The three main provisions of the takeovers code

* A mandatory bid rule, which means that anyone seeking to acquire more than 20 per cent of a company has to make an offer to all the other shareholders. The offer does not have to be for all the shares, but it has to be pro rata for enough shares to take the bidder's stake above 50 per cent, and be conditional on doing so.

The idea is to ensure, over time, that if you want effective control of a company you have to own a majority of its shares. As it is, many New Zealand companies have a minority controlling shareholder who can sell the stake, and capture the premium for control, without other shareholders getting a look-in.

* An equal price rule. A takeover offer under the code has to be on the same terms to all shareholders with the same sort of shares. The idea is to prevent a situation where one share is worth more than an identical share just because it is part of a larger parcel.

* An orderly process. An offer must be open for at least 30 but no more than 90 days. It can be sweetened during that period. There are provisions for independent appraisal reports. Certain sorts of defensive tactics on the part of target companies are prohibited.

A transaction which would otherwise breach the code can go ahead if approved by a meeting of disinterested shareholders, or if exempted by the Takeovers Panel, the body which drafted and will enforce the code.