Govt passes law to protect minority shareholdersCommerce
The government today passed a law giving greater protection to minority shareholders faced with a company takeover they don't support.
Commerce Minister Lianne Dalziel says the bill provides a way out – at a fair price – for shareholders who oppose a fundamental change to a company's structure and want the company to buy back their shares.
The bill provides guidance on determining an appropriate price for those shares.
"This is good news for minority shareholders who don't want to hold on to their shares when the goalposts are moved against their wishes. The law will make sure they get a fair price for their shares if they decide they no longer want them under the changed circumstances," Lianne Dalziel said.
"One of the first things we did when we became the government in 1999 was to introduce a Takeovers Code to provide an internationally accepted standard for protecting minority shareholders in a takeover situation. This latest move shows we're continuing to improve the laws to protect minority shareholders, which will give investors greater confidence and contribute to deepening our capital markets."
The minority buy-out provisions of the Companies Act apply to special resolutions that:
- alter the company’s constitution in a way that imposes or removes a restriction on the company’s activities; or
- approve a major transaction; or
- approve an amalgamation proposal.