ASIC have just now released for public consultation its proposed new policy on how it will deal with share transfers under a Deed of Company Arrangement (check out the following (https://svpartners.com.au/faq/faq-corporate-insolvency/) or click here and here for more info about DOCA’s).
Section 444GA share transfers are relatively rare, with only about 11 in the last 6 years, but they can be important weapons in your arsenal.
For instance (and in overly simplistic terms), a secured creditor could be granted 100% shareholdings in a company in consideration for its debt, thus allowing an otherwise insolvent company to keep surviving.
ASIC proposes to standardise its policy so that shareholders are given equivalent information to ‘standard takeovers’. Eg, ASIC currently requires the following:
- independent expert valuation reports
- explanatory evidence
- court order
The requirement that the external administrator/Deed Administrator of the Company cannot produce this expert report is one area that in my opinion needs to change! Otherwise, it may be cost prohibitive (and certainly not efficient).