KEY POINTS:
Government officials are looking for new ways to close a loophole in the Takeovers Code after being stymied by the National Party last week.
The loophole enables businesses to sidestep the code, and the Government had planned to fast-track law changes to block it by attaching them to the Business Law Reform Bill, now going through Parliament.
But National refused to support adding the necessary supplementary order papers to the bill.
Ministry of Economic Development official Justine Gilliland said the ministry was awaiting Cabinet confirmation today that the changes could not be made through the bill before it started looking at how else they might be made.
"There's a reasonable sense of urgency on this," she said.
The panel has been concerned over the use of schemes of arrangement and amalgamation to circumvent shareholder support requirements in some takeovers.
Those concerns were exacerbated when Transpacific Industries took over Waste Management this year.
It used a scheme of arrangement to structure the deal as a merger, which required a lower level of shareholder support than needed under the Takeovers Code.
Under a scheme of arrangement, a company can be fully taken over with approval of 75 per cent of shareholders.
Under the Takeovers Code, a bidder needs acceptances from 90 per cent of shareholders before it can compulsively acquire the remaining shares and take over the company.
Commerce Minister Lianne Dalziel said the amendment to the Business Law Reform Bill "would have gone part way to addressing the Takeovers Panel's concerns".
"It would have created new regulation-making powers, meaning shareholders could have received additional information about a proposed amalgamation," she said.
"It would have also required the court to take into account matters specified in regulations about whether an amalgamation proposal would have unfairly prejudiced a shareholder and whether a proposed scheme of arrangement should be approved."
National Party MP and commerce select committee chairwoman Katherine Rich said her party was sympathetic to what the panel was trying to achieve, but did not support the inclusion of supplementary order papers with the reform bill because it would have circumvented due process.
Rich believed the panel's bid to fast-track the changes were prompted by concerns that Stephen Tindall and Pacific Equity Partners would use a scheme of arrangement to privatise The Warehouse.
But Takeovers Panel chairman John King said the panel's efforts were not prompted by any particular transaction.
The Takeovers Code
* Established in 2001 and enforced by the Takeovers Panel.
* Aims to ensure takeovers take place in an orderly way and that all shareholders are treated equally and are well informed.
* Its provisions governing compulsory acquisition of shares have been criticised for giving too much to minority investors.
* Companies have skirted these provisions with deals called "amalgamation" or "schemes of arrangement" which are not covered by the code.
