Under the Takeovers Code (Code), a person and their associates are prohibited from becoming the holders or controllers of 20% or more of the voting rights in a company with 50 or more shareholders and 50 share parcels (Code Company), except in a manner permitted by the Code.
As the M&A landscape continues to shift towards equilibrium after the GFC, recent international trends have emerged in the New Zealand market. Specifically, the increased use of:
• locked box pricing mechanisms;
• warranty and indemnity insurance; and
• the "fundamental warranty" exclusion for vendor warranty limitations.
Once again, New Zealand is leading the way in business reform. New laws allowing equity crowdfunding fundamentally change the way that private companies can raise funds, and give them a meaningful, cost effective and efficient way of doing so.
The recent implementation of the Financial Markets Conduct Act 2103 allows companies to raise up to $2 million from the New Zealand public in a 12 month period, in return for shares in their company, provided they do so via a licensed equity crowdfunding provider.
Equity crowdfunding gets green light from the Minister – no individual investor caps
Cabinet has approved the regulations for equity crowdfunding which will come into force on 1 April. Equity crowdfunding will allow businesses to raise up to $2 million from investors, via a licensed crowdfunding platform, without the need for a formal prospectus or prescribed investment statement.
Commerce Minister Craig Foss announced today that there will be no individual caps on the amount any investor may invest in a company raising funds via a licensed equity crowdfunding platform, provided however that a company will only be permitted to raise up to $2 million in any year.
Wynn Williams has made a number of submissions on investor caps, as well as meeting with MBIE and Minister Foss, and has voiced strong support of no individual investor caps.
The New Zealand government is backing innovation and we in Australia seem to be watching on as our smaller neighbour becomes more agile and starts to get noticed overseas. The recent introduction of crowdfunding is just one example of how the entrepreneurial landscape in New Zealand is changing. With platforms such as Snowball Effect signing licensing agreements with the new regulator, the Financial Markets Authority, Kiwi entrepreneurs and investors are off to a flying financial start.
Lawyer Hayley Buckley of New Zealand based Wynn Williams Lawyers estimates more than $NZ7.2 million has been raised via equity crowdfunding; $NZ5.7 million of that with Snowball Effect. Six companies have received significant investments to date, including Invivo Wines raising $2 million and capping out.