Most submissions which were in favour of comparability of rights and protections available to shareholders of code companies regardless of whether a merger is structured as an offer, scheme or amalgamation, are generally supportive of the Panel's proposed amendments in respect of amalgamations.

However, concerns were expressed about the meaning of the phrase "principles of the Code". These concerns are similar to those expressed about the meaning of the term in the context of the suggested amendments regarding schemes of arrangement.

The Business and Law Reform Committee of the New Zealand Law Society state that it is mindful of the uncertainty that may be created where amalgamations are subject to the approval of the Panel. They suggest that degree of uncertainty would be reduced if either:

NZX believes more clarity as to the circumstances under which the Panel would impose conditions on amalgamation proposals is critical. NZX states that there are cogent arguments both ways as to shareholders' rights - including the right to be apathetic. Merely giving the Panel the power to impose conditions does not provide sufficient clarity as to how, why and when such power would be used.

Harmos Horton Lusk's submission is supportive of the Panel's proposal regarding amalgamations. They state that they believe the natural concern which market participants will have as to the Panel "over reaching" in terms of the types of amalgamations and matters to be taken into account by the Panel determining to exercise its approval, can be adequately resolved.

Simpson Grierson, Bell Gully, Chapman Tripp and Cameron Partners are not supportive of the Panel's proposed amendments in respect of amalgamations.

Their main concern was the removal of a process which is fairly certain, with the level of shareholder approval required and the information to be included in a proposal being set out in Part XIII of the Companies Act, and the introduction of a process dependent upon the application of the principles of the Code as interpreted by the Panel. This type of concern is perhaps greater in respect of amalgamations rather than schemes because the proposed change introduces a regulator into the amalgamation process where there currently is not one. The suggested amendments would mean that the Panel would determine the approval threshold and information requirements for an amalgamation proposal. These matters are currently set out in statute.

Parties who oppose the Panel's suggested amendments are of the view that Panel approval should not be a pre-requisite to the use of an amalgamation involving a code company and that the Panel should not impose conditions similar to those which apply in respect of a code offer. Those parties consider that the current amalgamation provisions provide adequate protection for shareholders. They suggest that the combined effect of the directors' fiduciary duties, the requirement for a special resolution and the availability of minority-buy-out rights are appropriate protections for minority shareholders.

Bell Gully state that the requirement for an amalgamation to be approved by a special resolution is sufficient protection for shareholders and accordingly the Panel's suggested amendments are unnecessary. They state that the fact that dissenting shareholders can exercise minority buy-out rights provides sufficient protection for minority shareholders. Bell Gully suggest that the minority buy-out provisions of the Companies Act confer protections on shareholders which are in many respects more extensive and effective that those provided under the Code.

Simpson Grierson suggest that any legislative amendment in this area should have as one of its objectives adding certainty so as to facilitate (and not discourage) commercial activity leading to changes in corporate control. They state that undermining the level of clarity or certainty about the criteria to be applied when reviewing comparable transactions is to be avoided as it only adds to the costs and risk associated with transactions which must be regarded as adding value to our economy and introduces an element of country risk which should be avoided in seeking to attract and retain capital for development.

Parties opposed to the Panel's suggested amendments also express concern about the shareholder approval thresholds that the Panel might impose as a condition of any approval.

Parties opposed to the Panel's suggested amendments are concerned that the Panel would impose a 90% approval threshold in every case because all amalgamations involve an element of compulsory acquisition. They have expressed the view that it may be undesirable to impose a 90% compulsory acquisition threshold on a transaction that is to be approved by a vote of shareholders (as opposed to acceptance by shareholders of an offer to acquire shares). Given that shareholder participation in votes is often relatively low, any requirement for 90% voting approval is likely to confer on a very small percentage of shareholders the ability to block a transaction even though it is supported by the directors and the vast majority of shareholders. In this respect it is argued that a 90% voting threshold is potentially very different from a 90% acquisition threshold, and far more difficult to obtain.

Simpson Grierson suggest that conferring on all shareholders of an amalgamating company rights similar to those of outstanding shareholders in respect of a takeover offer which has a 90% acceptance threshold is not appropriate in every case. They state that in the case of a takeover offer these 'hold outs' have not had the benefit of the board review process that leads to the approvals required in an amalgamation and accordingly are in need of the compulsory acquisition provisions of the Code.

There is not a great deal of support for the Panel introducing conditions in respect of amalgamation proposals which replicate the compulsory acquisition provisions of the Code.

Simpson Grierson and Bell Gully suggest that there is no need to amend the minority buy-out rights contained in the Code. They state that minority buy-out provisions and the compulsory acquisition provisions of the Code operate differently because they apply to different types of transaction. As noted above Bell Gully suggest that minority buy-out rights potentially apply in many circumstances when the compulsory acquisition provisions under the Code would not.

Harmos Horton Lusk state that they would be reluctant to see the minority buy-out facility removed. Perhaps a regime whereby minorities have the choice of proceeding under the minority buy-out regime, or alternatively exercising the "put option' formulation envisaged by the compulsory acquisition rules might be a suitable alternative.

ABN AMRO suggest that the minority buy-out provisions in respect of amalgamations involving code companies should be that in cases which are in effect a scrip based offer there should be a cash option available to shareholders who dissent.

However Simpson Grierson suggest there are one or two anomalies surrounding the level of information provided to minorities in respect of amalgamations under Part XIII of the Companies Act which require review, particularly: