New Zealand Law Society - Takeovers Panel says transaction activity steady

Takeovers Panel says transaction activity steady

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Takeover transaction activity remained steady throughout the year to 30 June 2018, with the total number of transactions similar to the previous year, the Takeovers Panel says in its annual report for the 2017/18 year.

During the latest year there were 15 Code-regulated transactions, which was just below 16 in the 2016/17 year. Nine of the transactions were acquisitions or allotments of parcels of shares approved by shareholders at a meeting of the Code company, and six were takeover transactions.

The Panel says there were also five transactions structured as schemes of arrangement under the Companies Act 1993, although three proposed schemes of arrangement were abandoned by the scheme promoters prior to completion.

"The greater flexibility of the regulatory requirements for schemes, as compared with more prescriptive rules under the Takeovers Code, can make Code company schemes an attractive vehicle for complex transaction structures," the report says.

"The Panel has noted an increase in scheme-related activity following the implementation of the Code company scheme provisions in the Companies Act in 2014."

The Panel says its role in Code company schemes is principally to ensure that shareholders in a scheme of arrangement receive a level of disclosure similar to that which they would have received in a takeover regulated by the Takeovers Code.

"Early engagement with the Panel’s executive team helped applicants to meet the standards of disclosure required by the Panel for the Code company schemes. The Code company schemes regime is functioning as expected."

Key policy initiative

The report says the most significant policy initiative by the Panel in the 2017/18 year was to work with its monitoring agency, MBIE, to carry forward the Panel's recommendations for amendments to the Takeovers Act and Code made by the Panel to the Minister of Commerce and Consumer Affairs in March 2017.

"The recommendations covered a number of technical matters, but the key policy recommendations related to reducing the cost of Code compliance for ‘small’ Code companies, simplifying the Code’s timing rules and encouraging electronic access to information in Code-regulated transactions."

The Panel says most of its recommended changes will be enacted through regulations to amend the Code. The Panel worked with MBIE officials to instruct Parliamentary Counsel, assisted to review draft regulations, and helped to develop the final form of the amendment regulations.

"The change to the definition of Code company requires an Act of Parliament. The Panel worked with MBIE officials to ensure that proposed amendments to the definition of Code company were included in the Regulatory Systems (Economic Development) Amendment Bill. Finally, the Panel is working with MBIE officials to ensure an amendment to facilitate the Panel’s publication of Code-regulated documents on its website is included in a future bill."

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