Fraser v NRMA Holdings Ltd

Ampolex obtained interim orders on 13 March 1996, restraining MEPA from sending the Part A statements, or any offer pursuant to them to any of Ampolex's shareholders. MEPA was also restrained, on an interim basis, from acquiring certain convertible notes in Ampolex, except on specified terms. The significance of the convertible notes to this litigation will appear later. At the time the interlocutory relief was granted, the parties were offered a hearing date on 25 March 1996, in the expectation that the hearing would take one day. The parties sensibly agreed that this should be a final hearing of Ampolex's claim for relief although, in the event, the hearing continued for three days. At the hearing, MEPA was granted leave to file a cross claim. The cross claim related in part to a revised Part A statement that had been prepared by MEPA and annexed to an affidavit filed shortly before the hearing. The cross claim was also dealt with on a final basis at the hearing. The interim relief granted to Ampolex was continued pending the handing down of this judgment, but subject to the deletion of the order relating to the convertible notes. The Parties Ampolex is a company engaged in the production of and exploration for oil. It carries on business in Australia and a number of other countries. As at the date of service of the Part A statements, its issued capital consisted of 292,114,263ordinary shares of 50 cents each and 57,201,413 convertible redeemable 5.5% preference shares of 50 cents each. A further 5,042,000 options to acquire ordinary shares had been issued under the Ampolex Limited Employee Incentive Share Scheme. In addition, Ampolex had on issue 21,680,000 unsecured subordinated convertible notes with a face value of $3.30 per note, convertible at the option of the holder into ordinary shares. Ampolex presently has approximately 16,000 shareholders, of whom about 7,000 hold parcels of 1,000 shares or less. MEPA is a subsidiary of Mobil Corporation ("Mobil"), the headquarters of which are located in Fairfax, Virginia. The Mobil Group conducts business in over 100 countries and worldwide produces some 1.6 million barrels of oil equivalent per day. The principal activities of MEPA are oil and natural gas exploration and production. II THE STATUTORY FRAMEWORK Part A Statements Chapter 6 of the Law deals with the acquisition of shares in corporations. Section 615 prohibits, in substance, the acquisition of shares by a person if, immediately after the acquisition, that person would be entitled to more than 20% of the shares in the target company. However, this prohibition does not apply to an acquisition of shares as a result of the acceptance of an offer to acquire those shares during a takeover scheme: s.616. Before referring to the specific requirements applicable to takeover schemes, it is convenient to refer to the statutory principles underlying the legislative scheme. Section 731 of the Law states the matters that the Australian Securities Commission ("ASC") should take into account in exercising its powers to exempt persons from compliance with Chapter 6 (s.728) and to modify the application of Chapter 6 (s.730). Section 731 directs the ASC to "take account of the desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market and, without limiting the generality of the foregoing, shall have regard to the need to ensure: (a) that the shareholders and directors of a company know the identity of any person who proposes to acquire a substantial interest in the company; (b) that the shareholders and directors of a company have a reasonable time in which to consider any proposal under which a person would acquire a substantial interest in the company; (c) that the shareholders and directors of a company are supplied with sufficient information to enable them to assess the merits of any proposal under which a person would acquire a substantial interest in the company; and (d) that, as far as practicable, all shareholders of a company have equal opportunities to participate in any benefits accruing to shareholders under any proposal under which a person would acquire a substantial interest in the company; but nothing in this section requires the Commission to exercise any of its powers in a particular way in a particular case." The principles expressed in s.731(a),(b),(c) and (d) reflect the policy underlying the takeover provisions as a whole: Samic Ltd v Metals Exploration Ltd (1993) 60 SASR 300 (SCt SA/FC), at 303, per King CJ; Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554 (FCA/FC), at 561, per Sheppard J. The principles are generally known as the "Eggleston principles", since they adopt the formulation put forward by the Eggleston Committee in 1969: Company Law Advisory Committee to the Standing Committee of Attorneys-General, Second Interim Report (1969), para.16. Offers to acquire shares are made under a takeover scheme if, and only if, the offer relates to a class of shares in a company and the requirements of Part 6.3, Div.1 (ss.634-643) have been complied with: s.634. An offeror must, not later than 14 days before the day on which the offers are sent, serve on the target company a Part A statement and a copy of one of the proposed offers to which the Part A statement relates: s.637. The period of 14 days gives effect to the second of the Eggleston principles. Section 603 defines a number of terms used in Chapter 6. The definitions include the following: "'Part A Statement' means a written statement that complies with the requirements of Part A in section 750; 'takeover scheme' means offers that relate to shares in a company and, because of section 634, are taken to be made under a takeover scheme; 'takeover offer' means an offer to acquire shares made under a takeover scheme." The "takeover period", in relation to a takeover scheme, begins when the Part A statement is served and, if offers are sent pursuant to the statement, ends at the time the offers no longer remain open. The requirements applicable to a Part A statement are specified in Part A of s.750. They include the following: "8. Where: (a) the offeror has sent offers or invitations relating to (i) the acquisition of shares in the target company (whether voting shares or not) of a different class from the shares to which the takeover offers relate; or (ii)the acquisition of renounceable options or convertible notes granted or issued by the target company; being offers or invitations that are open or expressed to be open on the day on which the statement is served on the target company; or (b) the offeror proposes to send, while the takeover offers remain open, offers or invitations relating to: (i) the acquisition of shares in the target company (whether voting shares or not) of a different class from the shares to which the takeover offers relate; or (ii)the acquisition of renounceable options or convertible notes granted or issued by the target company; the statement shall set out the terms or proposed terms of those offers or invitations. ... 17. The statement shall set out any other information material to the making of a decision by an offeree whether or not to accept an offer, being information that is known to the offeror and has not previously been disclosed to the holders of shares in the target company. ... 20(1) The statement shall set out particulars of the offeror's intentions regarding: (a) the continuation of the business of the target company; (b) any major changes to be made to the business of the target company, including any redeployment of the fixed assets of the target company; and (c) the future employment of the present employees of the target company. (2) Without limiting the generality of subclause (1), if the offeror has not made a decision on a matter referred to in paragraph (1)(a), (b) or (c) but is considering a possible course of action, or 2 or more possible courses of action, in relation to that matter, the statement shall set out the fact and specify the course of action or courses of action concerned and the reason why the offeror has not made a decision on the matter." An intending offeror is not to serve a Part A statement on a target company unless a copy of the statement and a copy of one of the proposed offers have been registered by the Australian Securities Commission ("ASC"): s.644(1). The ASC must refuse to register the copies if (inter alia) it appears that the statement or proposed offer does not comply with the requirements of the Law: s.644(3). However, if by 5 p.m. on the day after the copies were lodged, the ASC has neither registered nor refused to register them, the copies are deemed to have been registered by the ASC at that time: s.644(5). Misleading or Deceptive Conduct Section 995(2) provides as follows: "995(2) A person shall not, in or in connection with: (a) any dealing in securities; or (b) without limiting the generality of paragraph (a): ... (iii) the making of takeover offers or a takeover announcement, or the making of an evaluation of, or of a recommendation in relation to, takeover offers or offers constituted by a takeover announcement;... engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Announcement of Takeover Bids A public announcement of a takeover bid must be followed by the making of the bid. Section 746(4) of the Law provides as follows: "[W]here a person makes a public announcement to the effect that the person proposes, or that the person and another person or other persons together propose, to make a takeover bid in relation to shares in a company, the person shall, before the end of 2 months after the day on which the announcement was made or such further period as the Commission permits in writing make a takeover bid in relation to shares in that company in accordance with the public announcement." Section 746(1) defines the terms used in s.746(4): "In this section: (a) a reference to making a takeover bid is in reference to: (i) making takeover offers; or (ii)causing a takeover announcement to be made; and (b) a reference to making a takeover bid in accordance with a public announcement to the effect that a takeover bid is proposed to be made is a reference to making a takeover bid the terms and conditions of which are the same as, or not substantially less favourable to the shareholders in the target company than, the terms and conditions of the takeover bid referred to in the public announcement." A breach of s.746(4) constitutes a criminal offence. The person in breach is liable to pay compensation to any other person who suffers loss as a result of entering into a transaction with respect to shares, in reliance on the public announcement: s.746(8). Benefits to Offerors Section 698 provides that offerors are not to give or offer benefits to shareholders except under a take-over offer. The relevant provisions are as follows: "698(1) ...if a Part A statement is served on a target company, the offeror, or an associate of the offeror, shall not, during the takeover period, give, offer or agree to give to a person whose shares may be acquired under the takeover scheme, or to an associate of such a person, any benefit not provided for under the takeover offers.... (2) ...a person who proposes to send takeover offers within the next following 4 months (in this subsection called the "proposed offeror"), or an associate of such a person, shall not give, offer to give or agree to give to a person whose shares may be acquired under the takeover scheme, or to an associate of such a person, any benefit that the proposed offeror is not proposing to provide for under the takeover offers...."

