Senator JOYCE—With the greater play of sovereign wealth funds in Australia, do you believe that there will be the proper transparency of the utilisation, audit, control of Australian assets with a greater involvement of sovereign wealth funds, especially with places such as China? Do you believe there is a differentiation between the transparencies that would be accorded a public company in how they take over an asset compared with a sovereign wealth fund? Do you feel that there are any threats from incursions from sovereign wealth funds? Are there any issues in regard to reciprocity in the policies of sovereign wealth funds’ involvement in Australia and our Australian—if we had them—sovereign wealth funds’ involvements overseas?

Talk
Mr Bulman—I think I will need to frame that question in the context of our role. Our role is within chapter 6 of the Corporations Act in relation to takeovers, and we are a peer review body in relation to takeovers. In other words, our role would only be if a matter involving a sovereign wealth fund came to us. I do not wish to speculate too much, but effectively it would depend on whether a bid was a scrip bid or a cash bid. Normally I would have thought sovereign wealth funds would not use scrip bids. They would normally use cash bids. Therefore, the issue of disclosure would be issues of disclosure about whether they have sufficient funds to fund the bid. Sovereign wealth funds being what they are, being relatively cash rich, that probably would not be so much of an issue. If they are offering scrip there may be issues around the disclosure of the value of whatever scrip they are offering. Those rules apply whether it is a sovereign wealth fund, an Australian company or another overseas entity.

I am no expert in the areas of accounting, but my understanding would be that if a sovereign wealth fund was acquiring a reasonably large company in Australia they would still be large proprietary companies and subject to reporting as large proprietary companies. From our perspective, chapter 6 of the Corporations Act applies to everybody equally, whether they are overseas, whether they are Australian, whether they are sovereign wealth funds or whether they are not.

Talk
Senator JOYCE—So your involvement is limited to chapter 6 of the Corporations Act and that is it?

Talk
Mr Bulman—Just chapter 6 of the Corporations Act; that is correct.

Talk
Senator BUSHBY—In light of the current proposal or media speculation and comments by various people about the potential for Westpac and St George Bank to merge, what role would you play if that were to proceed?

Talk
Mr Bulman—My understanding from reading the press is that that merger is by way of a scheme of arrangement. We would have very little involvement at all in that. Schemes of arrangement are approved by the court. Therefore, the court and ASIC, the corporate regulator, would be the main regulators in that case. If there were some sort of rival bid or where that then led to a dispute, then perhaps we would become involved if somebody made an application.

Talk
Senator BUSHBY—Some of the media speculation that I have seen has been—and only from commentators—that it would be preferable if NAB and St George merged. You never know: something might come out of the woodwork that involves you. Anyway that is all I have.

Talk
Senator JOYCE—As to unincorporated bodies that merge, are there any requirements whatsoever? If I wanted to get away from having to deal with you under chapter 6 of the Corporations Act and I made my vehicle a trust of an unincorporated body and then had a takeover between unincorporated bodies—so that I was one step away from it—how would you pick me up?

Talk
Mr Bulman—For a start, because we are a dispute resolution body we would not be picking you up as such. But in terms of the way chapter 6 of the act applies, you have to be a company with more than 50 members or a listed company or a listed managed investment scheme for that act to apply.

Talk
Senator JOYCE—What if I put an unincorporated body above me in control of the vessel?

Talk
Mr Bulman—I suspect chapter 6 would not apply in that situation.

Talk
Senator JOYCE—That is a good trick. For all you people watching late at night, that is how you get out of it!

Talk
Mr Shaw—I am not sure that you can actually get out of it, because you would have to move the ownership of the company, which is all the shareholders, somehow into this trust and that would not be so straightforward.

Talk
Mr Bulman—That would probably involve either the scheme of arrangement provisions, which would involve ASIC and court supervision, or it would involve a takeover of some description that may involve us, depending on whether there was a dispute.

Talk
Senator JOYCE—Just make sure the management vessel was not the unincorporated body.

Talk
Mr Shaw—I am not sure I particularly understand.

Talk
Senator JOYCE—That is all right. Thank you, Mr Shaw. We do not have time for me to explain it.