Unlisted Code Companies

Published 2 October 2025

Introduction
1. This Guidance Note has been prepared to assist market participants with understanding the Panel's approach to the Code’s requirements in relation to unlisted Code companies.
2. This Guidance Note provides guidance for unlisted Code companies. It expresses the Panel’s view on the meanings of “medium-sized” and “shareholders”, to assist companies to understand whether the Code applies to them. It also indicates how the Code might impact unlisted Code companies.
Code companies
1. The Code applies only to “Code companies”. A Code company is a New Zealand-registered company:
  1. that is a party to a listing agreement with a licensed market operator and has securities that confer voting rights quoted on a licensed market; or
  2. that was within paragraph (a) at any time during the period of 12 months before a date or the occurrence of an event referred to in the Code; or
  3. that:
    1. has 50 or more shareholders (with voting rights) (the Shareholder Limb); and
    2. is at least medium-sized (the Size Limb).
2. This Guidance Note is concerned with unlisted Code companies as defined at paragraph 2.1(c) above. Essentially, a New Zealand-registered company that satisfies the Shareholder Limb (having 50 or more holders of voting securities) and the Size Limb (meeting certain asset / revenue thresholds), but is not listed on a licensed market, is an unlisted Code company.
3. This Guidance Note provides further explanation as to the Shareholder Limb and Size Limb, followed by a discussion of common difficulties faced by unlisted Code companies and the Panel’s expectations in Code transactions involving such companies.
4. As with all matters that come before the Panel, any examples referred to in this Guidance Note are illustrative only and the Panel is not bound by its own precedent.
  
  Shareholder Limb – meaning of “shareholder”
5. Under the section 2A(3) of the Takeovers Act 1993, “shareholder” means a shareholder holding a financial product that confers a voting right.
6. If a share that confers a voting right is held jointly by 2 or more persons, those persons are treated as a single shareholder for the purposes of counting the number of shareholders.
7. Double counting should be avoided. If, for example, a shareholder holds one parcel of ordinary shares and another parcel of redeemable preference shares (with voting rights), that shareholder only counts as one shareholder for this purpose.
8. The Panel is not averse to the beneficial owners of unlisted Code companies deciding to structure their interests so that the company does not fall under the definition of Code company, so long as such structuring is done in a manner that complies with the Code.
  
  Size Limb – meaning of “medium sized”
9. Under the Code, a company is at least medium-sized if:
  1. the company has completed 1 or more accounting periods and either or both of the following are true:
    1. Assets Threshold - on the last day of the company’s most recently completed accounting period, the total assets of the company and its subsidiaries (if any) are at least $30 million; and/or
    2. Revenue Threshold - in the most recently completed accounting period, the total revenue of the company and its subsidiaries (if any) is at least $15 million; or
  2. Interim Assets Threshold - the company has not completed its first accounting period and on the last day of the most recently completed month the total assets of the company and its subsidiaries (if any) are at least $30 million.
  Essentially, the definition of medium-sized will be met where one (or both) of the Assets Threshold, Revenue Threshold or Interim Asset Threshold is met.
10. The financial thresholds are an adaptation of the thresholds found in the Financial Reporting Act 2013 for defining “large” companies. Therefore, the Assets Threshold and Revenue Threshold should be calculated in the same manner as applies under the Financial Reporting Act 2013.
11. The relevant accounting period for the calculations of the Assets Threshold and Revenue Threshold is the company’s most recently completed accounting period. This means, for example, that an unlisted Code company might meet one (or both) of the financial thresholds in one year, but fall below the thresholds in a subsequent year. If the company did not meet either threshold in its most recently completed accounting period, it is no longer a Code company and the Code does not apply to it, even if it still has 50 or more shareholders. If the same company meets either of the financial thresholds again in a subsequent accounting period, the Code will apply to it again from the end of that period.
12. If a company has yet to complete its first accounting period, the Interim Asset Threshold is used to calculate an approximation of the Assets Threshold.
Why do unlisted Code companies run into difficulty with the Code?
1. Shareholders in an unlisted Code company may be involved in the activities and operations of the company, or be connected to the history of the company in some way. The shareholders may be family members, existing or former employees, or persons with whom the company has a significant trading connection. Such relationships may give rise to associations between shareholders, which can lead to compliance issues under the Code for the associated shareholders. This is discussed further below.
  
  Definition of association under the Code
2. Rule 4 of the Code states that, for the purposes of the Code, a person is an associate of another person if:
  1. the persons are acting jointly or in concert; or
  2. the first person acts, or is accustomed to act, in accordance with the wishes of the other person; or
  3. the persons are related companies; or
  4. the persons have a business relationship, personal relationship, or an ownership relationship such that they should, under the circumstances, be regarded as associates; or
  5. the first person is an associate of a third person who is an associate of the other person (in both cases under any of paragraphs (a) to (d)) and the nature of the relationships between the first person, the third person, and the other person (or any of them) is such that, under the circumstances, the first person should be regarded as an associate of the other person.
3. Shareholders in unlisted Code companies will often have the types of relationships that are described above, in particular paragraph (d), meaning the shareholders may be associates of one another under rule 4 of the Code.
  
