ASIC consults on proposals to maintain investor protections by restricting retail offers of ‘stub-equity’ in control transactionsJune 4, 2019

ASIC has today issued a consultation paper seeking feedback on proposals to address concerns with offers of ‘stub-equity’ to retail investors in control transactions. The proposals seek to restrict certain structures that would result in retail investors not being covered by the normal protections available under Australian law when participating in a broad offer of securities. This can occur when shares in a proprietary, rather than public, company are offered as consideration under a takeover bid or scheme of arrangement. It can also arise when scrip consideration is required to be held by a custodian. ASIC is concerned offers of consideration of this kind, often known as ‘stub-equity’, deny retail investors important rights.

click here for paper >>cp312-published-4-june-2019

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