Dated at Wellington this 8th day of February 2005.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 30 April 2010, exempts Feltex Carpets Limited (Feltex), and any NZX Trading and Advising Firm that it appoints to act as its broker, from sections 37 and 37A of the Securities Act 1978 and from all of the Securities Regulations 1983 other than regulation 8.
The notice concerns a dividend reinvestment plan under which shareholders of Feltex can choose to convert all or any of the dividends to be paid to them by Feltex into shares in Feltex without incurring brokerage or other charges. Under the plan, there will be no new issue of shares in Feltex. Instead, Feltex's broker will purchase Feltex shares that have previously been allotted and then transfer those shares to participating shareholders.
The exemption allows the offer of securities under the dividend reinvestment plan in a manner similar to that allowed under the terms of the Securities Act (Dividend Reinvestment) Exemption Notice 1998, which is a class notice that relates to dividend reinvestment plans that offer new securities (the class notice).
The Securities Commission considers that it is appropriate to grant the exemptions because, for shareholders participating in a dividend reinvestment plan, there is no difference between a plan that offers new securities (to which the class notice would apply) and a plan that offers previously allotted securities. The conditions of this exemption are consistent with the conditions of the class notice and require additional disclosure about the method and timing of the pricing of the securities. The conditions include the following:
every eligible shareholder must be informed about the plan and given a right to participate in it; and
the documentation for the plan must contain provisions concerning (amongst other things) the manner in which the shares are acquired by the broker, the maximum threshold price that the broker may pay for such shares, the nature of the shares that are to be allotted, the return of dividend payments in certain circumstances, and the rights of participating shareholders; and
a description of the plan and its terms and conditions must be included in Feltex's annual report and placed on its website.