Dalziel Lianne: Companies (Minority Buy-out Rights) Amendment Bill — First Reading 
Dalziel Lianne: Companies (Minority Buy-out Rights) Amendment Bill — First Reading 
[Volume:644;Page:13912] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Companies (Minority Buy-out Rights) Amendment Bill be now read a first time. 
 It is my intention to refer the bill to the Commerce Committee.  
The purpose of the bill is to amend the minority buy-out provisions in the Companies Act 1993 in accordance with the recommendations set out in the Law Commission report  
Minority Buy-Outs 
 which was written as a result of Justice Doogue’s decision in  
Natural Gas Corporation Holdings Ltd v Infratil 1998 Ltd 
. That case concluded that the provisions could do with some further clarity in order to make the minority buy-out rights more beneficial and workable. The case highlighted the fact that the law did not provide a basis upon which the shares at issue were to be dealt with at the time the company was required to pay the shareholder. 
The amendments to the minority buy-out provisions include providing clarity surrounding the value of the shares to be purchased from a shareholder to ensure that the value is an honest estimate. To achieve this the bill requires that the share offer to the shareholder be accompanied by a statement outlining for the shareholder how a fair value for the shares was determined. The amendments also provide that the price of the shares in a minority buy-out be calculated from the date the company gives the shareholder notice agreeing to buy back the shares but that the calculation of the value of the shares must not take into account any fluctuations that have occurred due to the triggering event except in times when a shareholder is being eliminated against the shareholder’s will. Thirdly the amendments clarify and expand the powers of the arbitrator to determine the share price in a minority buy-out. 
The company has three options at a time a shareholder invokes the minority buy-out provisions. It can agree to the purchase of the shares apply to the court for an exemption from the requirement to purchase the shares or arrange to have rescinded the special resolution that led to the minority buy-out provisions being exercised. Currently only in times of an amalgamation is the company obliged to send to each shareholder of a company a statement setting out the rights of the shareholder in the amalgamation. This bill extends that obligation to any situation where there is a special resolution. 
The bill also clarifies for the parties involved the time of the transfer of shares from the shareholder to the company. The legal title of the shares and the voting rights attaching to them remain with the shareholder until such time as the price is ascertained and paid in full. However after an original offer has been made and the company has paid the shareholder a provisional payment any purported disposition of the shares of the shareholder except in favour of the company will be of no effect. 
To conclude I tell the House that the bill establishes a much more clear and transparent process for calculating the price of shares in a minority buy-out situation and addresses the particular issues raised in the Infratil case. I commend the bill to the House.