On 10 October 2022, the Takeovers Panel (Panel) announced that it had declined to conduct proceedings in respect of an application from Romell Pty Ltd (Romell) in relation to the affairs of Nimrod Resources Ltd (Nimrod). In June 2019, Nimrod conducted an entitlement offer (Offer) to raise up to $3.3 million. Nimrod, a junior gold explorer, intended to use the funds raised to advance exploration via drilling.
The application to the Panel concerned participation in the Offer by Goldtower Construction Pty Ltd ATF GTC Trust (Goldtower), a substantial shareholder of Nimrod. Following the Offer, Goldtower increased its relevant interest of 33% in Nimrod shares to 43.87%. Romell alleged that, because Nimrod did not appoint a foreign shareholder nominee under section 615 of the Corporations Act 2001 (Cth), it was not entitled to rely on the exception in item 10 of section 611 of the Corporations Act 2001 (Cth) (on the basis that Romell alleged certain foreign shareholders were not entitled to participate in the Offer) and accordingly, Goldtower had contravened the takeovers prohibition in section 606.
The Panel ultimately determined that the foreign shareholders in the United States held 0.04% of the Nimrod shares and their participation (or lack thereof) in the Offer would not have had a material impact on control of Nimrod. The Panel also considered that it was unclear whether shareholders in the United States were made the offer or that they had a reasonable opportunity to accept the offer made to them. For these reasons, the Panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances.
The Panel’s ruling in Nimrod Resources Limited 02 reflects its earlier decision in Emperor Mines Limited [2004] ATP [24] where the Panel determined that any increase in a party’s voting power as a result of excluded foreign shareholders (holding 1.533% of the voting shares) not being offered entitlements under a rights issue would be relatively small and would therefore not justify a declaration of unacceptable circumstances. The Nimrod Resources Limited 02 decision provides a timely reminder for entities raising capital of the need to consider appointing a foreign shareholder nominee if the conditions in item 10 of section 611 cannot be satisfied in respect of foreign security holders.
Read the Takeovers Panel announcement here.
For more information, please contact Brett Heading or Benny Sham.
