Zero proposed to make an unsolicited offer to shareholders with holdings of 1,500 shares or less, with a 21 day acceptance period. The proposed offer price per share would be less than 10% below the current market price of the shares.
FMA asked Zero for an enforceable undertaking and to include a statement provided by FMA at the beginning of the offer to ensure that investors make an informed decision.
Zero Commission NZ Limited agreed to FMA's letter dated 2 June and confirmed to include the statement at the beginning of offer letters.
FMA's letter text to Zero Commission NZ Limited with enforceable undertaking:
"You have indicated that Zero proposes to make an unsolicited offer to shareholders in [ ] with holdings of 1,500 shares or less, with a 21 day acceptance period. The proposed offer price per share would be less than 10% below the current market price of the shares.
On the basis of the above information, and of your assurance that Zero is committed to ensuring that investors make an informed decision, we expect to see the following statement included at the beginning of the offer:
'This offer document contains an offer from Zero Commission NZ Limited to buy your shares in [name of company].
Before you accept this offer, you should carefully read the details of what you will be paid and when, and any fine print anywhere on the offer or forms.
The price offered per share under this offer is $[offer price] per share.
As at the close of [offer date] the market price of the shares on the NZX was [market price]. You can check the most recent share price for [name of company] on the NZX website at www.nzx.co.nz or in newspapers. The stock code for [name of company] is [code].
If you sell your shares through a sharebroker instead you will receive the full market price for your shares (less any brokerage fees) and you are likely to receive payment within 3 days.
You may have to pay a minimum brokerage fee if you sell your shares through a sharebroker. Different sharebrokers charge different fees but generally you should expect to pay between $40 to $70 as a minimum brokerage fee.
You can find a sharebroker in the Yellow® Pages under "sharebroker", on the NZX website www.nzx.co.nz, or by talking to a registered financial adviser.
Further guidance for investors is available on the Financial Markets Authority's website www.fma.govt.nz.'
Please provide Zero's undertaking to include that statement at the beginning of any offer document containing an unsolicited offer by Zero.
For this purpose, an 'offer document' means a document that contains or refers to an offer to acquire or dispose of securities and 'unsolicited offer' means an offer to which all of the following apply:
If given, this undertaking cannot be varied or withdrawn without the consent of FMA. In addition, if FMA considers that a term of an undertaking has been breached, section 47 of the Financial Markets Authority Act 2011 provides that FMA can apply to the High Court for orders, including an order directing a person to comply with that term, and an order directing a person to pay compensation.
Please provide Zero's undertaking by 5:00pm Friday 10 June 2011. If we do not hear from you by that time, we will consider what further action (if any) FMA may take in this matter. This may include issuing a warning in relation to Zero's activities, and making a warning disclosure order under section 49 of the Financial Markets Authority Act 2011."