NEW ZEALAND Law and Practice Contributed by: Ian Beaumont, Tom Gillespie and Sam Kember, Russell McVeagh
association that aggregates the parties’ holdings for the purposes of the 20% threshold. 4.4 Dealings in Derivatives Dealings in derivatives are allowed in New Zealand. However, these activities are subject to strict regulato - ry, disclosure and compliance requirements under the FMCA, the Takeovers Code, and regulations enforced The substantial product holder disclosure regime under the FMCA applies to relevant interests in quot - ed voting products, including interests arising through derivatives. A person who becomes a substantial product holder (ie, by acquiring a relevant interest in 5% or more of a class of quoted voting products) must file a disclosure notice with the issuer and NZX as soon as they become aware (or ought to be aware) of that holding. The disclosure notice must include the identity of the substantial product holder, the nature and extent of the relevant interest, the number and percentage of voting securities in which the relevant interest is held, and details of any consideration given or received in connection with the acquisition of the relevant interest. by the FMA and the Takeovers Panel. 4.5 Filing/Reporting Obligations Once a person is a substantial product holder, any subsequent movement of 1% or more (whether an increase or a decrease) in the relevant interest must be disclosed by filing an amended substantial product holder notice. If the person ceases to be a substantial product holder (ie, its relevant interest falls below 5%), a “ceasing to be” notice must be filed. In each case, the disclosure obligation arises as soon as the person knows (or ought to know) of the change. The concept of “relevant interest” is broad. It cap - tures not only direct legal and beneficial ownership of voting securities, but also indirect interests held through associated persons, nominees, trusts and other arrangements. It also extends to interests arising through derivative arrangements, securities lending agreements, or other contractual arrangements that confer a power to exercise, or to control the exercise of, voting rights attached to quoted voting products.
Directors and senior managers of listed issuers must also disclose their relevant interests in equity prod - ucts and “specified derivatives” over those products (or over those of a related company) and subsequent changes, generally within five trading days, using the prescribed form. From a competition law perspective, there are no specific filing obligations for derivatives under the Commerce Act unless the acquisition of the deriva - tive constitutes an acquisition of a business asset or shares that may “substantially lessen competition”, in which case voluntary clearance or authorisation may be sought under the Commerce Act. 4.6 Transparency The substantial product holder disclosure require - ments enable the market to monitor movements in ownership and identify patterns of accumulation that may signal an approaching control transaction. This transparency is particularly important in the context of the Takeovers Code’s 20% threshold, as it allows the market, the target company and regulators to track whether a shareholder is approaching or has exceed - ed that threshold. During the stakebuilding phase, there is no specific obligation under New Zealand law for a shareholder to disclose the purpose of its acquisition or its inten - tion regarding control. A substantial product holder is not required to state whether it intends to make a takeover offer, seek board representation or pursue any particular strategic objective. However, the pat - tern of disclosures, particularly where a shareholder is steadily increasing its stake, will often be interpreted by the market as indicative of a potential control trans - action, even in the absence of any express statement of intent. However, the position changes materially once a for - mal takeover offer is launched. (See 9.1 Hostile Ten- der Offers .)
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