Code Word - Issue No.9, April 2003
IN THIS ISSUE
  • Guidance Note to assist independent advisers
  • Minister announces Panel appointments
  • Practice Notes – variations of Code offers & variable pricing
  • Comments on exemptions declined
  • Discussion paper – proposed amendments to the Code
  • Keep up to date with Panel decisions

GUIDANCE NOTE TO ASSIST INDEPENDENT ADVISERS
The Takeovers Panel believes that independent advisers have a pivotal role in the Takeovers Code regime. The report of an independent adviser should provide offerees and voting shareholders with comprehensive, independent advice on the matter they have to decide.

The Panel monitors the performance of independent advisers in meeting their responsibilities. On some occasions this performance has been disappointing.

The Panel has prepared a Guidance Note about the role of independent advisers. The matter of most concern to the Panel is that independent advisers have not always informed shareholders of the protections and rights available to them under the Code or of the options available to, or denied to, the acquirer/bidder as a result of the Code.

The Guidance Note is available on the Panel’s website www.takeovers.govt.nz or in hard copy from the Panel’s offices, phone (04) 471 4618.

THE PANEL’S VIEW – INDEPENDENT ADVISERS
The independent adviser is critical to the effectiveness of the Code in regulating the market for the control of companies. The independent adviser helps ensure that there are well-informed shareholders wherever a takeover offer is made or another transaction is occurring that requires shareholder approval under the Code. The Panel takes a close interest in the skills as well as the independence of any company or individual proposed for appointment as an independent adviser.
 

 
Some advisers have not fully appreciated the philosophy of the Code, the rights it creates for shareholders, and/or the important role of the voting or offeree shareholders in the process. The Panel considers some advisers need to improve the balance and quality of their reports.

Advisers should not assume that because they have been approved as an independent adviser in the past, that they will necessarily be approved again. This will depend to a significant extent on how they fulfill their responsibilities under the Code.

The Panel will continue to monitor independent advisers’ reports and comment on these where it considers this necessary. The quality of previous reports will be taken into account when approving new appointments. However, no adviser previously approved by the Panel would subsequently be considered unsuitable for appointment without the opportunity to make submissions to the Panel.

THE PANEL’S VIEW – DIRECTORS
The independent directors of the target or allotting company also have important responsibilities in the process of independent adviser reports. From some of the reports it has seen, the Panel believes that not all independent company directors appreciate the extent of those responsibilities.

Directors need to ensure that the appointed adviser is given all the information necessary to provide a comprehensive report.

They should, in the course of reviewing the independent adviser’s draft report, satisfy themselves that it is sufficiently comprehensive and covers all the relevant issues.

AIMS OF THE GUIDANCE NOTE
The Guidance Note is to assist independent advisers approved by the Panel to prepare a report under rules 18, 21 or 22 of the Code or under a class exemption or specific exemption granted by the Panel.

The Guidance Note is an aide memoire. It is not a prescription by the Panel on the matters an independent adviser must address in any report prepared for the purposes of the Code. It should not be regarded as definitive and may be amended by the Panel from time to time.

The adviser is required to assess the “merits” of the particular offer (takeover), acquisition (share transfer or buyback), or
 

 
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