Mixed Ownership Model Bill

  • not the latest version
16  New Part 5A inserted
  • After Part 5, insert:

    Part 5A
    Mixed ownership model companies

    Preliminary provisions

    45P Definitions of mixed ownership model company and other terms
    • (1) In this Act, mixed ownership model company means a company listed in Schedule 5.

      (2) In this Part,—

      10% limit has the meaning set out in section 45S

      Crown means Her Majesty the Queen in right of New Zealand

      FMA means the Financial Markets Authority established under section 6 of the Financial Markets Authority Act 2011

      relevant interest has the meaning given to it by sections 5 to 6 of the Securities Markets Act 1988

      security has the meaning set out in paragraph (a) of the definition of that term in section 2(1) of the Securities Markets Act 1988

      voting right means a currently exercisable right to cast a vote at meetings of shareholders of a company (and, for this purpose, a right is treated as currently exercisable even if section 45T(1)(c) applies to prevent its exercise), other than a right to vote that is exercisable only in 1 or more of the following circumstances:

      • (a) during a period in which a payment or distribution (or part of a payment or distribution) in respect of the security that confers the voting right is in arrears or some other default exists:

      • (b) on a proposal that affects rights attached to the security that confers the voting right:

      • (c) on a proposal to put the company into liquidation:

      • (d) during the liquidation of the company:

      • (e) in respect of a special, immaterial, or remote matter that is inconsequential to control of the company.

    45Q Treaty of Waitangi (Te Tiriti o Waitangi)
    • (1) Nothing in this Part shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi (Te Tiriti o Waitangi).

      (2) For the avoidance of doubt, subsection (1) does not apply to persons other than the Crown.

      Compare: 1986 No 124 s 9

    51% Crown control

    45R Restriction on reduction of the Crown's holding below 51% control
    • (1) No Minister who is a shareholder in a mixed ownership model company may take any of the following actions if it would result in the Crown holding less than 51% of the voting rights in the company:

      • (a) sell or otherwise dispose of any shares in the company held in the Minister's name:

      • (b) permit shares in, or other securities of, the company to be allotted or issued to any person.

      (2) A mixed ownership model company must not issue, acquire, or redeem shares in, or other securities of, the company if the issue, acquisition, or redemption would result in the Crown holding less than 51% of the voting rights in the company.

      (3) An issue, acquisition, or redemption of shares or other securities is invalid and of no effect to the extent that it breaches subsection (2) (and, if more than 1 person has participated in an issue of shares affected by this provision, the invalidity applies to the issue of shares to those persons on a pro-rata basis).

    10% limit

    45S 10% limit on holdings by persons other than the Crown
    • (1) No person (other than the Crown) may have a relevant interest in securities that confer more than 10% of the voting rights of a mixed ownership model company (the 10% limit).

      (2) Subsection (1) is subject to section 45U.

    45T Effect of exceeding 10% limit
    • (1) Every person who contravenes section 45S must—

      • (a) comply with any written notice that the person receives from the mixed ownership model company requiring that the person sell or otherwise dispose of interests in securities of the company, or take any other steps that are specified, for the purpose of ensuring that the 10% limit is not exceeded; and

      • (b) without limiting paragraph (a), take the steps that are necessary to ensure that the person is no longer in contravention of that section at the end of 60 days after the date of the first contravention; and

      • (c) while the person contravenes that section, not exercise or control the exercise of the voting rights that exceed the 10% limit.

      (2) An exercise of a voting right in contravention of subsection (1)(c) is of no effect and must be disregarded by the person responsible for counting the votes concerned.

      (3) Nothing in section 45S or this section limits or prevents the constitution of a mixed ownership model company from providing for the 10% limit and the consequences of a person exceeding the 10% limit (including to implement, or to add to, the consequences set out in this section).

      Compare: 1988 No 234 s 36U

    45U Exemption from 10% limit for trustee corporations and nominee companies, etc
    • (1) A person (A) may exceed the 10% limit without contravening section 45S if—

      • (a) A complies with both of the following subparagraphs:

        • (i) A exceeds the 10% limit merely because A holds securities on behalf of another person in the ordinary course of business as a trustee corporation or nominee company; and

        • (ii) section 31(1)(b) of the Securities Markets Act 1988 currently applies to A (and so exempts A as a trustee corporation or a nominee company under that Act); or

      • (b) A exceeds the 10% limit merely because A is attributed with (under section 5B of the Securities Markets Act 1988) the relevant interests of another person who is exempt from the 10% limit under paragraph (a) or this paragraph.

      (2) A person to whom subsection (1)(a) applies must—

      • (a) keep under continuing review the transactions of all persons for whom A holds securities of the mixed ownership model company in A's name; and

      • (b) inform the mixed ownership model company if any of those persons exceeds the 10% limit.

      (3) The exemption under this section does not apply to a person who is currently designated under section 45V as no longer exempt.

      Compare: 1988 No 234 ss 31–32A

    45V Power of FMA to remove exemption from 10% limit for trustee corporations, nominee companies, etc
    • (1) The FMA may, by notice in the Gazette, designate a person as no longer exempt under section 45U if it is satisfied that—

      • (a) the person has not complied with the condition in section 45U(2); or

      • (b) the exemption is being used for the purpose or purposes of circumventing, evading, or defeating the operation of the 10% limit taking into account the nature, substance, and economic effect of the interest or relationship or other facts (and not the mere form).

      (2) The FMA may, by notice in the Gazette, revoke a designation under this section.

      (3) A notice under this section takes effect from the date stated in the notice (which must not be earlier than the date of the Gazette notice).

      (4) Before designating a person as no longer exempt, the FMA must—

      • (a) do everything reasonably possible on its part to advise the person of the proposed designation; and

      • (b) give the person a reasonable opportunity to make submissions to the FMA on the proposal.

      (5) Subsection (4) does not apply to a designation if the FMA considers that it is desirable in the public interest for the exemption to be removed urgently.

      (6) Failure to comply with subsection (4) does not invalidate the designation.

      Compare: 1988 No 234 ss 48C, 48D

    45W FMA may use its powers for purposes of exemption
    • The FMA may exercise its powers under subpart 1 of Part 3 of the Financial Markets Authority Act 2011 for the purposes of section 45V.

    Continuing application of certain provisions

    45X Certain provisions of State-Owned Enterprises Act 1986 and other enactments continue to apply
    • (1) Sections 22 to 30(1) of the State-Owned Enterprises Act 1986, the provisions listed in subsection (2), and any Order in Council made at any time under any of those provisions continue to apply to a mixed ownership model company, despite it ceasing to be a State enterprise, as if—

      • (a) the company were a State enterprise and a company named in Schedule 2 of the State-Owned Enterprises Act 1986; and

      • (b) the Minister of Finance and the Minister responsible for that company were the shareholding Ministers for the company.

      (2) The provisions are—

      • (a) the definition of State forest land in section 2(1) and sections 24(1) and (6), 24B(4) to (6), and 61(2) of the Conservation Act 1987:

      • (b) section 11 of the Crown Pastoral Land Act 1998:

      • (c) sections 8A to 8H of the Treaty of Waitangi Act 1975.

      Compare: 1998 No 99 s 3(2), (4).