Exit stage left? The Takeovers Panel considers de-listing proposals
27 August 2025
Ahead of the Deal - Australian M&A Briefing
Key insights
- Recent Takeovers Panel decisions confirm that its jurisdiction is confined to circumstances involving a control transaction or breach of takeover laws. In the absence of such circumstances, a de-listing proposal is principally a matter for the ASX and the target board's commercial judgment.
- To counter the potential for minority shareholders to challenge a proposed de-listing in the Takeovers Panel, a bidder should clearly disclose in its bidder's statement its intention to have the target apply to ASX to de-list following a takeover bid if acceptances under the bid do not reach compulsory acquisition thresholds.
- Crucially, a bidder can vote in favour of a resolution to approve a de-listing proposal if the target has waited at least 12 months from the end of the takeover period to hold the meeting and otherwise complied with applicable ASX conditions.
- Any de-listing proposal made independently of any transaction that may affect control of the listed entity is unlikely to be of interest to the Takeovers Panel.
Recent decisions of the Takeovers Panel, including its decision not to conduct proceedings in relation to the proposed de-listing of Pact Group Holdings, confirm that where:
- a bidder states in its bidder's statement its intention to have the target apply to de-list from ASX as soon as it is able to do so – being 12 months following the end of the offer period for a takeover offer; and
- the target board has sound reasons to progress a de-listing and complies with the customary conditions imposed by the ASX, attempts by minority shareholders to block the de-listing are likely to fall outside of the Panel's jurisdiction.
The Panel's jurisdiction is clearly defined and will not extend to allow the Panel to intervene, or second guess the decisions made by the ASX and the target board regarding a de-listing proposal in the absence of a control transaction or a breach of the takeover provisions of the Corporations Act.
The Pact Panel proceedings
The Panel's decision in Pact followed an off-market takeover bid for the shares in Pact made by its controlling shareholder, Kin Group via its wholly owned subsidiary Bennamon Industries. During the takeover bid, Kin Group's relevant interest in Pact securities increased from just over 50% to approximately 88%, falling short of the 90% threshold required to commence with the compulsory acquisition of the remaining minority Pact shareholdings.
The bid closed and, eleven months later, Pact applied to the ASX for removal from the official list, which was approved by ASX subject to customary conditions including:
that the removal from the official list is approved by a special resolution of its shareholders; and
the removal does not take place any earlier than one month after the date of that shareholder approval.
Following the announcement of the proposed de-listing, two minority shareholders who had held out from accepting the bid applied to the Panel for a declaration of unacceptable circumstances but the Panel decided not to conduct proceedings.
What to know when you're planning on de-listing
That decision highlights some practical steps that bidders can take to preserve their ability to have the target de-list if they fall short of the compulsory acquisition threshold (which may ultimately assist in reaching 100% ownership of the target).
1. Bidders must disclose early in the bid their intention for the target to apply to de-list from ASX
In 2019 the Panel denied a controlling shareholder's efforts to have a target company de-list following a takeover offer in an earlier decision concerning Flinders Mines Limited, which also involved a buy-back of shares.
In finding unacceptable circumstances in that matter, the Panel noted that Flinders' proposed de-listing, with the support of its controlling shareholder, TIO, was not clearly disclosed to Flinders shareholders in TIO's bidder's statement or subsequent entitlement offer booklets issued by Flinders. As such, the Panel's view was that the proposed de-listing would not take place in an efficient, competitive and informed market.
In contrast to the Flinders decision, Kin Group's intention to have Pact apply for removal from the official list of the ASX was made clear to Pact shareholders from the outset in its bidder's statement – which also included a statement that Kin Group would be permitted to vote in favour of that resolution if the meeting was held 12 months after the close of the offer period. The de-listing intention also appeared in several supplementary bidder's and target's statements, with disclosure of such intention itself being the subject of a Takeover Panel application during the takeover bid.
The Panel considered it relevant that the applicants had acquired most of their shares after the bidder had set out in detail its intentions for the target to de-list, and were therefore taken to be aware of those intentions.
2. A meeting of target shareholders to approve the de-listing must be held at least 12 months after the expiry of the offer period to ensure the Bidder can vote in favour of the de-listing proposal
ASX provided its approval for Kin Group and its associates to vote in favour of the Pact shareholder resolution to approve the de-listing, on the basis that the vote was being held more than 12 months after the takeover bid closed.
This is consistent with ASX's published guidance that all shareholders can vote on a resolution seeking approval of an entity's removal from the official list, unless certain exceptions apply (none of which applied to Pact).
If a de-listing proposal is put to shareholders within 12 months of the closing of a takeover bid, on the other hand, ASX will not permit the bidder and its associates to vote on the resolution.
3. The de-listing should be independent of a control transaction or an acquisition of a substantial interest in the company
The Pact de-listing was not coupled with a control transaction or the acquisition of a substantial interest in the company, which led the Panel to determine that it did not have jurisdiction to consider the objecting minority shareholders' applications.
"The Panel does not have a general oversight role over listed entities "
The Panel's jurisdiction is clearly defined in the Corporations Act. Effectively, an applicant will need to demonstrate that the matter will have an effect on control of the company, involve an acquisition (or proposed acquisition) of substantial interest in the company or otherwise be unacceptable having regard to the purposes of the takeover rules (as set out in the Corporations Act) or constitute a contravention of Chapters 6 or 6C of the Corporations Act.
If a de-listing is conducted in a way that stays outside of the scope of the Panel's remit, then the Panel will not be able to prevent the de-listing occurring.
No effect on control or acquisition of a substantial interest.
