NSW Government Bulletin

You have been asked to provide consent to a change of control – what next?

Has a counterparty asked you to consent to a change in the control of their entity?

“Change of control” clauses are common in government contracts, and are frequently seen in leases and service or supply agreements. The purpose of these clauses is to:

provide a party with certainty as to who they are dealing with (which is particularly important if you have specific requirements on who you can contract with)
prevent a counterparty from circumventing any contractual restrictions on assignment.

In this article, we provide an overview of our key considerations for reviewing and responding to a change of control request.

What is a change of control clause?

The general concept of a “change of control” clause is that an entity must obtain consent from and/or notify the other party if there is a change in the controlling interest of the entity.

What is considered to be a “change” in control varies between contracts. It will commonly include:

a change of 50 per cent or more in the direct or indirect ownership of the entity (e.g. the sale of shares in the entity or in the entity’s holding company);
a change which results in a person or other legal entity holding more than 50 per cent of the securities in the entity; or
a change in the persons who determine the composition of the board of directors.

What steps should you take if you receive a request for consent?

If you receive correspondence in relation to a change of control, you should consider taking the steps below.

1. Review the relevant contract

Review the contract to confirm what the actual consent requirement is and whether you have a timeframe for providing your consent. In particular, you should consider:

whether you actually need to provide your consent, or if the counterparty is only required to notify you of the change
if there are any restrictions on your consent (e.g. can consent be withheld in your sole discretion? Or can it not be unreasonably withheld?)
each party’s termination right under the agreement (e.g. can you terminate if you are unhappy with the counterparty’s performance after the change? Can the counterparty just terminate the agreement if you don’t provide your consent?).

2. Request further information

Consider if you need any additional information before you make an informed decision on whether the incoming owner is suitable for the contract (and if you have this right under the contract). If possible, you should consider requesting:

information on the new owner, including their identity, ownership and experience in the relevant industry
financial information of the incoming owner to confirm their solvency and suitability (e.g. a counterparty could be assigning the agreement to a shell company to try and reduce their liability)
information on whether the change will impact any bank guarantees or other security in place in connection with the contract.

3. Additional considerations

Before providing your consent, you should also consider:

the reasons behind the change in control (e.g. is it a sale, a third party investment or an internal restructure?)
whether the change may detrimentally impact the services being provided to you
if the consent request includes additional terms (such as a waiver of any claims against the old owners).

In summary, the key consideration will be reviewing the relevant contract to confirm your rights and obligations. You should also ensure that you have sufficient comfort on the suitability and solvency of the incoming owner and, if necessary, seek legal advice.

We can help you review any requests and assist you with the above steps. Contact us below or get in touch with us here for more information.

Authors: William Kontaxis & Samuel Lane

In the media

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The NSW government will take the rail union to the Federal Court, seeking damages and any loss of revenue over their planned industrial action to turn off Opal card readers at train stations. (18 Oct 2022). More…

Publications

Have your say on the future of NSW
The NSW Government is providing a community consultation that allows NSW residents to help shape the future of NSW. This was launched by the Department of Customer Service and its government partners (24 October 2022). Have your say here.

Climate Change Policy and Action Plan
The NSW Environment Protection Authority is seeking public feedback on the EPA’s draft Climate Change Policy and Climate Change Action Plan 2022-2025 (21 October 2022). The Department is taking feedback and submissions until Thursday 3 November 2022, 5pm. Read here.

Single-use plastic guidance for industry (food service ware items)
This guidance intends to assist suppliers to assess whether a food service ware item listed under the NSW Plastic Reduction and Circular Economy Act 2021 (NSW) is likely to be a ‘single-use’ item and banned (11 October 2022). Read here.

Marine Debris Threat and Risk Assessment Summary Report
The report summarises the key findings in a study of the risks posed by marine debris to the marine estate in NSW (24 October 2022). Read here.

Sydney Harbour National Park plan of management draft amendment
The draft amendment proposes changes to the Sydney Harbour National Park Plan of Management which would enable the development of a proposed environmental education centre (21 October 2022). Read here.

Govetts Leap Lookout: Review of environmental factors
This document examines the likely environmental impacts associated with upgrading the visitor precinct and measures needed to reduce these impacts (13 October 2022). Read here.

First Nations Business Sector Technical Research Paper
The inaugural First Nations Business Sector Technical Research Paper provides the first NSW-specific analysis of the size and nature of the First Nations business sector and sets a baseline against which sector’s growth is able to be measured over time (25 October 2022). Read here.

