In its discussion paper the Panel suggested that to avoid problems resulting from the use of the amalgamation provisions of the Companies Act to effect a merger with or acquisition of a code company the Code and the Companies Act could be amended as follows:

(a)

the Code could be amended to no longer apply to changes of control resulting from an amalgamation under Part XIII of the Companies Act (with the definition of control being sufficiently broad to ensure that the alternative protections are not also avoided); and

(b)

Part XIII of the Companies Act could be amended to require that:

(i)

parties to a proposed amalgamation must obtain the approval of the Panel to the amalgamation process; and

(ii)

the Panel, in giving approval for an amalgamation process, take into account the principles of the Code.

The Panel suggested that its approval of an amalgamation process would be subject to conditions based on the principles of the Code.

The Panel did not suggest that in approving an amalgamation process it would always seek to impose identical requirements to those contained in the Code. The Panel would instead take into consideration the particular circumstances of the amalgamation. The Panel would look to apply the broader principles of the Code of equal treatment and fairness and the intentions of the Code thresholds.

This approach would continue to allow companies to utilise the amalgamation provisions of the Companies Act in respect of transactions involving code companies but in a manner that ensures that shareholders of code companies continue to have comparable or similar rights and protections to those provided by the Code.

The Panel also suggested that it may be appropriate to amend the minority buy-out provisions of the Companies Act in respect of amalgamations involving code companies.

The minority buy-out right in respect of amalgamations is only available to shareholders who cast a dissenting vote at a meeting held to consider an amalgamation proposal. Under the Code compulsory acquisition rights apply in respect of all outstanding shareholders i.e. all those who have not accepted a code offer. In addition under the Code when the compulsory acquisition price is challenged the price is determined by an independent expert, subject to certain requirements. Under the amalgamation provisions the price is fixed by arbitration.

The Panel's discussion paper highlighted these differences and asked market participants whether instead of having minority buy-out rights under the Companies Act, the Panel should have the power to impose as a condition of approval of any amalgamation proposal that all shareholders of the relevant code company have rights and protections consistent with the compulsory acquisition provisions of the Code.

The Panel's discussion paper asked respondents to address the following questions:

• In respect of amalgamations, what are your views on an amendment to Part XIII of the Companies Act to require that parties to a proposed amalgamation obtain the approval of the Panel to the amalgamation process and that the Panel impose conditions on amalgamations which ensure that code company shareholders have rights and protections under the amalgamation proposal consistent with the principles of the Code?
• In respect of minority buy-out rights, do you consider that instead of dissenting shareholders having minority buy-out rights under the Companies Act the Panel should have the power to impose as a condition of approval of any amalgamation proposal that all shareholders of the relevant code company have rights and protections consistent with the compulsory acquisition provisions of the Code?
• Would such amendments address concerns that market participants have regarding the use of amalgamations in respect of code companies? Are there other alternatives which market participants would like to suggest?
• What are your views on the possible compliance costs of such amendments to the Code and Part XIII of the Companies Act?