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POA - Notice of Annual Shareholder's Meeting 2004

POA - Notice of Annual Shareholder's Meeting 2004

Notice is hereby given that the Sixteenth Annual Meeting of Shareholders of Ports of Auckland Limited will be held at the Hilton Hotel, Aquamarine Room, Princes Wharf, Auckland, New Zealand on Thursday 21 October 2004 commencing at 2.00 p.m.


1. Presentation of the report of the Directors, the report of the Auditors and the Financial Statements for the year ended 30 June 2004 as contained in the Company¡¦s annual report. 2. To elect five Directors: a) Mr R.L. Challinor retires by rotation and, being eligible, offers himself for reelection. b) Mr P.B. Coote retires by rotation and, being eligible, offers himself for reelection. c) Mr T.K. McDonald retires by rotation and, being eligible, offers himself for reelection. d) Mr P.V. Hubscher offers himself for election. e) Mr I.R. Palmer offers himself for election. f) Mrs S.M. Paterson offers herself for election. The Board currently consists of eight Directors.

The Board has fixed its number at nine, from the end of the Annual Meeting on 21 October 2004. One Director, Mr Ross Johns, is retiring and is not seeking re-election. As there are six candidates and only five vacancies, there will be a poll for the election of Directors. If there is a majority vote in favour of each of the six candidates, the five highest polling candidates will be deemed to be elected. (For information on each of the candidates please see Explanatory Note 1) 3. Banking Facilities That the initial entry into banking facilities in March 2003 be ratified. (See Explanatory Note 2)

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4. Directors¡¦ Remuneration That the maximum total aggregate fees payable to Directors be increased from $330,000 per annum to $365,000 per annum to be divided amongst the Directors in such proportion and in such manner as the Board may agree. (See Explanatory Note 3) 5. Adoption of a new constitution That the existing constitution of the Company be revoked and the Company adopt a replacement constitution in the form tabled at the meeting and signed by the Chairman for the purposes of identification. (See Explanatory Note 4)

GENERAL BUSINESS 6. Opportunity for shareholders to question, discuss or comment on the management of the Company.

INVITATION TO SHAREHOLDERS The Directors cordially invite shareholders to join them for refreshments at the conclusion of the meeting.

PROCEDURAL NOTES (i) The persons who will be entitled to vote on the resolutions at this Annual Shareholders¡¦ Meeting are those persons who will be the shareholders of the Company at 2.00 p.m. on Tuesday 19 October 2004. (ii) Shareholders can participate by proxy or by casting their vote in person at the Annual Shareholders¡¦ Meeting. (iii) All shareholders entitled to attend and vote at the Annual Shareholders¡¦ Meeting are entitled to appoint a proxy to attend and vote for them in their place. The proxy need not be a shareholder of the Company. A proxy form is enclosed, and if used, must be lodged at the office of the share registry, Computershare Investor Services Limited, at either Private Bag 92119, Auckland 1020 or at Level 2, 159 Hurstmere Road, Takapuna, North Shore City, Auckland, New Zealand not less than 48 hours before the time of the holding of the meeting (i.e. before 2.00 p.m. 19 October 2004). (iv) Agenda items 2, 3, 4 and 5 will be decided by way of a poll. (v) Agenda items 2, 3 and 4 must be passed by an ordinary resolution of shareholders, i.e. by a simple majority of the votes of those shareholders entitled to vote and voting on the resolution. Agenda item 5 must be passed by a special resolution of shareholders, i.e. by a majority of 75% of the votes of those shareholders entitled to vote and voting on the resolution.

EXPLANATORY NOTES Explanatory notes in respect of the resolutions are set out on the following pages. J.A. Harknett Company Secretary 1 October 2004 EXPLANATORY NOTES

EXPLANATORY NOTE 1: ELECTION OF DIRECTORS There are three Directors who are required under the constitution to retire by rotation at this Annual Meeting. They are all eligible for re-election. There have been three additional nominations to the Board. The six candidates for election at the meeting are:

Robert Lanham Challinor BCom, FCA, FCIS, CMA, FInstD Mr Challinor was appointed a Director in July 2000. Mr Challinor is a Partner/Director of investment bankers Northington Partners Limited. He was previously a partner in an international accounting firm. Aged 62, Mr Challinor has 20 years¡¦ experience as a director of numerous public and private companies. He is currently Chairman of Mighty River Power Limited, Kingfish Limited and Sheffield Limited; a Director of The Warehouse Group Limited and the Copthorne Waitangi Resort; and a member of the Australasian Advisory Board of international strategy consultancy L.E.K. Consulting. Mr Challinor brings to the Board particular expertise in corporate finance and governance. He is Chairman of the Board¡¦s Audit Committee. The Board has determined that Mr Challinor is independent when considering the NZX Listing Rules.

