By Business editor Peter Ryan
The current corporate manoeuvres by Gina Rinehart and James Packer have attracted the attention of the corporate watchdog.
The Australian Securities & Investments Commission is moving to tighten or close legal loopholes used by the multi billionaires to increase their stakes in Fairfax Media and Echo Entertainment.
Listen to my interview with the ASIC boss broadcast this morning on AM.
The regulator is seeking to overhaul so-called "creep" provisions where corporate raiders can ramp up their shareholdings by three percentage points every six months once they surpass 19.9 percent without paying a premium for a formal takeover bid.
ASIC's chairman Greg Medcraft told AM that the legal but destablising use of "creep" tactics by corporate raiders needed to be overhauled.
"I think that the current creep provisions are an anachronism. It is basically allowing takeover by stealth which I think is inconsistent with the takeover law in terms of making sure that when there is a change of control and there is a premium to be paid that all parties can share in that," Mr Medcraft said.
Responding to a question on whether Mrs Rinehart or Mr Packer needed to make formal takover offers rather than using "creep" loopholes, Mr Medcraft said:
"I think there is probably a need to clarify the issue of takeover law. Perhaps we need to think about the UK provision which is put up or shut up. Basically, if you are going to make a takeover offer, it has actually got to be very clear and very committed."
Mr Medcraft did not name Mrs Rinehart or Mr Packer directly.
However, he made it clear that the regulator is concerned about recent boardroom battles where the respective chairmen at Fairfax Media and Echo Entertainment have been subjected to high profile personal attacks.
"Where there are means other than legal or other means used to take control of a board, then I believe that needs to be looked at in terms of the spirit of the takeover laws," Mr Medcraft said.
"We are all about making sure that markets are fair and efficient and particularly that they are fair, orderly and transparent. If any of those principles are compromised then clearly we (ASIC) have an interest."
ASIC has written to Treasury requesting that "creep" provisions need to be reviewed by the government, with the view of reducing gradual ownership to one percentage point per six months rather than the current three percentage points.
ASIC is also advocating a possible adoption of British takeover rules where the "put up or shut up" rule is enforced.
"The situation in the UK is that if you make an offer it has to be clear and it has to be committed. It can't be ambiguous or highly conditional so it has actually got to be a clear and committed takeover and if its not and if you don't deliver on it, then there are consequences."
ASIC has become increasingly concerned about takeover bids after the bizarre takeover bid for David Jones which caused wild sharemarket swings.