Most Read Contributor in New Zealand, September 2016
Key business law changes flowing from the passage
yesterday of the Regulatory Reform Bill will come into effect early
These will reduce compliance costs for all businesses
but are particularly relevant to listed issuers and to companies
with a large number of shareholders.
We discussed the amendments proposed to the Companies
Act, the Unit Trusts Act and the Takeovers regime in an earlier
Amendments to the Companies Act enable on-line AGMs
explicitly providing that shareholders may lawfully
cast proxy or postal votes electronically (in our view this was
already provided under the Electronic Transactions Act
(ETA) but it is now also written into the Companies Act),
allowing for direct real-time online electronic voting
(a facility which some
service providers and share registries are already geared to
Use of both of these provisions will be subject to the
consent of the company's board of directors.
Shareholders will, however, now be able to
require a company to provide notices, annual reports and other
documents electronically. The ETA currently provides for this, but
on an optional basis. Companies will still be able to send a hard
copy to those that require electronic distribution.
An amendment made by the Select Committee at the request of the
Listed Companies Association (LCA) clarifies that a
shareholder can appoint more than one proxy. This will allow
different clients of a custodian or depositary to appoint their own
proxies and vote in different ways, which is particularly important
in New Zealand as most institutional shareholdings are held through
the Reserve Banks' custodian New Zealand Central Securities
The LCA previously estimated savings of $1.5 million a year by
listed companies alone as a result of enhanced electronic
A company undertaking an on-market buyback of less than 5% of
the company's shares will no longer need to send shareholders a
notice detailing the shares bought back within three months of the
buyback. This removes a totally redundant compliance cost as NZX
Listing Rule 7.12 already requires companies to advise the stock
exchange of an on-market buy-back by the end of the same trading
Application of the Takeovers regime
The definition of a "code company" has been clarified
and narrowed and will now apply only to listed companies or to
companies with both 50 or more shareholders
and 50 or more share parcels.
"Shareholders" will now be interpreted as shareholders
with voting rights, so unlisted companies with a widely held class
of non-voting preference share on issue will now not be subject to
the code if the ordinary voting shares are closely held.
This will reduce compliance costs for some companies that were
previously subject to the code.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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