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	Transitional provisions for the Code coming into force
	When the Takeovers Code comes into force on 1 July it is intended that the new law should have full effect from that day. The market is expected to have planned for the changes. However, the Takeovers Act 1993 sets out rules to deal with the transition to the regulatory regime that applies under the code. These provisions are in:   section 23 of the Takeovers Act;   section 49 of the Takeovers Act; and   section 12(2) of the Takeovers Amendment Act 2001 which repeals section 3(2)(c) and 3(2)(d) of the Securities Act 1978. SECTION 23 OF TAKEOVERS ACT A person will not be in breach of the Takeovers Code when it comes into force simply because they acquired before 1 July a particular proportion of securities (e.g. more than 20 percent of the voting securities in a code company) (section 23(a)). However, the code will apply to any increase in voting rights that a person holds or controls from 1 July. In addition, the code does not apply to any acquisitions of securities by a person on or after 1 July if that acquisition arises from performing a contractual obligation incurred, or exercising a right acquired, before 1 July (section 23(b)). Whether section 23(b) applies in any particular case will depend on the precise		nature of the relevant contractual obligation or right. Anyone proposing to rely on this provision should seek legal advice. NEW SECTION 49 OF TAKEOVERS ACT This section was inserted into the Takeovers Act by section 12(1) of the Takeovers Amendment Act 2001. Section 49(1) repeals the Companies Amendment Act 1963 from 1 July. However under section 49(2) the Companies Amendment Act 1963 continues in force where notice of a takeover scheme has been served on a company under section 4 of the Companies Amendment Act before 1 July. The Takeovers Code may also apply to the takeover, unless the transitional provisions in section 23 of the Takeovers Act apply. SECTION 12(2) OF TAKEOVERS AMENDMENT ACT This section repeals sections 3(2)(c) and 3(2)(d) of the Securities Act 1978 on 1 July 2001. These provisions deal with scrip offers in takeovers. From 1 July any offer of scrip in a takeover will have to comply with the Securities Act, subject to any exemption granted by the Securities Commission. The Commission recently released a public consultation document (Offers of Securities in Takeover Bids) on the question of a possible exemption for scrip offers.
	NO MANDATORY BID RULE IN NZ TAKEOVERS CODE If a shareholder goes over the 20 percent threshold of the Takeovers Code they must offer to buy all the voting securities of the company? Not true! The mandatory bid rule applies in England under the London City Code, and in some other countries, but there is no mandatory bid rule in the New Zealand Takeovers Code. In New Zealand if a person exceeds the 20 percent threshold without complying with the code, that person has breached the code but this does not trigger a mandatory bid. The person has committed an offence and is liable to heavy penalties. In addition the Court has the power to make a range of orders including suspending voting rights and ordering disposal of the shares.		RELATIONSHIP BETWEEN THE TAKEOVERS PANEL AND THE SECURITIES COMMISSION The Panel and the Commission are separate Crown entities with their own legislation and defined functions. The Panel and the Commission are separately funded and they report to Parliament quite independently of each other. The Panel and the Commission have separate “boards of directors” with their Panel members and Commission members. Commission staff provide administrative and support services to the Panel. They do so under the authority of the Securities Amendment Act (No 2) 2001 which empowers the Commission to provide services to the Panel by agreement. Services are purchased at an agreed level and price each year. The result of this is that some of the Commission’s staff also undertake work for the Takeovers Panel.
	(continued from previous page) SECTION 12(2) OF TAKEOVERS AMENDMENT ACT Nominee companies and bare trustees are exempted in the same way as executors and trustees if they hold code company voting rights as a result of acquisitions in the ordinary course of their business and they do not control those voting rights (clauses 23 and 24). There are consequential exemptions for associates of nominee companies and bare trustees. SECTION 12(2) OF TAKEOVERS AMENDMENT ACT Clause 25 exempts intra-group transfers within wholly-owned groups from the fundamental rule.		DOCUMENTATION REQUIREMENTS - SHARE REGISTERS The target company in a takeover is required under rule 42(2) of the Takeovers Code to provide the offeror with a copy of its securities register. This exemption provides that there is no requirement on the target company to also send a copy to the Takeovers Panel, provided that certain conditions are complied with. DISCLAIMER This is a broad summary of the class exemptions. If you wish to rely on the Takeovers Code (Class Exemptions) Notice 2001 you must refer to the specific exemption that is applicable.

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