Part II - Securities Amendment Act 1988
22. As stated above Part II of the Securities Amendment Act 1988 ("the Amendment Act") is the Act that contains the regime for substantial security holder disclosure in New Zealand.
Substantial Security Holder Obligations
23. A "substantial security holder" is defined in section 2 as a "person who has a relevant interest in 5 percent or more of the voting securities of that public issuer or body".
24. Under section 20(1) every person who is a substantial security holder in a public issuer must give notice to the public issuer and to the stock exchange on which the securities are listed when the five percent shareholding level is reached.
25. In addition, a substantial security holder must also give notice where there is a change in the number of voting securities of a public issuer in which a substantial security holder has a relevant interest, and that change is more than 1% of the total number of issued voting securities (section 22(1)).
Relevant Interest
26. The substantial security holder disclosure requirements are triggered by a person having a "relevant interest" in a public issuer that is above the set threshold of 5%. The Amendment Act states that a person will have a "relevant interest" in a voting security in a number of different situations. It also provides a number of situations where a relevant interest can be disregarded.
Content of Disclosure
27. The form, content and manner of disclosure that a substantial security holder in a public issuer must provide are prescribed in the Act and the Securities (Substantial Security Holders) Regulations 1997. Section 22(2)(e) states that notice must be given as soon as the substantial security holder knows, or ought to know, of the notice being required. The form requires the substantial security holder giving notice to state why the substantial security holder notice is required. A number of items of specific information must also be given, including the total number of voting securities issued by the public issuer and the total number in which the substantial security holder holds a relevant interest.
Obligations on the Public Issuer
28. Part II of the Amendment Act also places obligations on public issuers. This includes obligations to:
- maintain a file containing every substantial security holder notice and all information about the disclosure of relevant interests that it receives;5
- at the request of a person by whom a notice is given, give to that person an acknowledgement of the notice;6
- state, in a note accompanying its statement of financial position laid before the public issuer in general meeting:
- the names of all the substantial security holders in the public issuer;
- the number of voting securities in the public issuer in which each substantial security holder has a relevant interest; and
- the total number of issued voting securities.7
Remedial Orders
29. The Amendment Act gives the High Court power to make certain orders remedying contravention of the disclosure obligation.8 The Court has power to make an order when:
- there are reasonable grounds to suspect that a substantial security holder has not complied with ss 20, 21 or 22 in relation to a public issuer; or
- a person has not complied with a request for information pursuant to ss 28 or 29 from a public issuer; or
- a notice has been given under s.28, but not all required information has been disclosed.
30. There are a number of orders that the High Court can make.9 For example, the Court can make an order:
- directing a substantial security holder to comply with ss 20, 21 or 22 of the Amendment Act;
- directing a person to identify people who have relevant interests in the voting securities of a public issuer;
- directing the public issuer not to make payment of any sum due in respect of any voting securities;
- directing the public issuer not to register the transfer of all or any voting securities;
- restraining the disposing of any voting securities of the public issuer or any relevant interest in them;
- directing the forfeiture of any voting securities of the public issuer;
- declaring that the exercise of voting rights attached to voting securities of the public issuer is void and of no effect; and
- directing the public issuer, or any other person, to do or refrain from doing a specified act, for the purpose of securing compliance with any other order made under this section.
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