The intended impact of the Panel's operating outputs is an effective and efficient takeovers market that maintains the confidence of domestic and international participants by providing a transparent process which ensures equal treatment of shareholders.

The Panel is a small body administering a specialised area of the law and practice. The Panel aims to achieve a number of impacts by upholding the provisions of the Code effectively and quickly through its members and the executive and by facilitating market transactions through the granting of exemptions and the recommending of changes to the law where these are required.²

The Panel's overall objective is that of being an effective and efficient regulator of the takeovers market respected by domestic and international market participants, and enforcing a Takeovers Code that provides for equal treatment of shareholders and a transparent takeover process, that contributes to confidence in the integrity of our markets.

The class of outputs which the Panel proposes to supply is the non-departmental output expense in Vote Commerce "Administration of the Takeovers Code".

The effectiveness of the Code in promoting market efficiency 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.

The objective sought by the Crown for its takeovers law is a subset of its overall goal of driving productive non-inflationary growth. 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. This is particularly important at a time when there is a loss of confidence in global credit and equity markets.

The intended impact 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. The Panel has been particularly active in relation to undertaking research into, and proposing changes to, the provisions of the Companies Act as they apply to changes of control of code companies.

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. 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 effect changes in the control of Code companies.

The theoretical aim of enforcement is to achieve 100% compliance with the Code. While that may never happen, the Panel's interventions can result in a high level of compliance with the Code by market participants.

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.

The Panel achieves this impact in a number of ways, starting with the review of most takeover documents to check for their compliance with the law. In some instances individual market transactions are investigated. On other occasions the Panel follows up on complaints made to it about the actions of other parties. Where necessary the Panel convenes meetings under section 32 of the Act to determine whether to use its enforcement powers.

The Panel's second most significant output in resource terms relates to the granting of exemptions.

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.

This was recognised by giving the Panel the ability to grant both individual and class exemptions. Individual exemptions may be retrospective.

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.

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 the application of the Code.

The Panel has to be cognisant both of the application of the law to particular circumstances and of the impact on the rights of various parties caused by any exemptions it may grant. It is the task of the Panel executive to advise the Panel on these issues as well as on the application of Panel policies and the existence of any relevant precedents. Staff processing exemptions are set targets within which they are expected to complete work on each exemption.

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. In future years it is possible the Panel could have a similar role in relation to some transactions affecting Code companies carried out under the provision of the Companies Act 1993.

The Panel seeks to ensure that appointed advisers are both independent and competent to do the job required. It has published policies to explain to the market how it administers its approval role. It is also trying to expand the available pool of independent advisers where it can.

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.

The Panel has as a function to promote public understanding of the law and practice relating to takeovers.

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.

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.

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.

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. We can also test our Code and policies underlying the Code against international practice and achieve improvements in the efficiency of the Code.

The Chairman of the Panel is a member of the Australian Takeovers Panel, and a member of the Australian Panel is a member of the New Zealand Panel.

The Panel also aims to be represented at international conferences of takeovers regulators. These are occurring every two to three years. The Panel offered, subject to funding, to host the next such conference in New Zealand in 2010. The Panel does not now intend to proceed with hosting this conference because of its likely cost and the likely constraints on attendance at this time of global economic uncertainty.

The intended impact of the Panel's international activities is the improvement in the level of co-operation and understanding between international takeovers regulators.