|
|
Article: Escalation Agreements - An Escalator To Nowhere?
- Article from:
- Mondaq Business Briefing
- Article date:
- July 29, 2009
CopyrightCOPYRIGHT 2009 Mondaq Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
The prohibition of escalator clauses under section 622 of the Corporations Act is intended to ensure the fair and equal treatment of all shareholders. However, in many cases the prohibition may be unwarranted where no real benefit is received. This FocusPaper provides an examination of the issue, particularly in light of the decisions of Savage Resources, Cultus Petroleum and GoldLink IncomePlus.
In the world of takeovers prospective bidders often enter into pre-bid agreements with substantial shareholders of target companies in order to build up a strategic stake before launching a takeover bid. These agreements will often be structured so that the selling ...