Valediction - John King

It was a very lengthy process from the appointment of the original Takeovers Panel Advisory Committee back in 1991 to the Code becoming law in 2001. I pay tribute to Sir Douglas Graham for the introduction of the Takeovers Act in 1993 which provided for a panel appointed from the market to formulate and administer a Takeovers Code. Unfortunately, in spite of his best efforts, the government of the day shelved the adoption of the Code.

When the present government took office in late 1999 it moved the Code off the shelf very quickly. The Takeovers Code Approval Order was made on 19 October 2000 and the Code became operative on 1 July 2001. I compliment the government and the minister of the day, Paul Swain, on quickly filling the gap in an important part of the regulatory framework of the capital markets.

The Panel had quite a dramatic start. The Code became law on Sunday 1st of July 2001, and on that day the Panel held its first meeting, issued its first restraining order, and called its first enforcement meeting. The enforcement meeting was held on the 6th of July and the Panel’s decision was released on the same day. The Panel was dealing with the contested takeover for Montana Wines.

Although demanding, this was a great start for the Panel. It showed the market that we were in business and would act promptly and decisively. While there is the policeman aspect in the Panel’s role, I see the role as more akin to that of a referee, to facilitate the smooth operation of the takeovers market. The market has responded to this approach. Where we have found a breach, it has been remedied without the need for

court action. The only exception where a matter went to court involved another wine company, Oyster Bay, where the High Court upheld the Panel’s decision.

I think a key reason for this response from the market is the fact that the decisions are made by a panel drawn from the market. It is most important therefore that the high quality of the Panel membership is maintained. I am very pleased that this is in fact happening as evidenced by the recent appointment of three very highly qualified individuals to the Panel.

At present we have a very active takeovers market and, with the weight of money around and the interest of private equity funds, it looks as if the takeovers market will continue to be strong for some time. I have no doubt that we have been fortunate that the Code has been in place during this period. Takeovers in New Zealand now take place in an orderly way with all shareholders, including, in particular, minority shareholders, taking part in the takeover process. At a time when New Zealand has concerns about the loss of major companies to overseas buyers, it is even more important that there be a sensible regulatory framework to govern the takeovers market.

It has been a privilege to lead the Panel. It was a significant challenge to fIrst of all formulate a Takeovers Code suitable for the New Zealand market and then to undertake the administration and enforcement of that Code.

I have been fortunate to have been well supported by the very able people that have served on the Panel and by Senior Executive Kerry Morrell and the executive team. David Jones will be an able leader of the Panel. He and Alastair Lawrence, the new deputy chairman, were members of the original Panel. I believe I leave the Panel in good hands.