Dated at Wellington this 26th day of November 2009.
The Common Seal of the Takeovers Panel was affixed in the presence of:
[Seal]
David J Quigg,
Member.
Statement of reasons
This notice applies to acts or omissions occurring on or after 27 November 2009 and expires on 31 October 2015.
The Takeovers Panel (the Panel) has granted exemptions to—
Royal Dutch Shell plc and its direct and indirect wholly owned subsidiaries (Shell) from rule 6(1) of the Code, subject to conditions, in relation to any increase in the percentage of voting securities that are held or controlled (voting control) by Shell that results from Fulton Hogan Limited (Fulton Hogan) acquiring its own voting securities under Fulton Hogan’s buyback programme (the buyback):
any person who is a Fulton family shareholder (as that term is defined in this notice) from rule 6(1) of the Code, subject to conditions, in relation to any increase in that person’s voting control that results from—
Fulton Hogan acquiring its own voting securities under the buyback:
Fulton Hogan acquiring up to all of its own voting securities from Shell (the Shell repurchase):
allotments of voting securities under Fulton Hogan’s employee share scheme:
allotments of voting securities under Fulton Hogan’s share bonus scheme:
transfers of voting securities between persons who are Fulton family shareholders:
any person who is a Fulton family shareholder from rules 7(d) and 16(b) and (d) of the Code, subject to conditions, in relation to allotments of voting securities under a 1 for 12 pro rata non-renounceable offer to be made by Fulton Hogan to its shareholders (the rights issue):
any person who is a Hogan family shareholder (as that term is defined in this notice) from rule 6(1) of the Code, subject to conditions, in relation to any increase in that person’s voting control that results from—
Fulton Hogan acquiring its own voting securities under the buyback:
Fulton Hogan acquiring its own voting securities under the Shell repurchase:
transfers of voting securities between persons who are Hogan family shareholders.
It is arguable that the Fulton family shareholders are associates for the purposes of the Code. The exemptions were considered on the basis that the Fulton family shareholders are associates for the purposes of the Code. The persons who comprise the Fulton family shareholders hold or control more than 20% of the voting securities in Fulton Hogan. Given this, if any person who is a Fulton family shareholder increases their voting control as a result of the transactions referred to above, that person would breach rule 6(1) of the Code.
It is also arguable that the Hogan family shareholders are associates for the purposes of the Code. Their exemptions were also considered on the basis that the Hogan family shareholders are associates for the purposes of the Code. The persons who comprise the Hogan family shareholders hold or control less than 20% of the voting securities in Fulton Hogan at the date of this notice, but will hold or control more than 20% of the voting securities in Fulton Hogan as a result of the Shell repurchase and the buyback. That would constitute a breach of rule 6(1) of the Code by any person who is a Hogan family shareholder. Further, once that 20% level is exceeded, then if any person who is a Hogan family shareholder increases their voting control as a result of the Shell repurchase or the buyback, that person would breach rule 6(1) of the Code.
Shell currently holds or controls more than 20% of the voting securities in Fulton Hogan. If Fulton Hogan decides to acquire its own voting securities under the buyback, then Shell, which will not participate in the buyback, will increase its voting control in breach of rule 6(1) of the Code.
Buybacks
The Panel considers that the exemptions for Shell, the Fulton family shareholders, and the Hogan family shareholders from rule 6(1) of the Code in relation to any future increases in their voting control that result from Fulton Hogan acquiring its own voting securities under the buyback are appropriate and consistent with the objectives of the Code for the reason that the conditions to the exemptions require that the buyback is approved by shareholders. Multiple resolutions in respect of shareholder approval are permitted, and the conditions to the exemption ensure that a person whose voting control will or may increase as a result of the buyback to be approved by a resolution cannot vote on the resolution, and neither can any associate of such a person.
