CODEWORD

The definition provisions in the Code and in the Takeovers Act that specify the companies to which the Code applies have been changed for both listed and unlisted companies.

The definitions relating to listed companies had provided that a “Code company”, or a “specified company”, was a company that was –

(a) a party to a listing agreement with a registered exchange;

(b) not a party to a listing agreement with a registered exchange but was a party to a listing agreement with a registered exchange at any time during the period of 12 months before any date or the occurrence of any event referred to in the Code.

Under the old definitions, all listed companies were caught by the Code. This meant that companies that had only nonvoting securities quoted on an exchange were caught by the Code. However, it was not intended that the Code should apply to such companies (because the Code is concerned with voting rights) and the Panel has granted a number of exemptions from compliance with the Code as a result.

The “Code company/specified company” definitions have now been changed to exclude listed companies that have only non-voting securities quoted on an exchange. Accordingly, the new definition of a Code company will be a company that –

(a) is a party to a listing agreement with a registered exchange and has securities that confer voting rights quoted on the registered exchange’s market; or

(b) was within paragraph (a) at any time during the period of 12 months before a date or the occurrence of an event referred to in the Code.

For unlisted companies, the definitions had applied to companies that had “50 or more shareholders and $20,000,000 or more of assets”. The asset threshold has been removed from the definition, so that the Code and Takeovers Act apply now to every company that has 50 or more shareholders. (This is in line with Australian legislation).

The result of these definition changes is that any listed company with only non-voting securities quoted (for example, debt securities) is no longer a “Code company/ specified company”. The 12-month ‘look back’ for previously listed Code companies is retained. Every company with 50 or more shareholders, regardless of its assets, falls within the “Code company/specified company” definitions.