2007/187

Takeovers Code (Sealegs Corporation Limited) Exemption Notice 2007

Pursuant to section 45 of the Takeovers Act 1993, the Takeovers Panel gives the following notice (to which is appended a statement of reasons of the Takeovers Panel).

Contents

1 Title
2 Application
3 Expiry
4 Interpretation
5 Exemption from rule 7(d) of Code
6 Exemption from rule 16(b) and (d) of Code
 
7 Conditions relating to particulars of voting securities to be contained in notice of meeting
8 Additional conditions relating to contents of notice of meeting
9 Additional condition relating to annual reports
10 Application of exemption in clause 5

Notice

1 Title
This notice is the Takeovers Code (Sealegs Corporation Limited) Exemption Notice 2007.
2 Application
This notice applies to acts or omissions occurring on or after 5 July 2007.
3 Expiry
This notice expires on the close of 31 July 2013.
4 Interpretation
(1) In this notice, unless the context otherwise requires,-

Act means the Takeovers Act 1993

Code means the Takeovers Code approved by the Takeovers Code Approval Order 2000 (SR 2000/210)

meeting means the meeting of Sealegs' shareholders to be held on or about 31 July 2007 to consider, amongst other things, whether to approve, for the purposes of rule 7(d) of the Code, the possible allotment of voting securities to the option holders as a result of the exercise by them of all or some of the options

notice of meeting means the notice of the meeting to be sent to Sealegs' shareholders in respect of the meeting

option holders means-

(a)David McKee Wright; and
(b)Maurice Bryham


options means-

(a)5 000 000 share options in Sealegs to be offered to David McKee Wright; and
(b)5 000 000 share options in Sealegs to be offered to Maurice Bryham
(2) In this notice, a reference to a person increasing voting control is a reference to the person becoming the holder or controller of an increased percentage of the voting rights in Sealegs.
(3) Any term or expression that is defined in the Act or the Code and used, but not defined, in this notice has the same meaning as in the Act or the Code.
5 Exemption from rule 7(d) of Code

Each option holder is exempted from rule 7(d) of the Code in respect of any increase in that option holder's voting control that results from the allotment of voting securities to that option holder on the exercise by that option holder of any options to the extent that the notice of meeting does not comply with rule 16(b) or (d) of the Code.
6 Exemption from rule 16(b) and (d) of Code

Sealegs is exempted from rule 16(b) and (d) of the Code in respect of the notice of meeting.
7 Conditions relating to particulars of voting securities to be contained in notice of meeting

The exemptions in clauses 5 and 6 are subject to the following conditions:

(a) that the notice of meeting contains, or is accompanied by, the following particulars of the voting securities that may be allotted in respect of the options held by David McKee Wright:

(i) the maximum number of voting securities that could be allotted to David McKee Wright on the exercise of all the options held by him:
(ii) the maximum number of voting securities that could be allotted to David McKee Wright on the exercise of all the options held by him expressed as a percentage of the total voting securities on issue after the allotment of the voting securities on the exercise of all the options held by him:
(iii) the maximum percentage of the total voting securities on issue that could be held or controlled by David McKee Wright after the allotment of the voting securities on the exercise of all the options held by him:
(iv) the maximum percentage of the total voting securities on issue that could be held or controlled by David McKee Wright and his associates after the allotment of the voting securities on the exercise of all the options held by David McKee Wright:
(b) that the numbers and percentages referred to in paragraph (a) are calculated on the basis that-

(i) no options held by persons other than David McKee Wright are exercised; and
(ii) there is no change to the total number of voting securities on issue between the date of the notice of meeting and the final option exercise date other than as a result of the exercise of the options held by David McKee Wright:
(c) that the notice of meeting contains, or is accompanied by, the following particulars of the voting securities that may be allotted in respect of the options held by Maurice Bryham:

