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23 August 2002
Market demands for approvals, exemptions and enforcement have kept the Takeovers Panel busy during its first year of operation, according to the Panel's annual report released today.
Chairman John King said the Panel's workload has placed enormous strains on Panel members and executives. These demands were met, but only by many hours of work often outside normal business hours.
Panel members have, with little if any notice, been required to be intensively involved with enforcement matters for 10 or more consecutive days.
"With only eight members, one of whom is in Australia, demands on individual members are very high," John King said. Panel members must have genuine experience in the market and be available virtually on call. This makes resourcing the Panel quite difficult and raises the question of what is an appropriate level of remuneration for members. Mr King welcomed the proposal to increase the number of Panel members from eight to 11.
Code well received
The Code has had a very successful introduction, the report says. It has been well received by most people, with some very positive and supportive comments about its operation even from former opponents of the Code.
Takeovers are taking place in an orderly fashion and investors are being kept well informed.
The Panel's decisions have been accepted and non-complying behaviour rectified. However accurate disclosure as required by the Code is fundamentally important, John King said.
"The Panel has had to point out that all directors are responsible for disclosure in the target company statement. Although a group of directors may be managing the process for the target company, the other directors are not absolved from their responsibility to make full disclosure."
The Panel was involved with the contested takeovers of Montana Group (NZ) Limited and Otago Power Limited, and intervened in the purchase of 55.98% of the issued shares in Seafresh New Zealand Limited by four buyers acting in concert.
The Panel called 10 meetings under section 32 of the Act where it considered parties may not have complied with the Act or the Code. Determinations were published after each meeting. The Panel issued 13 restraining orders.
The Panel has not yet had to use its powers to seek either orders or pecuniary penalties from the Court. As a result no calls have been made on the litigation fund.
Forty-two applications for appointment of independent advisers were received and 35 independent advisers were appointed. Four applications were declined and three were withdrawn.
The Panel approved two requests for withdrawal of takeover offers.
An exemption applying to common classes of transactions was gazetted when the Code came into force on 1 July 2001. Class exemptions gazetted during the year included an exemption for trustee corporations and for offers unconditional as to level of acceptances. Thirty-two applications for individual exemptions were considered. Of these 14 were granted and two were approved but withdrawn by the applicants before gazettal.
All exemptions, and the Panel's reasons for granting them, are published on www.takeovers.govt.nz.
Parliament appropriated $822,000 for the year for the Panel's operations and $675,000 for a litigation fund. The Panel can also recover costs for approvals, exemptions and some enforcement actions. Fee revenue of $120,000 was anticipated for the year but was higher than expected at $551,000 leading to an unexpected surplus of $266,000. Resource constraints restricted some of the Panel's research, policy and other activities and this contributed to the surplus.
The surplus is being carried forward to provide for an anticipated increase in workload, taking into account that the Panel's baseline funding for 2002/2003 has not been increased.
The Panel has had a successful first year in its role of facilitating and enforcing the Code and achieving its policy objectives.
"However it is still early days," John King said, "The Panel must remain vigilant and identify any adverse developments which occur in the takeovers market."
The annual report is on the Panel's website www.takeovers.govt.nz. For a hard copy contact our offices by email to email@example.com or phone (04) 471 4618.