NEW ZEALAND Law and Practice Contributed by: Ian Beaumont, Tom Gillespie and Sam Kember, Russell McVeagh
process that allows a company and its shareholders to agree to a reorganisation or transfer of shares. A scheme of arrangement requires the approval of the target’s shareholders and the court, and also generally requires a no-objection statement from the Takeovers Panel (the primary takeover regulator in New Zealand). Specifically, a scheme needs the approval of at least: • 75% of the votes cast in each interest class enti - tled to vote and voting; and • a simple majority of all shareholders entitled to vote. Increasingly, schemes are becoming the preferred (though not exclusive) route for public acquisitions, in view of the following factors: • the lower shareholder-consent threshold to obtain 100% ownership of the target than a takeover (75% of votes cast in each interest class, and 50% of all shares, for a scheme versus 90% for a takeo - ver); and • schemes generally permit a longer time-period to obtain any requisite regulatory approvals (eg, Over - seas Investment Office or New Zealand Commerce Commission clearance), although regulators will generally try to adhere to timeframes prescribed by the Takeovers Code (it is also possible to obtain a limited set of warranties, backed up by warranty and indemnity insurance, for a scheme). 2.2 Primary Regulators The primary regulators for M&A activity in New Zea - land are as follows. Takeovers Panel The New Zealand Takeovers Panel regulates takeo - vers of code companies, the underlying principle of the Takeovers Code being that all shareholders have equal, informed opportunity to participate in major share transactions. Commerce Commission The New Zealand Commerce Commission (NZCC) is New Zealand’s regulator of competition, fair trad - ing and consumer-credit contracts. Its main role is to
enforce the Commerce Act 1986 (“Commerce Act”), alongside a list of additional legislation. The NZCC works under a voluntary notification regime, meaning that there is no legal requirement for a seller or buyer to notify the NZCC in respect of a potential acquisition. However, notification is encour - aged, especially when the relevant transaction could substantially lessen competition in a market. A buyer can apply to the NZCC either for clearance (that is, the NZCC is satisfied the merger will not substan - tially lessen competition in the market) or for a formal authorisation (allowing an acquisition even if it does substantially lessen competition in a market). See 2.4 Antitrust Regulations for further details on merger control and antitrust regulation in New Zealand. Financial Markets Authority The Financial Markets Authority (FMA) is New Zea - land’s regulator for securities law and financial report - ing. Most of the FMA’s work is carried out under the Financial Markets Conduct Act 2013 (FMCA). The FMA generally has a limited practical role in mergers and acquisitions, in that there is no requirement to consult with the FMA in relation to a proposed trans - action or seek its consent. However, depending on the nature of the target business and the acquisition (by way of example, the form of consideration to be provided), the FMCA may be relevant. Overseas Investment Office Purchasers proposing to invest directly or indirectly in New Zealand will need to be aware of the country’s inbound foreign direct investment regime set out in the Overseas Investment Act 2005 (OIA) and associ - ated regulations, which is overseen by the Overseas Investment Office (OIO). See 2.3 Restrictions on For- eign Investments for further details on foreign direct investment regulation in New Zealand. Reserve Bank The Reserve Bank of New Zealand (“Reserve Bank”) is New Zealand’s regulator of banking, insurance and non-bank deposit-takers. Its main purpose is to promote the maintenance of a sound and efficient financial system. In instances where there is to be a significant acquisition of a New Zealand incorporated registered bank or insurer, Reserve Bank approval will
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