  Code approach to association
4. Shareholders being associates of one another, or becoming associates (even if the combined shareholding is above a level restricted by the Code) is not problematic in itself. In summary, the Code's fundamental rule restricts a person, together with their associates in aggregate, from becoming the holder or controller of an increased percentage of voting rights in a Code company above 20%, unless an exception under rule 7 applies.
5. For example, if two persons each hold or control 15% of a company’s voting securities and then become associates, this does not, in itself, breach the fundamental rule of the Code.^[1] However, while these shareholders remain associated, their combined control percentage (30%) means they are restricted from increasing their voting control, unless an exception under rule 7 applies (e.g., a takeover offer is made to all shareholders or shareholder approval is obtained for the increase).
6. This can create issues for unlisted Code companies if all or a majority of existing shareholders are associates, as they will not be able to buy or transfer shares (other than through a Code offer) between themselves because each shareholder, together with its associates, would in aggregate hold or control more than 20% of the voting rights in the company.
  
  Difficulties with approval
7. Under rule 7, Code companies can seek shareholder approval for any acquisition or allotment of shares that would otherwise breach the fundamental rule of the Code. However, rule 17 restricts any person, and their associates, seeking approval for an increase from voting on any relevant solution. Where all of a company's shareholders are associated under the Code, it can create situations where no-one can vote on the resolutions to approve any increase, as required by rule 7.
8. In such instances, the company may apply to the Panel for exemption relief. In the past, the Panel has granted exemption relief to facilitate an orderly shareholder vote on how relative changes in voting control amongst shareholders may occur.^[2]
  
  Shareholder agreements
9. Although it is only one part of the relationship between shareholders, a shareholders’ agreement may be a relevant factor as to whether association exists. A shareholders’ agreement sets out rules and procedures for shareholders on matters relating to the company.
10. The Panel’s view on shareholders’ agreements is that the parties to those agreements may be associates for the purposes of the Code. Whether or not those parties are in fact associates will depend on the nature of the shareholders’ agreement and the surrounding circumstances. Accordingly, the Panel considers questions of association for these types of agreements on a case-by-case basis. Further guidance, of a general nature, is available in the Panel's Guidance Note on Control and Association, at section 7.
Takeover documents
1. Unlike companies with voting rights quoted on a licensed market, unlisted Code companies do not benefit from a centralised platform for publishing Code-related transaction documents. While the Code requires certain documents to be sent to holders of securities in Code companies, it does not explicitly require these documents to be published elsewhere in the case of unlisted Code companies. The Panel considers it important that such documents be made available online to ensure that all shareholders (particularly so those who, for any reason, may not have received direct communication) can access them. This promotes transparency and helps ensure shareholders are adequately informed throughout the transaction process.
2. Accordingly, the Panel considers it imperative that, where an unlisted Code company is involved in a transaction regulated by the Code (including, for example, Code offers or shareholder meetings involving buy-backs or allotments), the following documents be made available online in a location that is readily accessible to shareholders:^[3]
  1. takeovers notice;
  2. offer documents;
  3. shareholder communications by both parties;
  4. rule 49A notices;
  5. dominant ownership notices; and
  6. acquisition notices,
  (together, the Notices).
3. The Panel’s expectation is that Code companies that are not listed on a licenced market publish any Notices on their websites in a timely manner. If the Code company is listed on a non-licensed market, such as the USX, those Notices should be published on that exchange in addition to being made available on the company’s website.
Contact us
1. The Panel executive is available to help and can explain the implications of the Code, whether an exemption might be necessary, and the matters that the Panel will consider for granting an exemption.

Footnotes

[1] Unless one of the associates is deemed to have increased their voting control under rule 6(2).

[2] For example, see the Takeovers Code (The Todd Corporation Limited) Exemption Notice 2025.

[3] The Panel notes that there may be other relevant document disclosure requirements under the Code and that this list should not be read as limiting those other disclosure requirements.

Version Control

This version (Panel document reference number #1001954.1) was published on 2 October 2025.

The version history of this Guidance Note is, in summary:

Date of version	Principal changes from previous version	Document reference number
2 October 2025	Reflected the amended definition of Code company (which became effective on 30 March 2025) and set out the Panel’s expectations regarding publication of transaction documents for unlisted Code companies.	#1001954.1
13 January 2020	Reflected the legislative amendments to the definition of Code company (the introduction of a financial threshold for unlisted companies to be Code companies) and the revocation of the Takeovers Code (Small Code Companies) Exemption Notice 2016.	#379942.1
26 June 2016	n/a – first edition of this Guidance Note.	#374937.1

Disclaimer

All reasonable measures have been taken to ensure the information in this Guidance Note is accurate and current. The Takeovers Panel may replace or update Guidance Notes at any time and you should ensure that you have the most recent version of this Guidance Note by checking www.takeovers.govt.nz.

The information is not legal advice. It is not intended to take the place of specific legal advice from a qualified professional. The information does not replace or alter the laws of New Zealand and other official guidelines or requirements. As with all matters that come before the Panel, any examples referred to in this Guidance Note are illustrative only, may not state all relevant facts which are material when contrasted to future matters and the Panel is not bound by its own precedents.

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