A Comparison of the Law Relating to Schemes of Arrangement and Takeover Offers in New Zealand

45 Pages Posted: 17 Nov 2019

See all articles by Joanna Bate

Joanna Bate

Victoria University of Wellington, Faculty of Law, Student/Alumni

Date Written: 2018

Abstract

This paper explores the increasing popularity of schemes of arrangement under the Companies Act 1993 as an alternative mechanism to effect corporate takeovers by comparing schemes with traditional takeover offers under the Takeovers Code.

Parts I and II of this paper introduce and provide background on the rationale for the regulation of takeovers. Parts III and IV explain the law relating to takeover offers and schemes, including an explanation of the process for effecting a takeover under both mechanisms. Part V of this paper considers whether shareholders are adequately protected when a takeover occurs by way of a scheme in comparison to the Code’s paradigm of shareholder protection. Part V submits that shareholders are sufficiently protected as the result of several additional protections that form part the scheme process. Part VI of this paper discusses the advantages and disadvantages of a scheme when compared to a takeover offer to understand why a bidder may choose to structure a takeover as one over the other. As a result of this comparison, this paper submits that while there are arguable advantages and disadvantages to both mechanisms, on balance, both can produce a successful outcome for a bidder. Finally, this paper explores the potential to reform the Companies Act to make the scheme process more efficient.

Keywords: schemes of arrangement, takeovers

JEL Classification: K00

Suggested Citation

Bate, Joanna, A Comparison of the Law Relating to Schemes of Arrangement and Takeover Offers in New Zealand (2018). Victoria University of Wellington Legal Research Paper, Student/Alumni Paper No. 41/2019. Available at SSRN: https://ssrn.com/abstract=3485308 or http://dx.doi.org/10.2139/ssrn.3485308

Joanna Bate (Contact Author)

Victoria University of Wellington, Faculty of Law, Student/Alumni ( email )

PO Box 600
Wellington, Victoria 6140
New Zealand

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