CODEWORD

From former Chairman, 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 be 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.

From the Minister of Commerce, Hon Lianne Dalziel

I want to thank John King for his major contribution to New Zealand's business regulatory environment and in particular for his dedication to the development and implementation of the law covering takeovers.  John's interest in takeovers law saw him involved from the initial Panel, set up in the early 1990s, through the preparation and implementation of the Takeovers Code, and the first almost six years of its application.

The smooth transition of this new law and the wide general acceptance of the Code are largely due to John's foresight and wisdom.  Takeovers in New Zealand now follow disciplined processes and involve well-informed shareholders.

I congratulate David Jones on his appointment as Chair and Alastair Lawrence on becoming deputy chair. Three new Panel members have been appointed for five year terms.  They are:    

John Waller who has in-depth commercial experience from his role leading the PricewaterhouseCoopers Advisory Division. He is also a member of the PwC New Zealand board;

Keith Taylor who has considerable experience gained over many years in the corporate world, including his time as Chief Executive with Tower; and

Pip Greenwood a partner at Russell McVeagh who specialises in securities offerings, mergers and acquisitions, takeovers and general corporate advisory work. She is a member of the firm's board of management.

From the Chairman, David Jones

I take this opportunity to pay tribute to John King for his long involvement with the regulation of takeovers.  John had a key role from the initial Panel set up in 1991, through the development and drafting of the Code, the reactivation of the Takeovers Panel in 2000 and the introduction of the Code in 2001.  He chaired the Panel through almost six years of operation during which time it has been tried and tested, and generally well received.  Takeovers in the New Zealand market now take place in an orderly way and shareholders are kept well informed of, and involved in, the takeover process.

My appointment as Chairman does not herald any change.  It will be business as usual.  I worked closely with John King on the development, implementation and enforcement of the Code for more than a decade in my capacity as Deputy Chair, and we share the same philosophy on the application of the Code and its underlying principles.  This will contribute to market certainty.

I am assuming the Chair when the Code is “bedded down” in that the manner in which the Code is applied and its provisions interpreted is largely settled.   The market understands the Code and the Panel’s approach to interpretation and enforcement very well.  We recognise the importance to the market of maintaining consistency in this approach. 

That is not to say that there will not be changes in the future.   Commerce and the takeovers market is a dynamic environment where change is a part of the landscape.  In the face of change the Code will be tested and the Panel may need to respond.  Any response will be made in a manner consistent with the principles of the Code and, to the extent possible, in consultation with the market.  The Panel will continue to work with the market as it has always done.  We pride ourselves on providing certainty and, subject to the legal limitations of the Takeovers Act and the Code, will always strive for sensible commercial outcomes.