This Statement of Intent for the Takeovers Panel ("the Panel") relates to the 2009/2010 financial year and each of the following two reporting years.

The Panel is a committee of the market. It comprises eleven members, all of whom are currently active participants in the corporate world. Members are variously lawyers, company directors, sharebrokers, merchant bankers, accountants or financial advisers. One member is appointed because he is a member of the Australian Takeovers Panel.

These members are the governing body of the Panel, and exercise all the Panel's powers. One of the features of the Panel's operations is its ability to form "divisions", comprising a minimum of three members, to attend to most matters before the Panel. The only times where the Panel is not able to operate by division is where it is considering class exemptions or is making recommendations to the Minister for changes to takeovers law. In practice the great bulk of the Panel's work is done by divisions.

The Panel is the regulator of the market for the control of "public" or generally larger companies in New Zealand ("Code companies¹"). It achieves this through the administration of the provisions of the Takeovers Code ("the Code") and the Takeovers Act 1993 ("the Act"). It carries out a quasi-judicial function when exercising its enforcement powers.

An efficient market for corporate control, with broad participation by investors both large and small, is an important element of the Government's objective of driving productive, non-inflationary growth because takeovers are an efficient market mechanism for shifting resources to their most productive use. The Panel's enforcement activities promote confidence and certainty in markets.

Takeover activity covered by the Code has generally increased since the inception of the Code but began to slow in 2007/2008 and has now slowed sharply as illustrated in the following table.

The low level of market activity reflects the current global uncertainties and general lack of investor confidence. It is difficult to predict how long the reduced level of activity will continue.

During this period of relatively quiet corporate activity the Panel is putting greater emphasis on its policy functions. There are a number of important policy issues to address in relation to the operation of the Code and policy work has tended to fall behind when the executive has been heavily committed to transactional work.

In the past year, apart from recommendations for changes to the law relating to schemes of arrangement and amalgamations effecting changes of control of code companies, the Panel has published guidance notes in relation to the interpretation of rule 49(2) of the Code and the interpretation of the timing rules of the Code, and has issued discussion papers relating to reviews of the buyback class exemption notice and the policy in relation to upstream takeovers. This emphasis on important policy work is expected to continue in the year ahead pending an upturn in market activity.

The provisions of the Code are aimed at providing a transparent process for the change of control of Code companies with adequate time allowed to ensure that the various issues are properly addressed and considered. They do not allow the Panel to intervene in takeovers on the basis of their perceived merits or lack thereof.

From the time the Panel became separately funded in 2000 and up to March 2008 it had no staff of its own, the entire Panel executive being employed by the Securities Commission and effectively seconded to the Panel. The Panel executive has also been physically co-located with the Commission in Wellington over this period.

Following a governance review undertaken in 2007 the Panel decided that in order to meet its obligations under the Crown Entities Act it needed to become the employer of its own staff and, for preference, move to its own premises. The transition of the Panel's operations started in April 2008 with the employment of the Panel's own Chief Executive Officer and was completed on 1 September 2008 when the Panel became the employer of the last of its seconded staff.

The process of physical relocation of the Panel has been delayed by funding issues. In the latter part of 2008 the Ministry of Economic Development commissioned a report by the accounting firm of KPMG on the business case for the Panel's relocation. That report assessed the likely funding requirements of separation on several scenarios. Now that relocation funding has been assured for 2009/2010 the Panel anticipates remaining co-located with the Commission for the first month or two of 2009/2010 but then moving to its own premises in late 2009. The two outer years covered by this statement should see the Panel employing its own staff and being located in its own premises.