Variation of Offers Part 6.3, Division 5, is headed "Withdrawal and Variation of Offers". Section 653 provides that a "takeover offer is not capable of being withdrawn without the written consent of the [ASC]". Section 654 specifies the circumstances in which offers may be varied. "654(1) An offeror may not vary a takeover offer except: (a) in accordance with this Division; (b) in accordance with the regulations; or (c) with the written consent of the Commission and in accordance with any conditions specified by the Commission in the consent. 654(2) Where an offeror varies an offer under a takeover scheme as mentioned in paragraph (1)(a), the offeror shall, at the same time, make a corresponding variation to each other offer (other than an offer that has been accepted before the variation is made) under the takeover scheme." Section 657 sets out the manner in which offers under a takeover scheme may be varied. A notice must be sent to the target company setting out the terms of the proposed variation and particulars of such modifications of the Part A statement as are necessary, having regard to the variation: s.657(1)(a). A copy of the notice must also be sent to each person to whom an offer was made under the takeover scheme, including (subject to certain exceptions) a person who has accepted an offer: s.657(1)(b). Powers of the Court The Law confers powers on the Court to grant injunctions. Section 1324(1) provides as follows: "1324(1) Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute: (a) a contravention of this Law: ... the Court may, on the application of the Commission or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing." Part 6.10 of the Law confers a variety of other powers on the Court. Section 739 provides as follows: "739(1) Where: (a) a statement that purports to be a Part A statement relating to offers under a takeover scheme has been served on a target company or a takeover announcement has been made; (b) an application for an order under this section is made to the Court by the Commission, the offeror, the target company or a person who holds shares in the target company or held shares in the target company when the statement was so served or the takeover announcement was made; and (c) the Court is satisfied that a provision of this Chapter has been contravened; the Court may make such orders as it thinks necessary to desirable to protect the interests of a person affected by the takeover scheme or takeover announcement (including a person who is the holder of non-voting shares in, or renounceable options or convertible notes granted or issued by, the target company). ... (3) The orders that may be made under subsection (1) or (2) include one or more of the following orders: (a) an order directing: (i) where the Court is acting under subsection (1) - the offeror or the target company; or ... to supply to the holders of shares in the target company such information as is specified in the order; ... (d) for the purposes of securing compliance with any other order made under this section, an order directing a person to do or refrain from doing a specified act. (4) In this section, "shares", in relation to a company, includes: (a) non-voting shares in the company; and (b) renounceable options and convertible notes granted or issued by the company." The Court's power to excuse a contravention is contained in s.743: "743(1) Where a person has contravened a provision of this Chapter and, on application by any interested person, the Court is satisfied that, in all the circumstances the contravention ought to be excused, the Court may make an order declaring any act, document or matter not to be invalid because of the contravention and to have effect, and at all times to have had effect, as if there had been no such contravention. ... (3) The circumstances to which the Court may have regard in deciding whether or not a contravention of a provision by a person ought to be excused include the contravention having been due to the person's inadvertence or mistake, to the person not having been aware of a relevant fact or occurrence or to circumstances beyond the control of the person. (4) This section applies notwithstanding anything contained in any other provision of this Chapter." The Court is not to make an order under s.739 or 743 if it is satisfied that the order will unfairly prejudice any person: s.744(2). IIIFACTUAL BACKGROUND The Convertible Notes Ampolex issued 22.7 million convertible notes in 1988, pursuant to a trust deed made between Ampolex and Perpetual Trustee Company Ltd. At the time the shareholders approved the issue of the convertible notes they received an Explanatory Statement which stated that a noteholder could convert one note into one ordinary share at any time. In 1991 the notes were listed on the Stock Exchange, on the basis (according to Ampolex's 1995 Annual Report) that the notes were convertible to Ampolex ordinary shares in the ratio of one note to one share. Until 25 May 1995, the notes traded on this basis. On 25 May 1995, GPG Nominees Ltd ("GPG"), a company associated with Sir Ronald Brierley, announced that it had bought six million convertible notes in Ampolex. GPG also announced that it took the view that, owing to the wording of the relevant clause in the Convertible Notes Trust Deed, the noteholders were entitled to conversion, not at a ratio of one note for one share, but of 6.6 shares for one note. GPG and an associated company, Allied Mutual Holdings Pty Ltd ("Allied"), requested conversion of 1,020,000 notes held by them, in the ratio of 6.6 shares for one note. The apparent ambiguity in the trust deed had previously been drawn to the attention of Ampolex and a correcting supplemental deed had been entered into between it and the trustee. GPG's position was (and is) that it is not affected by the supplemental deed. On 26 May 1995, the closing price of the convertible notes was $4.16. On 29 May 1995 the market price increased to $4.90 and reached $5.37 by 1 June 1995. Over the same period, 26 May 1995 to 1 June 1995, the price of the ordinary shares fell from $3.90 to $3.35. In June 1995, Ampolex commenced proceedings in the Supreme Court of New South Wales against GPG, seeking a declaration that the correct conversion ratio for the notes is one share for one note. Subsequently, Ampolex was given leave to join additional defendants, some of whom have filed cross-claims. It was common ground in the present proceedings that the issues in the convertible note litigation are complex. The Supreme Court proceedings have been listed for hearing, commencing on 9 April 1996. The estimated duration of the hearing is 10 to 12 weeks. The Public Announcement of the Takeover Offer On 14 February 1996, Mobil announced that its Australian subsidiary, MEPA, had acquired a substantial position in Ampolex through the purchase of its listed securities. Mobil indicated that it was prepared to pay $4.25 per ordinary share in Ampolex, which was a premium of 34% over the closing price of $3.17 the previous evening. Mobil stated that the total acquisition price for the ordinary shares was $1.24 billion, "plus additional amounts for preference shares and convertible notes". The announcement included the following passages: "'We believe the potential benefits of a union between Ampolex and Mobil represent a winning proposition for the shareholders of Ampolex and Mobil, for Ampolex employees, and for the overall business of both companies,' said Paul J. Hoenmans, Mobil director and president of its Exploration and Producing division. Our strategies and interests are complementary. Ampolex's resource base and current production will contribute to Mobil's upstream goal of profitably growing production and reserves. In turn, Mobil will bring world-class capabilities in development, technology, project finance and operations. The Mobil offer will be conditional upon regulatory approvals in Australia and the United States, minimum acceptance conditions, no material change in Ampolex's circumstances or in the financial markets and standard conditions." (Emphasis added.) The Part A Statements and Offers On 27 February 1996, MEPA's Part A Statements and proposed offers to acquire all ordinary and preference shares in Ampolex were registered by the ASC. One Part A statement and proposed offer related to the ordinary shares; the other Part A statement and proposed offer related to the preference shares. Except for a slight difference in the offer price ($4.25 for ordinary shares and $4.27 for preference shares) there were no material differences between the two sets of documents. Accordingly, except where otherwise indicated, the references in this judgment are to the proposed offer and Part A statement relating to the ordinary shares. I shall refer to these documents, respectively, as "the original offer" and "the original Part A statement".

On 28 February 1996, the original offer and the original Part A statement were served on Ampolex. The conditions to which the offer was subject were specified in cl.7 of the original offer. Insofar as relevant, cl.7(1) provides as follows: "7(1)[T]his offer and the contract that results from acceptance of this Offer are conditional upon the following conditions subsequent: ... (b) no material adverse change occurring, being announced or otherwise becoming public in the business, financial or trading position or profitability of Ampolex or a subsidiary of Ampolex between and including 14 February 1996 and the end of the Offer Period, including, but without limiting the generality of the foregoing: (i) any disposal by Ampolex or a subsidiary of Ampolex of shares in a subsidiary of Ampolex; (ii)Ampolex, or a subsidiary of Ampolex entering into any agreement (including, without limitation, an option agreement) in relation to the disposal, or acquisition, by Ampolex or a subsidiary of Ampolex of any assets the aggregate unencumbered value of which exceeds the sum of $50 million; or (iii)any person having, as a result of MEPA acquiring Ampolex Shares, the right (whether actual or contingent) to: A. acquire any asset of Ampolex or a subsidiary of Ampolex under any joint venture or other agreement (Agreement); or B. require Ampolex or a subsidiary of Ampolex to dispose, or to offer to dispose, of any asset under an Agreement, where the aggregate unencumbered value of any such assets exceeds the sum of $50 million; ...

(d) the number (the specified number) of Ampolex Shares to which MEPA is entitled at the end of the Offer Period being not less than 90% of the total number of Ampolex Shares (notwithstanding that the specified number may subsequently become less than that percentage as a result of the issue of further shares of the same class as the Ampolex Shares); ... (f) one or other of the following having occurred before the end of the Offer Period: (i) MEPA having received a notice in writing from the Australian Treasurer unconditionally advising that or to the effect that there is no objection under the Australian Government's foreign investment policy or under the Foreign Acquisitions and Takeovers Act 1975 to the proposed acquisition of Ampolex Shares under the Takeover Scheme; ... (3) Subject to the Corporations Law and to Clause 7(4), MEPA alone is entitled to the benefit of the conditions in Clause 7(1) and any breach or non-fulfilment of any of those conditions may be relied upon only by MEPA. (4) (a) Subject to the Corporations Law, MEPA may at any time declare this Offer, and any contract resulting from acceptance of this Offer, free from all or any of the conditions in Clause 7(1) by giving written notice to Ampolex except that the declaration must be made not later than seven days before the end of the Offer Period. (b) In accordance with section 663 of the Corporations Law, if, at the end of the Offer Period any of the conditions in Clause 7(1) have not been fulfilled and MEPA has not declared the Offers free from those conditions..., all contracts resulting from the acceptance of the Offers will be void." (Emphasis added.) The original Part A statement recorded that MEPA was entitled, within the meaning of the Law, to 43,500,000 ordinary shares in Ampolex (14.89% of the total) and 4,242,465 preference shares (7.42%). It was thus entitled to 13.67% of the aggregate number of voting shares in Ampolex. MEPA had also acquired 1,387,400 convertible notes (6.4%), at an average price of $5.16. The original Part A statement expressed MEPA's intentions with respect to the convertible notes, as follows: "MEPA will offer (the Unconditional On-Market Offer) to acquire Ampolex Convertible Notes on the Australian Stock Exchange Limited (the Australian Stock Exchange) while the Offers remain open for acceptance. The consideration to be offered under the Unconditional On-Market Offer will be $7.00 for each Ampolex Convertible Note. MEPA reserves the right to increase this price at any time while the Offers remain open for acceptance. Holders of Ampolex Convertible Notes (Noteholders) who wish to accept the Unconditional On-Market Offer will need to instruct a stockbroker to accept the offer. MEPA proposes to send letters to all registered holders of the Ampolex Convertible Notes notifying holders of the existence of the Unconditional On-Market Offer. In addition, MEPA may at any time after the date of this Statement offer to acquire Ampolex Convertible Notes other than through the Unconditional On-Market Offer by various means including, but not limited to, entering into agreements with individual Noteholders to purchase their Convertible Notes. If MEPA decides to offer to acquire Ampolex Convertible Notes other than through the Unconditional On-Market Offer it proposes to initially offer Noteholders $7.00 for each Ampolex Convertible Note. However, the price and the other terms of any agreement that MEPA may reach with an individual Noteholder would be the subject of negotiation and may vary between Noteholders. Noteholders who accept the Unconditional On-Market Offer will not be entitled to receive any higher price which MEPA may pay to other Noteholders (whether that higher price is paid by MEPA pursuant to an acquisition of Convertible Notes on the Australian Stock Exchange or pursuant to any other agreement). The Unconditional On-Market Offer or any other offer to acquire Convertible Notes will not be conditional on MEPA acquiring a particular percentage of Ampolex Shares or Ampolex Preference Shares, or on any Noteholder accepting or agreeing to accept MEPA's offer for any Ampolex Shares or Ampolex Preference Shares which that Noteholder may hold." (Emphasis added.) The original Part A statement then dealt with how the cash consideration was to be provided. It noted that the total consideration payable was approximately $1.586 billion, assuming that none of the preference shareholders or noteholders converted their securities into ordinary shares and that they accepted the offers made by MEPA for their preference shares or convertible notes. MEPA was to obtain the total cash payment required from a combination of intercompany borrowings and equity contribution from Mobil or its wholly owned subsidiaries. The original Part A statement also addressed the question of the litigation against GPG. It attached as an Appendix the Chairman's address to the annual general meeting of Ampolex which set out the history of the claim that each note was convertible into 6.6 shares. An extract from the Chairman's address was reproduced in the Part A statement: "The company is confident that it has taken all proper steps to protect shareholders and has been advised that it has a strong case in maintaining that the company's Convertible Notes should only be capable of conversion into one Ordinary share, that is the basis upon which shareholders originally intended and approved that they should be so converted." The Part A statement itself discussed the progress of the litigation. It noted that the basis of Ampolex's claim was that the