CODEWORD

The Takeovers Panel has an exemption power under section 45(1) of the Takeovers Act 1993.

The Panel recognises that in some cases there may be technical difficulties with complying with the Code which justify an exemption being granted in order to facilitate the operation of the market. However, the objectives of the Code must not be compromised by the grant of such an exemption.

Exemptions may be granted subject to conditions. Example of such conditions might include:

• a requirement that additional voting securities are sold within a specified period to reduce the holding to a pre-existing level consistent with the rules of the Code;
• a restriction on the exercise of additional voting rights prior to the sell-down;
• a requirement for shareholder approval of the exempted action or transaction; and
• a disclosure requirement under the exempted transaction which matches as closely as possible the disclosure that would otherwise be required by the Code.

The most commonly asked questions about seeking an exemption, and answers to them, are detailed below together with a format for applying for an exemption.

Applicants should be familiar with the policy of the Panel as outlined above and should study any reasons published in relation to exemptions already granted or declined. They should also be familiar with any relevant previous exemptions. However, the Panel will keep policies under review and it will not be bound by prior decisions.

It should not be assumed that the Panel’s interpretation of the law as it applies in relation to a particular exemption is necessarily applicable for all purposes of takeovers law.

By granting an exemption the Panel does not approve or endorse the subject transaction or any party. The Panel will regard any claim that it has endorsed or approved a transaction or party as false or misleading.

Frequently Asked Questions

What can the Panel give an Exemption from?

You may apply to the Panel for an exemption from compliance with any provision of the Takeovers Code. The Panel cannot however grant an exemption from the Takeovers Act. Thus, applications which seek exemptions from parts of the Code which replicate the Act will not be granted.

When is an Exemption required?

The Panel does not generally offer advice or give legal rulings on how the Takeovers Code applies and whether in the circumstances an exemption may be required. The applicant makes its own interpretation of the law when deciding whether to apply for an exemption. In difficult cases the Panel will ask the applicant to provide a legal opinion setting out clear reasons for concluding that the law necessitates an exemption. The Panel is also empowered to obtain independent expert advice or assistance relating to particular applications and to recover the cost of this, although we will consult beforehand if we think such advice is necessary. This is for the purpose of ensuring that it has jurisdiction to act.

Is a Lawyer needed to apply for an Exemption?

Compliance with the Takeovers Code more often than not involves complex issues about the interpretation and application of the law. Questions about liability arise. The matter can be complex. Generally we recommend that you seek legal advice before making an application. 

How is an Exemption applied for?

Applications should be in writing and addressed to the Chairperson, Takeovers Panel. They can be posted or faxed to us.

If you prefer you can send your application on disk in Word format or by email to takeovers.panel@takeovers.govt.nz. A hard copy of your application should also be forwarded together with the cheque for the application fee.

What is required in an application for an Exemption?

A suggested format for an exemption application is set out below. It is not mandatory that the table be used but we recommend that you follow the format to ensure that all the necessary information is provided and delays caused by an incomplete application are avoided. The format can be downloaded from our web site www.takeovers.govt.nz in Word format or we will supply it by email or on disk on request. In preparing an exemption application you should consider the interests of all relevant holders of voting rights.

Conflicts of interest

Individual Panel members may sometimes have a conflict of interest with a matter that comes before the Panel. If you think any Panel member may be conflicted in the matter you are dealing with for exemption it would be helpful to note this in your application. Panel members are listed in our annual report which is published on our website.

What are the charges?

A cheque for $1,237.50 should accompany each application for an exemption. This represents the application fee of $100 prescribed under the Takeovers (Fees) Regulations 2001 and an advance of $1,000 in respect of fees and costs to be incurred, plus GST.

The Takeovers (Fees) Regulations 2001 prescribe charging rates of $200 plus GST per hour for time spent by members of the Panel and $145 plus GST per hour for time spent by professional staff.

We are willing to provide estimates for our work. While we endeavour to provide reliable estimates we do not consider ourselves bound to limit our charges to the amount of the estimate and will seek payments at the prescribed rates.

You will be sent an account for costs, where required, each month and at the conclusion of our work. If the cost of work done at the prescribed rates does not exceed the $1,000 paid in advance a refund will be made when our work is finished. Our experience is, however, that this will only arise in a few cases.

