ASIC has released Consultation Paper 170: Downstream
Acquisitions: Update to RG71 (CP170)
detailing its plans to update the guidance on the takeovers
exception for downstream acquisitions which is set out in s. 611,
Item 14 of the Corporations Act 2001 (Cth)
(Corporations Act).
A downstream acquisition occurs where a person indirectly
acquires a relevant interest in the shares of a downstream entity
as a result of an acquisition in an upstream entity. This is
because a person is deemed1 under s.
608(3) of the Corporations Act to have the same relevant interests
in securities that an upstream entity has if they have voting power
above 20% in, or control, the upstream entity.
Where the acquirer obtains a relevant interest in more than 20%
of the securities of a downstream entity2,
which is a listed company or an unlisted company with more than 50
members, the takeover provisions of the Corporations Act will be
breached, unless the exemption in s. 611, Item 14 is
