Commission ‘out of power,' Court told

Press, 17 November 1981, Page 26

Commission ‘out of power,' Court told

PA Wellington A proposed investigation by the Securities Commission of a take-over bid involving two Wellington property companies was a “detailed inquisition” quite beyond the commission’s power, the High Court was told yesterday. Mr D. L. Mathieson, counsel for City Realties, Ltd, which wants to take over Property Securities, Ltd, told Mr Justice Quilliam this while seeking an order to prevent the commission’s investigation. An interim order temporarily halting a hearing by the commission was granted last week. The parties who want the investigation stopped are: City Realties, Mr Frank Renouf, chairman of Prbperty Securities, Renouf Investments, Ltd, New Zealand United Corporation, which sold its large shareholding in Property Securities to the National Insurance Company several months ago, and the National Insurance Company. The commission wants to investigate events involved in the selling of shares held in Property Securities by Mr

Henouf and Renouf Investments, Ltd, the circumstances surrounding the sale of Property Security shares to National Insurance and the Government Insurance Commissioner, areas of conflict Property Security directors might have, the proposed appointment of Mr Kenouf as chairman of City Realties, and all other relevant matters in the terms of the take-over bid. Mr Mathieson said that the commission did not have the jurisdiction to examine in much detail a particular take-over. Not only was the investigation out of its power but the terms are so widely drafted “they can leave no room for any argument that the consideration of some particular facet of the takeover offer would be irrelevant.” Thus, Mr Mathieson said, details of how sales were negotiated and what led up to them, agendas, decisions and minutes of meetings and conversations by directors would all be relevant to the commission's requirements. Some of its requests hinted at possible impropriety and collusion.

However, there was no power in the Securities Act, 1978, to investigate one particular take-over offer. The commission could review generally practises involved in take-overs and make recommendations upon them. To do this it could look at a series of cases but it could not look at one in such depth as it was proposing to do here. Mr Mathieson said the only conceivable purpose for the investigation was to protect Property Security shareholders by finding out all the facts relating to the takeover and then telling them. Judge Quilliam said that another reason might be to form one of the series of cases to which Mr Mathieson referred earlier. The take-over is objected to by Property Securities’ deputy chairman, (the leader of the National Party, Mr George Chapman) and another director. City Realties wanted to issue shares in payment to Property Security shareholders, but Mr Chapman and the other director want a full cash alternative for the shareholders. (Proceeding)