Insider Participation In Control Transactions – Takeovers Panel Guidance Note 19

On 7 June 2007, the Takeovers Panel released a guidance note on insider participation in control transactions (Guidance Note).

The Guidance Note provides guidance on when involvement by management, directors or external advisers of a target company with a bidder may be inappropriate, and seeks to clarify the process that management of a target company should take in this situation.

The Guidance Note was a response to the increase in the number of private equity bids and other buy-outs, such as the proposed management buy-out of Alinta by Macquarie Bank earlier this year. It deals with unacceptable insider participation arising from a breach of section 602 of the Corporations Act, which requires an efficient, competitive and informed market for a company's securities where the company is subject to a takeover bid.