Peter Branford Coote BCom, CA, FCIS, ACMA Mr Coote was appointed a Director in August 2002. Aged 63, Mr Coote is Executive Chairman of a transport and distribution group that includes Provincial Freightlines Limited and Car Haulaways Limited. He is a Director of Capital Properties (New Zealand) Limited. Mr Coote has a broad knowledge of logistics from both an operational and strategic perspective. The Board has determined that Mr Coote is not independent when considering the NZX Listing Rules.

Peter Vernon Hubscher MNZM B.Tech (Food Tech.) Peter Hubscher, aged 61, retired as managing director of Montana on 28 May 2004 and assumed chairmanship of that company. Peter Hubscher had been managing director of Montana since 1991 and had been instrumental in building a consistently high performing premium wine business. His leadership within New Zealand and the global wine industry has led to the establishment of one of the most successful premium wine organisations in the world and the integration of Montana into Allied Domecq World Wines (ADWW). Mr Hubscher was made a member of the New Zealand Order of Merit in 1998 for his services to the wine industry. In 1999, he was named Executive of the Year in the Deloitte Management Magazine Top 100 Awards. In 2002, he was awarded an honorary doctorate from Massey University for his outstanding contribution to winemaking, the wine industry and the wider field of business. He is a Director of Auckland Regional Holdings.

Thomas Kirriemuir (Kerry) McDonald MCom(Hons), FinstD, FNZIM Mr McDonald was appointed to the Board in August 2002. Aged 62, Mr McDonald is Chairman of the Bank of New Zealand, Oceana Gold Limited, and Advanced Dynamics (New Zealand) Limited, and a Director of Carter Holt Harvey Limited, Gough, Gough and Hamer Limited and Dux Industries Limited. He is also Deputy Chairman of the New Zealand Institute of Economic Research Inc., a member of the National Council of the Institute of Directors, a Governing Board member of the New Zealand Antarctic Institute, a Life Member of the Australia-New Zealand Business Council, an Executive Member of the Japan-New Zealand Business Council, and a member of the e-Government Advisory Board. Mr McDonald brings a broad experience to the Board, particularly in the areas of strategic direction and performance improvement. As a previous Managing Director of Comalco New Zealand Limited he is able to share his considerable industry operating experience. He was also Executive of the Year in the Deloitte Management Magazine Top 100 awards in 1996. He is Chairman of the Board¡¦s Due Diligence Committee. The Board has determined that Mr McDonald is independent when considering the NZX Listing Rules.

Iraia (Harry) Raymond Palmer The following is a statement provided by Mr Palmer for this Notice of Meeting: Thank you to my fellow small shareholders for your support these past ten years that I have been nominated as a director. After working on the waterfront for the past 30 years I know I can make a major contribution to the future of the Company. I oppose the sale of any port company assets. Legislation states the Company is to ¡§Run a successful business¡¨, not sell assets. I would like to recommend the Company build a car park at Bledisloe Wharf to create space for containers and ease congestion in that area. Finally, thank you to my fellow employees for the effort in producing another highly profitable year. Well done.

Susan Marie Paterson BPharm, MBA (London) Susan Paterson, aged 46, has a broad range of Board and executive experience with direct profit accountability and consultancy/restructuring roles. Experience includes pharmaceutical and management background, and a range of consulting and management positions throughout New Zealand and internationally. Susan has seven years¡¦ Board experience on the Boards of Transpower New Zealand Limited (appointed 1999), Auckland Regional Holdings, NZ Eco-Labelling Trust, Tower Health and Life (1996-2002), Energy Efficiency and Conservation Authority (1996- 2000), and St Cuthbert's College (since 1997).

