Typically a takeover notice will list one or more companies or persons who hold equity securities in the target company. The Panel considers that it is then permissible to state that, “apart from the persons listed in the schedule above, none of following hold or control equity securities” in the target company and to then list each of categories (a) to (e) as a generic statement. It is not however necessary to name all the persons and companies which comprise each of the categories.

PRACTICE NOTE - CONDITIONS IN TAKEOVER OFFERS - PAYMENT OF CONSIDERATION

Rule 25 of the Takeovers Code provides that a takeover offer may be subject to conditions, except conditions that depend upon the judgement of the offeror or any associate of the offeror or conditions whose fulfilment is in the power, or under the control of the offeror or any associate of the offeror. If the offer is subject to conditions it must specify a date by which the offer is to become unconditional. There are restrictions in rule 25 as to when this date must be. No condition contained in the offer can have effect beyond the date specified by which the offer is to become unconditional. The offer will lapse if it does not become unconditional by the specified date. If the offer does become unconditional then written notice must be sent to the target company, the Panel and, if the target company’s voting securities are quoted, the New Zealand Stock Exchange.

Rule 33 of the Takeovers Code provides that an offer document must specify the date by which the consideration for accepting the offer must be sent to those persons whose securities are taken up under the offer. The rule requires that the date specified in the offer document must not be later than 7 days after the later of:

1. the date on which the offer becomes unconditional; or
2. the date on which an acceptance is received; or
3. the end of the offer period first specified in the offer.

The intention of this rule is to ensure that offerees who accept a takeover are paid promptly within the context of a takeover. For example an offeror cannot postpone the time of payment of consideration for an offer that is unconditional simply by extending the offer period.

1. written notice has been given to the offeror of the intention to withdraw; and
2. 7 days have expired since the written notice was given; and
3. the offeree does not receive the consideration from the offeror during that 7-day period.

Some offer documents received by the Panel have included a statement to the effect that “the offeror’s obligations in respect of settlement will be subject to the registration of the transfer of the relevant securities from the offeree to the offeror.” Some of these offer documents have also included a further statement to the effect that “the offeror will present all forms of acceptance and transfer to the target company for registration as soon as possible following the offer being declared unconditional or the conditions being waived in respect of the offer by the offeror”.

Confusion has arisen as to whether statements of the kind referred to in the preceding paragraph are a condition of the offer which must be satisfied before the offer can become unconditional for the purposes of rule 25 of the Code. One view is that such statements merely prescribe the requirements of settlement between the offeror and the offerees and are not a condition of the offer. The other view is that the statements are a condition of the offer.

The Panel considers that such statements are a condition of the offer. As such the offer cannot become unconditional until the condition contained in the statements is either satisfied or waived. The Panel takes this view because the statements have the effect of making the offeror’s obligations under rule 33 of the Code subject to registration of the transfer by a third party - the target company’s directors.