Takeovers Panel moves to protect shareholders
19 June 2006
MEDIA RELEASE
Takeovers Panel moves to protect shareholders
The Takeovers Panel is seeking public comment on the use of schemes of arrangement and amalgamations to merge or acquire code companies. A code company is a listed company or a company with 50 or more shareholders and assets of $20m or more.
“The media and the market have expressed concerns on the use of schemes and amalgamations under the Companies Act to merge or acquire a code company,” Chairman John King said. “The Panel shares those concerns.”
The current relationship between the Code and the Act can result in a change of control of a code company under a scheme or amalgamation without shareholders having the rights and protections they have under the Code.
“This is undesirable,” John King said. “Companies should be able to choose which process they use to merge with or gain control of a code company. But the rights and protections of code company shareholders should follow consistent principles under all processes.”
The Panel has
published a discussion paper seeking the views of market
participants.
It will then recommend changes to the law
on the use of schemes and amalgamations.
The paper
considers amending the Code and the Companies Act so
that:
- schemes and amalgamations are taken out of the
Code; and
- the principles of the Code are included in
the provisions of the Companies Act that deal with schemes
and amalgamations.
To achieve this; the Panel suggests
that:
- the Companies Act relating to schemes be amended
to require:
o the Courts to consider the code principles
when approving a scheme, including the level of shareholder
approval needed and the information to be given to
shareholders; and
o the Courts to take into account
recommendations from the Panel on the Court’s requirements
for approval of a scheme.
- the Companies Act relating to
amalgamations be amended to require:
o parties to a
proposed amalgamation to obtain Panel approval of the
amalgamation provisions; and
o the Panel to take into
account the principles of the Code in determining its
requirements for approval.
The discussion paper is on the Panel’s website www.takeovers.govt.nz. Submissions close on 30 June 2006.
“The paper raises important policy issues and I urge interested parties to make submissions,” John King said.
ENDS