Statement of reasons
Note: The following statement of reasons should be read in conjunction with the statement(s) of reasons appended to the:
This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 30 September 2012, replaces the Securities Act (Takeovers) Exemption Notice 2001 (the 2001 notice).
This notice is on substantially the same terms as the 2001 notice. However, the notice relates to the Securities Regulations 2009 (rather than the Securities Regulations 1983).
The notice exempts issuers of quoted and unquoted equity and debt securities and units in a unit trust offered as consideration or part of the consideration for a takeover under the Takeovers Code from compliance with provisions of the Securities Regulations 2009 (the 2009 regulations).
The notice applies to full and partial offers under the Takeovers Code and to compulsory acquisitions under Part 7 of the Code. This notice clarifies that where the offer is made in reliance on an exemption granted under section 45 of the Takeovers Act 1993, the offer must be made in accordance with the terms and conditions of the exemption and the provisions of the Code from which there is no exemption.
The exemptions differ depending on whether the securities are quoted on a securities market operated by NZX Limited or unquoted securities.
Part 1 of the notice applies to quoted equity and debt securities and quoted units in a unit trust. It exempts issuers, subject to the conditions, from the prospectus content requirements in Schedules 1, 2, and 4 of the 2009 regulations.
Part 2 of the notice applies to unquoted equity and debt securities and unquoted units in a unit trust. It exempts issuers, subject to the conditions, from particular prospectus content requirements in Schedules 1, 2, and 4 of the 2009 regulations.
Part 3 of the notice relates to both quoted and unquoted equity securities, debt securities, and units in a unit trust. It exempts issuers from clauses 1(1) and 5 of Schedule 13 of the 2009 regulations. Schedule 13 sets out the information that must be included in an investment statement for an offer of securities. The exemption relates to disclosures concerning how much the subscriber must pay for the securities.
The Securities Commission considers that it is appropriate to grant the exemptions because,—
if a takeover bid under the Takeovers Code involves the offer of securities as all, or part, of the consideration, there is some overlap between the information required to be disclosed by the 2009 regulations and the Takeovers Code. The exemptions reduce compliance costs by reducing this overlap of information by exempting an issuer from compliance with some disclosure requirements prescribed by the 2009 regulations where that information is required to be provided under the Takeovers Code or is publicly available in any event:
the notice divides securities into 2 classes, those quoted on a securities market operated by NZX Limited for at least 12 months (quoted securities) and other securities (unquoted securities). Exemptions from the usual prospectus content requirements are appropriate where quoted securities are offered as consideration, or part consideration, for a code offer. This is because subscribers are sufficiently informed by the information prescribed by the Takeovers Code for inclusion in the takeover notice, publicly available information about the securities, and information required to be disclosed by conditions to the exemptions. The minimum listing period defined for quoted securities ensures a base level of information will be available. Exemptions from some, but not all, of the usual prospectus content requirements are appropriate where unquoted securities are offered on the basis of the information which is available in the takeover notice:
in the circumstances that the securities being offered are the consideration for the acquisition by the issuer of the target company’s securities, it is more useful for prospective subscribers to receive information in the investment statement to explain the terms of the exchange of securities proposed, the consideration ratio, the proportion of target company securities the offeror wishes to acquire, any cash sum offered, and how to accept the offer, rather than the usually required information about how much the subscriber must pay:
this notice provides for existing exemptions from provisions of the Securities Regulations 1983 to be provided in respect of equivalent provisions of the 2009 regulations (with the effect that companies will be able to continue to rely on those exemptions in respect of offers of securities under the 2009 regulations). While the changes in the 2009 regulations reduce costs for issuers and improve information for investors, they do not attempt to tailor disclosure requirements specifically for all the circumstances to which securities law requirements apply. Exemptions from equivalent provisions of the 2009 regulations continue to be useful, and remain appropriate in light of the policy of the 2001 notice. An exception is the exemption from certain requirements relating to the prospective statement of cash flows and its corresponding conditions. This exemption and the corresponding conditions are now redundant in light of changes to the regulatory provisions relating to prospective financial statements:
the transitional provisions reduce the short term compliance costs resulting from the regulatory changes for issuers that have previously relied on the 2001 notice. These issuers may continue to rely on the 2001 notice in respect of securities offered under an existing registered prospectus.
Note: The preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to the: