By Baden Furphy, Bradden Jolley, and Robert Franklyn
The collateral benefits prohibition in the Corporations Act plays a prominent role in regulating transactions and arrangements between bidders and target Shareholders.
Broadly speaking, the prohibition provides that a bidder must not give or agree to give a benefit to a target shareholder during the offer period if the benefit:
- is likely to induce that shareholder to accept the bid or sell their shares, and
- is not offered to all other target shareholders under the bid.
The rule is one of a number of provisions that are designed to ensure that all target shareholders have an equal opportunity to participate in any benefits available under a takeover bid.
