Statement of reasons
This notice applies to acts or omissions occurring on or after 28 June 2021 and is revoked on 28 June 2026.
The Takeovers Panel (the Panel) has granted an exemption from rule 6(1) of the Takeovers Code (the Code) in respect of allotments, acquisitions, and buybacks relating to certain specified companies. The companies affected by the exemption are companies that—
are listed on the licensed stepping-stone market operated by Catalist Markets Limited; and
were not code companies immediately before being listed on that market; and
either do not have 50 or more shareholders and 50 or more share parcels or are small companies with total assets of no more than $30 million and total revenue of no more than $15 million.
Catalist Markets Limited may be granted a licence to operate a market with a reduced regulatory burden that is targeted at small and growth issuers because of the difficulties faced by those issuers to access capital. The purpose of the exemption granted by the Panel is to lower disproportionate cost barriers to capital raising by those companies. Those 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 the specified companies 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 4 main requirements. First, the company must not have been a code company immediately before becoming listed on the Catalist Public Market. Second, the company’s board must resolve that, in its opinion, opting out of the Code is in the best interests of the company. Third, this resolution must be repeated at least every 18 months. Fourth, the company must disclose details about its opt out from the Code.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemption from the Code because—
the exemption reduces compliance costs for some Code-regulated transactions for small listed companies that fall within the definition of exempt issuer in this notice; and
an alternative stepping-stone market will be advantageous for New Zealand capital markets more broadly; and
the exemption maintains a proper relationship between the costs of compliance with the Code and the benefits resulting from it by ensuring that shareholders have adequate disclosure before each auction, but at a lower cost to the company; and
the Catalist Public Market will provide a well-regulated, licensed stepping-stone market that will provide market participants with an alternative to traditional or unlicensed exchanges.
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 24 June 2021.
This notice is administered by the Takeovers Panel.