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Offers of Securities in Takeover Bids

PART I
INTRODUCTION

1. The Securities Commission is an independent statutory body established under the Securities Act 1978. It has power to exempt any person or class of persons from compliance with various provisions of the Securities Act and the Securities Regulations 1983.

2. The Takeovers Code comes into force on 1 July 2001. Also on that date the current statutory exemptions in the Securities Act in respect of securities offered in a takeover will cease to apply. Both the Takeovers Code and the Securities Act make provision for the disclosure of information. Where a takeover bid involves an offer of securities there may be some overlap between the two.

3. This paper raises the question whether the Commission should grant an exemption in respect of securities offered as part of a takeover bid under the Takeovers Code, and presents a number of options for consideration. The Commission is seeking public responses on these and on the matter generally.

4. The key question for consideration is the nature of the information that should be disclosed when securities are offered as part of a takeover offer. Should an offer of securities as consideration for the purchase of shares in a takeover regulated under the Takeovers Code be treated in the same way as an offer of securities made for the purpose of raising funds from the public? If not, should the Commission use its power of exemption to distinguish them? How?

5. This paper discusses takeover offers and the relevant legislation, and goes on to set out four proposals for a possible class exemption from securities law. A number of discussion questions are set out at the end of the paper, in Appendix A.

6. As the questions show, any exemption in respect of a takeover offer that includes an offer of securities will give rise to a number of important and, at times, complex questions. These need to be carefully assessed. We would be pleased to have responses in respect of all the questions.

7. This paper may be downloaded from the Commission's web site, www.seccom.govt.nz.

8. Comments on this discussion paper should be sent to the Commission by Friday 15 June 2001. These can be emailed to chris.holland@seccom.govt.nz or sent by post to:

Chris Holland
Securities Commission
PO Box 1179
Wellington