CP 1 Indirect self acquisition by investment funds
Released 19 October 1998. Comment closed 18 December 1998.
This paper covers our policy proposals on when we will give relief to financial institutions from the indirect self acquisition provisions under s259C(2). Indirect self acquisition is where the shares in a company are issued or transferred to an entity it controls (see s259C(1)).
We propose to give relief to financial institutions on conditions which relate to the regulatory risks of indirect self acquisition. These conditions may relate to:
- the proportion of a company’s shares which may be held by its controlled entities and how those shares are voted;
- limiting the risk of preferential treatment to the company, its controlled entities and other shareholders; and
- disclosure of trading in the company’s shares by its controlled entities.
We also propose to grant relief to controlled entities which invest in funds, that are managed independently of the company and its controlled entities, which in turn invest in the company’s shares.