The case of Mobile Asset Holdings Ltd [2026] ATP 7 (Mobile Asset Case) concerned a proposed special resolution to insert drag-along and tag-along rights into the company constitution of Mobile Asset Holdings Ltd ACN 614 791 043 (Mobile Asset).^[1]  Ultimately, the Australian Takeovers Panel (Panel) decided that Mobile Asset could not hold a general meeting to put this special resolution to shareholders.^[2]  This article will consider the meaning of a drag-along provision and discuss the reasoning of the Panel in reaching this decision.

What are drag along provisions?

Drag-along provisions are clauses commonly contained in a shareholders’ agreement or company constitution.  They allow a majority shareholder, or a specified proportion of shareholders, to compel minority shareholders to sell their shares to a third-party purchaser as part of a broader sale of the company.  These provisions can facilitate the sale of the entire company where a purchaser is only willing to proceed if it can acquire one hundred percent (100%) ownership.

Tag-along provisions are often discussed alongside drag-along provisions and were also relevant in the Mobile Asset Case.  They are intended to protect minority shareholders by allowing them to participate in a sale negotiated by the majority shareholders, generally on the same terms and at the same price.  This prevents minority shareholders from being left behind following a change in control.

Chapter 6 of the Corporations Act 2001 (Cth) (Corporations Act) details protections for minority shareholders in the event of takeovers, restricts share acquisitions, requires disclosure, and mandates that equal participation opportunities are afforded to minority shareholders.  Some of the relevant provisions include:

• Section 602 – takeover principles: The acquisition of control should occur in an efficient, competitive and informed market.  Shareholders should have enough information to assess a proposal and, as far as practicable, a reasonable and equal opportunity to participate in any benefits arising from it.
• Section 606 – the 20% prohibition: Subject to specified exceptions, a person must not acquire a relevant interest in voting shares if the acquisition increases their voting power from twenty percent (20%) or below to more than twenty percent (20%), or from a point above twenty percent (20%) but below ninety percent (90%).
• Section 611 – permitted acquisitions: This section contains exceptions to the prohibition in section 606.  These include an acquisition approved by shareholders under item 7 of the provision, subject to prescribed disclosure requirements and voting exclusions.

The Panel is the primary forum for resolving disputes concerning takeovers and corporate control.^[3] 

Background to Mobile Asset Case

In the Mobile Asset Case, a contentious situation surrounding a constitutional amendment was brought before the Panel on application by Andrew John Barlow as director of Venturian Pty Ltd as the trustee for the Maverick Innovation Trust (Applicant).  The Board of Mobile Asset, an unlisted public company operating a digital platform, consisting of directors which represented more than fifty percent (50%) of shareholding in the company, put a resolution to shareholders about an amendment which would allow them to compel shareholders to sell their shares.  Significantly, the provisions did not require a minimum sale price, an independent valuation, a fairness opinion or substantive disclosure to minority shareholders.  The Panel found that the provisions created a mechanism through which one hundred percent (100%) control of Mobile Asset could be acquired in a manner that circumvented the protections of Chapter 6 of the Corporations Act, functionally creating a drag-along provision.

The Applicant sought a final order to prohibit the resolution being put to shareholders.^[4]  The Applicant’s submissions consisted of the following statements:^[5]

• “the board collectively holds between 51% and 72% of voting power in Mobile Asset (based on shareholdings and historical voting patterns);
• the Explanatory Statement was materially deficient, misleading and inadequate to enable shareholders to make an informed decision on the Proposed Resolution;
• the Proposed Resolution, if passed, would have enabled the Board to unilaterally trigger a forced sale of all minority shares at any price, without independent valuation, fairness protections or minority shareholder consent;
• the irrevocable power of attorney was coercive;
• minority shareholders would not have had a reasonable and equal opportunity to participate in any benefits accruing through the Relevant Provisions; and
• no independent expert report had been obtained despite the Board’s conflict of interest in relation to the proposed provisions.”

[Bold is our emphasis]

Findings

The Panel found that the drag-along rights created a mechanism for acquiring one hundred percent (100%) of Mobile Assets in a way that bypassed protections under chapter 6 of the Corporations Act.  Several features of the proposal were concerning to the Panel, including that:

• the provisions contained no requirements for a minimum sale price, an independent valuation, or a fairness opinion;
• the amendment included an irrevocable power of attorney allowing any two (2) directors to execute share transfers on behalf of minority shareholders who failed to comply with a drag-along notice; and
• the Panel noted the Board would be the primary beneficiary of these rights, yet the Explanatory Statement failed to disclose this conflict or the true control implications for the company.

Further, the decision highlighted two (2) major legal hurdles for companies seeking to implement such provisions:

• Breach of Takeover Thresholds: The Panel concluded that the drag-along rights conferred a “relevant interest“ in one hundred percent (100%) of the company’s shares to the potential “dragging shareholders“.  This would likely result in a contravention of section 606, which prohibits the acquisition of more than twenty percent (20%) voting power unless a specific exception applies.  The Panel rejected the company’s argument that the mechanism was merely “dormant” or “facilitative“.
• The Consent Requirement: Under section 140(2)(c) of the Corporations Act, a member is not bound by a constitutional modification made after they joined the company if it imposes or increases restrictions on the right to transfer their shares, unless they agree in writing.  The Panel agreed that drag-along rights—which replace a member’s decision to sell with someone else’s decision—constitute such a restriction.

Orders

The Panel determined that the market for control of Mobile Asset was not operating in an efficient, competitive, and informed manner.  Consequently, it made final orders prohibiting Mobile Asset from holding a general meeting to consider the resolution and ordered that any votes already cast be disregarded.

The Panel awarded costs of $35,220.15 against Mobile Asset due to their “unwillingness to engage meaningfully with the Applicant’s concerns”,^[6] despite clear deficiencies in the proposed resolution and disclosure.

This decision reinforces that the Panel will intervene where corporate governance “innovations” threaten to strip minority shareholders of the statutory protections guaranteed during a change of control.

Links and further references

Legislation

Corporations Act 2001 (Cth)

Cases

Mobile Asset Holdings Ltd [2026] ATP 7

Further information

If you need advice on shareholder rights and corporate responsibilities, contact us for a confidential and obligation‑free discussion.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances

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[1] Mobile Asset Holdings Ltd [2026] ATP 7 at [1].

[2] Mobile Asset Holdings Ltd [2026] ATP 7 at [1].

[3] Australian Government, Takeovers Panel.

[4] Mobile Asset Holdings Ltd [2026] ATP 7 at [14].

[5] Mobile Asset Holdings Ltd [2026] ATP 7 at [11].

[6] Mobile Asset Holdings Ltd [2026] ATP 7 at [90].

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