amending deed was effective to effect a conversion ratio of one ordinary share for each note. It also noted that Ampolex claimed that it was entitled to rectification of the trust deed, because the common intention of the parties involved in the issue of the notes in 1988 was that there should be a conversion ratio of one to one and that GPG and Allied were bound by this equity of rectification. The original Part A statement continued as follows: "Possible effect of the litigation on Ampolex. Prior to GPG's and Allied's request for conversion, Ampolex had 22.7 million Convertible Notes on issue. As at the date of this Statement, Ampolex had 292,114,263 ordinary shares on issue (including 1,020,000 issued by Ampolex following receipt of the request for conversion from GPG and Allied). If the Court upholds the claims made by Ampolex and declares that the Convertible Notes are convertible on a one for one basis, the maximum number of shares which Ampolex would be required to issue if all the holders of the Convertible Notes sought to convert their Convertible Notes would be 21,680,000 shares. If, on the other hand, the Court determines that each Convertible Note converts into 6.6 ordinary shares in Ampolex and upholds the claims by GPG and Allied concerning their entitlement to shares in respect of accrued interest on the 1,020,000 Convertible Notes previously converted, the maximum number of shares which Ampolex would be required to issue if all the holders of Convertible Notes sought to convert their Convertible Notes would be approximately 149,058,808 shares (being 6.6 shares for each of the remaining 21,680,000 Convertible Notes, a further 5.6 shares for each of the 1,020,000 Convertible Notes previously converted by GPG and Allied, and approximately 258,808 shares in respect of GPG's and Allied's alleged accrued interest entitlement). Shareholders to make their own assessment of the litigation. Shareholders must make their own assessment of the potential outcome of the proceedings commenced by Ampolex. In the Chairman's Address to the 1995 annual general meeting, Mr Anderson, after referring to the claim by GPG that it was entitled to 6.6 ordinary shares for each Convertible Note, stated that: 'This claim, clearly contrary to the basis upon which the notes were issued, is being vigorously contested by the company in the interests of both Ordinary and Preference shareholders who would otherwise be damaged by such a conversion.'" Section 17 of the Part statement is headed "Other Material Information". The first paragraph of section 17 is as follows: "There is no other information material to the making of a decision by an offeree whether or not to accept MEPA's Offer (being information that is known to MEPA and has not previously been disclosed to the holders of shares Ampolex) other than as disclosed in this Statement and other than that on 26 February 1996, the Commission executed an exemption, declaration and approval under the Law." Under the heading "MEPA's Intentions About Business, Assets and Employees of Ampolex", section 18 of the original Part A statement said the following: "On the basis of the information concerning Ampolex known to MEPA at the date of this Statement, and subject to the matters referred to in this section, it is the intention of MEPA, if the Takeover Scheme is successful, that: (a) the business of Ampolex be continued in the same manner as it is presently being conducted; (b) no changes be made in the business of Ampolex and there not be any re-deployment of the fixed assets of Ampolex; and (c) the employment of the present employees of Ampolex be continued. If the takeover Scheme is successful, MEPA proposes to discuss with the senior executives and management of Ampolex the best way to utilise the assets and the experience and expertise of employees of Ampolex for the benefit of MEPA and other members of the Mobil Group. In accordance with usual practices engaged in by MEPA and other exploration and producing (E&P) affiliates of the Mobil Group, as well as other corporations involved in the oil and gas exploration and production industry (including Ampolex), all of Ampolex's assets will be subjected to regular scrutiny and review as to performance and prospectivity. In relation to Ampolex's assets in the United States of America, MEPA notes the comments made in the Ampolex 1995 Annual Report that: 'The financial contribution of the Company's United States assets is under close scrutiny, with a commitment to improve the value-generation potential and return on funds invested. Associated with this commitment, a review of existing United States assets has been completed with the steps taken to orientate future activities to achieve maximum value generation and to continue the process, already well advanced, of disposing of lower-contributing and non-core assets. In line with the Company's overall commitment to deploy resources to areas of greatest potential value, the performance of United States assets will be an important determinant of the nature and extent of Ampolex's continued operations in the country.' MEPA proposes to discuss the review process identified by Ampolex with senior executives and management of Ampolex to determine whether the United States assets should be retained, merged with existing assets of other Mobil E&P affiliates or divested. MEPA recognises that an issue which will need to be resolved is the rationalisation of functions presently carried on by the respective Australian offices of both Ampolex and MEPA. MEPA intends to identify and realise potential cost savings associated with avoiding duplication of functions." (Emphasis added.) The Alleged Defects in the Original Part A Statement On 11 March 1996, the solicitors for Ampolex wrote to MEPA's solicitors identifying seven alleged defects in the original Part A statement and offer. In summary, the complaints were these: (i) The condition relating to the approval of MEPA's takeover under the Foreign Acquisitions and Takeovers Act 1975 (Cth) ("FATA") was expressed as a condition subsequent. Ampolex shareholders were not informed that, if they accepted the offer prior to the Treasurer's approval, the resulting agreement might infringe FATA and therefore be unenforceable. (ii) MEPA's offer was inconsistent with and less favourable than the terms described in Mobil's announcement of 14 February 1996, thereby contravening s.746(4) of the Law. This was because the announcement stated that the offer would be conditional upon "no material change in Ampolex's circumstances", while certain conditions in the offer itself related to disposal or acquisition of assets by Ampolex, where the value of the assets exceeded $50 million. Such a disposal or acquisition would not (it was said) necessarily result in a material or adverse change in Ampolex's circumstances. (iii) Some of the conditions of the offer were incapable of being fulfilled on the date MEPA lodged the Part A statement. This would be the case, for example, if Ampolex's interim result, announced on 26 February 1996 (a loss of $11.6 million after tax and abnormal items), were regarded as constituting a material adverse change in Ampolex's financial circumstances since 14 February 1996. It would also be the case (it was said) if GPG succeeded in the convertible note litigation. MEPA might therefore have, in effect, a "free option" over the shares of accepting shareholders, in breach of s.662 of the Law. (iv) In contravention of s.750, Part A, cl.17 of the Law, the Part A statement failed to disclose the fact that, if Ampolex succeeded in the convertible note litigation, this would have a material impact upon the respective values of the convertible notes and ordinary and preferred shares and would affect the amount MEPA would be prepared to pay for each class of securities. (v) In contravention of s.750, Part A, cl.20, of the Law, the Part A statement contained inadequate disclosure regarding MEPA's intentions about the business, assets and employees of Ampolex. (vi) In contravention of s.750, Part A, cl.8 of the Law, the Part A statement failed to disclose the terms or proposed terms of the offers or invitations MEPA proposed to send relating to the acquisition of the convertible notes. (vii) Until the convertible note litigation was resolved, and the "proper conversion rate" for the notes established, any offer to holders of the convertible notes in excess of a one for one conversion ratio, constituted an illegal benefit under s.698 of the Law. The solicitors for MEPA responded the following day, rejecting all the claims put forward on behalf of Ampolex. IV THE PROCEEDINGS The Claim for Interim Relief On 13 March 1996, Ampolex commenced these proceedings and sought interim orders from the Court, essentially on the grounds identified in the letter of 11 March 1996. Although MEPA's counsel were present in Court on that day, it was not possible to hold a full interim hearing. In the result, orders were made, pending a further hearing, restraining MEPA from l sending to any member of Ampolex a copy of either of the original Part A statements or of any offers pursuant to those Part A statements; or l acquiring the convertible notes from persons who hold ordinary and preference shares in Ampolex, at a price based on a conversion ratio in excess of one to one plus accrued interest. The Revised Offer and Part A Statement As I have already noted, the parties agreed that the further hearing, scheduled for 25 March 1996, should finally determine all issues in the proceedings. On 21 March 1996, four days before the hearing, MEPA served an affidavit sworn by Mr Entsminger, MEPA's Chairman and Managing Director. Mr Entsminger's affidavit annexed what was described as a "revised" offer and Part A statement for the ordinary shares. I shall refer to them in the same way. The revised offer and Part A statement incorporated a number of amendments approved on 8 March 1996 by the ASC pursuant to s.728 of the Law (which empowers the ASC to exempt a person from compliance with any provision within Chapter 6). These amendments are not relevant to the present proceedings. However, the revised offer and Part A statement also included a number of other changes (to use a neutral word), that had not been approved by the ASC. In view of the relief sought in MEPA's cross-claim it is necessary to describe in some detail the changes not approved by the ASC. (i) Clause 7(b) of the original offer, which specified certain conditions subsequent to which the offer was subject, was altered. The following extract shows the changes to the original cl.7(b). The blocking indicates the new material and the blocking shows the deleted material. "(b)(1) no material adverse change occurring, being announced or otherwise becoming public in the business, financial or trading position or profitability of Ampolex or a subsidiary of Ampolex between and including 14 February 1996 and the end of the Offer Period, including, but without limiting the generality of the foregoing; and (2) no one or more of the following changes occurring, being announced or otherwise becoming public between and including 14 February 1996 and the end of the Offer Period which would have the effect (whether as a result of a single transaction or otherwise) that assets with an aggregate unencumbered value in excess of $100 million are, or at some future time will be, disposed of or acquired (as the case may be): (i) any disposal of (i)Ampolex or a subsidiary of Ampolex disposing of shares in a subsidiary of Ampolex; (ii)Ampolex or a subsidiary of Ampolex entering into any agreement (including, without limitation, an option agreement) in relation to the disposal, or acquisition, by Ampolex or a subsidiary of Ampolex of any assets the aggregate unencumbered value of which exceeds the sum of $50 million; or (iii)any person having, as a result of MEPA acquiring Ampolex Shares, the right (whether actual or contingent) to: (A) acquire any asset of Ampolex or a subsidiary of Ampolex under any joint venture or other agreement (Agreement); or (B) require Ampolex or a subsidiary of Ampolex to dispose, or to offer to dispose, of any asset under an Agreement. where the aggregate unencumbered value of any such assets exceeds the sum of $50 million." The revised Part A statement referred to cl.7(1)(b)(1) of the revised offer, but did not set out the changes in the drafting of cl.7(1)(b)(1) and (2). (ii) The condition subsequent, previously contained in cl.7(f) of the offer (relating to approval of the Treasurer to the proposed acquisition under FATA), was deleted and reintroduced as a condition precedent (new cl.7(3)). The revised offer provided that no contract to sell Ampolex shares could arise from acceptance of the offer until the condition in cl.7(3) was satisfied, or the offer was declared to be free from the condition. (iii) The revised Part A statement modified MEPA's intentions with respect to its on-market offer to acquire the convertible notes. The changes made it clear that MEPA would make an on-market offer, on an unconditional basis, to purchase the notes for $7.00 per note. However, MEPA reserved the right to vary the consideration offered either upwards or downwards (the original Part A statement had stated that the price would only be revised upwards) and to withdraw the offer at any time (the original Part A statement had at least implied that the offer would remain on foot while the take-over offer continued in force). The relevant changes appear in the following passage: "MEPA will, during the Offer Period, offer on an unconditional basis (the Unconditional On-Market Offer) to acquire Ampolex Convertible Notes on the Australian Stock Exchange Limited (the Australian Stock Exchange) while the Offers remain open for acceptance. The consideration to be offered under the Unconditional On-Market Offer will be $7.00 for each Ampolex Convertible Note. MEPA reserves the right to increase may vary this price at any time while during the Offers remain open for acceptance Offer Period. MEPA may also withdraw the Unconditional On-Market Offer at any time by giving notice to the Australian Stock Exchange." (iv) The revised Part A statement specifically addressed the significance of Ampolex's half-yearly report, released on 26 February 1996. MEPA expressly stated that it would not seek to treat the interim result as a "material adverse change" for the purposes of cl.7(1)(b)(1) of the offer. (v) Under the general heading "Other Information Concerning Ampolex", part 13 of the revised Part A statement included an additional section (4) concerning the convertible note litigation. Among other things, it was stated that a holding by the Court in favour of GPG's conversion ratio, of 6.6 shares for one note, would not be regarded as a "material adverse change". This section is as follows: (4) The following matters in relation to the Convertible Note Litigation may also be relevant to holders of Ampolex Shares: (a) As set out in section 8(2) of this Statement, during the Offer Period MEPA will make an Unconditional On-Market Offer. Pursuant to this offer, MEPA will offer to acquire Ampolex Convertible Notes on the Australian Stock Exchange at a price of $7.00 per Convertible Note. MEPA may vary this price at any time. The Unconditional On-Market Offer may be withdrawn at any time by MEPA giving notice to the Australian Stock Exchange. MEPA considers that it is unlikely that the Convertible Note Litigation will be resolved prior to the end of the Offer Period. If the Convertible Note Litigation is resolved before the end of the Offer Period and a declaration is made by the Court that Ampolex Convertible Notes are convertible on the basis of one ordinary share per Convertible Note, this would not cause MEPA to vary the price at which it would offer to acquire Ampolex Shares or Ampolex Preference Shares. However, MEPA might withdraw the Unconditional On-Market Offer or reduce the price of that offer. If the Convertible Note