This notice replaces the Securities Act (Amalgamations) Exemption Notice 2000 (the 2000 notice).
Context
The notice applies to equity securities and debt securities that are offered as part of an amalgamation under Part XIII of the Companies Act 1993.
Effects of the exemption
Companies amalgamating under Part XIII of the Companies Act, and companies formed from such amalgamations, are exempted, subject to conditions, from certain clauses of the Regulations relating to information required to be included in the prospectus for securities offered as part of the amalgamation.
Exemption from regulation 3(1)
Companies are exempted, subject to a condition, from regulation 3(1) in the case of shares that are offered under an amalgamation. Regulation 3(1) requires a prospectus for equity securities to contain all applicable information specified in the First Schedule to the Regulations.
Condition
The exemption is subject to the condition that the registered prospectus for the shares
- contains, or is accompanied by, the information that must be sent to shareholders of each amalgamating company under section 221(3) of the Companies Act 1993; and
- contains information specified in clauses 2, 4 to 7, 16, 17, 21, 39, and 40 of the First Schedule of the Regulations.
Exemption from regulation 3(2)
Companies are exemption from regulation 3(2) in the case of debt securities offered under an amalgamation. Regulation 3(2) requires a prospectus for debt securities to contain all applicable information specified in the Second Schedule to the Regulations.
Condition
The exemption from regulation 3(2) is subject to the condition that the prospectus for the debt securities
- contains, or is accompanied by, the information that must be sent to shareholders of each amalgamating company under section 221(3) of the Companies Act 1993; and
- contains information specified in clauses 2, 4 to 6, 9, 12 to 14, 33, and 34 of the Second Schedule of the Regulations.
Condition relating to current financial statements
This condition required financial information from companies which have commenced business and acquired an asset or debt at the time of the amalgamation. The exemptions from regulation 3(1) and (2) are subject to the condition that the prospectus for the offer of shares or debt securities contains or is accompanied by
- the most recent audited financial statements of the amalgamating company; or
- if the company has been in business for less than a year, audited financial statements for the period from when it started business until its first balance date, or another date that is not more than 4 months before the amalgamation is to take effect; and
- if the allotment of the securities will be more than 9 months after the date of the financial statements, a copy of the interim financial statements from the day after balance date until a date not more than 9 months later; and
- if the company does not have to provide financial information under this condition, the prospectus must contain a statement that the company has not commenced business, acquired an asset or incurred a debt.
Condition relation to forecast financial statements
The exemptions from regulation 3(1) and 3(2) are subject to the further condition that the prospectus for the offer of shares or debt securities contains or is accompanied by
- a forecast statement of financial position for the amalgamated company at the date on which the amalgamation is to take effect; and
- forecast financial statements of the amalgamated company for 1 or more future accounting periods.
Condition relating to directors' statements
The exemptions from regulation 3(1) and 3(2) are subject to the further condition that the prospectus for the offer of shares or debt securities contains or is accompanied by
- a statement by the directors that since the balance date of the financial statements or interim financial statements no circumstances have arisen which materially affect
- the trading or profitability of the company; or
- the value of its assets; or
- its ability to pay its liabilities in the next 12 months; and
- that there have been no material changes in the nature of the company's business.
Condition relating to date of allotment
The exemptions from regulation 3(1) and 3(2) are subject to the further condition that the date of allotment of the shares or debt securities is not more than 9 months after the balance date of the financial statements or interim financial statements.
Exemption from clauses 1(1) and 5 of Schedule 3D
Companies are exempted, subject to conditions, from the requirement to include in an investment statement in the question "How much do I pay?"
Conditions
The exemption from clauses 1(1) and 5 of Schedule 3D is subject to the condition that the investment statement includes the question "What will this cost me?" and briefly describe the terms of exchange of the securities of the amalgamating companies for the securities of the amalgamated company.
Transitional provision
The notices includes a transitional provision so that securities allotted before 31 December 2002 may be offered and allotted in accordance with either the 2000 notice or this notice.
Differences between the 2000 notice and this notice
The 2000 notice exempted companies from the prospectus and investment statement requirements of the Securities Act and from the Regulations (except regulation 8). The main change in substance between the 2000 notice and this notice is that this notice does not exempt amalgamating companies from the requirement to have a prospectus and investment statement for equity and debt securities offered as part of an amalgamation.
Reasons
The Commission reviewed the 2000 notice and received submissions from interested parties. The exemptions in the 2000 notice were found to be relevant and useful.
The disclosure for investors should be made in an investment statement and prospectus. The exemption tailors disclosure to the circumstances of amalgamation, while leaving intact the liability provisions and other protections associated with an investment statement and prospectus.
