Takeovers Panel - Schemes of Arrangement and Amalgamations Involving Code Companies

	Consultation Paper: Takeovers Panel - Schemes of Arrangement and Amalgamations Involving Code Companies

Takeovers Panel
Schemes of Arrangement and Amalgamations Involving Code Companies
5 December 2007

3. POLICY OBJECTIVES

As outlined in the introductory section, the objective of changing corporate control, whether through Code takeovers, schemes of arrangement or amalgamations, is to maximise the returns on available resources, which in turn maximises the welfare of society. The Code and Parts 13 and 15 of the Companies Act provide for different mechanisms to effect changes in corporate control.
With this broad objective in mind, to determine whether the current regime or alternatives would be of net benefit to society, options are assessed against the objectives in section 20 of the Takeovers Act. These are set out in the following table, which highlights more clearly the sometimes competing goals of efficiency, and procedural and substantive fairness.

S.20 Objective	Requires...
Table 2. Policy objectives
Encouraging the efficient allocation of resources	An informed market with many buyers and sellers, clear property rights, and minimum barriers to trade.
Encouraging competition for the control of specified companies (i.e., Code companies)	No barriers to entry or exit and low transaction costs.
Assisting in ensuring that the holders of securities in a takeover are treated fairly	Equal opportunities to participate in a change of control. Equivalent consideration for shares. Appropriate shareholder support thresholds. No compulsory taking of shares except for very good reason.
Promoting the international competitiveness of New Zealand's capital markets	Reducing transaction costs and risk perceptions through encouraging confidence in the integrity of the New Zealand market.
Recognising that the holders of securities must ultimately decide for themselves the merits of a takeover offer	Individual shareholders having access to adequate information and being given sufficient time to consider a takeover offer.
Maintaining a proper relation between the costs of compliance with the Code and the benefits resulting from its existence	Knowledge of the costs and benefits.