Takeovers Code Another Step Backwards
"The decision to override shareholder choice and adopt a government-knows-best takeover code is another step towards
more intrusive regulation", Mr Roger Kerr, executive director of the New Zealand Business Roundtable, said today.
"The prime minister's claim that New Zealand has a 'wild west' sharemarket is unfounded. The world's major securities
market, the United States, has no national rules along the lines of the proposed code. New Zealand is not 'out of line'
with the rest of the world. There has been no lack of foreign investment interest in New Zealand, although the exchange
rate decline suggests we cannot take its continuance for granted.
"The code will discourage takeovers, which benefit both large and small shareholders. This will protect poor management
teams and boards and impede company restructuring. The evidence that some New Zealand firms have destroyed large amounts
of shareholder value underlines the case for an open takeover market.
"The property rights of investors in New Zealand companies will be changed without compensation by the government's
decision, reducing the value of many existing holdings in an inequitable way and adding to the list of recent decisions
which have affected property rights.
"The Stock Exchange's listing rules allow shareholders a choice of takeover regime. They include an option similar to
the code but it has found little favour among both large and small shareholders, indicating that they do not generally
regard it as in their interests.
"Opposition to the proposed regime from academic experts in finance and economics is overwhelming. Submissions
expressing a view on the code ran 2:1 against.
"The process for reaching this decision has not allowed an open debate on an important regulatory issue. Once again the
government has been determined to make an unwarranted step without listening to other views", Mr Kerr concluded.
ENDS