NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
lations 2000 (which include the Takeovers Code) – together known as the “takeovers regime”. A com - pany will be a “Code company” and subject to the takeovers regime if it either: • is a listed issuer with voting financial products quoted on a licensed market – eg, shares quoted on the New Zealand Exchange (NZX); or • has 50 or more shareholders and 50 or more share parcels and is “at least medium sized”, meaning that the total assets of the company and its sub - sidiaries are at least NZD30 million and/or their total annual revenue is at least NZD15 million. The Takeovers Code restricts any increase in a per - son’s control of voting rights in a Code company above a 20% ceiling – such increases may only be made by specific methods (eg, by making a formal takeo - ver offer to all shareholders on the same terms). The Takeovers Code also includes provisions designed to ensure transparency of information in the event of a takeover offer. Schemes of arrangement A scheme of arrangement (“Scheme”) allows a com - pany a high degree of flexibility to reorganise its share capital with court approval. Schemes may also trans - fer the rights or obligations of a company. In the con - text of an acquisition, Schemes are commonly used in New Zealand to transfer the entire share capital of a target public company to an acquirer in exchange for compensation for exiting shareholders. A Scheme in respect of a Code company requires shareholder approval, including both (i) 75% of the votes cast in each interest class; and (ii) a simple majority of the votes of all shareholders entitled to vote. The basis on which a Scheme is to be put to shareholders must also be approved by the High Court. There is extensive case law establishing the principles that the High Court applies in deciding whether to give that approval. The majority of take-private transactions of New Zealand listed companies in recent years have been effected by way of a Scheme. There is a high level of flexibility inherent in the Scheme structure with respect to consideration, conditionality and time -
frames, compared to the more prescriptive Takeovers Code processes. 3.2 Regulation of Domestic M&A Transactions Aside from the regulatory regimes applicable to FDI described in 1.2 Regulatory Framework for FDI and 7. Foreign Investment/National Security , the key regulatory regime that may be relevant is the merger control regime in the Commerce Act 1986 (the “Com - merce Act”) – see 6.1 Applicable Regulator and Pro- cess Overview . Specific industries (eg, banks, insur - ers, telecommunications, and oil and gas) are also subject to sector-specific legislation that may require regulatory consents for an acquisition of interests in a regulated business. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework The primary legislation that governs companies in New Zealand is the Companies Act 1993, which sets out the powers and duties of directors and the rights and obligations of shareholders. The Companies Act is fairly flexible – see 4.2 Relationship Between Com- panies and Minority Investors . The government has also announced proposed changes to modernise the Companies Act and further reduce compliance costs. In addition to companies, other common types of business organisations include limited partnerships (formed under the Limited Partnerships Act 2008), partnerships (formed under common law and the Partnership Law Act 2019) and trusts (formed under equitable principles and the Trusts Act 2019). For listed issuers, the NZX sets rules for trading and listing on its markets, with the principal rules being contained in the NZX Listing Rules (the “Listing Rules”). The Listing Rules impose mandatory require - ments that must be complied with by all issuers listed on the NZX. The NZX has also published a Corporate Governance Code. This uses a “comply or explain” regime, under which listed issuers must either comply with the rec - ommendations in the Corporate Governance Code or,
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