EXPLANATORY NOTE 2: BANKING FACILITIES A number of Ports of Auckland¡¦s Directors are also non-executive Directors of other companies. One Director is a member of a Board of a banking institution that is involved in the provision of banking facilities to the Company. Mr McDonald is a director of the Bank of New Zealand. As a consequence of this cross-directorship, and in terms of the NZX Listing Rules, transactions between the Company and the relevant banking institution may constitute a Material Transaction with a Related Party, which requires shareholder approval unless a waiver is obtained. In March 2003 Ports of Auckland entered into a $100,000,000 revolving cash advance facility and a $100,000,000 standby advance facility agreement (collectively the ¡§Facilities¡¨) with Westpac Banking Corporation and Bank of New Zealand. At that time, on the basis of professional external advice, no waiver from the New Zealand Exchange (NZX) Listing Rules was applied for, and the Facilities were not referred for shareholder approval. When application was made to extend the expiry date of the Facilities in July 2004, Ports of Auckland was advised by NZX that a waiver should have been applied for when the initial Facilities were entered into. A waiver was therefore obtained from the NZX on 17 August 2004 to allow extension of the Facilities to be entered into with the Bank of New Zealand as a member of the banking syndicate that provides the Facilities. In granting the waiver the NZX placed the following condition on Ports of Auckland: That Ports of Auckland seeks shareholder ratification of the initial entry into the Facilities, in March 2003, at the 2004 Annual Meeting. The Board of Directors is of the view that, at the time originally entered and as subsequently extended, the Facilities represent commercially standard terms for financial facilities of their size between a company of the credit rating of Ports of Auckland and a banking syndicate.

EXPLANATORY NOTE 3: DIRECTORS¡¦ REMUNERATION In accordance with the Company¡¦s constitution and the New Zealand Exchange (NZX) Listing Rules, the power of the Board of Directors to authorise payment of remuneration to each Director for services as a Director (except as Executive Director) is subject to shareholder approval. The existing total aggregate fees payable of $330,000 was set in 2002. The proposed increase in the level of Directors¡¦ fees is $35,000 per annum (being an increase from the current level of Directors¡¦ fees of $330,000 per annum to $365,000 per annum). The proposed increase is to allow for the appointment of an additional director.

EXPLANATORY NOTE 4: ADOPTION OF A NEW CONSTITUTION Introduction Item 5 on the Notice of Meeting is a proposal that the Company revokes its existing constitution and adopts a new constitution. A copy of the proposed new constitution and the existing constitution may be viewed on the Company¡¦s website Copies of those documents are also available on request free of charge from the Company at P O Box 1281, Auckland, New Zealand, Attention: Jim Harknett, Company Secretary. Copies of these documents may also be inspected free of charge at the registered office of the Company, Ports of Auckland Building, Sunderland Street, Auckland, New Zealand. The Company is required to update its constitution to reflect changes made by the NZX to a number of important aspects of the NZX Listing Rules. This must be done at the "first reasonable opportunity" - typically regarded as a Company's annual meeting. The number of changes that the Company is required to make to the constitution this year as a result of NZX Listing Rules changes means that it is a more simple procedure for shareholders to resolve to adopt a new constitution than to resolve to approve each change to the existing constitution. Those changes concern both the form and substance of the Company's constitution.

Change to form The NZX now permits listed company constitutions to incorporate a number of important NZX Listing Rules by reference; that is by referring to them and stating that they are to be treated as if set out in full in the constitution. The Board has determined a preference to adopt a constitution that incorporates such rules by reference because it will not be necessary in the future to amend the constitution as and when the NZX Listing Rules are amended. When in future the constitution is amended to reflect changes to the NZX Listing Rules, it will not be necessary for shareholders to approve that amendment. There is a material cost and inconvenience involved in regularly putting amendments to the constitution to shareholders at annual meetings. Incorporation by reference effectively means that changes to certain NZX Listing Rules will automatically be adopted as part of the Company's constitution. One effect of this change is that much of the detail of the constitution is no longer required as it will be set out in the NZX Listing Rules as amended from time to time. This creates a much shorter document. The adoption of the new form of constitution will however have the effect that all of the relevant material is not contained in the constitution itself. A reader of the constitution will need to have regard to the NZX Listing Rules as well.

