Code companies are companies that are subject to the rules of the Takeovers Code.
Listed companies with voting securities quoted on the NZSX or NZAX markets are Code companies. Unlisted companies with 50 or more shareholders are also Code companies.
The Panel has received enquiries about how to interpret the word shareholders when deciding whether an unlisted company falls within the definition of Code company in the Takeovers Code. This has been a more urgent question for some companies since the Takeovers Amendment Act 2006 removed the asset threshold from the definition.
The Code defines code company, in respect of unlisted companies, as a company that has 50 or more shareholders. Before the Takeovers Amendment Act 2006 was passed the words and $20,000,000 or more of assets were included in that definition.
Neither the Code nor the Takeovers Act 1993 defines shareholders. The particular enquiry made of the Panel has been whether each individual shareholder in the company should be counted, or whether the number of share parcels that are held should be counted, as shareholders.
These can result in different figures because some share parcels are held jointly, for example, by family members or by the trustees of a trust.
Each of the joint shareholders is required by the Companies Act 1993 to be named in the company's share register.
The Panel's view is that shareholders means each shareholder named in the company's share register. The Panel enforces the Code on that basis.
The Takeovers Act and Companies Act were passed in the same bundle of company law reforms. Since the takeovers law does not define shareholder (but does define company as having the meaning given by the Companies Act), the Panel considers that one must look to the Companies Act for the meaning of shareholder.
The Companies Act defines shareholder as having the meaning set out in section 96 of that Act, as follows:
In this Act, the term "shareholder", in relation to a company, means-