Say what you mean and mean what you say – sticking to the 'truth in takeovers'
27 August 2025
Ahead of the Deal - Australian M&A Briefing
Key insights
- ASIC's truth in takeovers policy aims to promote market integrity by requiring bidders, targets and shareholders to adhere to public statements about their intentions in control transactions.
- The policy primarily covers two types of statements: 'last and final' statements, which typically relate to offer price, timing or conditions; and shareholder intention statements, which disclose how significant shareholders intend to vote or act. Both are treated as binding unless clearly qualified.
- These statements can serve important strategic and signalling functions: bidders use 'last and final' statements to create deal momentum and encourage target shareholders to accept, while shareholder intention statements help build deal certainty.
- While committing to a 'truth in takeovers' statement may necessarily involve some potential risks, as demonstrated in the Takeovers Panel's decision in Dropsuite earlier this year, they remain an important tool for managing takeover dynamics and market expectations.
What is truth in takeovers?
ASIC's truth in takeovers policy is set out here ASIC Regulatory Guide 25 – Takeovers: false and misleading statements. Under the policy, bidders, targets and shareholders risk regulatory action by ASIC, or an application by ASIC or another party to the Takeovers Panel for a declaration of unacceptable circumstances, where they depart from their public statements regarding their intentions in relation to a control transaction.
The underlying rationale is that shareholders should be able to rely on public statements made by market participants in the context of control transactions. This in turn promotes an efficient, competitive and informed market for the acquisition of control in listed companies.
The Takeovers Panel has endorsed ASIC's truth in takeovers policy in its guidance notes and applied the policy in several instances, describing the policy in a 2007 decision as a "fundamental tenet of the takeovers regime". While ASIC's policy only expressly refers to takeover bids, the Panel considers the policy also applies to schemes of arrangement and other transactions requiring shareholder approval.
Categories of statements covered by the policy
The two main categories of public statements that attract the application of the truth in takeovers policy are 'last and final' statements and shareholder intention statements.
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Last and final statements |
Shareholder intention statements |
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| What are they? |
Last and final statements are public declarations made during the course of a control transaction – typically, though not exclusively, by bidders – that a party will or will not take a particular action. Common examples include statements that the offer price will not be increased, that the offer will close on a particular date, or that a specific condition (such as a 50.1% minimum acceptance threshold) will not be waived. ASIC and the Panel treat such statements as binding unless they are clearly and expressly qualified when made. This does not arise from contractual enforceability, but rather from the understanding that the market may – and should be able to – rely on such statements. Investors, rival bidders, and other stakeholders are entitled to take these statements at face value and act on them on that basis. For example, if a bidder states "this is our final offer and it will not be increased", the market will expect that position to be maintained when deciding how to respond to the offer. Similarly, if a bidder says the offer "will close on 1 September and not be extended", it must follow through unless it has specifically reserved the right not to do so in the relevant circumstances (for example, the emergence of a rival bid). |
These are public statements made by or on behalf of a shareholder of the target, disclosing their intention to support or oppose a control transaction – for example, an intention to accept a takeover offer or to vote in favour of a proposed scheme of arrangement. Such statements are most often made at the time the transaction is announced or following a price increase. The stated intentions are usually expressed to be subject to no superior proposal emerging, and where applicable, (such as in the context of a scheme of arrangement) confirmation from the independent expert that the transaction is in the best interests of target shareholders. |
| When and why are they made? |
For bidders, a last and final statement – such as that the offer price will not be increased – is a strategic tool to create a sense of finality and prompt target shareholders to accept a bid or vote in favour of a proposed scheme of arrangement, rather than agitating or holding out for a better deal. These statements are often deployed to build momentum, including where an offer is stalling or lacks early support – which can be a recurring challenge especially in hostile or low-premium takeover bids, where shareholders may be reluctant to accept until others do. As takeover bids must remain open for at least one month and a bidder cannot waive a defeating condition (other than in relation to 'prescribed occurrences', being a limited number of circumstances in relation to the target) to declare a bid unconditional in the final seven days, a stand-off can develop. To break this deadlock, bidders sometimes issue (ideally carefully calibrated) public statements intended to influence shareholder behaviour – for example, stating that the offer price is final, that the offer will close on a fixed date, or that certain conditions will not be waived. In Sibanye-Stillwater's unsolicited takeover of New Century Resources Limited in 2023, Sibanye declared from the outset that its offer price was "final and cannot be increased". The statement signalled price discipline and reduced expectations of a price increase or bidding war developing, particularly in the context of Sibanye already holding a 19.9% pre-bid stake in New Century. The strategy proved effective: Sibanye passed the 50% relevant interest threshold just two days after launching its offer. Similarly, bidders may state that an offer will not be extended to create time pressure on shareholders and encourage earlier acceptances. As with 'no increase' statements, such 'no extension' statements also discourage shareholders from holding out by signalling that the bidder is drawing a firm line under the timetable. |
