Fair Trading Act applied
Provisions in the Fair Trading Act, 1987, would appear to apply to takeovers, after a reserved decision was given in the High Court in Christchurch yesterday on an interim injunction.
The directors of CBP Industries, Ltd, had sought the injunction restraining a take-over by Bowker Holdings, No. 16, Ltd, in part considering that there had been breaches of the Fair Trading Act. It is believed to be the first time that an injunction has been sought using the act.
In his oral judgment, Mr Justice Hardie-Boys said that a failure in a certain legal document such as this take-over
offer to alert shareholders to the situation could well lull them into the belief that all was in order and that there was no problem.
“The prime purpose of the (Fair Trading) Act is to ensure disclosure so that persons are fully and fairly informed of the true nature and effect of a particular transaction
The injunction was not granted, but Mr Justice Hardie-Boys required Bowker Holdings No. 16 to clarify certain parts with the CBP Industries shareholders. The directors of CBP Industries had contended that Bowker Holdings
ought to have warned shareholders that CBP Industries’ articles of association contained preemption rights which meant that shareholders who wanted to sell their shares had first to offer them to existing shareholders in the company.
CBP Industries alleged that failure to do so was misleading or deceptive conduct under section 9 of the Fair Trading Act. Mr Justice Hardie-Boys said that when the Fair Trading Act achieved its purpose of ensuring disclosure so that persons were fully and fairly informed about the true nature of a particular transaction it seemed inappropriate to issue an injunction. Injunction procedure was protective not punitive.
He felt it was sufficient, at least at present, to declare the rights and obligations of shareholders under the articles of association, referring to the pre-emption rights.
CBP Industries was formerly known as Canterbury By-Products, Ltd, a butchers’ co-operative that was placed in receivership in 1981. The company came out of receivership in 1986, and is now an investment company, with its main asset being 12ha of industrially zoned land in Sockburn.
Bowker Holdings said in a statement yesterday that its offer of 205 c a share would stand. The company’s initial offer was 120 c and this was later raised to 170 c. The directors of CBP Industries have recommended that the offer be rejected.
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Press, 20 March 1987, Page 10
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408Fair Trading Act applied Press, 20 March 1987, Page 10
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