Shareholder intention statements

21 June 2016


A recent decision of the Takeovers Panel1 addressed the issue of shareholder intention statements in the context of a takeover offer. It is the first Panel decision to consider the issue of shareholder intention statements since the issue in December 2015 of the Takeover Panel’s Guidance Note 23 – Shareholder Intention Statements (GN 23).

In brief

The key guidance from the decision of the Panel is:

  • The Australian Securities & Investments Commission (ASIC) submitted to the Panel that a statement expressed as a ‘present intention’ of shareholders was consistent with GN 23 provided that the statements were stated to be  non-binding and that shareholders reserved their right to change their mind.
  • The Panel agreed with a submission by ASIC that a shareholder intention statement that was stated to be subject to there being a ‘substantially improved offer’ was “vague and unclear”.
  • The Panel stated that, consistent with GN 23, it is necessary in respect of shareholder intention statements, that the market, know the holding (in number and percentage of total [Target] shares) and the relevant relationships (eg director, associate of director etc) of the shareholders making the statements.
  • ASIC submitted that if the Target’s directors appear to have been significantly involved in procuring the shareholder intention statements, ASIC may form the view that this has resulted in the Target obtaining a relevant interest in those shareholders’ shares or that an association arises between the Target and those shareholders.

What is a shareholder intention statement?

Takeovers Panel GN 23 describes a shareholder intention statement as being any statement regarding the intention of a shareholder, which has been made or authorised by the shareholder, in the context of a bid, scheme or a shareholder vote for the purposes of item 7 of section 611.


  • X, a holder of #%, intends to accept the offer by Y in the absence of a superior proposal.
  • X, a holder of #%, intends to vote in favour of the scheme proposal with Y in the absence of a superior proposal.

Such statements include ‘acceptance’ statements or ‘rejection’ statements, but are not limited to these.

The significance of shareholder intention statements

Shareholder intention statements can be important in change of control transactions. In particular:

  • For a bidder, a positive intention statement from key shareholders can provide momentum for a takeover bid to succeed, and dissuade rival bidders.
  • For a target subject to a hostile bid, negative intention statements from key shareholders may influence other shareholders to not accept a takeover offer.

The Takeover Panel hearing and decision

In January 2016, Gulf Alumina Limited issued its Target’s Statement, recommending that shareholders reject a hostile off-market takeover offer from Metro Mining Limited. The Target’s Statement included the following shareholder intention statement:

Fifteen of Gulf’s Shareholders holding in aggregate 70.6% of Gulf’s Shares have stated that it is their current intention not to accept the Offer. Unless Non-participating Gulf Shareholders change their intentions, the Offer will not succeed.
Each of the Non-participating Gulf Shareholders informed Gulf by letters dated between the dates of 15 December 2015 and 3 January 2016 that they had no current intention of accepting the Takeover Offer from Metro Mining Limited…
The statements by Non-participating Gulf Shareholders are as to current intentions and are not binding on them. However, as at the date of this Target Statement, Gulf is not aware that any Non-participating Gulf Shareholder has changed its intention.

The Panel found that the shareholder intention statement was insufficient or misleading because it did not disclose the number of shares and percentage holding of each of the shareholders and was therefore contrary to GN 23. This prompted corrective disclosure by Gulf Alumina.

Takeover Panel GN 23

GN 23 provides the following guidance as to what may amount to unacceptable circumstances in relation to Shareholder intention statements:

Time before acceptance: If the statement is qualified by reference to a time before which it will not be acted on, it is likely to give rise to unacceptable circumstances if the shareholder acts before that time has passed.

Aggregation with bidder’s shareholding: If a statement is given without the qualification that it is subject to no superior offer emerging (or words to that effect), it is likely to give rise to unacceptable circumstances if given before the offer period is open and the shares the subject of the statement would, if aggregated with the bidder’s shareholding and any other shares the subject of similar statements, increase the bidder’s shareholding beyond the 20% threshold.

Superior proposal: If a statement is qualified by reference to a superior proposal, it is likely to give rise to unacceptable circumstances if the shareholder accepts before allowing a reasonable time to pass for a superior proposal to emerge. The Panel will consider a reasonable time to be 21 days after the offer has opened.

Guiding Principles: In considering whether the manner in which a shareholder intention statement is disclosed gives rise to unacceptable circumstances, the Panel is guided by the following:

  • The identity of the shareholder to whom the statement is attributed should be disclosed.
  • Details of the holding, in number and percentage terms, should be disclosed.
  • Shareholder intention statements must only be published in a bidder’s statement or target’s statement if the shareholder has consented and the document so states. The Panel expects that shareholder intention statements made outside a bidder’s statement or target’s statement will only be made with the consent of the shareholder.
  • If the statement aggregates holdings, the Panel expects that all the shareholders whose holdings are aggregated have consented, and their individual holdings have been separately identified in the statement.

Other Key Issues

In addition to the issues identified above, other key issues to consider in respect of shareholder intention statements are:

Statement by Bidder or Target: Where a bidder or target makes a shareholder intention statement, the circumstances may have the result that the bidder or target obtains a relevant interest in those shareholders’ shares or that an association arises between the bidder or target and those shareholders. Either of these two circumstances could result in the bidder or target obtaining a relevant interest in the shares of the target held by the maker of the shareholder intention statement.

Statement by shareholders: A statement of intention made directly by a shareholder may attract ASIC’s, ‘truth in takeovers’ policy, pursuant to which ASIC may require the shareholder to comply with its statement of intention.

Timing: There should be a reasonable period of time between the public announcement of a recommended takeover and the shareholder intention statement in support of it, otherwise there is a risk of an inference that the shareholder knew about the recommended offer before all other shareholders and the broader market.

Written by: Eugene Fung | Partner | +61 7 3338 7524 |


1 Gulf Alumina Limited [2016] ATP 4