The paper "What Is a Reverse Takeover" is a great example of an assignment on business. A reverse takeover (also referred to as reverse merger, backdoor listings or reverse IPO) is a means of going public by the private companies. This way is typically less costly in terms of procedures involved. A conventional way i. e. the initial public offering (IPO), usually, is more complex and costly. The investment bank is hired by the private companies to do paper work, issue shares to the public, underwrite and assist the authorities in deal reviewing.
The bank also advices on the initial pricing that is appropriate and further help in the interest establishment especially in the stock. The customary IPO primarily combines the function for raising capital with the procedure for going public. A reverse takeover separates the two functions. This makes it a strategically attractive option for the private companies’ investors and managers. In a backdoor listing, majority of public company’ s (also known as Shell Company) shares are acquired by the private company’ s investors. The purchasing entity is then merged with the company. Shell companies are used as vehicles through which the deals transacted by financial institutions and investment banks completed.
The process of registration can further be made simpler and less costly by registering small shell companies with SEC before the deal begins. The deal is then consummated when shares are traded between the private company and the public shell. The acquirer finally is transformed to a public company. Companies in Australia, types and their fundamental characteristics, their incorporation and directors’ , shareholders’ and officers’ are all under the Corporation act 2001. The Act has set rules governing how: Deregistration and wounding up of the companies should be handled Registration requirements and financial reporting of the companies Meetings held by the company directors Some chapters that are key in the Act deal also with issuing and offering of shares, schemes managed investments regulations and issuing of licenses of financial products and services to the providers, prohibitions on insider trading and setting out of takeovers regime that change transaction and companies listed or other large privately trading companies. Corporation Act 2001, chapter 6 regulates the list of takeovers listed in the Australian Stock Exchange (ASX).
ASX rules together with the regulations control the takeover to a very minimal extent. The act relates to voting shares that are listed in the public entity, non-voting shares together with other securities. This might include securities that can be converted, over issued options, unissued securities and other securities. Securities and shares with holders above 50 and which are not listed publicly in incorporated companies of Australia are also regulated by the Act. There exists a set of principles that underpins turnover regulations. This is aimed at protecting security holders ensuring equality of the security holders, fairness and transparency on the control of public company transition.
All these principles are listed in section 602 of the 6th chapter of the act. The Act provides that: Reasonable time is required for the order to be considered. Efficiency, competition, knowledge about the market is required for control acquisition. Reasonable time required for proposal consideration. The identity of the bidders should be known to the directors and stakeholders targeted. Enough information should be availed for ease of access to the merits. Stakeholders targeted should be in a position to enjoy equal and reasonable opportunity that flows from the proposal.