Archive | Takeovers Panel

Takeovers Panel consults on code avoidance trend

Published 22 December 2007

The Takeovers Panel has released a consultation paper on the trend to structure takeovers to avoid the Takeovers Code. Submissions close on Friday 15 February.


The paper follows Transpacific Industries Group’s decision in 2006 to use an amalgamation to take over NZX-listed Waste Management NZ Ltd, without having to comply with the code. Instead, Transpacific used the reconstruction provisions of the Companies Act. Waste Management shareholders received cash for their shares. 2 other amalgamations occurred in 2006 using the Companies Act for takeovers.


The Takeovers Panel said many market participants, including shareholders & brokers, had voiced concerns: “They believe the integrity of the New Zealand market will suffer if the code can be avoided by using the Companies Act for takeovers. There is no sign that this activity is abating.  For example, in 2007 there have been:


·         the amalgamation proposals involving Auckland International Airport Ltd & Dubai Aerospace Enterprise (now aborted) & the Canada Pension Plan Investment Board

·         Cadmus Technology Ltd & Provenco Group Ltd’s recently announced  amalgamation under the Companies Act, and

·         media speculation about the future of The Warehouse Group Ltd, which indicates that a bidder may use the Companies Act rather than the code for a takeover.”


The panel released its first discussion paper on the matter in June 2006 and made recommendations for changes to the law to the Minister of Commerce and to the select committee considering the 2006 Business Law Reform Bill.


The panel’s proposals weren’t dealt with in that bill, but the minister asked the panel in March to reconsider the issue and prepare a regulatory impact statement.


The panel has set out 6 options in its paper. It said the current law created a significant problem when related to the statutory objectives underlying the code and all proposed options would result in a greater degree of regulatory involvement in takeover transactions, but it doesn’t have a preferred option yet.


Website: Takeovers Panel consultation document


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Attribution: Panel release, story written by Bob Dey for this website.

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Takeovers Panel to look more closely at loophole

Published 30 March 2007

The Takeovers Panel said on Wednesday it would undertake more work to resolve the use of schemes of arrangement & amalgamations undermining the takeovers code.

New panel chairman David Jones said: “The panel has been concerned for some time about the increasing use of schemes of arrangement & amalgamations under the Companies Act to avoid the provisions of the code when seeking to change the ownership or control of code companies.

“We recognise the need for parties to be free to structure transactions in a manner which is appropriate to achieve their desired commercial result. The panel does not want to prevent the use of schemes or amalgamations. However, shareholders should have similar protections in a change of control as shareholders have in a takeover made under the takeovers code.”

Commerce Minister Lianne Dalziel asked for the further policy work.

Want to comment? Click on The new BD Central Forum or email [email protected].


Attribution: Panel release, story written by Bob Dey for this website.

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Takeovers Panel intervenes in Dominion Funds amalgamation

Published 8 November 2006

The Takeovers Panel has intervened in a Dominion Funds amalgamation of 3 companies after the scheme of arrangement got High Court approval.

The panel’s involvement has resulted in an appeal by Dominion, reversal of an order on the level of support required, and a requirement for the panel to be advised of the vote so it can decide if it wants to be heard on the final scheme approval.

The panel decided in May it wanted to be heard on mergers of companies covered by the takeovers code after the use of the amalgamation process by Transpacific Industries Group Ltd of Australia to take over Waste Management Ltd.

Although the Appeal Court observed that the Dominion Funds amalgamation appeared to be orthodox, and not a device to avoid the takeovers code, said it wanted to be involved because it believed “the decisions of the courts have important implications for participants in the market for corporate control in New Zealand.”

The panel has recommended changes to the law relating to schemes & amalgamations effected under the Companies Act, which have been sent to the Minister of Commerce. In the meantime, the panel said it would continue to seek to be heard by the court on scheme proposals and encouraged companies contemplating schemes of arrangement to discuss their intentions with the panel at an early date.

The Dominion Funds proposal is to amalgamate Dominion Income Property Fund Ltd, Property Fund Thirty-One Ltd & Dominion Newmarket Properties Ltd, with Dominion Income the surviving entity.

The High Court made initial orders on 22 September, allowing the scheme to be out to shareholders. When the panel was notified on 25 September, it decided the approval threshold could result in the amalgamations being approved by a very small number of shareholders in each company.

The panel said such business transformations should require majority shareholder support, without forming a view on the merits of the scheme itself.

The High Court agreed for the panel to out its view, heard it on 17-18 October and granted the orders the panel requested for this additional voting requirement.

The Appeal Court heard Dominion’s appeal on 26 October, when Dominion challenged the panel’s entitlement to intervene. Without expressing a final view, the court held it was probably right to hear from the panel and thought the proposed amalgamation was legitimately a matter of interest to the panel.

The Appeal Court reversed the original High Court order that the scheme would require approval from the holders of a majority of the voting rights in each company (not necessarily a majority of holders).

Want to comment? Click on The new BD Central Forum or email [email protected].


Attribution: Panel release, story written by Bob Dey for this website.

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