The takeover of Capilano Honey by Albert Tse's Wattle Hill and Roc Partners Investment Fund has left a bad taste in the mouth of the corporate regulator.

The Australian Securities and Investment Commission is examining ways of closing a loophole that allowed the bidders to offer Capilano's mum and dad investors equity in a vehicle created for the takeover, despite the fact this vehicle did not offer retail investors the same level of disclosure and governance protections as does a public company.