Wellington, Aug 19 NZPA - The Takeovers Panel is recommending law changes to tighten the rules governing ownership changes for companies covered by the Takeovers Code, while retaining flexibility.

Concerns that companies might be sidestepping the code were highlighted in early 2006 when Waste Management and Transpacific Industries amalgamated under Part 13 of the Companies Act.

Such deals required 75 percent shareholder support for the acquirer to grab 100 percent of the target company instead of the 90 percent as required by standard offers under the code.

After investigating the issue, the Takeovers Panel today said it had made recommendations to the Minister of Commerce for changes to the Companies Act and the Takeovers Act.

Its proposal dealt with the need to provide certainty, while retaining the flexibility of allowing changes of control of code companies to occur outside the code, the panel said.

At the same time, it would provide greater regulatory oversight, better information for shareholders, and more rigorous voting requirements.

The panel said its key recommendation was that changes of control of code companies should be possible either under the Takeovers Code, or as a scheme of arrangement with court approval under part 15 of the Companies Act.

But control changes should not be able to be effected by way of amalgamation under Part 13 of the Companies Act.

For any scheme of arrangement that had an effect on voting rights, the court would have to be satisfied that the code company shareholders would not be disadvantaged by the transaction.

Alternatively, the promoters of the scheme could produce to the court a statement from the panel stating that the panel had no objection to the scheme.

NZPA WGT mjd nb