Kiwishare and Rights of Kiwi Shareholders
FIRST SCHEDULE
KIWI SHARE AND RIGHTS OF KIWI SHAREHOLDER
DEFINITIONS |CONSTRUCTION | RIGHTS AND LIMITATIONS | ALTERATION OF CLAUSE | PROVISION OF TELEPHONE SERVICE | LIMITATIONS ON SHAREHOLDINGS | POWER TO SELL WHERE CLAUSE 6 BREACHED | TRANSFERS OF SHARES | MEANING OF "RELEVANT INTEREST" |
1. Definitions
In this Schedule, if not inconsistent with the context:
" affected share " means any share which is treated as such pursuant to clause 7;
" capital " means the share capital of the Company (including the Kiwi Share);
" Crown " means Her Majesty the Queen in right of New Zealand;
" employee " means an employee or officer of the Company or of any subsidiary or associated company of the Company, a labour-only contractor, consultant, or consultant company who or which contracts with the Company or with any subsidiary or associated company of the Company, any person whose services are provided or are to be provided to the Company or to any subsidiary or associated company of the Company pursuant to any contract or other arrangement, any trustee or trustees on behalf of any of the above persons, and any trustee or trustees of or in respect of any pension, superannuation or like fund established for the benefit of any of the above persons;
" Kiwi Share " means the convertible preference share referred to in clause 1.1 of this constitution and having the rights and limitations specified in clause 3;
" Kiwi Shareholder " means the Minister of Finance on behalf of the Crown, as holder of the Kiwi Share;
" New Zealand business " means, for the purposes of paragraph (d) of the definition of the term New Zealand national, anyone or more of the following:-
- a person exempted from the requirements of Parts II and III of the Overseas Investment Regulations 1995 by virtue of an exemption notice issued under those regulations;
- any person named in, or in a schedule to, any such exemption notice;
- if the regulations referred to in paragraph (a) of this definition are revoked, any person falling within that paragraph or paragraph (b) of this definition at the date of the revocation;
- of any person referred to in paragraph (a) or paragraph (b) or paragraph (c) of this definition;
- underwriters or sub-underwriters of any offer of voting shares for subscription or purchase;
" New Zealand national " means:
any New Zealand citizen, or any person who has attained the age of 18 years and is of full capacity who would, in the opinion of the Board, meet the requirements for citizenship set out in section 8(2) of the Citizenship Act 1977 (or any provision enacted in substitution for that section) if that person made an application for citizenship on the date on which his or her status as a New Zealand national is considered for the purposes of this constitution;
the Crown or any department or instrument of the executive government of New Zealand or any person acting on behalf of the Crown or any such department or instrument;
any municipal, local, statutory or other authority formed or established in New Zealand or any instrument of local government in New Zealand;
any New Zealand business;
any company, or other body corporate, that -
- is established in New Zealand and has its registered office in New Zealand and that is substantially owned and effectively controlled by persons coming within any of paragraphs (a) to (d) of this definition; or
- is not an overseas person within the meaning of the Overseas Investment Act 1973;
the trustees of any employee share purchase scheme operated by way of a trust for the benefit of any employees, where all the trustees are persons coming within any of paragraphs (a) to (e) of this definition and where all voting rights in respect of all shares to which the scheme relates are held by the trustees;
"person" includes a natural person, a company, a corporation, and any combination or association of natural persons or corporate or unincorporated bodies (in each case whether or not having a separate legal identity);
" relevant interest " has the meaning set out in clause 9;
" representative " means a person authorised by a corporation in accordance with clause 49 of the Seventh Schedule or, in the case of the Kiwi Shareholder, in writing by the person named in the last notice received by the Secretary pursuant to clause 3.1 to act as its or his or her representative at a meeting of the shareholders of the Company;
" subsidiary " has the meaning set out in section 5 of the Act;
" voting share " means a security that confers a right to vote at meetings of the shareholders of the Company (whether or not there is any restriction or limitation on the number of votes that may be cast by or on behalf of the holder of the security), not being a right to vote that, under the conditions attached to the security , is exercisable only in one or more of the following circumstances:
- during a period in which a dividend ( or part of a dividend) in respect of the security is in arrears;
- on a proposal to reduce the capital;
- on a proposal that affects rights attached to the security;
- on a proposal to put the Company into liquidation;
- on a proposal for the disposal of the whole of the property , business, and undertaking of the Company;
- during the liquidation of the Company;
For the purposes of this Schedule, a body corporate is related to another body corporate if:
the other body is its holding company or subsidiary; or
there is another body corporate to which both bodies are related by virtue of paragraph (a) of this definition, and related body corporate has a corresponding meaning.
