Takeovers Code (Professional Underwriters) Exemption Notice 2004

Reprint
as at 28 May 2004

Crest

Takeovers Code (Professional Underwriters) Exemption Notice 2004

(SR 2004/138)


Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

This notice is administered by the Takeovers Panel.


Pursuant to section 45 of the Takeovers Act 1993, the Takeovers Panel gives the following notice (to which is appended a statement of reasons of the Takeovers Panel).

Notice

1 Title
  • This notice is the Takeovers Code (Professional Underwriters) Exemption Notice 2004.

2 Commencement
  • This notice comes into force on its notification in the Gazette.

3 Interpretation
  • (1) In this notice, unless the context otherwise requires,—

    Act means the Takeovers Act 1993

    additional voting rights, in relation to any person who has increased voting control, means the portion of the voting rights in a code company held or controlled by the person that corresponds to the person's increase in voting control

    Code means the Takeovers Code approved by the Takeovers Code Approval Order 2000 (SR 2000/210)

    control percentage means the percentage of voting rights in a code company that a person holds or controls

    professional underwriter means a person whose ordinary business includes entering into bona fide underwriting or subunderwriting contracts with respect to offers of securities

    upstream party, in relation to a person, means any other person who directly or indirectly has effective control over the person.

    (2) Any term or expression that is defined in the Act or the Code and used, but not defined, in this notice has the same meaning as in the Act or the Code.

4 Exemption from rule 6(1) of Code
  • Every person who is, or is an upstream party of, a professional underwriter is exempted from rule 6(1) of the Code in respect of any increase in the person's voting control.

5 Condition of exemption
  • The exemption in clause 4 is subject to the condition that—

    • (a) the increase in the person's voting control results only from the allotment or transfer to the professional under-writer of voting securities in a code company under a bona fide underwriting or subunderwriting contract entered into in the professional underwriter's ordinary course of business; and

    • (b) the purpose of the professional underwriter's entry into the underwriting or subunderwriting contract is to earn fees, commission, or similar remuneration; and

    • (c) neither the professional underwriter nor any upstream party of the professional underwriter had a collateral purpose or intention, in respect of the professional underwriter's entry into the underwriting or subunderwriting contract, of enabling any or all of the following persons to increase their control percentage:

      • (i) the professional underwriter:

      • (ii) the upstream parties of the professional underwriter:

      • (iii) the associates of the professional underwriter; and

    • (d) immediately before the professional underwriter's entry into the underwriting or subunderwriting contract, the aggregate of the control percentages of the person and the person's associates did not exceed 5%; and

    • (e) the control percentage of the person is decreased within 6 months after the increase in the person's voting control so that the person and the person's associates hold or control in total not more than 20% of the voting rights in the code company; and

    • (f) the additional voting rights of the person are not exercised before the decrease of the person's control percentage required by paragraph (e).

6 Takeovers Code (Class Exemptions) Notice (No 2) 2001 amended

Dated at Wellington this 20th day of May 2004.

The Common Seal of the Takeovers Panel was affixed in the presence of:

[Seal]

J C King,
Chairperson.


Statement of reasons

Clause 19 of the Takeovers Code (Class Exemptions) Notice (No 2) 2001 exempted underwriters from the fundamental rule, rule 6(1) of the Takeovers Code (the Code), because professional underwriting agreements can inadvertently lead to a breach of the fundamental rule.

The Takeovers Panel became aware that there may be some uncertainty regarding whether the exemption in clause 19 of the Takeovers Code (Class Exemptions) Notice (No 2) 2001 applies to corporate investors who seek to use underwriting agreements as a means of increasing control in code companies. The Panel did not intend the class exemption to apply in such circumstances. In these circumstances, where appropriate, a specific exemption may be sought from the Panel. Alternatively, shareholder approval under rule 7(d) of the Code could be sought, provided that an appropriate exemption from rule 16(b) of the Code is first obtained.

The Panel decided to amend the exemption for underwriters from rule 6(1) of the Code to make it clear that it does not apply if an underwriter has a collateral intention in respect of the underwriting agreement of enabling any person to increase that person's voting control in a code company. Also, the exemption will not apply where the underwriter and its associates already hold more than 5% of the voting control of the code company.

The Panel considers that it is appropriate to grant an exemption to professional underwriters, and upstream parties of professional underwriters, from rule 6(1) of the Code because—

  • underwriting arrangements are an accepted means of assisting companies to raise capital in New Zealand, which should be facilitated by the Panel; and

  • the allotments pursuant to the underwriting agreements to which the exemption applies would not change the effective control of the code company.

The Panel considers that the exemption is consistent with the objectives of the Code because—

  • it is a condition of the exemption that any increase in voting control is eliminated within 6 months and the additional voting rights are not exercised before that elimination; and

  • it maintains a proper relation between the costs of compliance with the Code and the benefits resulting from it.


Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 27 May 2004.


Contents

  • 1General

  • 2Status of reprints

  • 3How reprints are prepared

  • 4Changes made under section 17C of the Acts and Regulations Publication Act 1989

  • 5List of amendments incorporated in this reprint (most recent first)


Notes
1 General
  • This is a reprint of the Takeovers Code (Professional Underwriters) Exemption Notice 2004. The reprint incorporates all the amendments to the notice as at 28 May 2004, as specified in the list of amendments at the end of these notes.

    Relevant provisions of any amending enactments that have yet to come into force or that contain relevant transitional or savings provisions are also included, after the principal enactment, in chronological order.

2 Status of reprints
  • Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment. This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.

    This presumption may be rebutted by producing the official volumes of statutes or statutory regulations in which the principal enactment and its amendments are contained.

3 How reprints are prepared
  • A number of editorial conventions are followed in the preparation of reprints. For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted. For a detailed list of the editorial conventions, see http://www.pco.parliament.govt.nz/legislation/reprints.shtml or Part 8 of the Tables of Acts and Ordinances and Statutory Regulations, and Deemed Regulations in Force.

4 Changes made under section 17C of the Acts and Regulations Publication Act 1989
  • Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice. Changes that would alter the effect of the legislation are not permitted.

    A new format of legislation was introduced on 1 January 2000. Changes to legislative drafting style have also been made since 1997, and are ongoing. To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all legislation reprinted after 1 January 2000 is in the new format for legislation and reflects current drafting practice at the time of the reprint.

    In outline, the editorial changes made in reprints under the authority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint:

    • omission of unnecessary referential words (such as of this section and of this Act)

    • typeface and type size (Times Roman, generally in 11.5 point)

    • layout of provisions, including:

      • indentation

      • position of section headings (eg, the number and heading now appear above the section)

    • format of definitions (eg, the defined term now appears in bold type, without quotation marks)

    • format of dates (eg, a date formerly expressed as the 1st day of January 1999 is now expressed as 1 January 1999)

    • position of the date of assent (it now appears on the front page of each Act)

    • punctuation (eg, colons are not used after definitions)

    • Parts numbered with roman numerals are replaced with arabic numerals, and all cross-references are changed accordingly

    • case and appearance of letters and words, including:

      • format of headings (eg, headings where each word formerly appeared with an initial capital letter followed by small capital letters are amended so that the heading appears in bold, with only the first word (and any proper nouns) appearing with an initial capital letter)

      • small capital letters in section and subsection references are now capital letters

    • schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross-references are changed accordingly

    • running heads (the information that appears at the top of each page)

    • format of two-column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chronological).

5 List of amendments incorporated in this reprint (most recent first)