The Takeovers Amendment Act 2012 (formerly part of the omnibus Regulatory Reform Bill 2010) came into force on 31 August 2012.
Changes to the definition of "code company"
The Act repeals and replaces the definition of “code company” in the Takeovers Act (with consequential amendments to the Takeovers Code) to:
Transactions started under the Takeovers Code must be completed under the Code: make it clear that a company continues as a code company even if it ceases to have 50 or more shareholders in the course of a Code regulated transaction or event. This will ensure that a dominant owner (that is, a company which acquires 90% of the shares of a code company) will be able to utilise the compulsory acquisition provisions to acquire the remaining shares in the company. The change will also ensure that the Takeovers Panel does not lose its powers to intervene in and supervise the completion of the takeover or compulsory acquisition, if necessary.
Exclude shareholders who do not hold voting rights: remove non-voting shareholders from being counted as a shareholder within the definition of 'code company'. This removes a number of relatively small companies which are closely held by a few voting shareholders with a number of investors holding non-voting shares from the scope of the regime.
50 or more share parcels: provide that a code company must have "50 or more shareholders and 50 or more share parcels". Previously the requirement of '50 or more shareholders' made it easy for small, closely held companies (with trustee shareholders or joint shareholders) to inadvertently exceed the 50-shareholder limit and be subject to significant compliance costs. It also made it impractical for many of those companies to carry out rights issues to raise capital from existing shareholders, or to introduce new, large shareholders.
Improvements to decision processes
The Act also amends the Takeovers Act to facilitate more efficient and quicker decision making on the part of the Takeovers Panel by enabling divisions of the Panel to make decisions by way of written resolution signed by all members of the division.