Litigation is resolved before the end of the Offer Period and a declaration is made by the Court that Ampolex Convertible Notes are convertible on the basis of 6.6 ordinary shares per Convertible Note, MEPA might withdraw the Unconditional On-Market Offer. (b) Clause 7(1)(b)(1) of the Offers provides that the Offers are conditional on there not being any material adverse change in the business, financial or trading position or profitability of Ampolex or a subsidiary of Ampolex between and including 14 February 1996 and the end of the Offer Period. While MEPA considers it unlikely that the Convertible Note Litigation will be resolved prior to the end of the Offer Period, if it is held by the Court during the Offer Period that Ampolex Convertible Notes are convertible on the basis of 6.6 ordinary shares per Convertible note. MEPA would not regard this as constituting a material adverse change within the meaning of Clause 7(1)(b)(1) of the Offers, and therefore would not rescind the contracts resulting from acceptance of the Offers on this basis." (vi) Under the heading "MEPA's Intentions About Business, Assets and Employees of Ampolex", the revised Part A removed the following sentence (which I have blocked for consistency): "If the Takeover Scheme is successful, MEPA proposes to discuss with the senior executives and management of Ampolex the best way to utilize the assets and the experience and expertise of employees of Ampolex for the benefit of MEPA and other members of the Mobil Group." The revised Part A added the following information concerning MEPA's intentions: "Typically, oil and gas resources and assets of the Mobil Group are developed, managed and operated by the Mobil E&P affiliate which is incorporated in the jurisdiction, or which has a branch office in the region, in which the resources and assets are located. Ampolex has assets located in, amongst other places, Australia, Papua New Guinea, Venezuela, Peru, Colombia, Argentina and the United States. Mobil has E&P affiliates or branch offices operating, or responsible for Mobil Group assets and businesses, in most of these countries. In the longer term, consideration will be given as to whether it is appropriate that assets of Ampolex located outside of Australia be sold or otherwise transferred to Mobil E&P affiliates that currently operate or have a presence in the region in which the relevant assets are located. It is not possible for MEPA to decide as to a particular course of action in this regard because it has not yet had access to the information necessary to review the operational, commercial, taxation and financial considerations relevant to making any such decision. Following the acquisition of Ampolex, MEPA would expect that Ampolex would invest more than $1.7 billion over the next ten years in the Australian upstream oil and gas projects already within Ampolex's portfolio. Approximately 75% of this expenditure is expected to be spent on the development of the Gorgon liquefied natural gas project, with the remainder being spent on fields such as Wandoo, East Spar, Harriet and Macedon/Pyrenes. In addition, an ongoing exploration programme will be pursued offshore North West Australia. Any exploration success or the identification of additional projects within the current portfolio may result in a further increase in further investment. MEPA uses the worldwide human and technical resources of the Mobil Group. These services include technical services such as geological modelling and reservoir characterisation, drilling technology and management, reserves estimation and management and well production engineering. Services provided to MEPA by companies within the Mobil Group are provided on commercial arm's length terms. MEPA intends that these resources of the Mobil Group will be available to Ampolex on the same commercial arm's length terms as those on which they are available to MEPA so as enable Ampolex to successfully develop its existing resource base. In addition, after detailed review of the Ampolex operations, employees of MEPA or another Mobil affiliate may, if required, be employed within Ampolex on a temporary or permanent basis to complement existing expertises within Ampolex." The Part A statement added the further comment that any rationalisation intended to produce savings associated with the avoidance of duplication of functions would not alter MEPA's intention to offer continuing employment to all Ampolex employees. (vii) Finally, the revised Part A statement clarified MEPA's intentions should it not succeed in acquiring all of the securities in Ampolex: "MEPA would seek to implement its intentions in respect of Ampolex as set out above even if MEPA has not acquired all of the securities in Ampolex pursuant to its various offers, although MEPA recognises that its ability to do so will be dependent upon the level of its shareholding in Ampolex and the circumstances at the time." The Cross-Claim The purpose of MEPA preparing a revised offer and Part A statement was to allow it to seek relief, if necessary, under ss.739 and 743 of the Law. This relief is sought in the cross-claim, in the form of the following paragraphs: "1. If the Part A Statements dated 26 February 1996 and offers relating thereto lodged by [MEPA] are found not to comply with any provision of Chapter 6 of the Corporations Law, a declaration pursuant to section 743 of the Corporations Law that on condition that such Part A Statements dated 26 February 1996 are amended in the manner set out in the [revised offer and Part A statement] (or in such further manner as the Court shall direct) such Part A statements and offers shall be valid. 2. If the Court shall find that any past or proposed conduct of [MEPA] in connection with the registration, service and distribution of the said Part A Statements or conduct referred to in such Part A Statements has contravened or shall contravene any provision of Chapter 6 of the Corporations Law: (a) an order pursuant to section 743 of the Corporations Law that the said Part A Statements and offers relating thereto are not invalid because of any such contravention; and/or (b) an order pursuant to section 739 of the Corporations Law that the said Part A Statements and offers only be distributed in a form which includes amendments of the type set out in the [revised offer and Part A statement] or with such further amendments or information as the Court shall direct. 3. That, upon the Cross-Claimant undertaking to the Court not to distribute either [the original Part A statements] nor the [revised Part A Statement], nor any Part A Statements in similar terms relating to the preference shares in [Ampolex], unless and until it has obtained an exemption under section 728 of the Corporations Law from the Australian Securities Commission permitting it to distribute: (a) a Part A Statement and offer either with amendments in the form indicated in the [revised offer and Part A Statement] or such amendment as the ASC or the Court considers necessary; and (b) a Part A Statement and offer relating to the offer to acquire preference shares in Ampolex Limited containing the same amendments mutatis mutandis, the Court refrain from making any order sought by the Applicant." The Parties' Positions At the hearing, MEPA was represented by Mr Campbell QC, who appeared with Mr Bannon. It is, I think, fair to say that Mr Campbell directed the bulk of his argument to supporting the terms of the revised offer and Part A statement. He contended that these documents were in conformity with the Law, even if the original Part A statement was held to be defective. Mr Bennett QC, who appeared with Mr Rares SC for Ampolex (each argued different aspects of the case), construed the amendments to MEPA's original offer and Part A statement as admissions by MEPA that the original Part A statement was deeply flawed. Mr Campbell, although perhaps not strenuously defending the original Part A statement, did not concede that it contravened the Law. MEPA's principal submission, as I followed Mr Campbell's argument, was that, insofar as the original Part A statement contravened the Law, the discretionary relief available under ss.739 and 743 of the Law ought to be afforded to MEPA. This was because the revised documents complied with the Law and it was in the interests of shareholders and noteholders that the original Part A statement be permitted to proceed, subject to the inclusion of the additional material incorporated within the revised documents. Accordingly, Mr Campbell argued, the relief sought in the cross-claim should be granted. (As to the need for a substantive application for relief see Gantry v Parker & Parsley, at 563-564, per Sheppard J., at 470, per Burchett J.) Mr Campbell supported the revised Part A statement as a whole. He did not suggest that the Court should pick and choose among the various changes, although he expressed the view that, if the Court was minded to include additional material, this could be accommodated in a consolidated document to be sent to shareholders. Ampolex's position on certain issues varied somewhat during the hearing. This was perhaps not surprising, given that MEPA's focus of attention was the revised Part A statement, which was made available only shortly before the trial. At the outset, Mr Rares said that no point would be taken about the amendment in the revised offer and Part A statement, converting the requirement for approval of the Treasurer under FATA from a condition subsequent to a condition precedent. Mr Rares also said that no point would be taken about the third issue raised in the letter from Ampolex's solicitors of 11 March 1996. The complaint under this heading was that the original Part A statement did not specify whether, if GPG succeeded in the convertible note litigation, this would be regarded as a material adverse change for the purposes of MEPA's offer. A similar complaint was also made in relation to Ampolex's interim results. Since both of these issues were expressly addressed in the revised Part A statement, Mr Rares accepted that the issues had been resolved. Relatively late in the argument, Mr Rares submitted that the Court had no power under ss.739 or 743 of the Law to sanction an amendment to an offer which is to be forwarded to shareholders. It was pointed out that this submission appeared to be inconsistent with the concessions previously made, since the conversion of a condition subsequent to a condition precedent was effected through a change to the proposed offer. Mr Rares then resiled from the concessions he had made earlier. However, as I understood his position, he did so only for the purpose of raising the jurisdictional argument and an argument as to the scope of s.739. He contended, in particular, that the commitment in the revised Part A statement not to regard success by GPG in the litigation as a material adverse change, was significant in considering whether MEPA could claim relief under s.739. However, Mr Rares made it clear that Ampolex would raise no objection if MEPA sought clearance from the ASC to alter the proposed offer, in order to convert the condition subsequent relating to the Treasurer's approval into a condition precedent. Apart from the jurisdictional question, Ampolex's principal contentions were that both the original Part A statement and the revised Part A statement contravened the Law. The grounds relied on generally, but not entirely, corresponded to those raised in the letter of 11 March 1996: (i) neither Part A statement adequately set out MEPA's considered views as to the likely outcome of the convertible note litigation, nor MEPA's intentions with respect to offers to be made to convertible noteholders (s.750, Part A, cll.17, 20; s.995(2)); (ii) neither Part A statement (but especially the original statement) adequately stated MEPA's intentions with respect to the business and assets of Ampolex, to the point where the Part A statements not only omitted material information, but constituted conduct that was misleading and deceptive (s.750, Part A, cll. 17,20; s.995(2)); (iii) both Part A statements and offers breached s.698(2) of the Law, since MEPA's proposed offers gave a noteholder who also held shares a benefit not provided for under the takeover offers; (iv) the revised offer contravened s.746(4) of the Law because the provisions relating to changes which would constitute conditions subsequent (cl.7(1)(b)(2) of the revised offer) were different from and therefore not "in accordance with" MEPA's public announcement on 14 February 1996; and (v) neither Part A statement set out the terms or proposed terms of offers or invitations made or to be made in relation to the convertible notes (s.750, Part A, cl.8); Ampolex also submitted that, independently of the jurisdictional point, no order should be made in favour of MEPA under ss.739 and 743 of the Law. Ampolex contended that s.739 did not permit the amendment of a Part A statement, as distinct from mere clarification or amplification of its terms. What was proposed here by MEPA amounted to an amendment, since matters of substance were involved. In any event, so it was submitted, the Court should not exercise its discretion in favour of MEPA. Among other things, Mr Rares relied on the absence of any explanation proffered on behalf of MEPA as to why the original Part A statement had failed to include information of importance to shareholders (this segment of the argument assuming that the original Part A statement contravened Chapter 6 of the Law). The Evidence Mr Rares read two affidavits sworn by Mr King, Ampolex's general counsel. These affidavits, for the most part, simply annexed documentation. Mr King was briefly cross-examined. Mr Campbell read an affidavit sworn by Mr Entsminger, MEPA's Chairman and Managing Director, annexing the revised offer and Part A statement. Mr Entsminger was cross-examined at some length by Mr Rares. Since Ampolex's submissions suggested that I should not accept Mr Entsminger's evidence on certain issues, I should say something about his evidence. Mr Entsminger from time to time presented as a quite hesitant witness, whose responses did not always suggest that he was in complete command of all the information relevant to the offers and Part A statements with which he said he was familiar. Nonetheless, I think that Mr Entsminger was endeavouring to be a truthful witness. Subject to one matter, I generally accept his evidence. In particular, I accept his account of the respective roles played by MEPA and Mobil in the decision-making process leading up to the preparation and service of the Part A statements. The substance of that account was that the initiative for the takeover came from MEPA and that it put forward recommendations to Mobil for the concurrence of the parent company. According to Mr Entsminger, despite the appearance in Australia at the time of the takeover announcement of Mobil representatives, MEPA itself managed the strategy for the takeover, although Mobil was to provide the funds to finance the bid. The qualification to which I have referred is that I formed the impression that Mr Entsminger was reluctant to concede the significance of certain contemporary documents. These, generally speaking, suggested that MEPA had formed particular intentions or was considering particular proposals in relation to Ampolex's assets and business, should the take-over ultimately succeed. I do not think that Mr Entsminger was trying to mislead the Court. But I think that, understandably enough, he was conscious of the requirements of the Law and, from time to time, was anxious not to accept an interpretation that might suggest that MEPA had contravened any of those requirements. On some of the matters on which I have made findings, I have relied on, or drawn inferences from, contemporary documentation. In doing so, I have not always fully accepted Mr Entsminger's interpretation of the events or proposals recorded or referred to in the documents.

