The Panel considered that the class exemption was appropriate
because:
- all the recipients of transfers under clause 14.1 of Todd
Corporation’s constitution represent members of a single
extended family, or represent interests associated with that
single family, and therefore are probably associates for the
purposes of the Code. As such, the mechanisms provided in
the Code for approval of increased shareholdings through
transfers of shares are unworkable;
- the transactions covered by the exemption are confined to
clause 14.1 of Todd Corporation’s constitution, the principal
purpose of which is to facilitate transfers of shares between
family interests;
- there are restrictions on the transfer of shares that may take
place in any 12-month period to limit the possibility of a
change of control occurring without using the mechanisms of
the Code.
The Panel considered that granting the class exemption was
consistent with the objectives of the Code for the following
reasons:
- it retained all the requirements of the Code except in relation
to inter-family transactions in limited circumstances;
- shareholders of Todd Corporation were required to approve
the exemption, by a substantial majority and on the basis of a
notice of meeting that was satisfactory to the Panel;
- it avoided unnecessary compliance costs that would have
been incurred if the exemption were not granted.
| EASTERN BAY ENERGY TRUST (2002/347)
|
Eastern Bay Energy Trust (“EBET”) is a trust established by
Horizon Energy Distribution Limited to apply trust funds towards
certain energy-related purposes. EBET owns 77.3% of the voting
rights of Horizon and each trustee is the joint legal owner of
EBET property, including the Horizon shares.
Under rule 6(2)(b) of the Code, if persons jointly hold shares and
another person subsequently joins those persons, then the person
who joins is deemed to have become a holder of all shares held
by those original holders. Accordingly, in respect of EBET any
person elected as a new trustee will become the joint holder of
the Horizon shares held by the trustees and accordingly will not
comply with the fundamental rule unless one of the exceptions in
rule 7 applies.
The Panel granted an exemption from rule 6(1) of the Code to
every person who is appointed as a trustee of EBET if the
appointment will result in that person being deemed (by the
operation of rule 6(2)(b) of the Code) to have become the holder
or controller of an increased percentage of voting rights in
Horizon. The exemption is limited to trustees appointed in
accordance with the Trust Deed in force on 22 August 2002. The
exemption expires on 31 July 2007.
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The Panel considered that the class exemption was appropriate
because upon the appointment of any trustee of EBET, the shares in
Horizon held by EBET will continue to be held by a person or
persons in their capacity as trustees of EBET and subject to their
duties and obligations under the Trust Deed and at law.
The Panel considered that the class exemption was consistent
with the objectives of the Code because the cost of obtaining the
approval of the non-associated shareholders of Horizon to a
change of trustee of EBET was not justified when a change in the
trustees of EBET would not in substance represent any change in
the control of the Horizon shares held by EBET.
Exemptions relating to notices of meeting
| ELDERCARE NEW ZEALAND LIMITED (2002/201)
|
ElderCare New Zealand Limited had put a recapitalisation plan to
a shareholders’ meeting for approval in October 2001. The plan
included the issue of convertible notes by ElderCare to Cullen
Investments Limited. The plan was approved at the shareholders’
meeting.
As we have previously noted in our Comment on Exemptions in
Code Word 5, the Code does not affect the issuing of convertible
notes as convertible notes themselves do not carry voting rights.
However, when such notes are converted, voting rights are
created. Increases in the holding or controlling of voting rights
are subject to rule 6 of the Code and the exceptions contained in
rule 7.
ElderCare and Cullen sought to obtain shareholder approval
under rule 7(d) of the Code to enable Cullen to convert the notes.
Rule 16 required ElderCare to state, in the shareholders’ notice of
meeting, the specific percentage of voting rights to be allotted to
Cullen on the conversion of the notes and the specific
percentage of voting rights in ElderCare that Cullen would hold
after the allotment. ElderCare could not state these percentages
because they depended on the number of notes that will be
converted which in turn will depend on the price of ElderCare’s
shares at the time the notes are converted.
ElderCare did not apply for an exemption prior to the
shareholders’ meeting. The company did not appreciate that an
exemption was required. The Panel granted a retrospective
exemption to ElderCare from rule 16(b) and (d) in respect of the
requirements for the notice of meeting and Cullen was exempted
from rule 7(d) to the extent that it required compliance with rule
16(b) and (d).
The exemption was granted subject to the condition that there is
no change in the effective control of Cullen between 15 October
2001 and the date of the allotment of any voting securities arising
from the conversion of the notes.
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