(i) the maximum number of voting securities that could be allotted to Maurice Bryham on the exercise of all the options held by him:
(ii) the maximum number of voting securities that could be allotted to Maurice Bryham on the exercise of all the options held by him expressed as a percentage of the total voting securities on issue after the allotment of the voting securities on the exercise of all the options held by him:
(iii the maximum percentage of the total voting securities on issue that could be held or controlled by Maurice Bryham after the allotment of the voting securities on the exercise of all the options held by him:
(iv) the maximum percentage of the total voting securities on issue that could be held or controlled by Maurice Bryham and his associates after the allotment of the voting securities on the exercise of all the options held by Maurice Bryham:
(d) that the numbers and percentages referred to in paragraph (c) are calculated on the basis that-

(i) no options held by persons other than Maurice Bryham are exercised; and
(ii) there is no change to the total number of voting securities on issue between the date of the notice of meeting and the final option exercise date other than as a result of the exercise of the options held by Maurice Bryham:
(e) that the notice of meeting contains, or is accompanied by, the following particulars of the voting securities that may be allotted in respect of the options held by the option holders:

(i) the maximum aggregate number of voting securities that could be allotted to the option holders on the exercise of all the options held by them:
(ii) the maximum aggregate number of voting securities that could be allotted to the option holders on the exercise of all the options held by them expressed as a percentage of the total voting securities on issue after the allotment of the voting securities on the exercise of all the options held by them:
(iii) the maximum aggregate percentage of the total voting securities on issue that could be held or controlled by the option holders after the allotment of the voting securities on the exercise of all the options held by them:
(iv) the maximum aggregate percentage of the total voting securities on issue that could be held or controlled by the option holders and the associates of each of them after the allotment of the voting securities on the exercise of all the options held by the option holders:
(f) that the numbers and percentages referred to in paragraph (e) are calculated on the basis that there is no change to the total number of voting securities on issue between the date of the notice of meeting and the final option exercise date other than as a result of the exercise of the options held by the option holders:
(g) that the notice of meeting contains, or is accompanied by, the following particulars:

(i) the exercise periods in relation to each series of options; and
(ii) a statement to the effect that the price for the voting securities is payable to Sealegs at the same time that either of the option holders gives written notice to Sealegs of their intention to exercise any of the options.
8 Additional conditions relating to contents of notice of meeting

The exemptions in clauses 5 and 6 are subject to the conditions that-
(a) the notice of meeting also contains, or is accompanied by,-

(i) full particulars of the issue of the voting securities on the exercise of the options; and
(ii) a summary of the terms and conditions of the exemptions granted to Sealegs and the option holders by this notice; and
(b) the notice of meeting displays, in a prominent position, a disclaimer stating that by exempting the option holders from rule 7(d), and Sealegs from rule 16(b) and (d), of the Code, the Takeovers Panel is-
(i) neither endorsing nor supporting the accuracy or reliability of the contents of the notice of meeting:
(ii) not implying it has a view on the merits of the proposed issue of voting securities to the option holders; and
(c) the form of the notice of meeting is approved by the Takeovers Panel.
9 Additional condition relating to annual reports

The exemptions in clauses 5 and 6 are subject to the additional condition that every annual report issued by Sealegs from the date of the granting of the options until the final exercise date of any of the options held by the option holders includes, in a prominent position and in a form approved by the Takeovers Panel,-
(a) a summary of the terms of the options; and
(b) a summary of the terms and conditions of the exemptions granted to Sealegs and the option holders by this notice; and
(c) a statement, as at the date of the annual report, of-
(i) the number of voting securities allotted to each of the option holders on the exercise of any of their options; and
(ii) the total percentage of voting rights on issue held or controlled by each of the option holders and their associates; and
(iii) the maximum percentage of total voting rights that could be held or controlled by each of the option holders and their associates on the full exercise of all of the options held by the option holders.
10 Application of exemption in clause 5

The exemption in clause 5 does not apply-
(a) to an option holder if that option holder increases his voting control, except as a result of the exercise of the options as approved by Sealegs' shareholders at the meeting, before the earlier of-
(i) the exercise of the last of the options held by that option holder; or
(ii) the final option exercise date:
(b) to any increase in voting control resulting from the exercise of a particular option if, immediately after the completion of the allotment resulting from the exercise of the option, the total percentage of voting securities held or controlled by the option holder is greater than the maximum percentage of voting securities that could be held or controlled by that person as disclosed in the notice of meeting,-
(i) in respect of David McKee Wright, in accordance with clause 7(a)(iii):
(ii) in respect of Maurice Bryham, in accordance with clause 7(c)(iii).