V THE ORIGINAL PART A STATEMENT - COMPLIANCE WITH THE CORPORATIONS LAW Although Mr Campbell focussed attention on the revised Part A statement and offer, the first issue raised by Ampolex's application is whether the original Part A statement complied with the Law and, if not, in what respects. Once conclusions are reached on this issue, the other questions in the case can be addressed. I therefore think it appropriate to commence by considering whether the original Part A statement complied with the Law. The Principles The requirements of s.750 of the Law are to be applied so as to give effect to the Eggleston principles, stated in s.731. In Samic Ltd v Metals Exploration Ltd, one issue before the Full Court of the Supreme Court of South Australia was whether the trial judge had correctly found that a Part C statement prepared by an offeror ("MEX"), which had made a takeover announcement, did not comply with s.750. The trial judge found that MEX's Part C statement did not adequately inform the target company's shareholders of the true character of MEX's principal activities, and that the statement of MEX's intentions towards the target company's business was misleading. The target's assets were entirely in cash and represented an asset backing of 52 cents per share. MEX's offer was 45 cents per share. MEX's principal activity was described in the Part C statement as "investment in listed securities". In fact, the company was engaged in corporate acquisitions. The relevant intention with respect to the target company was stated as follows: "It is the intention of MEX to identify investments for Samic which will earn a higher yield than existing bank deposits, with the ultimate objective of increasing the value of shareholder interests in [the target]." King CJ. said this (at 303): "The mandatory requirements imposed by s.750 are to be understood and applied so as to give effect to the policy underlying the takeover provisions of the Corporations Law as expressed in s.731, namely "the desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market". The object is to put shareholders in possession of the information required to enable them to make an informed and critical assessment of the offer and an informed decision as to whether to accept it." His Honour went on to uphold the trial judge's findings. The description of MEX's activities was "wholly inadequate to inform shareholders of the true character of the group's principal activities". The statement of intention concealed rather than revealed MEX's true intentions. His Honour continued (at 303): "It was important to Samic shareholders to be aware of the true nature of the group's takeover activities and MEX's intentions with respect to the Samic cash assets. This information could well affect the shareholders' assessment of whether MEX was likely to improve its offer, the prospects of a competing offer and the prospects of the shares, if retained, in the company under new management. It would assist shareholders to assess critically the attractiveness or otherwise of an offer of 45 cents for shares with a cash asset backing of 52 cents." Cox J. agreed with the reasons of the Chief Justice on this issue (at 309) and Olsson J. reached the same conclusions (at 312-313). In Gantry v Parker & Parsley, Sheppard J. quoted the observations of King CJ with approval (at 561), pointing out that there is no relevant difference between Part A and Part C statements for this purpose. Sheppard J. also said that the second sentence in the first of the extracts quoted above from the judgment of King C.J. was "quite fundamental". Burchett J. (at 566-567) specifically agreed with Sheppard J.'s observations on this point and Beazley J. (at 571) agreed generally. Care must be taken, however, not to push the construction of the mandatory requirements of the Law too far. In Gantry v Parker & Parsley, Sheppard J. (at 564) referred to the desirability of ensuring that the acquisition of shares takes place in an efficient and competitive market, as well as in an informed one. He pointed out that the stopping of a bid, at least in a case where there are competitive bidders, may have the effect of closing down the market. His Honour continued (at 564-565): "No doubt the presence of ss.739 and 743 of the Law, which enable the Court to relieve a party against breaches of the Law in appropriate circumstances enable the problem to be overcome in numbers of cases. But unless that is so, it does seem to me that a court asked to restrain the making of an offer needs to be astute to see that the breach of the Law relied upon is real and of substance. Otherwise there is a risk that the public interest which there is in a competitive market will suffer. That should not occur unless it is tolerably clear that the breach of s.750 which is alleged to have occurred does involve the withholding of relevant information from shareholders." In QIW Retailers Ltd v Davids Holdings Pty Ltd (No.1) (1992) 36 FCR 386 (FCA), Heerey J., after referring to a presently irrelevant matter, made a number of points about the takeover legislation (at 391): "[S]econdly, the fact that the take-over offers are usually made by public companies who therefore will have made available to the public much more financial information about themselves than a private company like Davids should not of itself result in the creation of mandatory requirements for Pt A statements beyond those found in the Corporations Law itself. Thirdly, there is a distinction between information which might be useful and relevant for a shareholder in the offeree company and information which is in fact known to the offeror at the date of the Pt A statement. Fourthly, the framework of the takeover legislation assumes that criticism of the commercial desirability of the offer will be dealt with in the offeree's Part B statement. Fifthly, the disclosure of speculation is not required and, indeed, is to be avoided: see Australian Consolidated Investments Ltd v Rossington Holdings Pty Ltd (1992) 35 FCR 226 at 228." The need to take account of the commercial realities confronting an offeror is illustrated by some additional observations of Sheppard J. in Gantry v Parker & Parsley (at 560), in relation to cl.20 of Part A of s.750. His Honour found no fault with a statement that the offeror preferred ultimately to dispose of the target company's operations in the United States, but had not made a decision concerning the available options because it had insufficient information to do so: "In reaching my conclusion I have taken into account the fact that it is particulars which cl.20 requires. I bear in mind also that cl.20(2) uses the word 'specify'. Accordingly, an offeror must do the best it can to be particular and specific about its intentions. Nevertheless the document is dealing with a commercial situation. It is being delivered in a context in which the offeror does not have control of the target company. In those circumstances it is not only reasonable, but it is also necessary, for it to express itself in a guarded way. If it does not do this, it runs the risk that statements it makes may, because of their very particularity, be found to have been misleading. To my mind the statements made in the offer to which I have so far referred give a fair indication to potential acceptors of the offer of what the appellant's intentions are." Where it is said that an offeror has engaged in misleading or deceptive conduct, the person claiming relief must establish materiality. Guidance on this question in the context of a claim under s.52 of the Trade Practices Act 1974 (Cth), was provided by the Full Court in Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 (FCA/FC), at 468: "The need for an applicant to establish materiality is of particular importance in a case like the present one where the proposal is complex, and involves difficult questions of commercial judgment and matters of degree and conjecture as to the future about which there is room for a range of honestly and reasonably held opinions. If every possible formulation of the commercial objective of the proposal, and arguments for and against every theoretical possibility, were set forth the total package of information to members would be likely to confuse rather than to illuminate the issue for decision, even for people having a familiarity with corporate law and commerce. The need to make full and fair disclosure must be tempered by the need to present a document that is intelligible to reasonable members of the class to whom it is directed, and is likely to assist rather than to confuse. ... It is important that the adequacy of the information provided by the prospectus and supporting documents be assessed in a practical, realistic way having regard to the complexity of the proposal. In the circumstances the Court should not be quick to conclude that a contravention of s.52 has occurred because other information could have been provided that was not. The need for the applicants to establish the materiality of errors and omissions is an important step in the proof of their claims." The Convertible Note Litigation - Material Information The original Part A statement provided considerable background information concerning the convertible note litigation. The Part A statement itself made it clear that a decision by the Supreme Court in favour of the conversion ratio of 6.6 shares for one note claimed by GPG could have a substantial effect on Ampolex and on its ordinary shareholders. The figures recorded in the Part A statement showed that, if Ampolex failed in its claim and GPG succeeded, noteholders would be entitled to a total of over 149 million ordinary shares in Ampolex. If the correct conversion ratio were one share for one note, the noteholders would be entitled only to a total of 22.7 million ordinary shares. Thus a complete failure by Ampolex in the litigation would increase the number of ordinary shares on issue from about 314 million to 453 million (an increase of approximately 47%). There may be other outcomes from the litigation, depending on the fate of claims against other parties (including damages claims) and the various cross-claims. However, the best and worst outcomes, from the point of view of Ampolex ordinary shareholders, are clear enough. Having established the significance of the convertible note litigation, the original Part A statement gave no indication that MEPA had formed any view as to the likely outcome of the litigation, nor whether the initial offer of $7 per convertible note was related to any such view. The statement recorded the views of the Chairman of Ampolex, that the company had taken the proper steps to protect shareholders. Shareholders were simply advised to form their own assessment of the potential outcome of the proceedings. But the original Part A statement gave no indication as to how individual shareholders might perform such a task. Mr Entsminger's evidence and the contemporary documentation support several findings relevant to the convertible note litigation. l MEPA had consulted at length with its legal advisers and had formed the considered view that Ampolex would succeed in the litigation and that, accordingly, the correct conversion ratio was one share for one convertible note. (In a conversation with Mr Brierley of GPG, on 7 March 1996, an adviser to MEPA asserted that Mobil had spent 'thousands of hours analysing the case'.) l The offer to convertible noteholders, which was initially set at $7 per note, was based at least in part on MEPA's considered view of the litigation, although other factors, such as the need to provide an incentive to avoid cost, delay and uncertainty, were taken into account. l An important objective that MEPA had in mind was to utilise the process of acquiring the convertible notes as a means of endeavouring to settle the convertible note litigation. It is true that, as Mr Entsminger pointed out, MEPA was forced to make its assessment of the litigation on the basis of incomplete information. It had access to the pleadings filed in the Supreme Court, but not to discovered documents, statements and other material needed for a complete analysis of the issues in the case. Nonetheless, MEPA certainly has a great deal more information available to it than have the vast bulk of ordinary shareholders. Moreover, MEPA has spent a great deal of time and resources analysing the available information and has formed a view on an issue of critical importance to the value of the shares in Ampolex. In my opinion, information relating to MEPA's assessment of the likely outcome of the convertible note litigation is material to shareholders wishing to make an informed and critical assessment of the offer for their shares. In addition, in my view, it is also material to the decision to be made by shareholders to have information as to the relationship between that assessment and the price offered by MEPA for the convertible notes. In reaching this conclusion, I am conscious of the need for Ampolex to show that the information not disclosed was material, having regard to the factors stated by the Full Court in Fraser v NRMA Holdings. However, the circumstances of MEPA's proposed takeover of Ampolex are most unusual. The offer of $4.25 per ordinary share might apply to as few as 314 million shares or to as many as 453 million shares, depending on the outcome of the convertible note litigation and the approach taken by noteholders to any offer made to them by MEPA. There is clearly a relationship between the legal entitlements of the noteholders and the value of ordinary shares. The overwhelming likelihood is that if Ampolex has over 450 million ordinary shares on issue, or about to be issued, each ordinary share will be worth less than if the company has a maximum of, say, 314 million shares on issue. Mr Entsminger appeared to accept in his cross-examination that the uncertainty associated with the noteholder litigation had caused MEPA to make a lower offer than it otherwise would have made. In any event, I would be prepared to infer that this is the case. Furthermore, the price paid by MEPA for the outstanding Ampolex convertible notes may well have a significant impact on the price MEPA is ultimately prepared to offer for the ordinary shares. If it succeeds in obtaining the notes relatively cheaply, it may be prepared to apply the resources "saved" into a higher price for Ampolex shares. The regime established by Chapter 6 of the Law does not apply to offers to acquire convertible notes, although specific provisions, such as s.750, Part A, cl.20 impose particular requirements relating to offers to acquire such notes in the context of takeover offers. See also s.739. Nonetheless, in the circumstances of the present case, Ampolex shareholders would be in a better position critically to evaluate MEPA's offer for their shares if they knew what view MEPA has formed about the litigation and the basis for MEPA setting its initial offer for the notes at $7 per note (bearing in mind that MEPA, in the original Part A statement, reserved the right to increase its offer to noteholders, either generally or in specific cases). This is especially so, given the fact that MEPA intends to attempt to resolve the litigation, without necessarily waiting for the case to run its course. For these reasons, I think that information on the three matters I have identified - MEPA's current assessment of the likely outcome of the litigation, the basis for MEPA's initial offer to noteholders, and the fact that MEPA intends to attempt to settle the litigation - are "material to the making of a decision by an offeree whether or not to accept an offer", within the meaning of cl.17. I appreciate that it could be misleading if shareholders are told of MEPA's assessment of the litigation without being informed of the limitations of the information available to MEPA when making the assessment. In my opinion, however, the way to address that difficulty is to advise shareholders of the important limitations affecting MEPA's assessment, rather than to disclose no relevant information at all. Unless the information is provided, shareholders will be required to consider MEPA's offer without material that in my view is necessary for an informed decision on their part. It must be remembered that the offeree must assess the offer, in a context where the offeror is trying to induce him or her to come into the market. As Bryson J. observed in ICAL Ltd v County Natwest Securities Aust Ltd (1988) 13 ACLR 129 (SCt NSW), at 137, receipt of the Part A statement may be the first time the shareholder learns of a takeover offer. The conclusion I have reached does not involve MEPA speculating as to future matters. It is the fact of MEPA's carefully considered assessment and its relationship to the offer made for convertible notes that is important to shareholders. I should mention two other matters in connection with this issue. First, Mr Campbell did not suggest that MEPA's assessment of Ampolex's prospects in the convertible note litigation is, or should be, treated as confidential. In any event, any such suggestion would be inconsistent with the evidence that Mr Price, one of MEPA's financial advisers, disclosed the