2. Construction
Unless stated otherwise, references to clauses are to clauses in this Schedule.
3. Rights and limitations
The following rights and limitations shall be attached to the Kiwi Share:
3.1 The Kiwi Share shall be held by, and registered in the name of, the Minister of Finance on behalf of the Crown. The Minister of Finance may from time to time give written notice to the Secretary of the person who is entitled to exercise the rights and powers of the Kiwi Shareholder. The Company shall regard as the person entitled to exercise the rights and powers of the Kiwi Shareholder, the person identified by name or office in the last such notice received by the Secretary.
3.2 Notwithstanding any provision of this constitution to the contrary, each of the following matters shall be deemed to be a variation of the rights attaching to the Kiwi Share and shall accordingly not be effective without the consent in writing of the Kiwi Shareholder:
3.2.1 the amendment, or removal, or alteration of the effect of, all or any of the following clauses and definitions:
The following definitions in clause 1.1 of this constitution, or defined by reference to the Rules in clause 1.2 of this constitution or the Act in clause 1.3 of this constitution:
"this constitution", "Board", "Company", "director", "holding company", "New Zealand citizen", "share register", "the Secretary", "security", "share" ; "shareholder";
Clause 31 of this constitution: Registration not to affect other powers;
this Schedule: Kiwi Share and rights of Kiwi Shareholder;
Clause 67 of this constitution: Half of Board to be New Zealand citizens;
Clause 21 of the Eighth Schedule: Voting on resolutions;
Clause 22 of the Eighth Schedule: Chairperson shall not have a casting vote.
3.2.2 any act or omission to act that contravenes or fails to comply with any of the clauses specified in clause 3.2.1, whether or not the act or omission is that of the Board or the shareholders in a meeting and whether or not the act or omission has been approved by a special resolution of shareholders.
3.3 The clauses and definitions referred to in clause 3.2.1 are hereby deemed to confer rights which attach to the Kiwi Share and which are legally enforceable against the Company at the suit of the Kiwi Shareholder. In the event of the Kiwi Shareholder bringing proceedings to enforce the rights attaching to the Kiwi Share and having judgment awarded in its favour , the Company shall indemnify the Kiwi Shareholder against all the costs of that action on a solicitor and own client basis.
3.4 The Kiwi Shareholder shall be entitled to receive notice of and, either by the person named in the last notice given pursuant to clause 3.1 or by that person's representative, to attend any meeting of shareholders or any meeting of any class of shareholders, and to speak on any matter relating to rights attaching to the Kiwi Share, but the Kiwi Share shall carry no right to vote nor any other rights at any such meeting.
3.5 In a distribution of capital in a liquidation of the Company, the Kiwi Shareholder shall be entitled to repayment of the capital paid up on the Kiwi Share in priority to any repayment of capital to any other shareholder. The Kiwi Share shall confer no other right to participate in the capital or profits of the Company.
3.6 The Kiwi Shareholder may convert the Kiwi Share into an ordinary share at any time, by notice in writing to the Secretary , which notice shall be accompanied by the share certificate for the Kiwi Share. In that event the Kiwi Share shall be convened into an ordinary share as from the date of receipt of the notice by the Secretary , the rights and limitations relating to ordinary shares shall be attached to the share in place of the rights and limitations specified in this clause 3, there shall cease to be a Kiwi Share and a Kiwi Shareholder, clauses 3 (except this clause 3.6) 4, S and 6.2 shall cease to apply, and all references to the Kiwi Share and the Kiwi Shareholder in this constitution shall cease to have any application.
3.7 Any approval or consent required of the Kiwi Shareholder under this constitution may be given on such terms and conditions as the Kiwi Shareholder thinks fit. The giving of any such approval or consent shall not derogate from the need to obtain any approval or consent of the Crown under any enactment.
4. Alteration of clause 3
Notwithstanding any other provision of this constitution, the rights and limitations attached to the Kiwi Share under clause 3 shall not be altered without the consent in writing of the Kiwi Shareholder.
