Discontinued Court case achieves desired result
19 August 2004
National Property Trust Limited – discontinued Court case achieves desired result
A court case taken by the Securities Commission against The National Property Trust Limited has been discontinued after settlement of the issues was agreed to between the company and the Commission.
The National Property Trust Limited is the manager of the National Property Trust, a listed unit trust.
The case related to the manager’s disclosure of a substantial security holding in the trust. At issue was a holding of around 16% of the units in the trust, acquired by the Metropolitan Life Assurance Company of New Zealand Limited in 2002.
Metropolitan disclosed the holding in a substantial security holder notice filed in September 2002.
Metropolitan entered into an agreement with the manager relating to the units in 2002. Metropolitan agreed that if it wanted to sell its units, the manager must be given a first opportunity to find a buyer for those units. Metropolitan also agreed not to exercise its votes against the interests of the manager of the trust.
The Commission considered that this agreement gave The National Property Trust Limited a relevant interest in the units held by Metropolitan and that this interest should have been disclosed under the Securities Markets Act 1988.
The agreement, entered into in 2002, was not disclosed to the market until March 2004.
The Commission began proceedings in the High Court in April, seeking orders to prevent The National Property Trust Limited from exercising its rights under the 2002 agreement because of the non-disclosure.
The Commission obtained interim orders to prevent the manager or Sovereign Assurance Company Limited dealing in the units until the matter was resolved. Sovereign had acquired the units held by Metropolitan when it amalgamated with Metropolitan in June 2003.
In June 2004 the manager and Sovereign signed an agreement setting aside the earlier 2002 agreement. The effect of this was that the manager gave up its interest in the units. The manager filed a substantial security holder notice on 4 June 2004 confirming that it no longer held a relevant interest in the units.
As a result of the earlier agreement being terminated the result sought by the Commission was achieved. The interim orders were discharged by consent on 23 July 2004.