assessment to Mr Brierley in a conversation that took place on 7 March 1996. Secondly, MEPA's assessment of the litigation appears to have been held by it at least since early February 1996, when a document referring to the assessment was prepared within MEPA. Accordingly, I think that the failure in the original Part A statement to address the matters to which I have referred constituted a contravention of s.750, Part A, cl.17 of the Law. Intentions Concerning Ampolex's Assets and Business - Material Information and Misleading and Deceptive Conduct The original Part A statement gave limited information concerning MEPA's intentions about Ampolex's business and assets. In substance, subject to limited exceptions, MEPA'sdeclared position was that it proposed to continue Ampolex's business in the same manner and not to redeploy any assets. The original Part A statement blandly asserted that, if the takeover were successful, MEPA proposed discussions with senior management of Ampolex to determine the best way to utilise the assets and expertise of Ampolex for the benefit of MEPA and the Mobil Group. The statement also foreshadowed that, in accordance with the practice of other affiliates of Mobil, all assets would be subjected to regular scrutiny and review. Particular mention was made of the review under way by Ampolex of its assets in the United States. Ampolex's criticism of the adequacy of the information provided rested principally on the proposition that, in fact, MEPA had in place a well-developed strategy to inject massive financial and management resources into Ampolex. This was part of a process designed to integrate Ampolex within the Mobil Group and to ensure the optimum utilisation of its under-performing asset base. In support of the argument, Ampolex pointed to a confidential letter dated 14 February 1996, from Mr Hoenmans, a director of Mobil, to Dr Power, the managing director of Ampolex. Mr Entsminger acknowledged that he had discussed the letter prior to its dispatch and made a contribution to it. The letter suggests that MEPA's takeover offer reflects a considerably more advanced state of planning on MEPA's part than the original Part A statement reveals. The letter includes the following passages: "Over the last several months, we have discussed with you and your management team a number of ways in which Ampolex and Mobil might work together. These exchanges have now culminated in our tabling with you our desire to discuss an acquisition of Ampolex by our subsidiary, Mobil Exploration & Producing Australia Pty Ltd (MEPA), on terms mutually beneficial to our respective constituencies. Mobil has a high regard for the portfolio of assets you have built. We are confident that, by integrating the resources of Mobil and Ampolex, we can achieve both the optimum development of Ampolex's existing resources discoveries and the continuation of your track record of successful exploration. In addition, for reasons I will discuss further, we believe that Mobil is uniquely situated, versus others in our industry, to make an offer that should be particularly attractive to your employees, your management and Ampolex shareholders. ... Mobil's interest in Ampolex reflects the complementary fit between our two companies. To participate fully and successfully in the development of its resource base, Ampolex will require not only massive financial and management resources, but also world class skills and strengths in development, technology, project management, project finance, production, operations, marketing and logistics. Mobil can supply all of these. By integrating into a major international oil company, Ampolex will be able to successfully accomplish the challenging next phase of your announced asset development program. ... Mobil's strategy to maintain and build on Ampolex's existing operations in the Australian and Papua New Guinea region is unique, because Mobil has a high interest in pursuing an active future in the Australian area but we currently have only a very small staff. Our intent is to work with you and your people to build for the future on the bases that Ampolex has created." The evidence, although by no means comprehensive, allows some findings to be made, in addition to what can be inferred from the letter, that are relevant to an assessment of MEPA's intentions at the time the original Part A statement was served.

l MEPA took the view, perhaps not surprisingly, that the returns achieved by Ampolex since its last capital raising in December 1993 had been disappointing. MEPA also had formed the opinion that its strengths in project management, development, project finance, marketing and logistics would help maximise the value of Ampolex's under-performing assets. l MEPA considered that its acquisition was consistent with "Mobil's goals of profitably growing reserves and production" (this language is used in a draft document prepared on 8 February 1996, and found its way into the press release of 14 February 1996). Ampolex not only had existing production capacity, but an "attractive resource inventory/ exploration acreage". It also had good positions in Argentina and Papua New Guinea. Ampolex's Australian resources included a one-seventh interest in the Gorgon joint venture gas field, located off the north west coast of Western Australia. Gorgon is being developed to supply liquefied natural gas after the turn of the century. l As acknowledged in projections prepared by MEPA in relation to Ampolex (edited versions of which were admitted into evidence), MEPA considered that there was "upside potential" for Gorgon, Harriet (a field also off Western Australia) and Argentina. Estimates of the value of the upside potential had been included in the projections prepared for MEPA. I infer, despite Mr Entsminger's reticence on this issue, that the potential of these fields was seen by MEPA as a significant attraction in its decision to make a takeover offer for shares in Ampolex. l As was stated in the revised Part A statement (but not the original), MEPA expected Ampolex to invest more than $1.7 billion over the next 10 years in Australian upstream oil and gas projects, some 75% of which is to be spent on the Gorgon project. This expectation was based on previously published information concerning Ampolex. MEPA intended to provide the funding for these projects. Mr Entsminger acknowledged in his evidence that neither version of the Part A statement refers to MEPA supplying massive financial resources to Ampolex. However, as I followed him, he suggested that the investment of funds by MEPA would be a consequence of Ampolex's status as a subsidiary. l MEPA had been giving consideration to creating a market for gas produced by Ampolex, especially from the Gorgon field, by participation in what a draft document describes as "independent power projects". (The language used in the document of 8 February 1996 was that MEPA might "be able to monetize some of [Ampolex's] gas by participation in independent power projects or IPP's, a business that Mobil has recently entered".) As Mr Entsminger explained it, the power projects envisaged are those in which Ampolex would have an interest as a joint venturer and to which the gas produced from the Gorgon field could be sold. Mr Entsminger was reluctant to concede that this was more than a possibility, but the evidence as a whole warrants the conclusion that this was a course actively under consideration, although no final decision had been reached. l MEPA has been giving active consideration to the early sale of all Ampolex's United States assets, should the acquisition succeed. This, I think, follows from the edited projections which were in evidence (they being the only projections discovered by MEPA). The projections estimated future returns to MEPA on various assumptions, one of which assumed that the assets in the United States would be sold. Other projections assumed the retention of the United States assets. Nonetheless, the documentation strongly suggests that one possible course of conduct being considered is the early disposal of the United States assets. I think that the contemplated course of action goes somewhat further than the plans discussed in Ampolex's 1995 annual report, an extract from which appears in both Part A statements. Those plans concentrate on the disposal of "lower-contributing and non-core assets". However, MEPA's consideration of the early sale of the United States assets is not inconsistent with Ampolex's published intentions. l As the revised Part A statement indicated, MEPA was contemplating the disposal of other Ampolex assets located outside Australia, either by way of sale or transfer to Mobil affiliates operating in the relevant areas. As I have said, the original Part A statement said very little about MEPA's plans for Ampolex, or indeed its reasons for making the takeover offer, beyond some very general statements about intending to continue the business in the same manner and not intending to redeploy fixed assets. A brief reference had been made in MEPA's press release of 14 February 1996 to the complementary nature of the strategies and interests of Ampolex and MEPA and to Mobil's "world class capabilities in development, technology, prospect finance and operations". But even this reference was not incorporated in the Part A statement. The bland statement, that MEPA proposed to discuss with Ampolex executives the best ways to utilise the assets and experience of Ampolex for the benefit of the Mobil Group, in my opinion obscured the true position, and was apt to mislead many shareholders. It is important to bear in mind that, as Sheppard J. observed in Gantry v Parker & Parsley, any alleged breach of the Law should involve a matter of substance. However, shareholders in Ampolex would have available to them, apart from any previously published information about the company, only the Part A statement. Section 18 of that document set out MEPA's intentions with respect to the business, assets and employees of Ampolex. A shareholder reading section 18 would gain the impression, not merely that MEPA contemplated no change in relation to the business and assets of Ampolex, but that MEPA was unable to form a clear view as to the future conduct or direction of the business until discussions with Ampolex's senior management had taken place. The paragraph in section 18, which was deleted in the revised Part A statement, implied that no intention had or could be formed with respect to the development and exploitation of Ampolex's assets until the foreshadowed discussions had occurred. I do not think that the impression gained by a shareholder from reading section 18 as a whole would accurately reflect the true position. As Mr Hoenman's letter of 14 February 1996 shows, MEPA had engaged in discussions with Ampolex's management team over a period of "several months". MEPA had formed the view that Ampolex's assets were valuable, but underperforming and that some parts of the resource base had significant upside potential. MEPA's assessment was that Ampolex required massive financial resources to exploit its resource base. MEPA intended to provide the necessary resources, including the funding of the $1.7 billion over 10 years needed to develop upstream oil and gas projects in Australia. (While the scale of Ampolex's proposed investment was publicly known, the fact that MEPA, or Mobil, intended to provide the finance, was not known to Ampolex shareholders.) Furthermore, MEPA intended to bring to Ampolex the "world class skills and strengths" in a variety of areas that Ampolex needed to improve its performance. Indeed, to use the language of the February letter, Ampolex was to be integrated into a major international oil company. In addition, MEPA was actively considering a particular strategy designed to create a market for production from the Gorgon field, a very significant part of Ampolex's resource base. I infer that this strategy, involving independent power projects, is not one that would necessarily be available to Ampolex. The point is not that MEPA is obliged to specify in a Part A statement the details of all plans it is considering for Ampolex's future operations. In order to avoid misleading shareholders it is clearly necessary for an offeror to couch its language carefully. It is also necessary to avoid speculation. General statements may well be enough, especially if intentions cannot be formulated precisely until after a takeover is completed. For example, I am not satisfied that the reference in section 18 of the Part A statement to the possible divesting of Ampolex's assets, despite its generality, can be regarded as a breach of cl.20, or as misleading or deceptive within s.995(2) of the Law. But the defect in section 18, in my opinion, is not merely that it omits material information. It is that it creates the impression that MEPA is much less advanced in its planning with respect to the development and exploitation of Ampolex's underperforming resource base than is in fact the case. It is material to a shareholder's decision whether or not to accept a takeover offer that the offeror after careful consideration over several months, intends to integrate the business into the offeror's world wide operations; to provide the financial and management resources to exploit the target company's underperforming resource base (including providing the finance of at least $1.7 billion for particular projects); and to consider a strategy to create a market for gas produced from an important field within that resource base. It is, in my opinion, likely that many Ampolex shareholders would be misled by the bland statements to which I have referred, since they would not be alerted to the reasons for MEPA making the takeover offer, nor to the overall strategy and indeed specific proposals MEPA plainly had in mind to improve Ampolex's performance and to ensure that its resource base is fully exploited. Of course, astute or well informed Ampolex shareholders would no doubt infer that MEPA would not make a takeover offer without carefully analysing how Ampolex would fit within Mobil's international organisation and without undertaking projections based on likely management strategies. But while I do not necessarily equate small shareholdings with lack of investor sophistication (as Mr Rares invited me to do), many of the smaller shareholders (and, for that matter, some larger shareholders) would be dependent upon the Part A statement for their information. They are entitled - as indeed are all shareholders - to receive information that, however general or qualified, fairly sets out the position concerning MEPA's intentions in relation to the conduct of the business and exploitation of the assets of Ampolex. As I have said, Mr Campbell did not concede that the original Part A statement was defective. Nonetheless, the fact that much of the information to which I have referred is included in the revised Part A statement, replacing the bland statement about proposed discussions with management, strongly reinforces the view that it should have been included in the original Part A statement. I think that section 18 of the original Part A statement infringed both cl.17 of Part A of s.750 and s.995(2) of the Law. It is not necessary to consider whether there was also a breach of cl. 20 of Part A of s.750. A Benefit Outside the Takeover Offer - s.698 Ampolex contended that the offer to convertible noteholders to acquire their notes at a price not below $7 per note, breached s.698(1) or, alternatively, s.698(2) of the Law. For present purposes it is enough to refer again to s.698(1), which applies where a Part A statement is served on a target company: "(1)...the offeror...shall not, during the takeover period, give [or] offer to give...to a person whose shares may be acquired under the takeover scheme... any benefit not provided for under the takeover offers...." It is to be noted that contravention of s.698(1) is a criminal offence: Law, s.1311. Mr Bennett's submission proceeded on the basis that there were a number of shareholders who also held convertible notes. He contended that those shareholders were offered a benefit not provided for under the takeover offer. As I understood the argument, this benefit took the form of the "premium" offered to noteholders. The "premium" presumably was the difference between the intrinsic value of the notes, calculated on the basis of a conversion ratio of one share for one note (plus accrued interest), and the minimum offer of $7 per note. In the case of GPG, the largest noteholder, the benefit was said to the opportunity to negotiate in respect of the notes. Mr Bennett placed some emphasis on what he suggested was a particular association between the ordinary shares in Ampolex and the convertible notes. This arose from what he said was the conduct of some shareholders in acquiring notes as a hedge against the uncertainty associated with the litigation. Mr Bennett conceded that any benefit, for the purposes of s.698, must be given or offered to a person in his or her capacity as a shareholder. This follows from Gantry v Parker & Parsley. In that case, the offeror had entered into agreements with five executives of the target company. The executives