ASIC consults on s444GA share transfers under a Deed of Company Arrangement

ASIC has released a consultation paper on a proposal to formalise its policy on share transfers made under s444GA of the Corporations Act. ASIC will seek public input on the proposal until Tuesday 28 February 2020.

Section 444GA permits a court to grant leave to allow an Administrator to transfer shares as a part of a Deed of Company Arrangement (DOCA), where it will not ‘unfairly prejudice’ the interests of shareholders. The Courts will generally allow the transfer if evidence shows that the shares have no value.

Where a transfer under a DOCA results in a shareholder’s voting power in the company increasing above 20%, ASIC relief from Section 606 is required.

ASIC is proposing to formalise its policy on giving relief from s606 in these circumstances.

Consultation Paper 326 Chapter 6 relief for share transfers using s444GA of the Act (CP 326) seeks views on ASIC providing relief where:

  • shareholders are provided with explanatory materials prior to the s444GA hearing, including an Independent Expert Report (‘IER’) prepared under RG 111: Content of Expert Reports;
  • the IER is prepared by an independent expert (not the administrator); and
  • the IER is prepared on a liquidation basis.

ASIC Commissioner John Price said, ‘The aim of these proposals is to provide certainty for all stakeholders and ensure that shareholders receive information equivalent to a standard control transaction. We encourage submissions on how we can achieve these goals’.

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