An analysis of Australian case law indicates that the Courts in Australia apply the consumer protection tests and reasoning to market manipulation cases. It is reasonable to believe that the same would occur in New Zealand Courts.
The Panel intends to construe the words 'misleading' and 'deceptive' in the same way as the New Zealand and Australian Courts. They will be given their natural and ordinary meaning of 'to lead into error'. Accordingly, the Panel will consider Code-related conduct to be misleading or deceptive if it leads, or would be likely to lead, persons into error.
When these new provisions come into force, the Fair Trading Act will no longer apply to conduct regulated by the Code and the Takeovers Act. This enhances the Panel's role as the primary regulator of changes of control in Code companies.
Market participants involved in a takeover or other Coderelated transaction should always take care if they make any representations to the media or to the market. This will be even more important when rule 64 is operative. When misleading or deceptive conduct takes place during a Coderelated transaction or event, the Panel will respond in an appropriate manner to protect the interests of the market.
Parties involved in a takeover often make announcements about their intentions for the takeover. These statements are made to influence other parties to the takeover and are described generically by takeover regulators as 'last and final statements'.
Statements by an offeror, such as "[Offeror Ltd] will not increase the offer price", or "[Offeror Ltd] will not extend the offer period" are last and final statements. At times, major shareholders in a target company will make announcements about their intentions, such as "[Shareholding Company Ltd] does not intend to accept the offer". Any later inconsistent action or statement risks breaching rule 64. The Panel will rigorously enforce the prohibition against misleading or deceptive conduct.
The integrity of the market requires that statements made in relation to takeovers can be relied on. For that reason, last and final statements must be adhered to as to a promise. The Panel intends to enforce those promises.
Last and final statements may be qualified when they are made, in order to preserve the right to depart from the statement. However, such qualifications must be clear and unequivocal. For example, "At present [Offeror Ltd] does not intend to increase the offer price, but it reserves the right to do so," is a clearly qualified statement.
As a matter of practice, the Panel will write to those who make last and final statements at the time of their publication or when drawn to the Panel's attention. If the statement is unqualified, the Panel will ask whether an unqualified statement is what was really intended. If it was not intended to be an unqualified statement, the person will be invited to promptly publish a qualification to the statement.
The person will be put on notice that unqualified statements must be adhered to. If the statement is equivocally qualified, the Panel will invite the person to clarify their position to the market and to the Panel immediately.
If clearly misleading conduct occurs, such as departing from the terms of an unqualified last and final statement, and the parties involved are not prepared or are not able to correct that conduct, the Panel is likely to call a meeting under section 32 of the Takeovers Act (which gives the Panel its principal enforcement powers). In these circumstances the Panel may give just 24 or 48 hours notice of the meeting. The Panel's intention for calling these meetings with short periods of notice is to ensure that any misinformation in the market, which is misleading or deceptive or is likely to mislead or deceive, is corrected promptly.