were shareholders in the target. The offeror agreed, upon successful completion of the takeover, to provide them with employment and with benefits including a stock option plan and certain severance payments. They were also required to acquire stock in the offeror: see 51 FCR, at 557. Sheppard J. rejected the argument that, since no other shareholder had received benefits of the kind given to the executives, s.698 had been infringed. His Honour said this (at 563): "In my opinion, the submission should be rejected. I do not regard the benefit intended to be conferred on the Executive Group as a benefit of a kind contemplated by s.698. The section contemplates a situation in which benefits conferred on some shareholders are not conferred or not to be conferred on all of them. In my opinion, the contemplation is that the benefit referred to in s.698 is a benefit provided to shareholders in their capacity as owners of shares in the company. That is not so in this case. The benefit which the members of the Executive Group are intended to have will be conferred on them in their capacity as employees, not shareholders. Accordingly, I do not consider that any breach of s.698 of the Law has been established." Beazley J. agreed with Sheppard J. on this issue (at 571). In my opinion, MEPA's offer to noteholders was made to them in their capacity as noteholders, and not in their capacity as owners of shares in the company. The Law plainly contemplates that an offeror may make offers to acquire convertible notes issued by the target company. So much appears from s.750, Part A, cl.8. It will often be the case that there is an overlap between the shareholders and noteholders in the target company. In the present case, the convertible notes were traded in the market, both before and after the announcement of the takeover offer. MEPA's offer, as recorded in the Part A statement, was to pay $7 for each convertible note, although it reserved the right to increase its on-market offer or to negotiate terms with individual noteholders. There is nothing in the evidence that the recorded offer, or any later dealing, was anything other than a bona fide attempt to acquire the notes, without regard to whether the noteholder happened to be a shareholder or not. In my view it makes no difference to this analysis whether many or some shareholders acquired notes as a "hedge". If it matters, on the material before me, I would not be prepared tofind that this occurred on any significant scale. There was evidence that one broker recommended hedging in June 1995, but nothing to indicate whether any shareholders had acted on that advice. I should add that it is by no means clear that the offer to noteholders, as recorded in the Part A statement, conferred a "benefit" upon any recipient of the offer, within the meaning of s.698. The offer price of $7 per note was set by MEPA over the weekend of 24/25 February 1996. The closing price on the Exchange on 23 February 1996 was $7 per note. Since then, except for 26 February 1996 (when the closing price was $6.95 per note), the price of the notes has never dropped below $7. There is no evidence that MEPA has offered any individual noteholder more than $7 per share, nor indeed that it has increased its on-market offer above that figure. It would seem difficult to conclude that an offer to acquire notes at less than their market value confers a benefit on a noteholder who happens to be a shareholder. However, there is no need to resolve this question. Takeover Offer in Accordance with Announcement - s.746(4) Section 746(4) of the Law requires a person making a public announcement to the effect that the person intends to make a takeover bid, to make such a bid within a specified period "in accordance with the public announcement". A takeover bid is in accordance with the public announcement if its terms and conditions are "not substantially less favourable to the shareholders...than the terms and conditions of the takeover bid referred to in the public announcement": s.746(1). Ampolex submitted that the proposed offer made in conjunction with the original Part A statement was not in accordance with the public announcement made by MEPA on 14 February 1996. The announcement stated, inter alia, that the offer would be conditional upon "no material change in Ampolex's circumstances". Ampolex's submission rested on the proposition that some of the events specified in cl.7 of the original offer, as constituting a condition subsequent, did not necessarily involve a material change in Ampolex's circumstances. For example, if Ampolex disposed of assets valued at $100 million for a price of $110 million, MEPA would be entitled to withdraw its offer, even though the disposal would not be (or not necessarily be) a material change in Ampolex's circumstances. A breach of s.746(4) constitutes a criminal offence. The sub-section should be construed with this in mind. Parliament must also be taken to have understood that public announcements are ordinarily brief and lack the precision of formal offer documents or Part A statements. What is required are terms and conditions "not substantially less favourable" than those referred to in the public announcement. The public announcement stated that the offer would be subject to no "material change" in Ampolex's circumstances, not "material and adverse change". I think it is arguable whether the words "material adverse change" qualify the specific events set out in cl.7(1)(b)(i), (ii) and (iii) of the original offer. But even if they do not, I do not think that the events specified in cl.7(1)(b)(i), (ii) and (iii) mean that the terms of the bid are substantially less favourable to the shareholders than those referred to in the public announcement. If any of these events occur, the likelihood is that the event will at least arguably constitute a material change in Ampolex's circumstances. There may be events covered by cl.7(1)(b)(i), (ii) and (iii) that, if they occur, will not constitute a material change in Ampolex's circumstances. But there was no evidence to suggest that any such events have occurred or are likely to occur in the present case, nor that MEPA would take advantage of those circumstances to withdraw its offer. Accordingly, I do not think that Ampolex has established that the original Part A statement breached s.746(4) of the Law. Terms of Acquisition of the Notes - cl.8 Ampolex contended that the original Part A statement did not comply with cl.8 of Part A of s.750. Mr Bennett submitted that MEPA intended to send offers or invitations relating to the acquisition of convertible notes in Ampolex. In those circumstances, cl.8 requires MEPA to "set out the terms or proposed terms of [the] offers or invitations". MEPA had not done so, but had chosen to deliberately leave its options open. It had announced an unconditional market offer of $7 per note (of which it intended to advise noteholders), but reserved the right to increase the price at any time while the takeover offer remained open for acceptance. MEPA had also stated its intention to acquire notes by means other than the on-market offer. These means included entering agreements with individual noteholders. If it took this course, MEPA intended to offer $7 initially, but the precise terms would be the subject of negotiations with individual noteholders. In view of the conclusions I have reached on other aspects of the case, I do not think it necessary to express a concluded view on this question. My tentative view is that the original Part A statement did not infringe cl.8. It must be remembered that the takeover legislation does not generally apply to convertible notes, although specific provisions of the Law deal with the position of convertible noteholders: see, for example, ss.703, 739. Offerors need not offer to acquire convertible notes in the target company, except that, if an offeror succeeds in acquiring more than 90% of the voting shares, a noteholder can require the offeror to acquire his or her notes: s.703(4),(8). The principle of equality does not apply to noteholders in the same way as it does to shareholders and, in particular, there appears to be nothing to prevent an offeror acquiring convertible notes on different terms. The objective underlying cl.8 seems to me to inform shareholders accurately of the intention of the offeror in relation to convertible notes at the time of the Part A announcement, rather than to confine the offeror to a particular price to be offered to convertible noteholders. In this case, MEPA clearly proposes to send an invitation, if not an offer, to noteholders concerning the on-market offer. I am inclined to think that the terms or proposed terms of the invitation to noteholders are accurately set out in the Part A statement. There was no evidence to suggest that MEPA had decided or intended to alter the on-market offer of $7 per note, which was to be communicated to noteholders, although that option was left open for the future. The Part A statement foreshadows MEPA's intention to acquire notes by means other than the on-market offer. However, on the evidence, I do not think that, at the date of the Part A statement, MEPA had formed an intention to send any offer or invitation to any particular noteholder. I doubt, therefore, that at the time of the Part A statement MEPA could be said to have a settled proposal to send an offer an invitation to any particular noteholder. If it did have such a proposal, its intention was to offer $7 initially, as the Part statement revealed. For this reason, my tentative view is that MEPA's original Part A statement did not contravene cl.8. However, as I have indicated, I do not think it necessary to resolve this issue. VI THE CROSS CLAIM I have found that the original Part A statement contravened the Law in the two respects I have identified. It thus becomes necessary to consider MEPA's cross claim, in which it seeks relief under ss.739 and 743 of the Law. A Threshold Issue Ampolex submitted that, once a finding was made that the original Part A statement contravened the Law, no relief could be granted to MEPA on its cross-claim. Mr Rares contended that MEPA could not invoke the Court's powers under ss.739 and 743 of the Law, because it sought not merely to revise the Part A statement, but to amend the proposed offer which was to be sent to shareholders together with the revised Part A statement. It will be recalled that the changes sought by MEPA to the offers were the conversion of the Treasurer's approval from a condition subsequent to a condition precedent and the inclusion of differently worded conditions subsequent. The steps in the argument were these: (i) The only power to amend an offer is that contained in Div.5 of Part 6.3, in particular ss.654 and 657, the terms of which have been extracted earlier in this judgment. (ii) Since ss.654 and 657 confer a specific power of amendment on the ASC, subject to detailed procedural requirements which have not been followed here, the general powers in ss.739 and 743 should be read down, on the principles discussed in David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 131 ALR 353 (H Ct), at 359-360. (iii) It follows that ss.739 and 743 do not empower the Court to make orders authorising an amendment to an offer, otherwise than in accordance with the procedure laid down by s.657 of the Law. Consequently, the only courses open to MEPA are to lodge a new Part A statement and a copy of the proposed offer with the ASC under s.644, or to dispatch the old offer and Part A statement (unless restrained from doing so) and seek to have the offer varied in the manner permitted by Div.5 of Part 6.3. In my opinion, Ampolex's argument on this issue fails at the first step. As Mr Campbell pointed out, Chapter 6 consistently distinguishes between a "proposed offer" (which refers to a proposal, not yet sent in the form of an offer capable of acceptance) and an "offer" (which has been sent in a form capable of acceptance). Sections 637(1)(b) and 644(1)(b), for example, refer to service of a Part A statement on a target company, together with a "copy of one of the proposed offers to which the Part A statement relates". Other sections refer to "offers", in a context which makes it clear that the reference is to an offer in the contractual sense: see, for example, Law, ss.638, 639, 640, 646. Sections 654 and 657 use the words "offer" or "offers", rather than "proposed offer" or "proposed offers". Accordingly, in my opinion, they are concerned with variations of contractual offers that have already been made to the offerees. This conclusion is confirmed by s.654(2), which requires a variation to an offer to be made in corresponding terms in other offers. The sub-section clearly assumes that the "offer" is one that has been made, but not yet accepted by the offeree. Accordingly, I do not think that ss.654 and 657 constitute an insuperable barrier to the relief sought by MEPA in its cross-claim. The Scope of s.739 - Amendment of a Part A Statement There is, however, another difficulty in MEPA's path in obtaining the relief sought in the cross-claim. The difficulty concerns the scope of the power conferred on the Court by s.739 of the Law, to make orders it thinks necessary or desirable, in order to protect the interests of a person affected by a takeover scheme. It must be said that s.739 has been construed widely. The jurisdiction conferred by the section is enlivened (subject to the formal requirements specified in s.739(1)(a) and (b)) when the Court is satisfied that a provision of Chapter 6 has been contravened: s.739(1)(c). Section 739(1) contemplates that relief is available where the Part A statement itself contravenes Chapter 6 (as I have found to be the case in the present proceedings). Section 739(1) does not apply merely where the contravention concerns something other than the termsof the Part A statement: Re Rossfield Group Operations Pty Ltd [1981] Qd R 372, at 378, per Connolly J., followed in Target Petroleum NL v Petroz NL (1987) 16 FCR 1 (FCA/FC), at 13-14. The specific orders that the Court may make include requiring the offeror to supply to the holders of the shares in the target company such information as is specified in the order: s.739(1)(a). In Target v Petroz the Full Court accepted that s.47 of the Companies (Acquisition of Shares) Act 1980, the predecessor of s.739, should be construed liberally (at 13): "The evident purpose of the Act is to ensure that the acquisition of shares in companies 'takes place in an efficient, competitive and informed market': s.59. Section 47 lends itself to a liberal interpretation. It is an enabling provision and is part of (indeed, central to) a statutory scheme designed to streamline and facilitate the making and consideration of takeover offers and the making of informed decisions with respect to them by shareholders, consonant with the public interest requirements of the Act which operate in a commercial environment often volatile and requiring dispatch and efficiency." But the Court also made it clear that there is an important limitation on the scope of the section (at 13): "Section 47 does not in terms empower the Court to amend a Pt A statement. Nor can any such power be inferred. The exercise of any power of amendment appears to be confined to the Commission (see s.58) pursuant to which a declaration has at least the practical effect of amending the Pt A statement." (The reference to s.58 is to the predecessor of s.730 of the Law.) While these observations were not part of the ratio in the case, they are carefully considered comments of the Full Court. In my view they should be followed by a trial judge. The distinction between "amending" a Part A statement and "clarifying" or "amplifying" it may not be easy to apply. In a recent case, for example, orders were made under s.739 requiring the offeror to correct "omissions going to matters of substance and importance", although the judgment did not refer to the limitation expressed in Target v Petroz: Pancontinental Mining Ltd v Goldfields Ltd (1995) 13 ACLC 577 (FCA/Tamberlin J.), at 579. By contrast, in ICAL v County Natwest, at 161-162, Bryson J. warned that, except in simple cases, there may be a risk that a correcting statement will confuse shareholders or promote inattention on their part. In my view, it is a matter of judgment, to be exercised in the circumstances of each case, whether a revised Part A statement propounded by an offeror goes beyond clarification or amplification of the original document and thus ought not to be the subject of relief under s.739 of the Law. The judgment is to be exercised having regard to the Eggleston principles adopted in s.731 and, of course, to the fundamental object underlying s.739, namely, the protection of the interests of persons affected by the takeover scheme. An unduly rigid approach should not be adopted. But if the offeror seeks to make significant changes to the substance of the takeover offer to which the Part A statement relates or to the information provided in the Part A statement, and those changes cannot be characterised as a clarification or an amplification of what is already in the original statement, it is unlikely that relief will be available under s.739.