Dated at Auckland this 3rd day of July 2007.

The Common Seal of the Takeovers Panel was affixed in the presence of:


David Jones,
Chairman



Statement of reasons

This notice which applies to acts or omissions occurring on or after 5 July 2007 and expires on 31 July 2013.

The Takeovers Panel (the Panel) has granted exemptions, subject to conditions, to-

  • David McKee Wright and Maurice Bryham from rule 7(d) of the Takeovers Code (the Code) to the extent that rule 7(d) requires the notice of meeting to be in accordance with rule 16(b) and (d) of the Code in respect of any increase in the percentage of voting rights held in Sealegs Corporation Limited (Sealegs) on the exercise of the options held by them:
  • Sealegs from rule 16(b) and (d) of the Code in respect of the notice of meeting.

David McKee Wright is the managing director of Sealegs and currently has an interest in 6 100 000 Sealegs' securities.

Maurice Bryham is the research and development manager of Sealegs and currently has an interest in 6 100 000 Sealegs' securities.

At a meeting of shareholders to be held on or about 31 July 2007, Sealegs proposes to ask shareholders to approve the allotment of ordinary shares in Sealegs (voting securities) to David McKee Wright and Maurice Bryham (the option holders) as a result of the exercise of the options held by them. However, Sealegs is unable to comply with rule 16(b) or (d) of the Code because Sealegs is unable to specify-

  • the exact number of voting securities that will be allotted pursuant to the exercise of options held by the option holders, because the number of options that will be exercised by each of those persons will not be known until the expiry date of the options. Additionally, the terms and conditions of the options provide for an adjustment to the number of voting securities issued on the exercise of an option where there is a change to the capital structure of Sealegs:
  • the exact percentage of the aggregate of all existing voting securities and all voting securities being allotted to the option holders as a result of the exercise of their options, because that will depend on unknown variables (including the number of options ultimately exercised by each of the option holders and the future capital structure of Sealegs):
  • the exact percentage of all voting securities that will be held or controlled by the option holders and their associates after completion of the allotment of voting securities, because that will depend on unknown variables (including the number of options ultimately exercised by each of the option holders, the future capital structure of Sealegs, and whether the option holders have increased their voting control otherwise than as a result of the exercise of their options).

The Panel considered that it was appropriate to grant the exemptions, and that the exemptions are consistent with the objectives of the Code, for the following reasons:

  • it is impossible for the actual number of voting securities to be allotted and the relevant percentages required by rule 16(b) of the Code to be stated in the notice of meeting, as these numbers and percentages are dependent on the extent to which the options are ultimately exercised by the option holders and whether there is a change to the capital structure of Sealegs before the expiry date of the options:
  • all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to the option holders as a result of the exercise of their options:
  • if the non-associated shareholders approve the potential maximum allotment of voting securities to the option holders, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be acquired due to the allotment of voting securities on the exercise by the option holders of their options:
  • it is impossible for the notice of meeting to state when the price for the voting securities is payable, as required by rule 16(d) of the Code, as this will depend on the exact date that either David McKee Wright or Maurice Bryham decides to exercise any of their options.

The Takeovers Panel considers that the exemptions in this notice are consistent with the objectives of the Code because the non-associated shareholders of A2 Corporation will have an opportunity to vote on the allotment of voting securities to Mountain Road and the acquisition of voting securities by Mountain Road.

Issued under the authority of the Acts and Regulations Publication Act 1989.
Date of notification in Gazette: 5 July 2007
This notice is administered by the Takeovers Panel.