An Independent Expert’s Report (IER) provides advice to shareholders on the fairness and/or reasonableness of a proposed transaction. The rules of the Australian Stock Exchange (ASX), regulatory guides issued by the Australian Securities and Investments Commission (ASIC) and the Corporations Act 2001 dictate certain circumstances whereby there is a requirement for companies to obtain an IER. There are also many other circumstances where prudent boards will obtain an IER to ensure they are acting in the best interests of their shareholders.
This article explains what an IER is and the circumstances under which an IER should be sought.
What is an Independent Expert’s Report?
An IER is an independent report prepared by a professional with significant valuation and transactional expertise. IER’s typically advise whether a proposed transaction is fair and reasonable to shareholders, or in the best interests of shareholders.
When may an Independent Expert’s Report be Required?
An IER may be required under a range of circumstances, such as:
1. Company acquisitions where the proposed purchaser holds more than 30 percent of the target company and has at least one common director.
2. Transactions that involve the sale or purchase of an asset worth more that 5 percent of a listed entities book value to or from a related party.
3. Circumstances where shares are issued or transferred and as a result the acquirer’s interest in the subject company increases from below 20 percent to above 20 percent or increases by any level between 20 percent and 90 percent;
4. The compulsory acquisition of securities due to the 90 percent ownership threshold being reached;
5. Transactions that provide a benefit to related parties;
6. To assist directors with communicating the details of a takeover bid or acquisition proposal and to ensure shareholders understand the risks of a proposed transaction.
Find Out More
Quinn M&A’s expert team have significant experience with preparing Independent Expert Reports. If you require assistance in this area, please phone us on 02 9223 9166 for a confidential discussion.