The "Vote Commerce" section of the Government's annual appropriation statement states that Crown entities "
assist economic growth by ensuring that businesses and consumers have confidence in the integrity and effectiveness of New Zealand markets and can make well informed decisions". The Panel contributes to economic growth because "
enforcement of the Code ensures equal treatment of shareholders and a transparent takeover process, resulting in confidence of domestic and international investors in the integrity of our market." This is a Government outcome.
1The Panel is a small body administering a specialised area of the law. The Panel aims to achieve a number of
impacts on the Government's target outcome through its work.
2 The Panel's contribution to the relevance and effectiveness of the Code
3.4
The effectiveness of the Code in promoting economic transformation depends both on the relevance of the framework of the Code itself and the effectiveness of the Panel in administering its provisions, covering in particular enforcement, exemptions and approvals.
3.5
The outcome sought by the Crown for its takeovers law is a subset of its overall goal of economic transformation through creating a growing, inclusive and innovative society for the benefit of all. Takeovers law aims to provide for equal treatment of shareholders and a transparent takeover process, giving confidence in the integrity of the market to domestic and international investors.
3.6
The impact arising from the Panel's function of keeping the Code under review is improvements in the efficiency of the Code. The Panel achieves this by identifying areas of the Code which require correction or would benefit from improvement, developing proposals to achieve those corrections or improvements, seeking public comments on those proposals, and making recommendations to the Minister of Commerce to achieve those changes.
Enforcement of the Code
3.7
The Panel has significant enforcement powers in relation to the Code. Enforcement of the Code's provisions is the largest of the Panel's outputs and is expected to remain so. In addition, the Courts have recently given support to the Panel's capacity to intervene in the High Court when schemes of arrangement and amalgamations are being used to change the control of Code companies.
3.8
The theoretical aim of enforcement is to achieve 100% compliance with the Code. While that obviously will never happen, the Panel's interventions can result in a high level of compliance with the Code by market participants.
3.9
Therefore the intended impact of the Panel's enforcement function is the continuing improvement in the level of compliance with the Code by market participants.
3.10
The Panel achieves this impact in a number of ways, detailed later.
The granting of exemptions
3.11
The Panel's second most significant output in resource terms relates to the granting of exemptions.
3.12
The Code is a relatively brief document, with far-reaching provisions. As a result there are occasions where the Code's provisions do not appropriately cover particular transactions or circumstances, or where strict application of the Code would produce unintended or unreasonable consequences.
3.13
This was recognised by giving the Panel the ability to grant both individual and class exemptions. Individual exemptions may be retrospective.
3.14
The Panel's power to grant exemptions is constrained by the requirement that any exemption be both appropriate and consistent with the objectives of the Code.
3.15
The intended impact of the Panel's exemption function is the improvement in the functioning of the market by alleviating unintended or unreasonable consequences arising from strict application of the Code or allowing otherwise legitimate but Code non-compliant market transactions to occur while still being consistent with the objectives of the Code.
The approval function
3.16
The Panel is required to approve the appointments of independent advisers where these are needed under various rules of the Code or by the terms of an exemption. The Panel is also responsible for appointing independent experts where these are required by rule 57 of the Code.
3.17
The Panel seeks to ensure that appointed advisers are both independent and competent to do the job required.
3.18
The intended impact of the Panel's role in relation to the approval of independent advisers is the improvement in the quality of advice given to recipients of takeover offers and to shareholders entitled to vote to approve Code-related allotments and acquisitions.
Promoting public understanding of the law and practice relating to takeovers
3.19
The Panel has as a function to promote public understanding of the law and practice relating to takeovers.
3.20
It carries out this function in a variety of ways, including by publishing a periodic newsletter, through maintaining its website, by public speeches, and by responding to market queries.
3.21
The intended impact of the Panel's function of promoting public understanding of takeovers law is the improvement in public understanding of takeovers law over time.
International liaison
3.22
The Panel has as a function to co-operate with overseas takeovers regulators on matters where it can use its powers to assist such regulators.
3.23
This can be important because takeovers of New Zealand Code companies may impact on shareholders domiciled in other countries, and vice versa with foreign takeovers.
3.24
The intended impact of the Panel's international activities is the improvement in the level of co-operation and understanding between international takeovers regulators.
1 "Outcome" is defined in the Public Finance Act as A state or condition of society, the economy or the environment and includes a change in that state or condition (s2(1) of the Public Finance Act).
2 "Impact" is defined in the Public Finance Act as: The contribution made to an outcome by a specified set of outputs, or actions, or both (s2(1) of the Public Finance Act)
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