When the exemption is gazetted the applicant also reimburses the Panel for the costs of printing and gazetting the exemption notice at the rate of $167.17 plus GST per printed page.

How long does it take?

Applications should include a statement of the date by which the Panel’s decision is required. If the application needs to be considered urgently, you must provide reasons for this. We will do our best to meet reasonable timeframes. You need to let us have all the information promptly and allow us sufficient time to process the application. Processing time depends on the nature and quality of the application and the resources available within the Panel when you apply. Applications may take longer to process if difficult questions of policy arise. Time must also be allowed for referral to Parliamentary Counsel Office, for drafting the exemption.

What steps are involved?

Application considered by staff

Your application is considered by Panel staff, who prepare a memorandum for the Panel to consider. You may be asked to provide further information at this stage. This process is speeded up when the applicant provides quality information at the time of application and responds to queries promptly.

Consideration by Panel

When the memorandum is finalised it is put to a Panel meeting. Class exemptions under section 45(1)(b) and exemptions that raise significant policy questions are considered by a full meeting of the Panel, usually held monthly. Other exemptions can be considered by a division of the Panel as the need arises.

Notice drafted by Parliamentary Counsel Office

 If the application is approved the Panel instructs the Parliamentary Counsel Office to prepare the exemption notice. Parliamentary Counsel Office (which is not an arm of the Panel) drafts all legislation and delegated legislation including exemption notices. One to two weeks should be allowed for parliamentary counsel to prepare a draft, but complex notices may take longer. You will generally be invited to comment on a draft notice before the final form of the exemption is settled. You should not deal directly with Parliamentary Counsel Office.

Signature and publication

Each exemption notice is signed by the Chairperson or another Member of the Panel and the exemption is effective once the notice is signed. The Panel must give notice of the exemption in the Gazette, which is published each Thursday. An exemption will generally be notified:

• in the Gazette subsequent to its approval by the Panel; and
• on the Panel’s website immediately after signature,

unless the Panel has agreed to defer notifying an exemption on the ground of commercial confidentiality. The Panel may also agree to defer notifying, or omit to notify, the reasons for granting an exemption, on the grounds of commercial confidentiality.

If the Panel considers it would promote public understanding, it may make reference, in general terms, to the reasons why some applications were declined.

Format for an application for an exemption

Who is applying?

Give the full name, address and corporate status of the person(s) seeking the exemption.

What transaction is involved?

Describe the transaction for which the exemption is being sought. It would be helpful to give some background to the transaction proposed and then specific details e.g. the parties to the takeover, details of the offer, details of target, etc.

What do you want an Exemption from?

Give the provisions of the Takeovers Code from which the exemption is sought and any conditions of exemption you consider appropriate.

Why are you seeking this Exemption?

Explain, for each provision of the Takeovers Code from which the exemption is sought, why the exemption is wanted and give full reasons which may justify why it is appropriate that the exemption should be granted and how it is consistent with the principles and objectives of the Takeovers Code. You should also confirm that the provisions of the Code from which you are seeking an exemption are not identical, or similar, to provisions in the Takeovers Act.

Are there any precedents?

Identify any existing exemption notices which are similar to the exemption sought and which may provide a precedent for your application. State how the notices are similar to and different from the exemption you are seeking.

What effects will there be on the holders or controllers of securities in the Code companies concerned?

Describe how your proposed exemption may affect the holders or controllers of securities in the Code companies concerned and the relative costs and benefits to you or them of (a) having and (b) not having the exemption.

Supporting documents

You need to supply the relevant documents to support your application. These could include the following documents or most recent drafts of:

• takeover notice;
• the offer document; and
• other relevant documents.

You should also provide a draft exemption notice and draft statement of reasons that states why the exemption is granted and how this is consistent with the principles and objectives of the Code.

Time frame

You should specify the date by which a decision is needed. If your application needs urgent consideration, give reasons for this.

Conflicts of interest

If there are any Panel Members you think may be conflicted from considering your application, please state their names, with reasons.

Commercial confidentiality

If you would like the Panel to consider:

• deferring notifying an exemption; or
• deferring notifying or omitting to notify the reasons for granting an exemption,

in the Gazette, you must satisfy the Panel that it is proper to do so on the grounds of commercial confidentiality and include sufficient information for the Panel to make a decision. You must also specify for how long you would like notification deferred.