5. Provision of telephone services
5.1 Notwithstanding clauses 79 and 80 of this constitution, and any resolution of the shareholders, unless the Kiwi Shareholder agrees otherwise in any particular case or class of cases-
5.1.1 The Company shall ensure that it and those of its subsidiaries which from time to time provide an "ordinary residential telephone service" (as that term is defined in clause 5.3) (in this clause 5, together called "Telecom") observe the principles relating to the provision of telephone services set out in clause 5.2; and
5.1.2 The Board shall not manage the business, or exercise any powers, of the Company in a manner which is inconsistent with those principles.
Without limiting the generality of clause 3.3, the Kiwi Shareholder may, in its discretion and without being required to do so, bring proceedings to enforce the rights conferred by this clause 5. It is expressly declared that this clause 5 is not intended to confer ~y benefit on, and is not enforceable by, any person other than the Kiwi Shareholder. Nothing in this constitution shall limit, or require Telecom to contravene, any enactment or rule of law.
5.2 The principles relating to the provision of telephone services referred to in clause 5.1 are as follows:
5.2.1 Local Call Charging - A local free-calling option will be maintained for all residential customers. Telecom may, however, develop optional tariff packages which entail local call charges for those who elect to take them, as an alternative;
5.2.2 Price Movement - Telecom will charge no more than the standard residential rental for ordinary residential telephone service and from 1 November 1989 the pre-GST standard residential rental will not be increased in real terms provided that overall profitability of the subsidiary regional operating companies, as evidenced by their audited accounts, is not unreasonably impaired;
5.2.3 Standard Prices and Availability - The line rental for residential users in rural areas will be no higher than the standard residential rental and Telecom will continue to make ordinary residential telephone service as widely available as it is at 11 September 1990.
5.3 For the purposes of clause 5.2, the term "standard residential rental" means the Standard Residential Rental specified on page 6 of the Company's Standard List of Charges for Local Telephone Services effective 1 November 1989 (as amended from time to time in accordance with clause 5.2.2) and the terms "ordinary residential telephone service" and "local free calling option" mean the standard local telephone service provided to residential customers for the Standard Residential Rental in accordance with the Company's usual terms and conditions.
5.4 For the purposes of clause 5.2.2, real price calculations will be made using the Consumer Price Index (for all groups as defined at 1 November 1989) as deflator.
6. Limitations on shareholdings
6.1 No person shall have a relevant interest in 10 percent or more of the total voting shares for the time being without, and except in accordance with the terms of, the prior written approvals of each of the Kiwi Shareholder and the Board given under this clause 6.1.
6.2 No person who is not a New Zealand national shall have a relevant interest in more than 49.9 percent of the total voting shares for the time being without, and except in accordance with the terms of, the prior written approval of the Kiwi Shareholder given under this clause 6.2.
7. Power to sell where clause 6 breached
7.1 The provisions of clauses 7.2 to 7.11 inclusive shall apply if either the Board determines, or the Kiwi Shareholder determines after consultation with the Board, that there are reasonable grounds for believing that a person has a relevant interest in voting shares in breach of clause 6. Where the Kiwi Shareholder makes such a determination and the Board fails to act pursuant to the following provisions of this clause 7 within such period of time as the Kiwi Shareholder considers is reasonable, or fails (in the opinion of the Kiwi Shareholder) to act in a manner which remedies the basis of the determination, the Kiwi Shareholder may act pursuant to the following provisions of this clause 7, and where the Kiwi Shareholder has so acted, those provisions shall apply in relation to the voting shares in question as if every reference therein to the Board was a reference to the Kiwi Shareholder and not to the Board. and the Company, the Board and every officer of the Company shall do everything necessary on its, his, or her part to enable the exercise by the Kiwi Shareholder of the powers given to the Kiwi Shareholder under those provisions.
7.2. After such determination, the Board may, by notice in writing served on any registered holder of voting shares to which the determination relates, require that holder to lodge with the Board within 21 days of the date on which such notice is served by the Board, a statutory declaration (or other disclosure if required by the Board) giving such information as the Board may reasonably require for the purposes of determining whether to exercise its powers under this clause 7.
7.3 Where the registered holder of any voting shares does not comply with clause 7.2, or the Board in its discretion considers that any disclosure required by clause 7.2 or other information reveals that any person, without the written consent of the Board and/or the Kiwi Shareholder, as the case may be, holds a relevant interest in any voting shares in contravention of clause 6, the Board may, subject to clause 7.4, serve a notice on the registered holder of those voting shares declaring those voting shares to be affected shares.
