Brownlee Gerry: Companies (Minority Buy-out Rights) Amendment Bill — Second Reading In Committee Third Reading 
Text is incorporated into the Bound Volume 
Brownlee Gerry: Companies (Minority Buy-out Rights) Amendment Bill — Second Reading In Committee Third Reading 
[Sitting date: 02 September 2008. Volume:649;Page:18525. Text is incorporated into the Bound Volume.] 
GERRY BROWNLEE (National—Ilam) 
: 
 The Companies (Minority Buy-out Rights) Amendment Bill is one of those interesting bills on which when they come before the Commerce Committee there is genuine interest on the part of all members to ensure that we get good and workable legislation. In this case we are talking about the rights of individuals who purchase interests in various entities only to find that a bigger parcel of shares than theirs is taken up by someone else or that there is a proposal to buy out those individuals by someone else not always at a price that might be in the best interests of those individuals. It is not uncommon for a price to be struck for a buy-out that is ahead of the market but not necessarily ahead of the expectations of some of the smaller shareholders in the particular company. As the Minister said when people make a decision that a new arrangement inside a company they had previously been confident about investing in comes to the fore then people should a right to exit—indeed to test the strength of whoever has bought the company and of the new philosophy that may presumably come with that.  
The committee has made a number of recommendations for amendments to the bill and we will discuss those further in the Committee stage. The bill is fairly technical in nature but as everyone knows it is the fine print that always ends up costing us. So if we were to typify this bill we would typify it as being a bill that puts some rules around the effect of the fine print.  
One of the things that we are a little uncertain about is the involvement of the Arbitration Act or bringing in the Arbitration Act as the vehicle for sorting out disputes between I guess an offered value and the value that someone would like for their shares. Those sorts of provisions can be very costly and it is a little unclear exactly who would meet the costs of that arbitration process. I do not believe that is specified in the bill so the Minister may wish to take us through that when we go through the Committee stage. That may be an oversight. If in fact there is a right to arbitration and a right to a price that reflects the best value of those shares I think the question should be asked and answered in the bill as to how the cost of dealing with the arbitration is to be met because it can be quite expensive.  
The provision of interest on I guess unpaid moneys owing after a price is struck is a very positive contribution in this bill and once again that matter is covered in a new clause in the bill. We will discuss that further during the Committee stage so that the  
Hansard 
 record is clear about what the select committee believed it was doing as this law was being put into place.  
We also recommended amending new section 112C inserted by clause 7 of the bill to provide that legal title to shares passes to a company on notification of the company’s decision to purchase the shares. The relevance of that is that if in fact a board accepts a proposal and the purchaser indicates that it has accepted it the potential exists for it to be quite some time before a settlement is reached—or is concluded which is perhaps a better way to describe it. None the less to all intents and purposes the owner of those shares once this bill is passed will in fact be the purchasing entity.  
It has been a very interesting exercise to consider all the various contortions of minority buy-out rights inside competition law and I think this bill goes a very long way towards trying to make clear some of the things that have been matters of confusion for players in the commercial world. We look forward to the coming debate in the Committee stage. The bill is relatively short but it is very very important. As I said before most people find that the devil is in the detail and that it is the fine print that trips us up. So we expect that the Committee stage today will traverse all aspects of the provisions of the bill in order to ensure it is abundantly clear exactly what it is all about. It is interesting though that the bill is in only two parts and we do notice over a period of time that when important bills are debated just part by part there is not a lot of time to consider all of the clauses in them.  
However I am sure that by the end of the day this bill will probably be law or I should say ready for the Royal assent. Subject to being satisfied with the answers to our questions in the Committee stage I say we will continue to support the bill.