What shareholders need to know about disposing shares after giving voting intention statements post-Dropsuite

In the recent decision of Dropsuite Limited [2025] ATP 10, the Takeover Panel offered important guidance for shareholders who have given voting intention statements – specifically addressing whether, when, and how they may dispose of their shares after committing to vote in favour of a transaction.

What are shareholder voting intention statements?

In general terms, a shareholder intention statement is any statement regarding the intention of a shareholder, which has been made or authorised by the shareholder, in the context of a takeover bid, scheme of arrangement or a shareholder vote for the purposes of item 7 of section 611 of the Corporations Act 2021 (Cth). For example, "Shareholder A intends to vote in favour of the scheme proposal with Y in the absence of a superior proposal". In the context of a scheme of arrangement, shareholder intention statements are typically provided to the target board to express support for the scheme. The shareholder will commonly consent to the inclusion of their statement in the target’s public announcement of the scheme, which is released upon execution of the scheme implementation deed.

A shareholder intention statement enlivens ASIC's "truth in takeovers" policy, which requires persons to be bound by their public statements once made. While the policy only expressly applies to takeover bids, ASIC and the Panel regard it as extending to schemes of arrangement. The underlying rationale is that security holders should be able to rely on public statements made by market participants, unless those statements are clearly qualified or include an express reservation of rights to change position. This in turn ensures that the acquisition of control over the voting shares in a listed company takes places in an efficient, competitive and informed market.

Shareholder intention statements can take various forms. For example, a shareholder may commit to voting all shares they hold and control at the time the intention statement is given in favour of the scheme. Alternatively, the commitment may be limited to shares held on the scheme meeting record date –typically two business days before the meeting, which determines eligibility to vote. Some statements may be more ambiguously drafted, lacking a clear reference point for when share ownership is assessed (as was the case in the Dropsuite matter). As mentioned above, in addition to the voting commitment, intention statements typically include consent for the target and/or bidder to disclose or refer to the shareholder’s intention statement in ASX announcements and documents concerning the transaction, including the scheme booklet.

The facts of the Dropsuite Limited [2025] ATP 10

The matter of Dropsuite Limited [2025] ATP 10 centered around the conduct of Topline Capital Management LLC, Dropsuite Limited's largest shareholder, in connection with a Proposed Scheme of arrangement under which NinjaOne Australia Pty Ltd would acquire all of the issued share capital in Dropsuite.

In its announcement of the Proposed Scheme, Dropsuite made the following statement regarding Topline, which had been approved by Topline (Intention Statement):

"Dropsuite’s largest shareholder, Topline Capital Management, LLC, which as at the date of this announcement, holds or controls approximately 21.6 million Dropsuite shares or 31.0% of the Company’s issued capital on an undiluted basis, has confirmed to Dropsuite that it intends to vote, or cause to be voted, all Dropsuite shares held or controlled by it in favour of the Scheme in the absence of a Superior Proposal and subject to an Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interest of Dropsuite shareholders."

On and from the date of the ASX announcement of the Proposed Scheme, Topline began disposing of its Dropsuite shares on-market, decreasing its voting power from 31% to 19.7% and only disclosing its change in voting power in one substantial shareholder notice 21 days after its initial change in shareholding of at least 1% (which requires public disclosure under the Corporations Act). Topline's substantial shareholder notice stated the following as a footnote at the very back of its notice:

"Topline Capital continues to firmly support Dropsuite being acquired by NinjaOne. The share sales were made because of an unforseen need for liquidity and because the position became a large percent of the portfolio. Topline Capital intends to hold its remaining shares through the close of the transaction and vote in favor of the transaction.”

One month after its initial substantial shareholder notice, Topline lodged another substantial shareholder notice disclosing that its voting power in Dropsuite had further decreased from 19.7% to 10.5% following further on-market sales of Dropsuite shares. Again, the substantial shareholder notice was only lodged 19 days after its further change in shareholding of at least 1%.

The applicant, another shareholder of Dropsuite, submitted to the Panel among other things, that:

• the Intention Statement did not indicate that Topline had reserved the right to sell Dropsuite shares before voting in favour of the Proposed Scheme. Consequently, a reasonable investor would have concluded that Topline intended to maintain its 31.0% interest and vote that interest in favour of the Proposed Scheme;

• the on-market sales indicate that the Intention Statement may have been made “on a knowingly misleading basis”; and

• even if the on-market sales were contemplated in the Intention Statement, Topline failed to disclose those transactions within the time required by section 671B of the Corporations Act, creating a false market in Dropsuite shares to Topline’s benefit.

The applicant sought interim orders that Topline be prevented from any further selling of shares and sought final orders that Topline be required to return to and vote a 31% interest in favour of the Proposed Scheme at the scheme meeting, such that it remained compliant with the intention statement provided to the market.

