Panel to Progress Work on "Loophole"

News release

28 March 2007

Takeovers Panel to Progress Work on "Loophole" for Schemes and Amalgamations

The Takeovers Panel is to undertake further work to resolve the problem of schemes and amalgamations potentially being used to undermine the Takeovers Code. This follows a request by the Minister of Commerce, Hon Lianne Dalziel, that the Panel lead the required policy work.

"The Panel has been concerned for some time about the increasing use of schemes of arrangement and amalgamations under the Companies Act 1993 to avoid the provisions of the Code when seeking to change the ownership or control of code companies," Chairman David Jones said.

"We recognise the need for parties to be free to structure transactions in a manner which is appropriate to achieve their desired commercial result. The Panel does not want to prevent the use of schemes or amalgamations. However, shareholders should have similar protections in a change of control as shareholders have in a takeover made under the Takeovers Code."

The Panel will commence its work immediately, and in doing so will consult further with the commercial community. Following that consultation the Panel will report back to the Minister.

ENDS

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