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Home Forums Australian Financial Services Licensing (AFSL) Forum Your parent company has been taken over. Do you need to tell ASIC?

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    Your parent company has been taken over by another company.  Do you need to tell ASIC?

     

    We get asked this question a lot.  The situation you have described is likely to be a change in control.  Please see our blog here, or contact our financial services team for further assistance.

     

    Change in Control

     

    What is a Change in Control?

     

    A change in control of a financial services licensee (where that licensee is a company), occurs when a transaction takes place which results in a person having (or ceasing to have) control of the licensee.

     

    Control can be direct or indirect.  Often, whether or not there has been a change in control of a particular entity, will be a question of fact and degree.

     

    The definition of “control” in the regulations includes:

     

    • Having the capacity to cast or control the casting of more than half of the votes at a general meeting of the licensee;
    • Directly or indirectly holding more than half of the issued share capital of the licensee;
    • Having the capacity to control the composition of the licensee’s board; and
    • Having the capacity to determine the outcome of decisions about the licensee’s financial and operating policies.

     

    If a new entity, takes control of a company in Australia or overseas, this may give rise to a change in control, of which ASIC must be notified.  This could be the case, even if the ultimate holding company of a particular entity changes hands – which may feel like “several rungs up the ladder” from where you sit in Australia.

     

    One of the things it is important to be aware of in these circumstances is that, often, there will be two changes of control.  That is, there will be a new “controller”, as well as the removal of a previous “controller”.  This means that there are two changes which need to be notified to ASIC.

     

    ASIC must be notified of both the date the new company became the ultimate holding company, and the date the old holding company ceased to be the ultimate holding company.

     

    ASIC must be notified within ten business days of the licensee becoming aware of the change(s).  Even if there are two changes to notify ASIC of, this can be done in the same form.

     

    Because of the short timeframes, it is important to remain aware of any changes in the shareholding of your company or its parent companies, and that this might give rise to a change in control.

     

    If you require any assistance with lodging change of control notices (or whether a change of control has occurred), please contact our office.

     

    Author: Matthew Twomey

     

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