Revisions to the Panel’s Guidance Note on Schemes of Arrangement
Published 19 May 2022
The Panel has made a number of changes to its Guidance Note on Schemes of Arrangement (the Guidance Note).
The amendments arise out of the Panel’s experience in monitoring schemes of arrangement since the Guidance Note was last updated in September 2020. The amendments have been made to both capture existing practice and to reflect the Panel’s updated approach to Code company schemes.
In addition, the Panel has undertaken a broader review of the Guidance Note in order to improve clarity and accessibility. This has led to a number of sections being re-ordered. This makes a compare version of the amended Guidance Note difficult to follow.
In lieu of a comparison, the Panel summarises the amendments below
1. Discussion of the roles of the Panel and the Court: The Panel’s primary role is to assist the Court in its consideration of a scheme. The Guidance Note now discusses the roles of the Panel and the Court within the broader schemes process. In addition, there is now established New Zealand jurisprudence as to the basis on which the Court might approve a scheme and this is now included in the Guidance Note.
2. Basis on which no-objection statements will be issued: The Panel has updated the basis on which it will issue no-objection statements to more precisely capture the matters that the Panel will consider.
3. Situations in which a no-objection statement is not sought: The Panel has clarified how it might respond should a party seek orders in respect of a scheme which affects the voting control in a Code company without seeking a no-objection statement.
4. Review of scheme implementation agreements and related documents: The Guidance Note now captures the current Panel practice of reviewing scheme implementation agreements and related documents. Applicants for no-objection statements should provide copies of these documents to the Panel after execution.
5. Changed circumstances after issue of Letter of Intention: The Guidance Note has been amended to clarify that a letter of intention will be given on the basis that the scheme is approved by the requisite majorities and there will not be any material changes in facts or additional information.
6. Objections and complaints: The Panel has clarified how it will consider objections and complaints in relation to schemes.
7. Statements of intention: The Panel has clarified that failure to comply with an intention statement may result in a breach of the Financial Markets Conduct Act 2013.
8. Voting Agreements: The Panel has clarified that the Takeovers Code (Voting Agreements for Schemes of Arrangement) Exemption Notice 2020 will apply only to a voting commitment that relates to a scheme that is proposed under a scheme implementation agreement that is duly executed by all parties to the agreement and is in force – i.e., the voting commitment cannot relate to a theoretical or potential scheme which might be proposed in the future.
9. Timeframes: The Panel has updated the timeframes in the Guidance Note to reflect the timeframes that are realistic given the Panel’s experience as to the time which is actually taken.
10. Evidence of voting: The Panel has clarified what evidence should be provided to it regarding whether a scheme has received the requisite shareholder approvals.
11. Variations: The Panel has clarified its approach to how schemes can be varied, including its expectations in respect of disclosure and time for shareholders to consider changes.
12. Dealings during a scheme: The Panel has clarified its approach on share dealings by the offeror and its associates during a scheme transaction. Should dealings occur during a scheme which would not be permitted under a Code offer, the Panel may decline to issue a no-objection statement and/or make submissions to the Court. In addition, the template deed poll which offerors who hold shares in the target are required to sign has been amended to restrict the offeror from disposing of those shares.
13. Conditions: The Panel has updated its guidance to encourage meaningful disclosure of scheme conditions and their effect on the transaction.
For further information, see the Panel’s Guidance Note on Schemes of Arrangement. The Panel also encourages early engagement with the Panel executive on any questions relating to a particular scheme.