Reports may be required both under the Code and under the Listing Rules of the New Zealand Stock Exchange (NZSE). The requirements are not the same although the reports may contain common elements. The merits of a proposal or an offer for the purposes of the Code need to be dealt with quite separately from the reporting requirements of the NZSE Listing Rules.

While the target company directors will expect their independent advisers to comply strictly with the Code, they are obliged to ensure that the advisers in fact do so.

To assist applicants the policy, an application outline and a practice note are published on our website www.takeovers.govt.nz. Incomplete applications can cause delays and added cost.

ENFORCES THE TAKEOVERS CODE

The Panel is in a very strong position regarding enforcement. It has its own powers and if it is not satisfied that a party is complying with the Code it has the power to take the matter to Court or consent to other parties taking the matter to the Court. On the other hand the rights of other parties to apply to the Court under the Act are limited.

The Takeovers Act 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 frustrate the takeover process.

Where the Panel suspects a breach or intended breach of the Code it can call a meeting under section 32 of the Act to determine whether to exercise its powers.

Where a notice calling such a meeting has been given, a restraining order may be made which may remain in force for a period expiring on the second day after the date for which the meeting is convened.

If the Panel determines that it is not satisfied that the Code is being complied with, it can extend the restraining order for a further 21 days and apply to the Court for a wide range of orders. These include the disposal or forfeiture of shares, removal of voting rights, avoidance of agreements and payment of compensation.

Interested parties may also apply for court orders where the Panel makes a determination that it is not satisfied that the Code has been complied with. These parties include the NZSE (if the Code company is listed), the Code company concerned and shareholders and affected former shareholders of the Code company. However a party may only apply if the Panel has consented to the application or the party has asked the Panel to make an application to the Court and the Panel has not done so.

The Court may have regard to any Panel determination, and in determining the type of order to be made, the Court may have regard to any Panel recommendation, including a recommendation made at the Court’s request.

A person who breaches the Code or is a party to a breach of the Code may be ordered to pay a penalty not exceeding $500,000 in the case of a person not being a body corporate, or $5 million in the case of a body corporate.

REVIEWS TAKEOVER DOCUMENTS

Most takeover documents are required to be sent to the Panel. The Panel is not obliged to vet those documents, but the executive generally reviews them for compliance with the Code. In a case of non-compliance the Panel decides what action to take.

Documents should be forwarded promptly to the Panel as it may be possible for errors and omissions to be rectified before the offer is sent. The same applies with documents relating to shareholder meetings called in compliance with the Code. Not all advisers pay sufficient attention to the specific information required in takeover documents. Accurate disclosure in accordance with the Code is important in both the offeror’s statement and the target company’s statement.

John King Chairman

David Jones Deputy Chairman

Denis Byrne Australian member

Colin Giffney

Alastair Lawrence

Kevin O’Connor

David Quigg