Practice and Courts

AAT Bulletin Issue No. 21/2022
The AAT Bulletin is a fortnightly publication containing information about recently published decisions and appeals against decisions in the AAT’s General, Freedom of Information, National Disability Insurance Scheme, Security, Small Business Taxation, Taxation & Commercial and Veterans’ Appeals Divisions (17 October 2022). Read more here.

Decisions Reserved – Supreme Court of NSW Court of Appeal
The Court of Appeal maintains a list of matters before the Court for which judgment is reserved (21 October 2022). Read more here.

Cases

Haigh v Department of Planning NSW [2022] NSWSC 1434
CIVIL PROCEDURE – Dismissal of proceedings – whether a reasonable cause of action is disclosed – whether proceedings constitute an abuse of process – reflective loss – statement of claim dismissed – leave granted to replead.
Civil Procedure Act 2005 (NSW); Environmental Planning and Assessment Act 1979; Fair Trading Act 1987; Limitation Act 1969; Trade Practices Act 1974 (Cth); Uniform Civil Procedure Rules 2005 (NSW).

FMP v Secretary, Department of Communities and Justice [2022] NSWCATAD 330
INTERLOCUTORY – stay – Children and Young Persons (Care and Protection) Act 1998 – out of home care – restoration – cancellation of authorised carers authorisation.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Community Services (Complaints, Reviews and Monitoring) Act 1993 (NSW).

North Sydney Council v EIG [2022] NSWCATAP 331
APPEALS – Privacy – whether leave to appeal is required – whether the personal information was collected – use of the relevant personal information – disclosure and s 11 of the Local Government Act – failure to resolve a factual dispute.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014; Privacy and Personal Information Protection 1998 (NSW); Local Government Act 1993 (NSW).

Young v Inner West Council [2022] NSWLEC 1574
DEVELOPMENT APPLICATION: alterations and additions to retail premises – conciliation conference – agreement between the parties – orders.
Environmental Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment Regulation 2000; Land and Environment Court Act 1979 (NSW); Inner West Local Environment Plan 2022; Marrickville Local Environmental Plan 2011; State Environmental Planning Policy (Resilience and Hazards) 2021; State Environmental Planning Policy (Transport & Infrastructure) 2021.

Armada Avalon Pty Ltd v Northern Beaches Council [2022] NSWLEC 1573
MODIFICATION APPLICATION – application to modify Court Development Consent – seniors housing – amended plans – conciliation conference – agreement between the parties – orders.
Environmental Planning and Assessment Act 1979; Land and Environment Court Act 1979; State Environmental Planning Policy (Housing for Seniors or People with a Disability) 2004; State Environmental Planning Policy (Housing) 2021; State Environmental Planning Policy (Building Sustainability Index: BASIX) 2004.

GPV Adamstown Pty Ltd AFT GPV Adamstown Trust v Newcastle City Council [2022] NSWLEC 1572
DEVELOPMENT APPLICATION: health services facility in R4 High Density Residential zone – Adamstown Renewal Corridor – whether provision of parking is sufficient – whether setbacks are acceptable.
Environmental Planning and Assessment Act 1979 (NSW); Land and Environment Court Act 1979 (NSW); Newcastle Local Environmental Plan 2012; State Environmental Planning Policy (Planning Systems) 2021; State Environmental Planning Policy (Transport and Infrastructure) 2021; State Environmental Planning Policy (Resilience and Hazards) 2021.

Thirroul Plaza Pty Ltd v Wollongong City Council [2022] NSWLEC 1569
DEVELOPMENT APPLICATION: demolition and construction of a proposed three storey mixed use development with basement car park – supermarket, shops, 77 residential apartments – whether the development has an adverse impact on built form and character of the village – acceptability of pedestrian circulation and public domain – whether the development will result in unacceptable impacts on the adjacent heritage items – whether the residential component of the development will have appropriate amenity – whether the development will have an appropriate level of acoustic amenity given proximity to rail and commercial uses – consideration of public submissions and concerns – appeal dismissed, application refused.
Civil Procedure Act 2005 (NSW); Environment Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment Regulation 2000; Land and Environment Court Act 1979 (NSW); State Environmental Planning Policy (Transport and Infrastructure) 2021; State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development; State Environmental Planning Policy Resilience and Hazards; Wollongong Local Environmental Plan 2009.

SSTG Property Pty Ltd v Inner West Council [2022] NSWLEC 1557
DEVELOPMENT APPLICATION – demolition of on-site structures – construction of multi dwelling housing – in-fill affordable housing – no contentions pressed by the Respondent – objecting lay submissions – significant excavation in proximity to boundaries – existing building prevents the undertaking of further subsurface investigations to define construction particulars – partial consent to allow demolition which in turn allows subsurface investigations – subsequent deferred commencement consent in regard to remainder of the development application.
Civil Procedure Act 2005 (NSW); Conveyancing Act 1919 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment Regulation 2000; Inner West Local Environmental Plan 2022; Leichhardt Local Environmental Plan 2013; State Environmental Planning Policy (Affordable Rental Housing) 2009; State Environmental Planning Policy (Housing) 2021; State Environmental Planning Policy (Resilience and Hazards) 2021.

