Restraining orders and compliance orders are likely to be made by the Panel where there has been a departure from a last and final statement. Court orders will be sought if any transactions require unwinding. The Panel believes that the integrity of information in the market must be upheld, so that market participants can rely on that information. Those who make last and final statements should be held to the terms of those statements.
When the Panel determines that a breach of rule 64 has occurred, any remedy the Panel orders will be balanced between providing certainty for the market and achieving the appropriate commercial outcome. The Panel is likely to require those who make last and final statements to act in accordance with those statements and to promptly correct any misinformation.
Keeping a takeover bid on track is likely to be at the forefront of the Panel's reasoning for the remedies put in place. However, in some cases it may be more appropriate to stop a bid from proceeding. The Panel will consider every case on its merits.
The Panel has new powers to require corrective statements to be published, without having to obtain Court orders. The Panel can also prohibit people from making statements or distributing documents. The remedies and penalties available through the Court have also been extended (see Code Word 17).
The Panel may seek pecuniary penalties against company directors who knowingly are involved in a company's misleading conduct. A director who incurs a pecuniary penalty is also automatically banned for five years from managing a New Zealand company.
In a contest for control of a Code company, or where a takeover is opposed, parties often look for an opportunity to complain to regulators. Because of the likelihood of tactical complaints being made in these circumstances, and also to manage its enforcement resources efficiently and responsibly, the Panel may apply threshold tests to decide whether to act on a complaint about misleading or deceptive conduct.
A departure from an unqualified last and final statement is likely to be seen as misleading or deceptive conduct, and the Panel will take prompt action on such departures. However, the question as to whether other Code-related conduct is misleading or deceptive or is likely to mislead or deceive may be less clear.
To enable the Panel to use its enforcement resources most effectively complainants may have to do more than merely complain to the Panel.
The Panel dislikes being drawn into a takeover contest through tit-for-tat complaints. Protagonists in a contested or hostile takeover must convince the Panel that its resources would be properly used if it acts on their complaint. For example, the complainant may be required to show that it has a prima facie case, or that the complaint is not vexatious, or to establish that there would be merit in the Panel's acting on the complaint.
A complainant's formal request that the Panel convene a section 32 meeting to determine whether there has been a breach of the Code is always taken very seriously by the Panel. However, complainants should be aware that they may have to pay the Panel's expenses if, as a result of a section 32 meeting, the Panel determines that the Code has not been breached.
A note of caution for anyone making public statements about Code-related transactions or events: under rule 64 no element of intention to mislead or deceive is required. Think carefully about words and actions and how others may perceive them.
Conduct may be found to be misleading or deceptive even if it was not intended to mislead or deceive. It still may unintentionally lead persons into error. However, if a person is found to have deliberately misled or deceived market participants, the remedies sought by the Panel are more likely to include pecuniary penalties.