Takeovers Panel
Discussion Paper: Schemes of Arrangement and Amalgamations Involving Code Companies
19 June 2006

Request for Comments on This Paper

The Panel invites submissions on the issues raised in this paper and the possible amendments to the Code and the Companies Act discussed in this paper.

The closing date for submissions is 30 June 2006.

Submissions should be sent to the Takeovers Panel-

  • By post
  • Takeovers Panel
    Level 8 Unisys House,
    56 The Terrace,
    P.O. Box 1171,
    WELLINGTON;
  • By fax
  • +64 4 471 4619; or
  • By email
  • takeovers.panel@takeovers.govt.nz
  • Electronically by completing the questions below

Any submissions received are subject to the Official Information 1982. The Panel may make submissions available upon request under that Act. If any submitter wishes any information in a submission to be withheld, the submission should contain an appropriate request (together with a clear identification of the relevant information and the reasons for the request). Any such request will be considered in accordance with the Official Information 1982.

In particular the Panel would like market participants to consider and respond to the following questions:




Is it appropriate that mechanisms for changes of control which achieve the same result and have the same effect on shareholders of code companies should provide shareholders with comparable rights and protections?


Do you consider that schemes and amalgamations should be completely separate mechanisms from code transactions and that the Code should not apply in respect of those mechanisms?

OR

Do you consider that the Panel should recommend some form of amendment to the Code and the reconstruction provisions of the Companies Act to address issues arising from the use of schemes of arrangement and amalgamations outside of the jurisdiction of the Code to effect mergers with or acquisitions of code companies?

What are your views on the Panel's proposal that the Code and the Companies Act could be amended so that:
  • schemes and amalgamations are carved out of the Code completely; and instead
  • the principles of the Code are introduced into the provisions of the Companies Act dealing with schemes and amalgamations?

Schemes of arrangement

Should the Court be required to take into account the principles of the Code in approving schemes of arrangement?

In respect of schemes of arrangement, what are your views on an amendment which would provide that:
  • the Code no longer applied to changes of control resulting from a scheme of arrangement under Part XV of the Companies Act;
  • in deciding what the appropriate process adopted in respect of a scheme of arrangement should be Courts have to take into account the principles of the Code; and
  • before approving a scheme of arrangement the Court would have to receive and take into account recommendations from the Panel as to the requirements to be met for the scheme of arrangement to be approved?

Would such amendments address concerns that some market participants have regarding the use of schemes of arrangement 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 XV of the Companies Act?

Amalgamations

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?

Other matters

Do you have any other suggestions or comments on the issues raised in the Panel's paper?