13 December 2007
Sydney, 13 December 2007: The Takeovers Panel may be safe from constitutional challenges for the foreseeable future following a landmark decision of the High Court today, according to Clayton Utz corporate partner John Elliott.
In a much anticipated decision, the High Court declared this morning that the Takeovers Panel was constitutionally valid. It has yet to publish its reasons.
Mr Elliott said the immediate result was that applications to the Panel could once again rely on allegations that someone had breached the takeover provisions of the Corporations Act.
Earlier this year, the Federal Court ruled that the Panel could not make declarations on the basis of a breach of the Act, because breaches of the law are a judicial matter. Under the Australian Constitution, only a court can exercise judicial powers.
The Federal Court also expressed a non-binding view that even decisions by the Panel made only on policy grounds could be unconstitutional. This was because the Court believed that, in reaching a decision on such grounds, the Panel would often take into account whether there had been a breach of the law.
"Ever since the Federal Court ruled against it, the Panel has been walking on eggshells," Mr Elliott said. "It overcame many of the initial problems by ensuring that applications made to it did not mention the law - relying instead on the Panel's power to declare takeover tactics to be "unacceptable" on purely policy grounds."
The Takeovers Panel can declare that there have been unacceptable circumstances in relation to a takeover.
Broadly speaking, there are two grounds for a declaration:
