result of a contravention of the Code or are made to prevent or reduce loss or damage.

A new pecuniary penalties regime through the High Court has also been included in the Act. The maximum amount of a pecuniary penalty is $500,000 for an individual and $5,000,000 for a body corporate, for each contravention of the Code. Pecuniary penalties are paid to the Crown.

Only the Panel has standing to make an application for a pecuniary penalty order. It can make such an application if it has held a meeting under section 32 of the Takeovers Act and has made a determination that it is not satisfied that a person has acted or is acting or intends to act in compliance with the Takeovers Code.

On an application for a pecuniary penalty, if the Court determines that there has been a contravention of the Code, the Court must make a declaration of contravention. The declaration of contravention must be made regardless of whether or not the Court also orders that the person who contravened the Code pay a pecuniary penalty. The purpose of a declaration of contravention is to enable an applicant for a civil remedy order or a compensatory order to rely on the declaration of contravention and not be required, for their civil action, to prove the contravention.

Offences and Orders

The fines for general offences under section 44 of the Act (for example for misleading or attempting to mislead the Panel or for contravening orders made by the Panel) have been increased from the original range of $10,000 - $30,000 for individuals and $100,000 for companies, to $300,000 whether the offence is committed by an individual or a company. A fine of up to $10,000 per day for continuing offences may also be imposed.

In addition to the penalties and remedies mentioned above, the Court now may also make management banning orders against persons convicted of an offence under section 44 of the Act (for misleading the Panel, etc) or under section 44C (for making or disseminating materially false or misleading statements or information - when this section comes into effect).

Company directors who persistently contravene the Takeovers Act or Code, the Companies Act, the Securities Markets Act or the Securities Act may also be subject to management banning orders. Consequently, even though a director’s persistent

contraventions may never have resulted in a criminal prosecution, a management banning order may nevertheless be made against him or her.

These banning orders can prohibit or restrict the person from being a director or promoter or in any way taking part in the management of companies in New Zealand for a period of up to 10 years.

If a criminal conviction for an offence under sections 44 or 44C of the Takeovers Act has been made against a company director, or a pecuniary penalty order has been made against him or her, that director is automatically banned for 5 years (except with the leave of the Court) from any involvement in the management of New Zealand companies.

The High Court also now has power to make orders aimed at preserving the assets of a person in respect of whom an investigation is being carried out by the Panel or where a prosecution or civil proceeding has been begun in respect of that person. These orders include the ability to require the subject person to deliver up their passport, and are broad enough to cover property held in trust. When an application is made to the Court for an order to preserve assets, interim orders preserving assets may be made pending the hearing of the substantive application.

TRANSITIONAL ARRANGEMENTS

The transitional provisions mean that the new laws will have no impact on persons or entities that acquired securities before the commencement of the new provisions, in a company that becomes a Code company under the amendments. In addition, any acquisition of securities in such a Code company after the commencement of the new provisions is not required to be made in compliance with the new laws if it is made in performance of a contractual obligation, or by exercising a right acquired, before the new provisions came into effect.

Similarly, offences against the Takeovers Act and contraventions of the Code that were committed or done before the commencement of the new provisions will be dealt with under the Takeovers Act and the Code as they were prior to being amended.

Outside of these specified transitional arrangements, the Code and the Takeovers Act, as amended, have full effect for any Code-related event or transaction that occurs on or after 25 October 2006.