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Financial Markets Conduct Act 2013

Dealing in financial products on markets - Insider trading - When prohibition on insider conduct does not apply

253: Exceptions from sections 242 and 243 for takeovers

You could also call this:

"Some rules don't apply when companies are taking over other companies."

Illustration for Financial Markets Conduct Act 2013

When you are involved in a takeover, some rules do not apply. You can share inside information with someone who wants to make a takeover offer, or with their advisers, under the Takeovers Code. You can also share inside information to encourage other people to make competing offers.

If you share inside information, the person you share it with must keep it secret. You must only share the information to help them make a takeover offer or to get involved in one. The rules about sharing inside information do not apply if you are advising the company being taken over, or if you are helping someone make a takeover offer under the Takeovers Code.

If you are helping someone with a takeover offer, you can share inside information with them without breaking the rules. You can also advise them to buy or sell financial products without breaking the rules, as long as you are only acting as their adviser for the takeover offer. This applies when you are involved in a takeover offer under the Takeovers Code.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091344.

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252: Exceptions from section 241 for takeovers, or

"Some takeovers don't have to follow the usual rules"

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254: Exceptions for schemes of arrangement approved under Companies Act 1993, or

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Part 5Dealing in financial products on markets
Insider trading: When prohibition on insider conduct does not apply

253Exceptions from sections 242 and 243 for takeovers

  1. Section 242 does not apply to the following conduct:

  2. disclosure of inside information to a prospective offeror or its advisers under a prospective takeover offer under the Takeovers Code:
    1. disclosure of inside information to encourage competing bona fide offers to be made in competition with a takeover offer under the Takeovers Code:
      1. disclosure of inside information by a prospective offeror or its advisers under a prospective takeover offer under the Takeovers Code for the purpose of forming a consortium to make a takeover offer:
        1. disclosure of inside information to an independent adviser to enable that adviser to make a report required by the Takeovers Code.

          1. A person's reliance on subsection (1)(a) to (c) is subject to the conditions that—

          2. the recipient of the information is bound by an obligation of confidentiality in respect of the information; and
            1. the purpose of the conduct is to enable or encourage the recipient to make a takeover offer or to participate in a takeover offer.

              1. Section 243 does not apply to advice or encouragement given—

              2. by the directors of a company that is the target company under a takeover offer under the Takeovers Code, to the extent that the advice or encouragement is given to the company's shareholders and relates to those shareholders trading or holding their financial products; or
                1. by a prospective offeror under a prospective takeover offer under the Takeovers Code for the purpose of forming a consortium to make a takeover offer.

                  1. A person (A) does not contravene section 242 or 243 merely because A, in relation to a takeover offer or prospective takeover offer under the Takeovers Code, discloses inside information to another person (B) or advises B to trade or hold financial products of the listed issuer when A has that inside information, or is an information insider, only through acting as B's adviser in relation to the takeover offer or prospective takeover offer.

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