Takeovers Panel hopes of quickly closing the Companies Act loophole allowing corporate predators to sidestep the Takeovers Code have been dashed after the National Party blocked a move to attach necessary legislation to the Business Law Reform Bill.
The panel had hoped supplementary order papers to the bill which would close the loophole, would gain Cabinet approval on Monday allowing them to pass into law before the end of the year.
However, Commerce Minister Lianne Dalziel said yesterday that because the measures the panel had requested fell outside the scope of the bill, they would require the consent of all parties, and National had declined to back them.
The panel is concerned that Companies Act schemes of arrangement and amalgamations are being used to effect company takeovers without the level of shareholder support required by the Takeovers Code.
The panel's concerns were fuelled earlier this year when Australian company Transpacific Industries took control of New Zealand-listed Waste Management via an amalgamation requiring just 75 per cent shareholder approval.
Takeovers Panel chairman John King said yesterday that while he was confident of Government support on the wider issue, quick action was not a given.
"We put in our recommendations and also had the select committee appearance, and the feeling one got was that the committee was favourably disposed - but I think there are issues for them on process."
The panel was pleased that the Court of Appeal confirmed this week its right to be heard during court proceedings to approve mergers via Companies Act schemes of arrangement.
But amalgamations such as the Transpacific/Waste Management deal did not require court approval.
"The Waste Management transaction just walked through the whole of the code process and clearly you need that alignment between the Takeovers Act and the code and the Companies Act, said King.
"Until we get legislation there's not much we can do to stop the use of Part 13, the amalgamation provisions, to have a repeat."