made up of private sector experts.
The government, however, plans to retain the prohibition against Australia's big-four banks -- ANZ Bank and National Australia Bank, both of Melbourne; and Commonwealth Bank and Westpac Banking Corp., Sydney -- merging with each other.
Because of a seemingly limited number of potential applications of the legislation, an increased number of acquisitions might not result from its passage. But takeover rules are just one of the desired changes. Other proposals in the wide-ranging reform list include:
* Allowing small businesses to raise up to A$5 million of capital without the red tape of prospectuses;
* Introducing a category of "sophisticated investors" that will be able to invest without seeing a traditional prospectus;
* Creating a "safe harbor" rule for directors to avoid personal liability if their business decisions are judged to be honest, informed and rational;
* Quarantining of securities from consumer protection provisions to remove the overlap between corporation law and the existing trade practices law;
* Creating a financial reporting council to oversee Australian accounting standards.
The government also wants to streamline the regulatory process for the financial sector. Adopting recommendations of the Wallis Committee -- a government-appointed body headed by Stan Wallis, chairman of Amcor Ltd., Melbourne -- the government is seeking to halve the number of financial regulatory bodies to two.
The government has named Graeme Thompson, who has been deputy governor of the central bank of the Reserve Bank of Australia, to serve as the APRA's chief executive. Jeffrey Carmichael, who was a member of the Wallis committee, was named its part-time chairman.
The ASIC will be headed by Alan Cameron, chairman of the Australian Securities Commission; Peter Day, his deputy, will be the new deputy chair.
Government Treasurer Peter Costello said he hoped to have the new regulators operating by July 1, and that their duties will expand to include oversight of the remaining financial institutions by the end of 1998. That would be well ahead of the potential timetable laid down by the Wallis committee report.
Mr. Costello plans to introduce legislation to reform corporation law in the budget session of Parliament, which begins May 12.
However, progress of the reforms and the legislation is clouded by potential logjams of legislation in the Senate. Among other hot topics on the agenda: debate about major taxation reform and legislation offering members a choice of superannuation fund.
Moreover, the upper house is controlled by the opposition parties, the Australian Labor Party, the Australian Democrats and the Green Party, rather than the ruling coalition parties.