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c) a shareholder meeting held for the purposes of
rule 7(c) or 7(d) if the notice of meeting was sent to
shareholders before the commencement date of the
amendment regulations. WE ARE HERE TO HELPThere are many small changes to the Code, and some that are more significant, as a result of the amendment regulations. Market participants and their advisers should look closely at the amended rules. Many of the amendments simply allow for the smoother practical operation of the Code’s requirements, but some rights and obligations have been changed. The Panel executive is happy to discuss the changes to the Code with advisers to potential acquirers and Code companies. Potential problems can be averted by doing this. These discussions are without prejudice to the Panel’s position if a question of compliance with the Code later arises. REFERENCES TO EARLIER DOCUMENTSProposed Amendments to the Takeovers Code – A Discussion Paper issued by the Takeovers Panel (7 April 2003): this was the Panel’s original discussion paper that was published and sent out for market consultation. It covers the bulk of the technical amendments that were recommended by the Panel. Technical Amendments to the Takeovers Code (15 December 2003): this contained the Panel’s formal recommendations to the Minister of Commerce, following the market consultation that had been undertaken in April 2003. Proposed Amendments to the Compulsory Acquisition Provisions of the Takeovers Code (15 December 2004): this was the Panel’s discussion paper that was sent out for formal market consultation on two areas of the Code’s compulsory acquisition process that were not covered by the original set of proposed technical amendments. Technical Amendments to the Takeovers Code – recommendations to the Minister of Commerce from the Takeovers Panel (April 2005): this contained the Panel’s formal recommendations to the Minister on the two areas of the compulsory acquisition process that had undergone consultation in December 2004. |
End NotesIf the offeror sends the target company statement to offerees under
rule 44(1)(d)(iv), then the rule 22 report must be included with
the offer document, the target company statement and the rule 21
report.
The Code does not itself utilise a defined term ‘substantial security
holder’ (which is defined in section 2(1) of the Securities Markets
Act 1988 with reference to relevant interests in voting securities).
The term is used loosely in this issue of Code Word to mean a
person who holds or controls 5% or more of a class of equity
securities in the target company.
This anomaly was resolved before the Code came into effect
through clause 26 of the Takeovers Code (Class Exemptions)
Notice (No 2) 2001, but is now dealt with in the Code, so
clause 26 has become redundant and is being revoked.
The Takeovers Code (Offers Unconditional as to Level of
Acceptance) Exemption Notice 2002 exempts every offeror, with a
full offer that is unconditional as to level of acceptances, from
rule 29(1) of the Code if they wish to just extend the offer period,
with no other variation being made to the offer. This exemption is
being revoked.
Practice Note – Variations of Code Offers (20 December 2002).
This is published on the Panel’s website under Publications,
then click on Practice Notes & Guides. The Practice Note warns
that the terms of an offer should allow for acceptors to be able to
switch from one consideration alternative to another if the latter
has been increased. Otherwise offerors risk breaching rule 20 of
the Code.
Compulsory acquisition occurs under the Code when a target
company shareholder becomes a dominant owner. The Code
defines dominant owner as "… a person who, after this code
comes into force, becomes the holder or controller, or 2 or more
persons acting jointly or in concert who, after this code comes
into force, become the holders or controllers, of 90% or more of
the voting rights in the code company (whether by reason of
acceptances of an offer or otherwise)".
Rule 56 sets a threshold for determining whether the compulsory
acquisition consideration will be the same as the consideration
offered under the offer (if the compulsory acquisition results
from a takeover offer). If rule 56 does not apply, the compulsory
acquisition consideration will be determined by rule 57.
The technical amendments have made a number of changes in the
area of compulsory acquisition under Part 7 of the Code. In the
interests of brevity, this issue of Code Word discusses each of these
changes only once, and does not explicitly refer to a change that
has already been discussed even though it may have implications
for another area of compulsory acquisition that is discussed.
The reader should bear this in mind (especially regarding the
exclusion of voting rights associated with the offeror from the
calculation under rule 56) when considering the impact of the
changes to Part 7 of the Code.
The Code defines outstanding security holders as "… the
holders of the outstanding securities". Outstanding securities
are defined as "… all the equity securities in the code company
that the dominant owner does not already hold or control".
The right of outstanding security holders to object to the
compulsory acquisition consideration arises only under rule 57. If
the compulsory acquisition consideration is determined under
rule 56 (i.e. there were more than 50% acceptances of the offer)
there is no right of objection available.
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If you wish to receive Code Word in hard copy or by email please contact polybanerjee@takeovers.govt.nz How to contact us Takeovers PanelLevel 8, Unisys House 56 The Terrace PO Box 1171 Wellington Phone: 64 4 471 4618 Fax: 64 4 471 4619 Email: takeovers.panel@takeovers.govt.nz Website: www.takeovers.govt.nz Disclaimer |
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