Jurisdiction - Australia
Australia – Unacceptable Acceptance Statements: Bullabulling Gold.

7 July, 2014


What You Need To Know


  • Statements by a bidder/target that unspecified shareholders had said they would accept/reject the bid gave rise to unacceptable circumstances 
  • However, it may still be possible in limited circumstances to develop a form of aggregated acceptance/rejection statement that satisfies the Panel’s concerns and any requirement of the Corporations Act 

Rejection Statements

In a letter to shareholders and its target’s statement, takeover target Bullabulling Gold stated that “holders of 41.8% of Bullabulling Gold’s shares have indicated that they DO NOT intend to accept the Offer”. Following an application by bidder Norton Gold Fields, the Panel found that these statements gave rise to unacceptable circumstances because (among other things):


  • Bullabulling did not inform all the rejecting shareholders how the statements were to be used.
  • Bullabulling did not obtain consents from the rejecting shareholders in accordance with Panel policy or the Corporations Act. 
  • Bullabulling shareholders were not given sufficient information about (among other things) how the rejection statements were compiled and the qualifications to which some statements were subject. 
  • Bullabulling shareholders were not informed that Bullabulling considered that the rejection statements were no more than statements of the rejecting shareholders’ intentions at certain points in time and were not intended to be statements of the rejecting shareholders’ future actions.

The rejection statements were compiled using varied verbal and written statements from 101 shareholders. The written statements, made by 88 shareholders, were not solicited directly by Bullabulling, but rather obtained by a third party through the internet stock discussion site HotCopper. The Panel concluded that Bullabulling had not exercised sufficient care and diligence to ensure that the statements were accurate in all material respects. The Panel accepted submissions by ASIC that, to avoid being misleading, Bullabulling should have at least disclosed:


  • The manner in which the statements were complied.
  • Whether the rejecting shareholders had given consent to the statement.
  • Whether any qualifications to the statements were given.

The Panel considered that the “truth in takeovers” policy did not apply to the statements, given rejecting shareholders had not been informed of the policy’s implications and their qualifications had not been reflected in the rejecting statements. Accordingly, rejecting shareholders were free to accept and the statements were misleading.

Furthermore, the Panel considered that either consents were required for the statements under the Corporations Act, or the making of the statements was unacceptable.

Acceptance Statements

Norton had itself previously stated in its bidder’s statement that “Bullabulling shareholders representing 6.6% of Bullabulling’s issued shares have already confirmed they intend to accept the Offer.” Norton later disclosed that one of these shareholders had sold some of its shares on-market and that the level of support for the offer from these shareholders had decreased from 6.6% to 5.39%. The Panel considered that the acceptance statements were misleading because (among other things):


  • Norton did not disclose that it was associated with one of the shareholders and already had voting power in its shares. 
  • Norton also did not disclose that the shareholders had consented to the statements being made in the bidder’s statement (in accordance with the Corporations Act) and did not disclose details of those consents including qualifications. 
  • As evidenced by the sale of shares by one of the shareholders, it was not clear it understood that its statement would be relied upon.


The Panel was minded to make a declaration of unacceptable circumstances but declined to do so after accepting undertakings from each of Bullabulling and Norton providing further disclosure and, in Bullabulling’s case, retracting the rejection statements.


The acceptance/rejection statements in this case were clearly deficient, and unacceptable, for a number of reasons. The key question going forward is whether such aggregated shareholder intentions statements can ever be made without obtaining consents under the Corporations Act and identifying the relevant shareholders. The Panel’s decision suggests that may be difficult, but does not rule it out.

The Corporations Act consent requirements are critical because they go to the likelihood of shareholders agreeing to participate in aggregated intentions statements. The Act requires that the consent of a person must be obtained (and not withdrawn) where a bidder’s statement or target’s statement includes a statement by that person (or a statement said to be based on a statement by them). The bidder’s/target’s statement must also state that the person has given consent. Giving consent results in the person becoming liable to any person suffering loss or damage caused by the inclusion of the statement in the document. Panel policy permits “aggregated” statements without consents (subject to certain requirements) in the case of average broker valuations. However, the Panel accepted that this was not an apt analogy for the statements in this case, noting that average broker valuations are published independently of the bid whereas acceptance/rejection statements are made in response to it. The Panel carefully avoided making any absolute finding that the Corporations Act consent requirements applied in this case, indicating that the circumstances were unacceptable regardless of that.

It is clear from the Panel’s reasons that, to avoid being misleading, an aggregated intentions statement should disclose whether shareholders consented to the statement (but the Panel does not specifically refer to consent under the Corporations Act). Depending on what the statement says, it may also attract the truth in takeoverspolicy so that relevant shareholders will be held to the statement, subject to any express qualifications. If that is not the case, the Panel may expect that to be made clear. Despite these limitations, it may still be possible in limited circumstances to develop a form of aggregated acceptance/rejection statement that satisfies the Panel’s concerns and any requirement of the Act.

There will probably be calls for the Panel to address aggregated intentions statements in a guidance note. That may well be useful, but there could also be good arguments that the Panel should wait for further developments in market practice.


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For further information, please contact:


Nick Terry, Partner, Ashurst 
[email protected]

Jason Hewitt, Ashurst
[email protected]


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