Change to substance A summary of the significant differences between the existing constitution and the new constitution is set out below. Clause 2 of the constitution now provides that the ¡§NZX Incorporation Rules¡¨ are deemed incorporated in the constitution as if they were set out in full. The ¡§NZX Incorporation Rules¡¨ are defined as those NZX Listing Rules which are specified in Appendix 6 of the NZX Listing Rules, or its replacement. The rules specified in Appendix 6 are broadly those which correspond to the provisions listed below which have been deleted from the constitution. The effect of the amendment is that if the NZX Incorporation Rules are changed from time to time, those rules as so changed will be deemed to be incorporated in the constitution. Changes to the NZX Listing Rules are proposed by the NZX and reviewed by the Securities Commission as part of a statutory process whereby the Minister of Commerce assesses whether or not to disallow the changes. Clause 2 also now provides that if a provision of the constitution is inconsistent with the NZX Listing Rules, that provision is deemed amended or deleted to the extent necessary to make that provision consistent with the NZX Listing Rules. It also provides that if at any time the NZX Incorporation Rules require or permit any act or omission which would otherwise be in contravention of the constitution, that act or omission is deemed to be allowed by the constitution. There are specified exceptions to the above provisions, which take account of the fact that the Company is also governed by the provisions of the Port Companies Act 1988. These relate to the minimum number of directors, the number of directors who may be members or employees of a Shareholding Local Authority and the requirement that the auditor must be the Auditor-General. A number of provisions have been deleted from the constitution. Those are provisions which correspond to the ¡§NZX Incorporation Rules¡¨ referred to above. Because those rules are now incorporated in the constitution by reference, there is no need to set them out in the constitution. The table below lists each clause which has been deleted, the NZX Listing Rule to which it corresponds, and a brief description of its subject matter. Where an NZX Listing Rule has been amended so that it differs from the existing constitution in a significant way the relevant change is described in the section of this note that follows the table overleaf.

Clause of existing Constitution Corresponding NZX Listing Rule Subject Matter

Clauses 4.2 and 4.3 Rules 7.3 and 7.4 Restrictions on issues of new shares and other equity securities. Clause 4.5 Rule 7.5 Restrictions on issues and buy backs of securities affecting control. Clauses 5.2 and 5.3 Rule 8.3 Restrictions on the modification of rights of holders of equity securities. Clauses 6.2 to 6.6 Rules 7.6.1, 7.6.2, 7.6.3 and 7.6.6 Restrictions on redemption and acquisition of equity securities. Clause 7 Rules 7.6.4, 7.6.5 and 7.6.6 Restrictions on financial assistance. Clause 22.5 Rule 6.3.1 Entitlement of holders of equity securities to attend meetings. Clauses 27.2 and 27.3 Rule 9.3 Restrictions on voting by shareholders. Clause 32 Rule 9.1 Restrictions on disposal or acquisition of assets. Clause 33 Rule 9.2 Restrictions on transactions with related parties. Clauses 34.7, 34.8 and 34.10 Rule 3.3 Rotation of directors, nomination of directors. Clauses 37.2, 37.3 and 37.6 Rule 3.5 Approval of remuneration and retirement benefits for directors. Clauses 40.3 and 40.4 Rules 3.4.3 and 3.4.4 Restriction on voting by interested directors. It should be noted that the NZX Listing Rules themselves have also been amended in October 2003 and again in May 2004. The NZX Listing Rules which will be incorporated in the constitution by reference do not correspond exactly with the NZX Listing Rules on which the existing clauses in the constitution were based, because those NZX Listing Rules have been amended since the constitution was last amended. The current NZX Listing Rules can be viewed on the NZX website at

Changes to NZX Listing Rules Incorporation by reference, as described above, means that not all of these changes will appear in the body of the proposed new constitution because they are now detailed by the relevant NZX Listing Rules. A number of the more important of these changes are described below. New requirements for independent Directors and Board composition: The