Shareholder intention statements can be another key part of the deal certainty equation. These statements are often sought by bidders and targets – particularly prior to announcing a proposal – to confirm and demonstrate that major shareholders are supportive. A public statement by a shareholder that it intends to accept or vote in favour of a transaction can deter potential rivals, support the decision to launch a bid, and influence other shareholders to support (or not support) a proposal. Particularly in contested situations, such statements help generate positive market sentiment around the transaction and provide momentum to the bidder. Unlike binding contractual arrangements with a shareholder – such as pre-bid acceptance agreements, call options or voting undertakings – intention statements, if appropriately qualified and absent extenuating circumstances, do not generally give rise to a relevant interest or association. This makes them a relatively simple and flexible tool for parties to signal shareholder support without triggering the substantial holder disclosure requirements and other potential legal implications arising from more formal arrangements, whilst also preserving a shareholder's optionality to deal with the underlying shares. They can also be used as an alternative to, or in conjunction with, the acquisition of a pre-bid stake in the target to secure a 'foothold' ahead of launching a transaction. |
| Key issues and potential pitfalls |
As noted, ASIC and the Panel expect that the maker of a last and final statement will act consistently with it. Accordingly, while such statements can create momentum, they also carry risks. Committing firmly limits the bidder's flexibility to respond to rival bids or adjust terms, leaving them with fewer strategic options if circumstances change. For example, in Genesis Capital's recent takeover bid for Pacific Smiles, it became 'stranded' after securing acceptances for only 89% of Pacific Smiles shares – just shy of the 90% threshold required for compulsory acquisition – having issued a 'no extension' statement and consequently being unable to extend the offer period to secure the remaining acceptances. |
ASIC and the Panel expect that:
If a shareholder intention statement is not appropriately qualified (for example does not state that it is subject to no superior offer emerging), or includes restrictions on the disposal of shares other than under the proposed transaction, it may be viewed by ASIC or the Panel as giving rise to an 'associate' relationship with the bidder or 'relevant interest' on the part of the bidder. This could result in the Panel declaring unacceptable circumstances if the shares the subject of the statement – when aggregated with the bidder's existing holding and any other similarly 'locked up' shares – would result in the bidder's relevant interest exceeding 20%. |
| Example Takeovers Panel cases |
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Most Panel cases and guidance concerning shareholder intention statements focus on whether the bidder is associated with the shareholder providing the statement or has a relevant interest in their target shares. For example:
Dropsuite Limited (2025) is the first Panel case addressing whether a shareholder may deal with their target shares after making a shareholder intention statement, and the first in which the Panel has made orders holding a shareholder to the intentions expressed in such a statement – as discussed below. |
Case study – the Takeover Panel's decision in Dropsuite
While not the first time the Takeovers Panel has grappled with ASIC's truth in takeovers policy, its recent decision in Dropsuite illustrates how the policy continues to evolve, particularly in the context of shareholder intention statements.
On 28 January 2025, Dropsuite Limited announced that it had entered into a scheme implementation deed with NinjaOne LLC and NinjaOne Australia Pty Ltd under which NinjaOne had agreed to acquire all of Dropsuite's shares for $5.90 cash per share via a scheme of arrangement.
In its announcement, Dropsuite stated that its largest shareholder, Topline Management LLC, which held a 31% stake, had confirmed its intention to vote in favour of the scheme (First Intention Statement). The statement was expressed in customary terms – it was subject to a favourable independent expert's report and the absence of a superior proposal – and, consistent with market practice, did not expressly reserve Topline's right to dispose of its shares.
Between 28 January and 6 February 2025, Topline subsequently sold 11.3% of its stake on-market, reducing its holding to 19.7%. It disclosed the change in voting power in a single notice on 18 February 2025 – well outside the timeframe required under the substantial holding provisions of the Corporations Act.
In its disclosure, Topline reiterated its support for the scheme, citing an unforeseen need for liquidity and portfolio concentration as reasons for the on-market sales. It also stated its intention to "hold its remaining shares through the close of the transaction and vote in [favour] of the transaction" (Second Intention Statement). However, Topline subsequently sold another ~9%, bringing its holding down to 10.5%, and again failed to disclose this change within the timeframe required under the substantial holding provisions.
Harvest Lane Asset Management, another shareholder in Dropsuite, applied to the Panel for a declaration of unacceptable circumstances. Harvest Lane argued that the First Intention Statement did not reserve a right for Topline to sell Dropsuite shares and so Topline was required to maintain its 31% interest and vote that shareholding in favour of the scheme. In particular, Harvest Lane asserted that by proceeding to sell down a significant portion of its stake, Topline had breached the truth in takeovers policy, and had reduced the likelihood of the scheme being approved by Dropsuite shareholders.
