• the number of voting securities in Viking to be allotted pursuant to the offer to each of the exempted persons; and
    • the potential maximum control percentage in Viking of each of the exempted persons after the completion, and as a result, of allotments pursuant to the offer; and
    • the potential maximum aggregate of the control percentages of each of the exempted persons and that person’s associates after the completion, and as a result, of allotments pursuant to the offer; and
  • Viking was not, or, but for having entered into a listing agreement with NZX in connection with the prospectus, would not have been, a Code company before the allotment of voting securities pursuant to the offer.

The Viking exemption’s statement of reasons stated that the Panel considered it was appropriate and consistent with the objectives of the Code to grant the Viking exemption because:

  • any person choosing to subscribe for shares in Viking for the first time can be expected to take into account allotments that are notified to them in the prospectus;
  • if an offeree subscribes for Viking shares offered under the Viking IPO on the basis of the information disclosed in the prospectus showing the potential maximum control percentages of each of the exempted persons, then the offeree can be taken to approve of the potential maximum control percentages to be held or controlled by the exempted persons; and
  • the exemption facilitates an initial public offer by a company that will only become a Code company as a consequence of the offer. The attaching conditions ensure that the exemption applies only to an offer that is effectively a preliminary step to Viking becoming a Code company.

The Panel considers applications for individual exemptions for IPOs in terms of this policy. The Panel may grant exemptions on similar terms and conditions as those of the Viking exemption. However, the terms and conditions may be altered for a particular exemption to better align them with the particular transaction.

It should not be assumed that an exemption will be granted. The Panel is empowered to only grant exemptions that are appropriate and consistent with the objectives of the Code. Full and frank disclosure should be made to the Panel, when an exemption is applied for, about the nature of the transaction and any related transactions, as well as of the relationships of the proposed allottees.

Revised policy -
Exemptions for Companies Act schemes of arrangement

The Panel has published a revised policy on the use of its exemption powers relating to schemes of arrangement under Part XV of the Companies Act 1993.

The Panel adopted the revised policy after considering submissions on a draft policy (4 April 2006) and a discussion paper Schemes of Arrangement and Amalgamations Involving Code Companies (19 June 2006).

The full text of the revised policy is on the Panel’s website . However the Panel’s general approach to schemes of arrangement when considering applications for exemption is explained below. The differences between the revised policy and the earlier policy published on 1 July 2003 are highlighted.

THE PANEL’S APPROACH TO SCHEMES OF ARRANGEMENT INVOLVING CODE COMPANIES

Companies can use the provisions of the Companies Act relating to schemes of arrangement to effect mergers with, or acquisitions of, other companies. In some situations a scheme is the most appropriate way to structure a transaction.

If a scheme results in a person becoming the holder or controller or more than 20% of the voting rights in a code company, the parties to the proposed scheme must comply with the Code as well as Part XV of the Companies Act. It is appropriate that parties who increase their control in a code company comply with the Code. The Code gives shareholders of code companies special protections and rights which should be available regardless of the type of transaction used to effect a change of control.

Some forms of scheme are caught by the fundamental rule but the structure does not fit the exceptions in rule 7 of the Code. In these situations the Panel may grant an exemption to enable the transaction to proceed in a manner consistent with the principles of the Code. This is discussed in more detail below.

Schemes involving code companies can be structured to avoid the Code. The Panel considers that it is not the intent of the Code that the rights and protections of shareholders, in relation to a change of ownership or control of code companies, should be determined by the form of the transaction used to effect the change of ownership or control. It will seek to be heard by the High Court on these schemes. The Panel’s detailed views on the use of schemes to avoid the Code are stated in recommendations

 

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