If a shareholder goes over the 20 percent threshold of the Takeovers Code they must offer to buy all the voting securities of the company? Not true!

The mandatory bid rule applies in England under the London City Code, and in some other countries, but there is no mandatory bid rule in the New Zealand Takeovers Code.

In New Zealand, if a person exceeds the 20 percent threshold without complying with the Code, that person has breached the Code but this does not trigger a mandatory bid. The person has committed an offence and is liable to heavy penalties. In addition, the Court has the power to make a range of orders including suspending voting rights and ordering disposal of the shares.

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