The Takeover Panel's decision

The Panel made a declaration of unacceptable circumstances and ordered Topline not to sell, transfer, or otherwise dispose of any further shares, or take any action that would further decrease its voting power. Additionally, Topline was directed to vote or cause to be voted, all Dropsuite shares held or controlled by it at the scheme meeting in favour of the Proposed Scheme, subject to the same qualifications as those contained in the Intention Statement.

The key observations of the Panel were as follows:

• Ambiguity in the Intention Statement: The Panel noted that the Intention Statement was ambiguous regarding whether Topline implied it would refrain from disposing Dropsuite shares before the scheme meeting. However, the Panel clarified that in and of itself, this is not unacceptable and, in most cases, statements in the form of the Intention Statement are unlikely to give rise to concerns from a Panel perspective. This is particularly so where the shareholder does not dispose of any of its shares, or if it does, the resulting decrease in voting power is small and disclosed within the time required by section 671B of the Corporations Act.

• Failure to lodge substantial shareholder notice in time: The ambiguity in the Intention Statement would have been clarified if Topline had lodged a substantial holder notice by the required date. Instead, Topline delayed disclosure of its first on-market sales by 21 days, breaching the substantial holder provisions of the Corporation Act.

• Significant decrease in voting power: Topline’s voting power dropped significantly from 31% to 19.7%, and later to 10.5%, amounting to a 66.67% reduction from their initial holding.

• Market practice regarding form of Intention Statements: The Panel acknowledged that it is not common market practice for shareholder intention statements to expressly reserve the right to sell shares and such reservations weaken the strength of the commitment. As a matter of policy, the Panel did not state that all voting intention statements now require an express reservation of rights to sell or to deal with their shares. Indeed, as highlighted by Dropsuite, if such a position was adopted, it would be reasonable to expect that voting intention statements would start to be accompanied by long lists of qualifications as the persons giving such statements will feel the need to seek  to cover the field in terms of all of the actions that they could take in the future (eg. selling shares, buying shares, stock lending, granting security interests, transfer of shares to related bodies corporate etc).

• Timing of the disposals: Topline began selling shares on the same day the Proposed Scheme and the Intention Statement were announced. Despite consenting to the Intention Statement five days prior, the Panel considered the timing indicative that Topline was likely aware its voting power could change before the scheme meeting.

• Severity of contraventions and market impact: The combination of the significant decrease in voting power and the ambiguity of the Intention Statement, particularly given the context and higher-than-usual likelihood that Topline would dispose of shares, exacerbated the severity of Topline’s contraventions of substantial holder provisions. These factors created a real risk that the market would be misled about the Proposed Scheme’s chances of shareholder approval, especially due to the perceived support of a 31% shareholder. Timely disclosure of the sales was crucial, and Topline’s failure deprived the market of material information during an active control proposal, making the contraventions especially concerning.

Practical takeaways

The Panel's decision in Dropsuite serves as a useful reference point for understanding whether, and under what circumstances, a shareholder who has provided a voting intention statement may subsequently dispose of its shares.

If a shareholder intention statement is ambiguous and lacks a clear reference point for when share ownership is assessed (as was the case in the Dropsuite matter), or if the commitment is limited to shares held on the scheme meeting record date, this does not prevent the shareholder from disposing of a small number of its shares before the scheme meeting. However, shareholders must ensure timely market disclosure of any disposal and reduction in voting power by lodging a Form 604 (Notice of change of interests of substantial holder) or Form 605 (Notice of ceasing to be a substantial holder) within the timeframe required under section 671B of the Corporations Act. Generally, this timeframe is within two business days of a change in substantial holding of at least 1% or ceasing to have a substantial holding of 5%, except where the listed entity is subject to a takeover bid—in which case the deadline is 9:30 a.m. on the next trading day of the relevant change.

That said, the Panel’s observations, particularly regarding the significant reduction in voting power following the on-market disposals by Topline, highlight the risks of shareholders disposing of a substantial portion, or all, of their shares after giving such an intention statement. The timing of the disposal relative to the giving of the statement may also be a relevant factor in assessing the appropriateness of the conduct.

In light of this decision, target boards would be wise to ensure that shareholder intention statements clearly specify the reference date for assessing share ownership, to avoid ambiguity as to which shares are subject to the voting commitment. This clarity will help mitigate market confusion and reduce the risk of regulatory scrutiny. Shareholders should also require and ensure that any reproduction of their intention statement, whether in an ASX announcement or a scheme booklet, accurately reflects its terms. In particular, the statement should disclose any relevant reference date for assessing share ownership, to ensure security holders are fully and properly informed.