The inconsistency between the technical requirements of
the substantial holding provisions in Chapter 6C of the
Corporations Act 2001 (Cth) (Corporations Act)
and the Takeovers Panel (Panel's) expectations on disclosure of
equity derivative instruments have long given rise to considerable
uncertainty for some market participants.
This is particularly the case when it comes to cash-settled
equity derivatives, which give the holder of the equity derivative
(the taker) an economic interest but not a relevant interest in the
underlying securities – that is, where the taker does not
have a right to acquire or control the disposal or voting of the
underlying securities.
The Panel's expectations in such circumstances are set out
in Panel Guidance Note 20 Equity Derivatives which
requires that where there is a control transaction, all long
positions of 5% or more (including both physical plus derivative
exposure) should be disclosed, even if disclosure is not