Lahoud v Willoughby City Council [2022] NSWLEC 125
JOINDER – Notice of Motion to join Willoughby Local Planning Panel (the Panel) as Third Respondent to Class 4 judicial review proceedings – r 59.3 (4) of the Uniform Civil Procedure Rules 2005 (the UCPR) mandates joinder of body “responsible for the decision” being reviewed – decision made by the Panel – notice of determination granting development consent issued by Willoughby City Council (the Council) as a consequence of the decision of the Panel - question of whether the Panel or the Council is “responsible for the decision” for the purposes of r 59.3(4) - applicant in Class 4 proceedings seeks joinder of the Panel in order to seek leave to issue.
interrogatories – the Council opposes joinder - holder of the challenged development consent takes no part in joinder hearing - held the Panel not “responsible for the decision” in the sense required by r 59.3(4) of the UCPR - joinder, in the alternative, also sought pursuant to r 6.24(1) of the UCPR – consideration of whether joinder necessary for issues in dispute – consideration of whether joinder necessary to bind the Panel to the outcome of the proceedings – neither basis for joinder established – joinder of the Panel rejected.
COSTS – costs of the application for joinder follow the event – the Applicant ordered to pay the Council's costs of the joinder motion as agreed or assessed.
Environmental Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment and Electoral Legislation Amendment (Planning Panels and Enforcement) Bill 2017; Uniform Civil Procedure Rules 2015.

Boulus Constructions Pty Ltd v Warrumbungle Shire Council [2022] NSWSC 1368
BUILDING AND CONSTRUCTION – where no valid development consent or construction certificate in relation to building works – whether defence of illegality available in relation to claim for breach of statutory duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) – whether managing director and project site supervisor of builder capable of being persons for the purposes of s 37 of that Act.
PRACTICE AND PROCEDURE – whether cross-claimant should have leave to amend Cross-Claim List Statement – where cross-claimant seeks to introduce claim for breach of statutory duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) – whether leave should be refused because of availability of defence of illegality – whether amendment should be disallowed against proposed individual cross-defendants because they are not persons for the purposes of s 37 of that Act – whether amendment should be disallowed on the basis of prejudice to the proposed cross-defendants.
Civil Liability Act 2002 (NSW); Corporations Act 2001 (Cth); Design and Building Practitioners Act 2020 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Interpretation Act 1987 (NSW).

NSW Legislation

Proclamations commencing Acts
Mining and Petroleum Legislation Amendment Act 2022 No 21 – published LW 21 October 2022

Bills introduced

Government
Crimes Amendment (Protection of Criminal Defence Lawyers) Bill 2022 19 October 2022
District Court Amendment Bill 2022 19 October 2022
Fisheries Management Amendment (Enforcement Powers) Bill 2022 19 October 2022
Government Sector Employment Amendment Bill 2022 19 October 2022
Medicines, Poisons and Therapeutic Goods Bill 2022 19 October 2022
Motor Accident Injuries Amendment Bill 2022 19 October 2022
Personal Injury Commission Amendment Bill 2022 19 October 2022
Registered Clubs Amendment Bill 2022 19 October 2022
Building and Other Fair Trading Legislation Amendment Bill 2022 12 October 2022
Children and Young Persons (Care and Protection) Amendment (Family is Culture) Bill 2022 13 October 2022
Confiscation of Proceeds of Crime Legislation Amendment Bill 2022 12 October 2022
Constitution Amendment (Appointment of Lieutenant-Governor and Administrator) Bill 2022 12 October 2022
Crimes Legislation Amendment (Coercive Control) Bill 2022 12 October 2022
Electoral Legislation Amendment Bill (No 2) 2022 12 October 2022
Electronic Conveyancing Enforcement Bill 2022 12 October 2022
Property Tax (First Home Buyer Choice) Bill 2022 12 October 2022
Statute Law (Miscellaneous Provisions) Bill (No 2) 2022 12 October 2022
Treasury and Energy Legislation Amendment Bill 2022 12 October 2022

