Page 19 - English-DBINZ brochure-2019

Buddle Findlay 16

ə By making an offer for a certain percentage of the total shares in a Code company (a partial offer)
ə By making acquisitions in the 50% to 90% range at a rate of up to 5% per annum (“creep” provision)

ə By making acquisitions in the 90% to 100% range by compulsory acquisition or otherwise
ə Under an exemption issued by the Takeovers Panel.
Although the Takeovers Code has, by international standards, greater flexibility in allowing full and
partial offers, there is a minimum acceptance condition. Under both full and partial offers a bidder must
receive acceptances that result in the bidder holding or controlling a minimum of 50% of the voting
rights of the Code company or, if a partial offer would result in the bidder holding or controlling a lower
percentage, the offer must be approved by the disinterested shareholders. This rule is obviously not
applicable if the bidder already holds or controls more than 50% of the voting rights before making an
offer.

TARGET COMPANY OBLIGATIONS

The Takeovers Code has a 10 working day notice and pause period, being the period between the date
of the notice of the takeover offer and the date any acquisition can be made under the Code offer.
The target company has a number of obligations during an offer, including the preparation of a target
company statement and the obtaining of an independent adviser’s report.
There are various restrictions on the directors of a Code company exercising certain defensive tactics. It
is expressly acknowledged that directors may seek to encourage competing bona fide offers, however
there is no obligation on directors to “auction” control of the company.

Further information about the Takeovers Panel and the operation of the Takeovers Code can be found at
takeovers.govt.nz.

Competition law

COMMERCE ACT
Competition law in New Zealand is governed by the Commerce Act 1986. The aim of the Commerce Act is
to promote competition in New Zealand markets for the long term benefit of consumers in New Zealand.

The Commerce Act regulates business acquisitions that impact negatively on competition and prohibits
certain restrictive trade practices.

BUSINESS ACQUISITIONS
Prohibition of certain business acquisitions
The Commerce Act prohibits the acquisition of assets or shares of a business if the acquisition would
have, or would be likely to have, the effect of substantially lessening competition in a market. In
determining whether an acquisition has or is likely to have such an effect, the Commerce Commission
will:
ə Define the relevant market: The relevant market is the market in New Zealand for the goods or
services supplied by the business (including any goods or services which, as a matter of fact and
commercial common sense, are substitutable for such goods or services)
ə Determine the impact of the acquisition on the market: This analysis involves a comparison of the
likely market outcome that would result if the acquisition did proceed (the “factual”) against the likely
market outcome if the acquisition did not proceed (the “counterfactual”). If the factual results in
substantial lessening of competition against the counterfactual, the acquisition will not comply with
the Commerce Act.