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The procedures for the meeting require the offeror and the target company to disclose a range of information. In addition, the directors of the target company must obtain a report from an independent adviser on the merits of the proposal. The target company directors must recommend whether or not the proposal should be approved or,if they are unable or unwilling to make that recommendation, provide a statement to that effect and the reasons.
Interested parties and their associates cannot vote at the meeting.
The Code’s compulsory purchase provisions apply when the threshold of 90% of voting rights has been reached. The dominant owner (the holder of the 90%) has the right to buy and the remaining shareholders have a right to be bought out. The compulsory purchase provisions are triggered by reaching 90%of the voting rights but the obligations to buy or sell relate to all equity securities,voting or non-voting. Where the 90% threshold is reached as a result of a Code offer, the price for the remaining shares is the price offered under the Code offer. Otherwise the price is a cash price specified by the dominant owner and certified as fair and reasonable by an independent adviser.
If shareholders object to the price and the number of objections exceeds the percentages referred to in the Code, the price is referred to an independent person appointed by the Takeovers Panel. To avoid issues of premiums or discounts for minority holdings the Code provides that the class as a whole is to be valued, with each share then being valued on a pro rata basis.
 The Panel has very extensive enforcement powers under the Takeovers Act. The law aims to ensure that those opposed to a particular takeover should not be able to use the Code and the litigation process to derail a takeover and subvert the true purpose of the Takeovers 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. Where notice of such a meeting has been given,an interim restraining order may be made which may remain in force until two days after the date of the meeting. If the Panel determines that it is not satisfied that the Code has been complied with, it can extend the restraining order for a further 21 days. If the Panel did not make an interim restraining order, it may make a restraining order for up to 21 days. The Panel may apply to the Court for a wide range of orders including orders for:
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Interested parties may also apply for Court orders where the Panel determines that it is not satisfied that the Code has been complied with. These interested parties are:
Interested parties may also apply to the Court if the Panel is requested to hold a meeting to determine whether the Code has been complied with and it does not make a determination on compliance within 14 days. If such a meeting is held and the Panel determines that it is satisfied that the Code has been complied with then the interested parties have no right to apply to the Court. The Court may have regard to any determination or recommendation made by the Panel, including any recommendation made at the request of the Court.
The Takeovers Act provides significant pecuniary penalties. A person who breaches the Code or is party to a breach may be ordered to pay a fine of up to $500,000 in the case of a person or $5 million in the case of a body corporate. |
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Takeovers Panel Email: takeovers.panel@takeovers.govt.nz Website: www.takeovers.govt.nz
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