CODEWORD

Cheques are being phased out in New Zealand. In light of the phase-out, the Panel issues the following guidance on the drafting of acceptance forms.

Under rule 33(2) of the Code, an offer to which the Code applies must specify a date by which the consideration for the offer must be sent to persons whose financial products are taken up under the offer. The specified date must be no later than 5 working days after the latest of:

• the date on which the offer becomes unconditional;
• the date on which the shareholder’s acceptance is received; or
• the end of the offer period first specified in the offer.

The Panel understands that current practice is that offerors pay consideration to shareholders by direct credit where the share registrar has the payee’s bank account details, with cheques being used as a “fall back” option where there is no bank account on record. The current phase-out of cheques means that this will cease to be an option in the near future.

The Panel understands that share registrars have been actively canvassing investors over the last few months to encourage them to provide bank details. However, to prevent offerors being required to send consideration when they are practically unable to do so, the Panel suggests that acceptance forms could provide that they may be treated as invalid unless they include a valid bank account number. The bank account number on the form may be pre-populated, but shareholders should be given the opportunity to verify and correct it.

The effect of this approach is that any acceptance form that is returned without valid bank account details may be treated by the offeror as invalid, and the offeror’s receipt of that form would not trigger an obligation to pay that shareholder.

If you have questions regarding this guidance, please contact the Panel executive.