The Panel considered that the proposed removal of Pact from the official list of the ASX was "not coupled with any transaction", had no control implication and did not involve the acquisition of a substantial interest. Bennamon had only purchased a small parcel of ~0.09% of Pact shares in the days after the de-listing was announced, and its bidder's statement had clearly disclosed its intention to acquire further Pact shares under the '3% creep' exception to the takeover rules.
This stands in contrast to the scenario the Panel considered in the Flinders decision, in which:
the de-listing was combined with an on-market buy-back of up to 10% of Flinders shares on issue;
the buy-back was to be funded by a loan from the controlling shareholder, TIO; and
the loan from TIO was to be repaid by the issue of further Flinders shares to TIO (which would not be participating in the buy-back) pursuant to a rights issue following the proposed buy-back.
In Flinders, the Panel found the combination of the insufficient disclosure together with the impact on control via the buy-back constituted unacceptable circumstances.
No other grounds for unacceptability or contravention of Chapter 6
The applicants alleged that the Pact de-listing would consolidate Kin Group's control of Pact in a manner that would contravene the purposes of the takeover rules as set out in the Corporations Act. Those purposes include ensuring that:
the acquisition of control over the voting shares in a listed company take place in an efficient, competitive and informed market;
shareholders know the identity of any person who proposes to acquire a substantial interest in the company, have a reasonable time to consider the proposal and are given enough information to enable them to assess the merits of the proposal;
shareholders have a reasonable and equal opportunity to participate in any benefits accruing to shareholders through any proposal under which a person would acquire a substantial interest in the company; and
an appropriate procedure is followed as a preliminary to compulsory acquisition following a takeover bid.
The Panel determined that:
as Kin Group had clearly disclosed its intention to de-list Pact, it could not be said that the de-listing was contrary to the efficient, competitive and informed market principle; and
as Kin Group was not acquiring a substantial interest in Pact and there was no relevant compulsory acquisition following the original takeover bid, the other principles did not apply.
On that basis, the Panel concluded that it did not have jurisdiction to declare unacceptable circumstances in respect of the proposed de-listing of Pact.
4. Bidders need the target Board to seek ASX approval for the de-listing
The ASX Listing Rules and associated guidance address the process by which entities can apply to be removed from the official list of the ASX.
Importantly, it is the target board, rather than the bidder itself, that will ultimately need to make the decision, in the best interests of the company, to apply for a de-listing.
ASX may decline an entity's request for removal if that request is made for an "unacceptable reason", for example where removal is sought to:
avoid the application of the ASX Listing Rule provisions that require shareholder approval for transactions with persons in a position of influence in relation to the entity;
avoid disclosure obligations that would otherwise apply to that entity under the ASX Listing Rules or the Corporations Act; or
remove a market for the entity's shares in order to coerce minority shareholders into accepting a undervalued offer for their shares from a controlling shareholder.
Pact's reasons for seeking a de-listing were typical of a company seeking to de-list, being the concentrated nature of its register, a low level of liquidity, the costs associated with maintaining an ASX listing and its compliance obligations as a listed company.
Other common reasons for de-listing include management time spent on the entity's administrative and compliance obligations as a result of being listed, a lack of interest from institutional investors and a belief by the entity's management that the traded price of its shares does not reflect their underlying value.
When will the Panel have jurisdiction to consider a de-listing application?
While the Panel is a popular dispute resolution body for shareholders, given its speed and low cost, the Pact decision makes it clear that the Panel is not the forum for any and every grievance or concern from shareholders relating to a listed entity, and in particular that it may not always be appropriate for the Panel to consider applications in relation to de-listings.
The Panel acknowledged that the ASX is the primary regulatory body that oversees de-listing applications and also noted that a de-listing decision is a matter of business or commercial judgement by the listed entity's board, and is subject to its directors' fiduciary duties.
Nonetheless, the Panel confirmed, citing the previous Flinders decision as an example of where a target board's decision and ASX's in-principle approval of a proposed de-listing, may not, of themselves, preclude the Panel from finding unacceptable circumstances where the de-listing is coupled with a transaction which has a control effect.
"We maintain that, in circumstances where a de-listing is coupled with a transaction which has a control effect or which involves the acquisition or proposed acquisition of a substantial interest in the company, a de-listing may very well involve unacceptable circumstances. Here, it was not the case."
Another Takeovers Panel decision this year, in relation to Vmoto Limited, concerned a proposed de-listing that was coupled with a selective share buy-back. That de-listing was not proposed following a takeover offer – instead, it involved a minority shareholder complaining about alleged transfers of Vmoto shares (comprising the shortfall under an entitlement offer) to entities selected by the target board in the context of a proposed de-listing and upcoming board spill meeting. The Panel considered that there was no reasonable prospect that it would declare the circumstances unacceptable, but notably did not say that the circumstances of that de-listing fell outside its jurisdiction.
Setting up for de-listing success
Removing a company from the official list of the ASX is a technical process that requires careful engagement with regulators including the ASX.
While a de-listing is primarily a matter decided by the target company's board of directors and approved by the ASX, in certain limited cases the Takeovers Panel may have jurisdiction to hear complaints from minority shareholders relating to circumstances in which a de-listing is proposed.
By clearly indicating its intentions regarding de-listing from the outset, waiting the requisite 12 months post-bid and ensuring any de-listing proposal is not linked to a proximate control transaction, a bidder can improve its prospects of a successful de-listing of the target following a takeover bid, even if the bidder does not acquire a sufficient interest in the target to proceed to compulsory acquisition.