Listing Rules now require that the Company have a minimum number of independent Directors on the Board. If at any time the Company has less than eight Directors, the constitution will require the Company to have at least two independent Directors. As the Company currently has eight Directors with a maximum of nine Directors, the constitution will require the minimum number of independent Directors to be three. The Board is required to reach a view as to which of its members are independent and disclose the outcome of such determination. The limits set out in the constitution on the number of Directors that can be nominated by Auckland Regional Holdings will be the same as applied to Infrastructure Auckland. These limits are required in POAL¡¦s constitution by the Port Companies Act 1988. Both the existing constitution and the proposed constitution therefore provide for the appointment of up to two employees or members of a shareholding local authority as Directors. Although Infrastructure Auckland was prevented by its enacting legislation from nominating Directors to POAL¡¦s Board, Auckland Regional Holdings is not subject to the same restriction in its enacting legislation. Auckland Regional Holdings can therefore nominate up to two of its members or employees to POAL¡¦s Board.

Audit Committee: The proposed new constitution incorporates the amended Listing Rule requirement that the Company establish an audit committee consisting of a minimum of three Directors of the Company, a majority of whom are to be independent Directors and at least one of whom is required to have an accounting or financial background (as defined by the NZX Listing Rules). The Company has had an audit committee in place for a number of years.

Governance Code: The NZX has adopted a Corporate Governance Best Practice Code. Compliance with this Code is not mandatory, but the Company must disclose whether its governance policies "materially differ" from the Code.

New requirements for the payment of retirement benefits to directors: Under the proposed new constitution (and in accordance with the amended NZX Listing Rules), an ordinary resolution of shareholders will be required to make a payment to a Director on cessation of office, unless the Director was in office on or before 1 May 2004 and has continued to hold office since that date, in which case a payment of up to three years¡¦ remuneration may be made by the Company without the need to have that payment approved by ordinary resolution of shareholders. There are also new restrictions on the payment of remuneration by the Company's subsidiaries to non-executive Directors.

Under the existing constitution, a payment could be made to a Director on cessation of office without shareholder approval, provided that the payment did not exceed three years¡¦ remuneration. Changes concerning the issue of new equity securities: These are: „FƒnExtension of the time limit for the issue of new equity securities approved by shareholders from 6 months to 12 months. The time limit for completing issues of securities made solely to employees has been increased from 12 months to 36 months. „FƒnA new Board power to issue securities pro rata to existing shareholders without shareholder approval if consideration for the issue does not exceed $5,000 per shareholder and does not exceed 30% of the number of fully paid shares already on issue. This power does not currently exist in the Company's constitution. „FƒnThe maximum number of equity securities that can be issued in a 12 month period to persons other than Directors or employees without shareholder approval has been increased from 10% to 15% of the total number of equity securities on issue. „FƒnThe percentage limit of equity securities which may be issued to employees without shareholder approval in any 12 month period has increased from 2% to 3%. „FƒnThe Company cannot re-price or amend the terms of any securities issued with shareholder approval to or for the benefit of employees or Directors, without either the approval of NZX or a further ordinary resolution of shareholders. This provision does not currently exist in the Company's constitution. New threshold test for major transactions: The proposed new constitution incorporates the amended Listing Rule requirements in relation to the disposal or acquisition of assets. The threshold for determining whether shareholder approval is required for the disposal or acquisition of assets will apply to transactions which are of a gross value in excess of 50% of the Company¡¦s average market capitalisation. The previous test was 50% of the lesser of the Company's average market capitalisation or the gross value of its assets. Material Transaction with Related Parties: The thresholds below which the Company may transact with Related Parties without shareholder approval will be as set out in the amended NZX Listing Rules. Generally this will now be 5% of the Company's average market capitalisation. Previously this was 5% of the lesser of shareholder funds or average market capitalisation. The NZX

Listing Rules now exclude employment contracts with natural persons who are not Directors as transactions that may require shareholder approval. The NZX Listing Rules now also exclude a Material Transaction with a Related Party at a value less than $250,000 from the requirement for shareholder approval. Takeovers: Clauses 14 - 18 of the current constitution will not be replicated in the proposed new constitution. These clauses related to the "notice and pause" provisions of the NZX Listing Rules and have been superseded by the Takeovers Code which already regulates the procedure in respect of the acquisition and disposition of significant stakes in the Company.

NZX and Minister of Transport Approval The proposed form of the new constitution has been approved by the NZX in accordance with the NZX Listing Rules and by the Minister of Transport in accordance with the Port Companies Act.


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