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Wednesday 17 December 2014

14-339MR Avestra Asset Management fined for breaching takeover laws

Avestra Asset Management Limited has been convicted and fined for breaching takeover laws.

Appearing in the Melbourne Magistrates Court on 16 December 2014, the company pleaded guilty to breaching takeover provisions and failing to alert the market it had acquired a substantial stake in AG Financial Limited, over five months in 2013.

Avestra was fined $40,000.

ASIC Commissioner Cathie Amour said, ‘Investors are entitled to know the identity of the major shareholders of publicly traded companies.

‘ASIC expects businesses to comply with important takeover laws that promote market integrity and provide significant safeguards when the control of a listed company changes.’

The Commonwealth Director of Public Prosecutions prosecuted the matter.

Background Avestra was charged with three counts of breaching section 606 of the Corporations Act (unlawfully acquiring a relevant interests in voting shares) and three counts of breaching section 671B of the Corporations Act (failing to lodge substantial shareholder notices).

Section 606 sets out that a person must not acquire a relevant interest in issued voting shares in a company if to do so would take that person’s voting power from 20% or below to more than 20%, or from a starting point that is above 20% and below 90%.

The law also sets out a shareholder in a publicly traded company must notify the market if its holding reaches 5 per cent, and it must give details of any arrangements with third parties that affect control of the shares. The shareholder is also required to update the market every time there is a 1 per cent change in the holding.

In March 2013 Avestra’s interest in AG Financial increased from 0 to 22.17% through its acquisition of shares from AG Financial’s former chief executive, in breach of section 606. Over the following five months, Avestra broke the law by increasing its shareholding in AHA to 56.28 per cent. Following discussions with ASIC, Avestra divested most of its interest in AG Financial to bring it under the 20% threshold.

During that period, some substantial shareholding notices were lodged, however they were lodged in the name of managed investment schemes, not Avestra, the responsible entity for the managed investment schemes, and the entity that held the relevant interest in the acquired shares. The notices were also inaccurate and lodged late.

Avestra was fined $25,000 for breaching section 606 and $15,000 for breaching section 671B.

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