Directors Certificates – Trans Tasman Properties

Published 1 June 2004

The Panel recently granted an exemption which recognised the difficulties that can arise when a person has executive positions in both a bidder and a target company.

On 20 April 2004, SEA Holdings New Zealand Limited made a full offer for all the voting rights in Trans Tasman Properties Limited. In the course of preparing its target company statement, Trans Tasman advised the Panel that it believed one of the requirements under Schedule 2 of the Code was inappropriate.

Trans Tasman advised that Mr Donald Fletcher was both the Chief Executive Officer and Chairman of its Board of Directors. Trans Tasman also informed the Panel that Mr Fletcher was also a director and Chief Executive Officer of the bidder, SEANZ.

Trans Tasman sought an exemption from sub-clause 26(1) of Schedule 2 to the extent that the sub-clause requires a certificate to be signed by the Chief Executive Officer of Trans Tasman, Mr Fletcher.

The Panel granted an exemption to Trans Tasman. The exemption was subject to two conditions. The first was that the target company statement must include a modified certificate signed by Mr Fletcher alone. The modified certificate required Mr Fletcher, in his role as the Chief Executive Officer of Trans Tasman, to certify that he had provided and disclosed all information required under the Code to the directors of the target company so they could complete the target company statement.

The certificate also required Mr Fletcher to certify that the information he had provided was, in all material respects, true and correct and not misleading, whether by omission of any information or otherwise.

The second condition was that the target company statement must also include notice of the exemption, and the reasons for the granting of the exemption, in a form approved by the Panel.

The Panel granted the exemption because of the conflicts of interest inherent in Mr Fletcher’s roles as the chief executive officer of the bidder and also of the target company. The exemption still required Mr Fletcher to make available to the Trans Tasman board all relevant information possessed by him.