NEW ZEALAND Law and Practice Contributed by: Ben Paterson, Cath Shirley-Brown and David Hoare, Russell McVeagh
These are summarised as follows. Does the Acquisition Constitute “Takeover Activity” Regulated by the Code? What is a Code company? The Code regulates the change in control of voting rights in companies (“Code companies”) that: • are listed on a regulated market, including the New Zealand Stock Exchange (NZX); • have been listed on a regulated market in the last 12 months; and/or • have 50 or more shareholders and 50 or more share parcels and are at least medium-sized. Accordingly, private companies (unless recently del - isted or widely held) will generally not constitute Code companies. The “fundamental rule” under the Code The fundamental rule under the Code prohibits any person (or persons acting jointly or in concert, or as associates) from acquiring an interest of 20% or more in a Code company (a “control transaction” and “con - trol interest”). Who are the relevant regulators from a Code perspective? The New Zealand Takeovers Panel (the “Panel”) regu - lates takeovers of Code companies, the underlying principle of this regulation being that all shareholders (no matter their relative size or influence) have equal, informed opportunities to participate in major share transactions. The Panel has the power to exempt per - sons from a provision of the Code and/or modify the application of the Code in a particular case. If the tar - get Code company is listed on the NZX, the NZX also has powers of supervision over a takeover, under the NZX Listing Rules. The Panel and NZX work together collaboratively. If the target company is dual-listed on the Australian Securities Exchange (ASX), as is reasonably common for NZX-listed companies, the ASX and, potentially the Australian Securities and Investment Commission, will also have a regulatory role in the matter.
If the proposed control transaction is structured by way of a scheme of arrangement (see later in this sec - tion), the New Zealand High Court will be required to review and sanction that scheme. Is the Acquisition Otherwise Regulated? Commerce Commission Commerce Commission New Zealand (NZCC) is New Zealand’s regulator of competition, fair trading and consumer-credit contracts. Its main role is to enforce the Commerce Act 1986, 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). In these circumstances, the sale and purchase agree - ment (SPA) for the transaction will normally include a condition stating that NZCC approval is required before the transaction can go ahead. Once notified, depending on the level of complexity of the clearance application, the NZCC will typically take between 40 and 130 days to make a decision and issue a state - ment. The NZCC seeks to be as transparent as pos - sible, which means that its decision and any submis - sions made are published on its website. However, a party may request that certain information remain confidential. 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 M&A, in that there is no requirement to consult with the FMA in relation to a proposed transaction or seek its con - sent. However, depending on the nature of the target business and the acquisition (by way of example, the
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