7.4 The Board shall serve notice upon the registered holder of any voting shares of its intention to declare those shares to be affected shares. The holder may make representations to the Board as to why any such voting shares should not be treated as affected shares, within 14 days of receiving the above mentioned notice from the Board. If after taking into consideration any such representations, the Board in its discretion determines that such shares shall be treated as affected shares, it may immediately serve a notice on the registered holder declaring those voting shares to be affected shares.
7.5 A registered holder of affected shares shall, if the Board so directs, not be entitled to vote in respect of such affected shares at any shareholders' or class meeting of the Company and in that event the votes attached to such affected shares shall vest in and may be exercised by the chairperson of any such meeting who may act entirely at his or her discretion. This shall be without prejudice to the right of any such registered holder to attend or speak at any shareholders ' or class meeting of the Company.
7.6 A registered holder of affected shares shall, within three months (or such longer period as the Board may determine) of receiving the notice declaring those voting shares to be affected shares, ensure that either the affected shares or one or more persons' relevant interests therein are disposed of, in whole or in part, so that no person has a relevant interest in the affected shares in breach of clause 6. If. after three months (or such longer period as aforesaid), the Board is not satisfied that such a disposal has been made, the Board may arrange for the sale of some or all of the affected shares on behalf of the registered holder at the best price reasonably obtainable at the relevant time, based upon advice obtained by it for the purpose, so that no person has a relevant interest in the affected shares in breach of clause 6. For this purpose, the registered holder shall be deemed to have appointed, and does hereby appoint, the Company as its agent and its attorney, in each case with full authority to act on its behalf in relation to the sale of the affected shares and to sign all documents relating to such sale and transfer of the affected shares and the Board may register a transfer of the affected shares so sold, whether or not the transfer has been properly completed and whether or not it is accompanied by the share certificates for the affected shares. If the certificate for the affected shares is not delivered up to the Company, the Board may issue a new certificate distinguishing it as it thinks fit from the certificate not delivered up, whereupon the latter shall be deemed to have been cancelled. The person to whom such voting shares are transferred shall not be bound to see to the application of the purchase money, nor shall his or her title to the voting shares be affected by any irregularity or invalidity in the proceedings relating to the sale of those voting shares.
7.7 If the Board considers that no person has a relevant interest in breach of clause 6, in any voting shares which have been declared to be affected shares, (whether because of the sale of the affected shares or otherwise), it shall withdraw the declaration. On withdrawal, those voting shares shall cease to be affected shares. The Board shall serve notice on the then holder of those voting shares of such withdrawal within 14 days of having so resolved.
7.8 The Board shall not be obliged to serve any notice required under this clause to be served upon any person if it does not know either the identity or address of the person. The absence of service of such a notice in such circumstances, and any accidental error in or failure to give any notice to any person upon whom notice is required to be served under this clause shall not prevent the implementation of or invalidate any procedure under this clause. Clauses 117 to 124 of this constitution shall apply to the service on persons of notices required under this clause 7 as if references in clauses 117 to 124 of this constitution to shareholders were references to those persons and references to the registered addresses of shareholders were references to the last addresses of those persons known to the Company.
7.9 Any resolution or determination of, or decision or declaration or exercise of any discretion or power by, the Board or by the chaim1an of any meeting under or pursuant to this clause 7 shall be final and conclusive; and any disposal or transfer made, or other things done, by or on behalf o£: or on the authority of, the Board pursuant to this clause 7 shall be conclusive and binding on all persons concerned and shall not be open to challenge, whether as to its validity or otherwise on any ground whatsoever.
7.10 The proceeds of sale of any voting shares sold on behalf of the registered holder under this clause 7 shall be applied as follows:
7.10.1 first, in payment of any expenses incurred in regard to the sale;
7.10.2 the residue (if any) shall be paid to, or in accordance with a direction of, the person who was the registered holder of the voting shares immediately before the sale
7.11 A certificate signed by a director and countersigned by the Secretary , or by a second director, or signed by the Kiwi Shareholder, that a power of sale under this clause 7 has arisen and is exercisable by the Board, or that a voting share has been duly transferred under this clause 7 on the date stated therein, shall be conclusive evidence of the facts stated therein.