The Panel made a declaration of unacceptable circumstances, concluding that:
- The First Intention Statement was ambiguous as to whether Topline intended to retain its full 31% holding until the scheme meeting. Although the statement did not expressly commit Topline to retain its shares, shareholders may have understood it as such given it is rare for a shareholder to dispose of shares after making an intention statement. However, the Panel stopped short of finding the disposals themselves unacceptable, instead noting that any ambiguity could have been resolved if Topline had lodged a substantial holder notice within the required timeframe.
- Topline's further disposals following the Second Intention Statement were clearly inconsistent with that statement, which conveyed an intention to retain its remaining shares and vote in favour of the scheme. The Panel found these disposals to be contrary to the expressed intention, and again noted Topline's failure to disclose the changes in a timely manner.
The Panel made orders requiring Topline to maintain and vote its remaining Dropsuite shares in favour of the scheme, subject to certain qualifications.
The Panel's decision does not mean that shareholders who make a voting intention statement are automatically in breach of the truth in takeovers policy if they subsequently dispose of their shares. However, shareholders will need to be mindful of the market perception created by an intention statement, taking all relevant circumstances into account.
In particular, some shareholders may now be more inclined to expressly reserve the right to dispose of shares or – more subtly – to frame their intention as applying to the number of shares held or controlled at the time of the scheme meeting, to avoid any potential breach of the truth in takeovers policy and Panel policy if they do. Compliance with the substantial holding provisions of the Corporations Act also remains essential, particularly in the context of a control transaction where a shareholder's voting power is influential on the outcome of the transaction.
Beyond Dropsuite: the practical application, and potential limits, of 'truth in takeovers'
While much of the immediate commentary on Dropsuite has centred on the abovementioned implications for qualifying shareholder intention statements moving forward, the decision also provides a useful lens through which to examine broader trends in and lessons from the Takeovers Panel's application of the truth in takeovers policy generally.
- Stated intentions should be firm and enduring: Any public statement attracting the truth in takeovers policy should reflect – and be understood as reflecting – a genuine and firm intention that will be followed through, rather than a transient or uncertain position. Attempting to limit risk just by framing a statement as a mere present intention is unlikely to be effective because:
- such language may be found by the Panel to be "misleading, or at least confusing" (in the words of the Panel's guidance on shareholder intention statements); and
- ASIC considers that the overall impression conveyed to an ordinary investor may still be that the intention is firm and final, regardless of any disclaimers.
In Dropsuite, the Panel gave little weight to Topline's argument that it genuinely had no intention to sell shares when its intention statements were made. The focus was on the market impact of the statement – not the subjective mindset of the maker.
- Truth in takeovers extends beyond takeover bids: Although ASIC's truth in takeovers policy is framed around takeover bids, Dropsuite re-confirms that the Panel will apply the underlying principles to schemes of arrangement. The Panel has also indicated (in its Guidance Note 23) that the principles of the policy extend to control transactions requiring shareholder approval under item 7 of section 611 of the Corporations Act.
More broadly, because the Panel's jurisdiction extends to all circumstances involving the acquisition of a substantial interest in, or control of, a listed company (and is not limited to formal control transactions), there remains an open question as to whether – and how – the policy should apply in other contexts affecting control, such as bidder shareholder approvals or resolutions to replace directors through requisitioned board spills.
This raises important considerations for market participants when making public statements of intention, even when not specifically related to a formal control transaction. If such statements are later contradicted by conduct, they may attract Panel scrutiny through the lens of 'truth in takeovers'.
- The context in which a last and final statement is not made determinative: Even an offhand remark by a bidder's CEO to a journalist can trigger the policy just as readily as a formal ASX announcement (as the Panel found in Ludowici in 2012).
In Dropsuite, Topline's Second Voting Intention statement was contained in fine print at the back of a substantial holder notice. The Panel rejected Topline's argument that this meant the statement should be treated differently or was unlikely to have been relied upon by market participants.
- Tangible detriment is not required: A departure from a public statement need not result in identifiable financial harm (or benefit) to contravene the truth in takeovers policy. The policy is concerned with preserving market integrity by promoting transparency and informed decision-making, rather than assessing financial outcomes after the fact.
In Dropsuite, the Panel found unacceptable circumstances even though Topline's share disposals did not impact Dropsuite's share price once disclosed, and the scheme was ultimately approved by 99.6% of Dropsuite shareholders. While there was no tangible financial harm to Dropsuite shareholders, the Panel was concerned that the market had been left uninformed about a material development affecting the scheme's support at a time when Dropsuite's shares were actively trading, and made orders preventing any further disposals by Topline.
- Obtain legal advice: Market participants must exercise caution when making or approving public statements about their intentions in relation to a control transaction to avoid misleading the market. Legal advice is essential in this regard.
In Dropsuite, the Panel was critical of Topline for not obtaining legal advice before its statements were made, despite Dropsuite having recommended that it do so. The Panel also gave little weight to Topline's submissions that its actions were inadvertent or uninformed.
