CODEWORD

The Takeovers Amendment Act 2012 came into force on 31 August 2012. This Act makes several amendments to the principal legislation, the Takeovers Act 1993, but the key change relates to the definition of “Code company”.

An unlisted Code company is now defined as a company with “50 or more shareholders and 50 or more share parcels”.

Previously, the Code applied to a company if it simply had 50 or more shareholders who were named in the company’s share register. Given that shares are commonly held jointly (by trustees, for example), a relatively small number of parcels of shares on issue could result in an unlisted company being a Code company.

Although joint holders of shares will still be counted as individual shareholders, there is a new requirement that 50 or more separate parcels of shares be on issue before the company becomes a Code company. This reduces the scope of the application of the Code and focuses the Code on companies that are more widely-held.

The amendments have another impact on the application of the Code. For the purposes of the definition of a Code company, a shareholder is now a person who holds a security that confers a voting right. This means that holders of non-voting securities (such as non-voting preference shares) are to be excluded when counting shareholders for the purpose of determining whether a company is a Code company.