377Announcements of proposed takeovers about proposed company

377 Announcements of proposed takeovers about proposed company

(1) This section applies to an offer to purchase shares in a co-operative made as part of a proposal for, or that is conditional on, the registration of the co-operative as a company (the proposed company) under the Corporations Act.

(2) A person must not make a public announcement to the effect the person proposes, or the person and another person or other persons together propose, to make takeover offers, or to cause a takeover announcement to be made, in relation to the proposed company if:

(a) the person knows the announcement is false or is recklessly indifferent as to whether it is true or false; or

(b) the person has no reasonable grounds for believing the person, or the person and the other person or persons, will be able to perform obligations arising under the scheme or announcement or under the Corporations Act in relation to the scheme or announcement if a substantial proportion of the offers or the offers made under the announcement are accepted.

Maximum penalty: $20,000 or imprisonment for 5 years, or both.

(3) If a person makes a public announcement to the effect the person proposes, or the person and another person or other persons together propose, to make a takeover bid in relation to the proposed company, the person must proceed to make a takeover bid in relation to shares in the company in accordance with the public announcement within 2 months after the day on which the company is incorporated.

(4) A person is not liable to be convicted of more than one offence under subsection (3) for any one public announcement.

(5) A person who contravenes this section (whether or not the person is convicted of an offence for the contravention) is liable to pay compensation to a person who suffered loss because of entering into a share transaction in reliance on the public announcement concerned.

(6) The amount of the compensation is the difference between the price of the shares at which the transaction was entered into and the price of the shares at which the transaction would have been likely to have been entered into if the person had not made the public announcement.

(7) A person does not contravene subsection (3) and is not liable to pay compensation for the contravention if it is proved the person could not reasonably have been expected to make the takeover bid concerned:

(a) because of circumstances that existed when the public announcement was made but of which the person had no knowledge and could not reasonably have been expected to have knowledge; or

(b) because of a change in circumstances after the announcement was made, other than a change in circumstances caused directly or indirectly by the person.