Takeover reform was needed in Australia to stimulate takeover activity, the Parliamentary Secretary to the Treasurer, Senator Ian Campbell, told a Securities Institute of Australia lunch in Adelaide today.
Senator Campbell said the Government remained committed to introducing a Mandatory Bid Rule as part of its Corporate Law Economic Reform Program.
The Mandatory Bid Rule would allow a shareholder with less than 20 per cent of a company to purchase a controlling stake without having to make a full on-market bid. However, the bidder would subsequently be required to make the same offer to all other shareholders.
"Putting more market pressure on under performing boards will play a significant role in improving the quality of performance and corporate governance", Senator Campbell said.
"The Mandatory Bid Rule is one instrument to increase that pressure.
"The current focus on corporate governance rules, standards and disclosure is necessary and constructive but should not be seen as a cure all.
"Having the rule would stimulate increased takeover activity and put boards and management under more market pressure to perform.
"Quality corporate governance is a crucial element in good performance. However corporate governance will not be improved by rules alone, stronger market forces are equally important".
Senator Campbell said that Labor and the Democrats rejected the Mandatory Bid Rule in the Senate three years ago however, the Democrats said they would review the situation after a reasonable period.
Adelaide
2 April 2003
Contact:
Wayne Grant, Senator Campbell's Office
08 9421 1755 or 0407 845 280
http://parlsec.treasurer.gov.au