The first ever fine for a takeovers code breach was triggered by an unnamed complainant following through on threats to marketing company New Image that if an unrelated legal claim was not withdrawn a complaint would be laid with Takeovers Panel about New Image’s privatisation six years previously. The whistle blower cost New Image $1.5 million in fines.
In early 2013, Graeme Clegg took steps to privatise New Image Holdings Ltd, then listed on the New Zealand stock exchange. There were some 1200 shareholders. He held a 70.5 per cent stake. Using a company called New Image Trustee Ltd, Mr Clegg took his listed company private with an offer of 26 cents per share. He subsequently admitted to the Takeovers Panel of what he described as unintentional breaches of the Takeover Code: failing to disclose the full extent of shares he controlled in concert with others and a failure to disclose a side deal whereby senior management of the then-listed New Image would be offered a shareholding in the privatised company. These failures breached a basic tenent of the Takeover Code, the panel said. Full information was not provided to public shareholders and some shareholders were offered a selective deal, not open to all.
The High Court approved as appropriate a $1.5 million fine negotiated between the Takeovers Panel and New Image.
Takeovers Panel v. New Image Group Ltd – High Court (28.06.22)
22.112