Sec. Com. reviews disclosure

Press, 16 April 1980, Page 24

Sec. Com. reviews disclosure

PA Wellington, The 150-member New Zea-I land Society of Investment: Analysts has told the Secu-| Titles Commission’s hearing j on nominee shareholdings; and beneficial interests, that; it favours a 10 per cent shareholding disclosure level) for nominee investors. ; The society told the com-| mission that it was in | favour of a more informed market, but was aware of the right of individuals to retain their privacy. But, in take-overs, the society saw much virtue in disclosure of dealings, though it did not want to deny anyone the right to buy shares in a company. The society submitted that "whatever reasonable level disclosure is set, at and Deyond which disclosures of beneficial interest is required, no guarantee is provided that the specified level will in all cases achieve the objective, since so much will depend on the structure of the shareholding of a specific company. “While disclosure at the 10 per cent level would con-

tribute much to the market! information and while, when] it is the intention to extend! this level beyond 10 perl cent, the merits to the mar-; )ket in general would be substantial, we believe that a question arises as to the I construction Which the market would place on disclosure in those instances |when there was no intention to go beyond the 10 per cent level,” the society said. “It must always be reasonable to expect that there will be situations in which a 10 per cent level in a company may be sought, without wishing to achieve or exercise control, or take the 'holding beyond 10 per cent. “Clearly, the 10 per cent level sho’uld apply to beneficial ownership, but we can see some problems in the precise, definition of this. To take the more simple case should the holdings of a husband and wife be aggregated. “For want of a better approach, we would suggest that the presumption of the 10 per cent shareholding be made, and that a beneficial

ownership be implied in the case of spouse, family trust and other like arrangements. “Since the intent of this aspect is to put on notice] those who subsequently; achieve control of the company’s affairs. it would probably be reasonable to cast the definition of beneficial interest sufficiently widely to include those ‘hr-1 rangements’ which sub-1 sequently were material in) the ultimate position.” i The society told the com-1 mission that it did not believe that the nominee company should be obligated to notify to the company, in which the shares were held, the names of the principals. “Instead, the society felt the nominee or trutees should be required to bring; to the attention of the ben-) eficial holder the legal requirements for disclosure, and that the onus of disclosure should be w’ith the beneficial holder. “Since the requirement for disclosure is based upon the requirement for an informed Imarket, it seems to us to be ’less than satisfactory to re-

quire disclosure only to the company whose shares are held. While this may be a secondary requirement, and while it may be required: that the company’s register should continue to record) the beneficial ownership ofl 10 per cent, we see the first' requirement as being dis-, closure to the. Stock Exchange. . “We note that this provision is made in the Bill of |the Commonwealth and State Ministers responsible for corporate affairs in Australia.” The society concluded that “it is our contention that modification of the law in New Zealand is not required, provided full consideration is given to the level and adequacy of disclosure of ) beneficial ownership under takeover legislation. “This - legislation should provide appropriate measures to prevent parties acting in concert, and should in 'settling the threshold level [take full account of delays in registration of securities, land such practices as warehousing,” the society said.