Dated at Auckland this 30th day of November 2016.
Richard Andrew Coupe,
Statement of reasons
This notice applies to acts or omissions occurring on or after 1 December 2016.
The Takeovers Panel has granted a class exemption from rule 6(1) of the Takeovers Code (the Code) for allotments, acquisitions, and buybacks relating to small unlisted companies. The purpose is to lower disproportionate cost barriers to capital raising by these companies. These costs include the costs of holding a shareholders’ meeting to approve an acquisition under rule 7(c) of the Code or an allotment under rule 7(d) of the Code, obtaining an independent adviser’s report, and obtaining legal advice to facilitate the process.
The effect of the exemption is to allow unlisted companies with total assets of $20 million or less to opt out of Code compliance. The exemption applies to share allotments, share acquisitions, and share buybacks. The exemption applies only if the company meets 2 main requirements. First, the company’s board must resolve that, in its opinion, opting out is in the best interests of the company. Secondly, the company must have given shareholders a disclosure document and an opportunity to object to the opt out and require full Code compliance. If holders of 5% or more of the voting rights in the company that are not held or controlled by persons who are increasing voting control as a result of the transaction in reliance on the exemption under this notice (or associates of those persons) object to the opt out, the transaction can proceed only if it is done in full compliance with the Code.
The Takeovers Panel considers it appropriate to grant the exemption, and considers the exemption to be consistent with the objectives of the Code, because—
the exemption reduces compliance costs for some Code-regulated transactions for small unlisted companies:
the conditions of the exemption ensure that shareholders are treated fairly in the transaction and are provided with sufficient information so that they can decide for themselves whether to opt back into full Code compliance:
by ensuring that shareholders are treated fairly, but at lower cost to the company, the exemption maintains a proper relationship between the costs of compliance with the Code and the benefits resulting from it.
Date of notification in Gazette: 8 December 2016.
This notice is administered by the Takeovers Panel.