8.Transfers of shares
8.1 The Board D1.1y decline to register a transfer of any voting shares it: in the reasonable opinion of the Board, any person would, upon transfer, have a relevant interest in those voting shares in breach of clause 6.
8.2 The Board shall, if it is able to do so, decline to register a transfer of voting shares if it is aware that the acquisition of the voting shares by the transferee results, or would result, in a breach of clause 6.
9. Meaning of "relevant interest"
9.1 For the purpose of this constitution, a person has a relevant interest in a voting share (whether or not that person is the registered holder of it) if that person:
9.1.1 is a beneficial owner of the voting share; or
9.1.2 has the power to exercise any right to Vote attached to the voting share; or
9.1.3 has the power to control the exercise of any right to Vote attached to the voting share; or
9.1.4 has the power to acquire or dispose of the voting share; or
9.1.5 has the power to control the acquisition or disposition of the voting share by another person; or
9.1.6 under, or by virtue of, any trust, agreement, arrangement, or understanding relating to the voting share (whether or not that person is a party to it):
- may at any time have the power to exercise any right to vote attached to the voting share; or
- may at any time have the power to control the exercise of any right to vote attached to the voting share; or
- may at any time have the power to acquire or dispose of the voting share; or
- may at any time have the power to control the acquisition or disposition of the voting share by another person.
9.2. For the purposes of this constitution, where two or more persons act jointly or in concert in respect of the exercise of the rights attaching to a voting share in which anyone or more of those persons has a relevant interest, then each of those persons shall be deemed to have a relevant interest in the voting share.
9.3 A body corporate or other body has a relevant interest in a voting share in which another body corporate that is related to that body corporate or other body has a relevant interest.
9.4 A person who has, or may have, a power referred to in any of clauses 9.1.1 to 9.1. 6 has a relevant interest in a voting share regardless of whether the power:
9.4.1. is expressed or implied;
9.4.2. is direct or indirect;
9.4.3 is legally enforceable or not;
9.4.4. is related to a particular voting share or not;
9.4.5 is subject to restraint or restriction or is capable of being made subject to restraint or restriction;
9.4.6 is exercisable presently or in the future;
9.4.7 is exercisable only on the fulfilment of a condition
9.4.8 is exercisable alone or jointly with another person or persons.
9.5 A power referred to in clause 9.1 exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.
9.6 A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them. whether or not it is legally enforceable.
9.7 For the purposes of clause 6, notwithstanding clauses 9.1 to 9.6, no account shall be taken of a relevant interest of a person in a voting share if:
9.7.1 the ordinary business of the person who has the relevant interest consists of, or includes, the lending of money or the provision of financial services, or both, and that person has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of that person; or
9.7.2 that person has the relevant interest by reason only of acting for another person to acquire or dispose of that voting share on behalf of the other person in the ordinary course of business of a sharebroker and that person is a member of a stock exchange; or
9.7.3 that person has the relevant interest solely in its capacity as a recognised clearing house, a nominee of a recognised clearing house, a recognised stock or investment exchange or a nominee of a recognised stock or investment exchange; or
9.7.4 that person has the relevant interest solely in its capacity as a custodian or depositary under arrangements whereby that person holds shares in the Company and either itself or some other person issues receipts or other securities evidencing the right to receive such shares; or
9.7.5 that person has the relevant interest solely in its capacity as an underwriter in respect of obligations (whether contingent or otherwise) to acquire or subscribe for shares in the Company pursuant to an underwriting or subscription agreement; or
9.7.6 that person has the relevant interest by reason only that he or she has been authorised by resolution of the directors or other governing body of a body corporate to act as its representative at any meeting of shareholders or class of shareholders of the Company; or
9.7.7 that person has the relevant interest solely by reason of being appointed as a proxy in accordance with the Seventh Schedule to vote at any meeting of shareholders, or of a class of shareholders, of the Company; or
9.7.8 that person:
(a) is a trustee corporation or a nominee company; and
(b) has the relevant interest by reason only of acting for another person in the ordinary course of business of that trustee corporation or nominee company; or
9.7.9 the person has the relevant interest by reason only that the person is a bare trustee of a trust to which the voting share is subject; or
9.7.10 that person has the relevant interest solely in its capacity as a trustee of an employee share purchase scheme of the Company.
9.8 For the purposes of clause 9.7.9, a trustee may be a bare trustee notwithstanding that he or she is entitled as a trustee to be remunerated out of the income or property of the trust.
