One of the Takeovers Panel's functions, as provided by section 8(1)(a) of the Takeovers Act 1993, is to keep under review the law relating to takeovers of specified companies and to recommend to the Minister of Commerce any changes to that law that it considers necessary.

The Takeovers Code came into force on 1 July 2001. The Panel has been responsible for the administration of the Code since that time.

The Panel is committed to making the Code work and making it work well. The present proposals for amendment to the Code relate to rules 56 and 57 of the Code and arise from the Panel's experience with the Code in the past year.

The proposed amendments bring together recommendations for amendment to the Code published on the Panel's website www.takeovers.govt.nz in March and November 2004.

To ensure widespread exposure of its recommendations the Panel distributed a detailed discussion paper in December 2004 to a large number of recipients. Submissions were requested by 25 February 2005. A copy of the Panel's discussion paper is attached.

To provide the greatest level of assistance to the target audience of the main professional law firms the Panel's paper included proposed drafting changes to the Code. These proposals were put forward on the basis that the final responsibility for drafting any changes to the Code remains with Parliamentary Counsel Office.

The Panel received eight substantive responses to its discussion paper, these being from:

This level of responses was not unexpected. The Panel's proposals are of a technical rather than a policy nature. They are of principal interest to practitioners actively involved in the takeover market.

The Panel has carefully considered these responses. As a result some of its original drafting of the proposed amendment to rule 56(3) of the Code has been amended.

This paper puts forward the Panel's final proposals for amendments to the Code. It outlines the Panel's original proposals and comments on submissions received on those proposals before detailing the Panel's final recommendations.

In order to assist the preparation of drafting instructions to Parliamentary Counsel Office the paper includes detailed drafting suggestions for each proposed amendment to the Code put forward by the Panel.

The technical amendments discussed in this paper concern:

While the proposals are intended to improve the operation of the compulsory acquisition procedures under the Code, they are of a minor nature that do not substantially alter existing arrangements.

The Panel's proposals should result in little to no increases in compliance costs for market participants. In particular they could result in a reduction in compliance costs for market participants by avoiding the unnecessary appointment of an independent adviser in certain circumstances of compulsory acquisition.

The Panel recommends that the Minister seek Cabinet authority to amend the Takeovers Code as proposed in this paper.