Status quo and problem definition
The Mixed Ownership Model Bill was introduced into the House in March 2012. It contains a 51% floor and a 10% cap: the Crown must hold at least 51% of the voting rights in each company, and no shareholder other than the Crown may have a relevant interest in more than 10% of the voting rights in each company. 'Voting rights' is a defined term, and includes voting rights attached to shares, as well as to other securities. A relevant interest includes legal ownership, but also includes the power to exercise voting rights, trusts, arrangements and understandings.
Cabinet had agreed to this position because of a desire to ensure control of the companies stayed in the hands of the Crown, and was not overly concentrated in the hands of any other shareholder. Only securities which confer voting rights affect the ability to control the company, and for that reason the restrictions apply only to voting shares and securities carrying voting rights
The Bill contains a number of provisions to enforce these limits, and also confirms that the constitutions of the mixed ownership model companies may provide for the 10% maximum limit and provisions dealing with the consequences of a person exceeding that limit. Nothing in the Bill limits what may be included in the constitutions.
This provision was criticised by some submitters during the select committee process, who suggested that the focus on voting rights might mean that the Crown would be in danger of losing an appropriate share of the economic benefits - such as dividends and other distributions. The Minister for State Owned Enterprises has asked that economic interests are included in the 51% floor and 10% cap, to ensure consistency with the Confidence and Supply Agreement with UFNZ.