In the present case, in my opinion, the revised Part A statement propounded at the hearing by MEPA, goes well beyond mere clarification or amplification of the original. Changes are proposed that significantly alter both the terms of the offer to which the Part A statement relates and the information to be provided to shareholders in the Part A statement itself. There are, I think, a number of such changes. First, both Part A statements refer to the fact that the offer is subject to a condition subsequent, that there be no "material adverse change" in the business, financial or trading position or profitability of Ampolex. The definition of "material adverse change" has been altered in the proposed offer to be sent to Ampolex shareholders with the revised Part A statement. The amendments in cl.7(1)(b)(1) and cl.7(1)(b)(2) of the offer are not merely trivial or technical. They substantially reformulate the circumstances in which MEPA is entitled to withdraw its offer or to rescind any agreement entered into with shareholders, regardless of whether these circumstances constitute a "material adverse change". In the original Part A statement, it was at least arguable (despite the contentions put in the letter from Ampolex's solicitors of 11 March 1996) that the specified circumstances would justify MEPA in withdrawing or rescinding only if they constituted a "material adverse change". More importantly, the minimum transaction justifying withdrawal or rescission has now been defined by reference to a figure of $100 million, rather than $50 million. This last change of itself is not necessarily unfavourable to shareholders and noteholders, but it materially changes the terms of the proposed offer to be sent to shareholders with the Part A statement. Secondly, in the revised Part A statement, MEPA reserves to itself the right to revise the on-market offer made to convertible noteholders, of $7 per note, either upwards or downwards. It also specifically allows MEPA to withdraw the unconditional on-market offer. The original Part A statement provided only for an upwards variation of the consideration offered to noteholders by the on-market offer and implied that the offer would not be withdrawn during the period in which the takeover offer remained on foot. This changes the position of noteholders substantially, since the "floor" offer of $7 can be withdrawn at any time. Section 739(1) specifically requires that the interests of noteholders be taken into account in exercising the powers conferred by the section. Thirdly, the revised Part A statement specifically states that, in what is said to be the unlikely event of the Court holding that the correct conversion ratio for the convertible notes is 6.6 ordinary shares per note, MEPA would not regard this as a "material adverse change" for the purposes of cl.7(1)(b)(1) of the offer and thus would not withdraw its offers to shareholders or rescind contracts resulting from acceptance of the offers. On the face of it, this statement might seem simply to be a clarification or amplification of the intended scope of the phrase "material adverse change". However, as Mr Entsminger acknowledged in cross-examination, in the absence of a similar declaration in the original Part A statement, MEPA would have seen itself as entitled to withdraw its offer if the Supreme Court decided the litigation adversely to Ampolex. It may well be unlikely that the Supreme Court will resolve the litigation during the period the takeover offer remains open, although of course litigation can often be resolved by agreement between the parties, rather than by a judicial determination after a hearing. (It is not clear from the wording of the revised Part A statement whether the disclaimer is intended to cover a negotiated settlement of the litigation which produces orders upholding GPG's position.) Be that as it may, MEPA's position in relation to an adverse determination in the Supreme Court litigation has substantially altered. It is difficult to assess whether this alteration is likely to be beneficial to the persons affected by the takeover offer. It may be that the alteration is likely to be beneficial to shareholders, but not necessarily beneficial to noteholders (since MEPA's reduced ability to withdraw its offer to shareholders might affect the price it is prepared to pay noteholders). In any event, the change seems to me to be substantially more than a mere clarification or amplification of the original Part A statement. Fourthly, the revised Part A statement provides a fuller account than did the original Part A statement of MEPA's intentions with respect to the business and assets of Ampolex. It has also removed the paragraph which, for reasons I have given, I regard as being likely to mislead shareholders. Without finally resolving whether section 18 of the revised Part A statement meets the requirements of the Law, the changes proposed to section 18 go beyond simply providing additional information that was omitted from the original Part A statement. Rather, the revised part A statement removes material that is likely to mislead shareholders and substitutes a more complete statement of MEPA's intention with respect to the business and assets of Ampolex. Again, I do not regard this as simply clarifying or amplifying the original Part A statement. Finally, I should note that, in view of the findings I have made, any order made under s.739 would need to take account of the omission from the original Part A statement of any reference to MEPA's assessment of Ampolex's prospects of success in the convertible note litigation. The conclusion I have reached on this aspect of the case is that, in the light of the principles stated in Target v Petroz, MEPA cannot rely on s.739 of the Law for the relief it seeks in the cross-claim. Discretion If I am wrong in the view I have taken of the scope of s.739, it would be necessary for me to consider whether to exercise the powers conferred by ss.739 and 743 of the Law in favour of MEPA. In this respect, where there is a serious defect in a Part A statement, an offeror who wishes to secure an exercise of discretion in his or her favour has a positive onus to discharge: Gantry v Parker & Parsley, at 570, per Burchett J. Unlike Gantry, the offeror in the present case called some evidence, although it related largely to the terms of the revised offer and Part A statement, rather than providing any explanation for what have been found to be contraventions. In the circumstances of the case, I have formed the view that I should neither excuse MEPA's contravention of Chapter 6, under s.743, nor make an order under s.739 for the distribution of the revised offer and Part A statement. I leave to one side my conclusion that the original Part A statement contravened not only Chapter 6, but s.995 of the Law, which is located in Chapter 7. The contraventions I have identified were in my opinion important, in particular the inclusion of material in section 18 that was likely to mislead shareholders of Ampolex. To use the language of Sheppard J. in Gantry v Parker & Parsley, at 564, the contraventions were "real and of substance". MEPA has adduced no evidence to suggest that the contraventions were brought about by "inadvertence or mistake" or any of the other matters referred to in s.743(3) of the Law. It was not suggested that I should make a finding that MEPA had deliberately set out to mislead Ampolex shareholders, and I do not make any such finding. But the onus is on MEPA to explain the circumstances in which the contravention occurred if the Court is to take those circumstances into account in the exercise of the discretion confirmed by s.743. MEPA did not do so. Even if the changes to the Part A statement cannot be characterised as amendments, they involve substantial departures from the original Part A statement. It is true that, as Mr Campbell pointed out, the excisions and additions could be incorporated into a single consolidated document for distribution to shareholders. But the consolidated document would not just be providing additional information omitted from the original. It would be putting forward revised proposals and correcting some misleading material. The case is therefore different from Pancontinental v Goldfields, where Tamberlin J. regarded the omission from the Part A statement as not constituting misleading or deceptive conduct (at 589). Moreover, the revised Part A statement would need to be revised even further to take account of the contravention relating to the convertible notes. It is, of course, necessary to consider the interests of those affected by the takeover. Those interests include those of the shareholders, the target company and the convertible note holders. It will often be the case that their interests will be served by allowing an offer and a Part A statement to go forward, with additional information to overcome omissions or irregularities in the original documentation. In particular, this may be so where there are competing bids and injunctive relief will have the effect of closing the market down: Gantry v Parker & Parsley, at 564. But it is not necessarily always the appropriate course to allow additional information to go forward. In this case, a revised Part A statement was prepared a few days before the hearing of Ampolex's claim in relation to the original Part A statement. For the reasons I have given, the revised Part

A statement and offer do not merely provide additional information, but alter the original proposal in significant aspects. In the circumstances of the present case, I think that the interests of the shareholders and noteholders, in particular, are best served by the preparation and registration of a fresh Part A statement which complies with the Law. Such a statement will have to be prepared in the light of the issues identified in this judgment and any relevant matters that might have arisen since the hearing. This process should be undertaken in accordance with the procedures provided by the Law. VIICONCLUSION Ampolex has established that the original Part A statement contravened the Law. In my opinion, it has made out a case for permanent orders restraining MEPA from sending out the original Part A statement or any offer pursuant to that statement toshareholders of Ampolex. MEPA's cross claim should be dismissed. I direct Ampolex to bring in short minutes of order to give effect to this judgment. Those short minutes may incorporate any declaratory relief to which Ampolex claims to be entitled. I shall provide the parties with the opportunity, if necessary, to debate the final form of the orders. Subject to any submissions the parties wish to make on costs MEPA should pay Ampolex's costs. The existing injunction will be continued until further order. I certify that this and the preceding 82 pages are a true copy of the Reasons for Judgment of the Honourable Justice Sackville. Associate: Dated: 4 April, 1996 Heard: 25-27 March, 1996 Place: Sydney Decision: 4 April, 1996 Appearances: Mr D.M.J. Bennett QC & Mr S. Rares SC, instructed by Allen Allen & Hemsley, Solicitors, appeared for the applicant. Mr J.C. Campbell QC and Mr A.J.L. Bannon, instructed by Dunhill Madden Butler, as agent for Arthur Robinson & Hedderwicks, Solicitors, appeared for the respondent.