Page 1 - Page 2 - Page 3 - Page 4

	FUNCTIONS OF THE PANEL (continued) to recognise that shareholders must ultimately decide for themselves the merits of a takeover offer; and to maintain a proper relation between the costs of compliance with the Code and the benefits resulting from it. The Takeovers Code recommended by the Panel was adopted by Government on 16 October 2000 and notified in the Gazette on 19 October 2000. It comes into force on 1 July 2001. To enforce the Takeovers Code Part III of the Takeovers Act sets out the Panel ’s powers to enforce the Code.Where the Panel suspects a breach or intended breach of the Code it can: call a meeting to determine whether to exercise its powers; and make an interim restraining order which may remain in force until two days after the date of the meeting. After a meeting,if the Panel is not satisfied that the Code has been,or is intended to be,complied with it can: extend the interim restraining order for a further 21 days; issue a restraining order for up to 21 days if an interim restraining order was not made;and apply to the Court for a wide range of orders including orders for: disposal or forfeiture of shares; removal of voting rights; avoidance of agreements;and payment of compensation. The Court may have regard to any determination or recommendation made by the Panel, including any recommendation made at the request of the Court. To grant exemptions from the Takeovers Code The Takeovers Act is in the process of being amended to ensure that the Panel may grant both individual and class exemptions from compliance with any provision of the Takeovers Code. Exemptions may be granted to any person or any class of persons or class of transaction or class of offer,and may be subject to terms and conditions. We will consult with the public on a set of class exemptions from the Code. The exemptions will be in place when the Code comes into force in July 2001. To promote public understanding of the law and practice relating to takeovers The Panel has set up a web site (www.takeovers.govt.nz) which carries information about the Takeovers Act,the Code, and about the Panel and its work. Code Word will publish information of interest to shareholders, lawyers,companies and others.		THE CODE IN BUSINESS LANGUAGE The Takeovers Code is the schedule to the Takeovers Code Approval Order 2000 (SR 2000/210). The Code comes into force on 1 July 2001. The Code aims to provide commercial and sensible rules to ensure that takeovers take place in an orderly fashion. It seeks to ensure that all shareholders are treated equally and,on the basis of proper disclosure,are able to make an informed decision as to whether to accept or reject the offer. The following is an outline of the Code. CODE COMPANIES The Code applies to “Code companies”. Code companies are companies registered under the Companies Act 1993 which are: listed on the New Zealand Stock Exchange;or have been listed on the exchange in the past 12 months; or have 50 or more shareholders and $20 million or more of assets. FUNDAMENTAL RULE The Code is based on a fundamental rule which prevents any person from becoming the holder or controller of 20% or more of the voting rights in a Code company except in a manner permitted by the Code. The fundamental rule is based on control of voting rights. “Control” is defined as “having, directly or indirectly, effective control of the voting right”. A holder or controller of 20%or more of the voting rights of a Code company cannot increase its voting rights except as permitted by the Code. There are no restrictions below the 20% threshold. The fundamental rule has anti-avoidance provisions which deal with situations where groups of people act jointly,or in concert, or join together as associates. EXEMPTIONS The fundamental rule catches,and is intended to catch, increases in voting power in a manner which can be regarded as involuntary. This can arise with transactions such as rights issues, buy backs and amalgamations. Class exemptions will be required to deal with these transactions. In formulating class exemptions policy issues will need to be addressed. On the one hand there is the need to facilitate normal business transactions but on the other hand the purpose and intent of the Code must be preserved. The class exemptions will be in place when the Code comes into force on 1 July 2001.

Page 1 - Page 2 - Page 3 - Page 4

Publications Index - Home Page