Government to amend company amalgamation rules

Commerce Minister Simon Power has announced that parts of the Companies Act that relate to schemes of arrangement and amalgamations for large companies will be amended to better align with the Takeovers Code regime.

Once enacted, the changes will mean that affected amalgamations will have to be done as schemes of arrangement.

An independent adviser's report clearly outlining the merits of the proposed transaction will be required to be provided to shareholders before they vote.

In addition, companies will be required to gain a similar level of support from shareholders to approve a transaction as they would have to for a takeover to succeed under the Takeovers Code.

"These amendments will ensure we continue to have a credible and robust takeovers regime which investors can have confidence in," Mr Power said.

"Currently, shareholders are being asked to make significant decisions based on inadequate information.

"That must change to ensure shareholders understand the effect that changes of company control have on the value of, and rights attached to, their shares."

The changes are likely to be implemented through legislation to be introduced next year.