Non-Government
ICAC and Other Independent Commissions Legislation Amendment (Independent Funding) Bill 2022 20 October 2022
Local Land Services Amendment (Private Native Forestry) Bill 2022 19 October 2022
Water Management Amendment (Water Access Licence Register) Bill 2022 20 October 2022
Weapons Prohibition Amendment (Silencers) Bill 2022 19 October 2022
Port of Newcastle (Extinguishment of Liability) Bill 2022 13 October 2022
Residential Tenancies Amendment (Prohibiting No Grounds Evictions) Bill 2022 13 October 2022

Bills revised following amendment in Committee
Childcare and Economic Opportunity Fund Bill 2022 13 October 2022
Children and Young Persons (Care and Protection) Amendment (Family is Culture) Bill 2022 20 October 2022
Crimes Legislation Amendment (Coercive Control) Bill 2022 19 October 2022
Electoral Legislation Amendment Bill 2022 18 October 2022
Childcare and Economic Opportunity Fund Bill 2022 13 October 2022

Bills passed by both Houses of Parliament
Childcare and Economic Opportunity Fund Bill 2022 18 October 2022
Confiscation of Proceeds of Crime Legislation Amendment Bill 2022 20 October 2022
Constitution Amendment (Appointment of Lieutenant-Governor and Administrator) Bill 2022 20 October 2022
Electoral Legislation Amendment Bill (No 2) 2022 20 October 2022
Electoral Legislation Amendment Bill 2022
Statute Law (Miscellaneous Provisions) Bill (No 2) 2022 20 October 2022
Crimes (Administration of Sentences) Amendment (No Body, No Parole) Bill 2022 13 October 2022
Crimes Amendment (Money Laundering) Bill 2022 13 October 2022
Criminal Procedure Legislation Amendment (Prosecution of Indictable Offences) Bill 2022 13 October 2022
Dedicated Encrypted Criminal Communication Device Prohibition Orders Bill 2022 13 October 2022
Law Enforcement (Powers and Responsibilities) Amendment (Digital Evidence Access Orders) Bill 2022 13 October 2022
Royal Botanic Gardens and Domain Trust Amendment (Facilitation of Sydney Metro West) Bill 2022 13 October 2022
Security Industry Amendment Bill 2022 13 October 2022

Bills assented to

Cth Legislation

Act compilation
Military Rehabilitation and Compensation Act 2004 24/10/2022 – Act No. 51 of 2004 as amended
Veterans Entitlements Act 1986 – 24/10/2022- Act No. 27 of 1986 as amended
National Emergency Declaration Act 2020 – 24/10/2022- Act No. 128 of 2020 as amended
Social Security Act 1991 – 24/10/2022- Act No. 46 of 1991 as amended
Income Tax Assessment Act 1997 22/10/2022- Act No. 38 of 1997 as amended
Corporations Act 2001 20/10/2022 – Act No. 50 of 2001 as amende
Income Tax Assessment Act 1936 20/10/2022 – Act No. 27 of 1926 as amended
Social Security (Administration) Act 1999 20/10/2022 – Act No. 191 of 1999 as amended
Social Security Act 1991 19/10/2022 – Act No. 46 of 1991 as amended
Veterans’ Entitlements Act 1986 17/10/2022 – Act No. 27 of 1986 as amended
Income Tax Assessment Act 1997 15/10/2022 – Act No. 38 of 1997 as amended
Social Security (Administration) Amendment (Continuation of Cashless Welfare) Act 2020 15/10/2022 – Act No. 136 of 2020 as amended
Fringe Benefits Tax Assessment Act 1986 15/10/2022 – Act No. 39 of 1986 as amended
National Health Act 1953 14/10/2022 – Act No. 95 of 1953 as amended
A New Tax System (Family Assistance) (Administration) Act 1999 14/10/2022 – Act No. 81 of 1999 as amended
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 13/10/2022 – Act No. 156 of 1988 as amended
Prohibition of Human Cloning for Reproduction Act 2002 12/10/2022 – Act No. 144 of 2002 as amended
Intelligence Services Act 2001 12/10/2022 – Act No. 152 of 2001 as amended
Freedom of Information Act 1982 12/10/2022 – Act No. 3 of 1982 as amended
Military Rehabilitation and Compensation Act 2004 12/10/2022 – Act No. 51 of 2004 as amended

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

William Kontaxis

Samuel Lane

NSW Government Bulletin

You have been asked to provide consent to a change of control – what next?

What is a change of control clause?

What steps should you take if you receive a request for consent?

In the media

Publications

Practice and Courts

Cases

NSW Legislation

Share this

Key Contacts

William Kontaxis

Christine Jones

NSW Government Bulletin

You have been asked to provide consent to a change of control – what next?

What is a change of control clause?

What steps should you take if you receive a request for consent?

In the media

Publications

Practice and Courts

Cases

NSW Legislation

Share this

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