Shell repurchase
The Panel considers that the exemptions for the Fulton family shareholders and the Hogan family shareholders from rule 6(1) of the Code in relation to any future increases in their voting control that result from Fulton Hogan acquiring its own voting securities under the Shell repurchase are appropriate and consistent with the objectives of the Code for the reason that the conditions to the exemptions require that the possible increases in voting control resulting from the Shell repurchase are approved by shareholders not associated with the party increasing their voting control.
Allotments of voting securities under Fulton Hogan’s employee share scheme and share bonus scheme
The Panel considers that the exemption for any person who is a Fulton family shareholder from rule 6(1) of the Code in relation to any increase in that person’s voting control that results from that person being allotted voting securities under Fulton Hogan’s employee share scheme or share bonus scheme is appropriate and consistent with the objectives of the Code for the following reasons:
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to all members of the Fulton family shareholders in aggregate under those schemes:
as the Fulton family shareholders are assumed to all be associates for the purposes of the Code and essentially 1 voting group, the conditions of the exemptions allow the notice of meeting to specify the maximum number of voting securities that will be allotted to all members of the Fulton family shareholders in aggregate:
if the non-associated shareholders approve the potential maximum allotment of voting securities to the Fulton family shareholders, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be acquired due to the allotment of voting securities under those schemes.
Transfers of voting securities between Fulton family shareholders
The Panel considers that the exemption for any person who is a Fulton family shareholder from rule 6(1) of the Code in relation to any increase to that person’s voting control that results from that person being transferred voting securities in Fulton Hogan from another person who is also a Fulton family shareholder is appropriate and consistent with the objectives of the Code for the following reasons:
the transactions covered by the exemptions are confined to those that take place under Fulton Hogan’s constitution, the principal purpose of which is to facilitate transfers of voting securities between family interests, not changes of control of voting rights:
there are restrictions on the transfer of voting securities that may take place in any 12-month period to limit the possibility of a change of control occurring without using one of the mechanisms of the Code:
intra-family transfers permitted by the exemption will not result in an effective change in the control of voting rights in Fulton Hogan.
Transfers of voting securities between Hogan family shareholders
The Panel considers that the exemption for any person who is a Hogan family shareholder from rule 6(1) of the Code in relation to any increase to that person’s voting control that results from that person being transferred voting securities in Fulton Hogan from another person who is also a Hogan family shareholder is appropriate and consistent with the objectives of the Code for the following reasons:
the transactions covered by the exemptions are confined to those that take place under Fulton Hogan’s constitution, the principal purpose of which is to facilitate transfers of voting securities between family interests, not changes of control of voting rights:
there are restrictions on the transfer of voting securities that may take place in any 12-month period to limit the possibility of a change of control occurring without using one of the mechanisms of the Code:
intra-family transfers permitted by the exemption will not result in an effective change in the control of voting rights in Fulton Hogan.
Rights issue
The Panel considers that the exemption for any person who is a Fulton family shareholder from rules 7(d) and 16(b) and (d) of the Code in relation to the rights issue is appropriate and consistent with the objectives of the Code for the following reasons:
it is impossible to comply with rule 16(b) of the Code by stating the actual number of voting securities to be allotted and the relevant percentages in the notice of meeting, as these numbers and percentages are dependent on a number of factors outside Fulton Hogan’s control:
it is unlikely that rule 16(d) of the Code will be able to be complied with by stating the issue price for the voting securities to be allotted and when it is payable in the notice of meeting, as that pricing and timing is unlikely to have been determined at the time of that notice:
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to all members of the Fulton family shareholders under the rights issue:
as the Fulton family shareholders are assumed to all be associates for the purposes of the Code and essentially 1 voting group, the conditions of the exemptions allow the notice of meeting to specify the maximum number of voting securities that will be allotted to all members of the Fulton family shareholders in aggregate:
if the non-associated shareholders approve the potential maximum allotment of voting securities to the Fulton family shareholders, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be acquired due to the allotment of voting securities under the rights issue:
rights issues are an acknowledged method of providing incentives to shareholders to participate in and contribute to a company’s growth as well as providing a company with a means of raising equity capital in New Zealand. The Panel should facilitate this by granting appropriate exemptions where necessary.