Government U-turn on SOE sale cap
The Government has backed down on a move that would have allowed it to sell more than 49 per cent of partially privatised state assets, providing the extra shares did not carry voting rights.
Fairfax Media highlighted the loophole in April and it is understood that sparked a backlash from United Future leader Peter Dunne. It is understood the Government made a U-turn after Dunne dug in his toes, arguing the wording in the Mixed Ownership Model Bill would breach his party's support deal with National.
Last night SOE Minister Tony Ryall moved the amendment to the Bill, which changed the requirement on the Government from retaining 51 per cent of the shares with voting rights to 51 per cent of all shares.
The change would also apply to the 10 per cent cap on individual ownership.
Ryall said the effect of the change was that the Crown must hold 51 per cent of every class of shares in the partially-privatised companies as well as 51 per cent of every class of the voting securities (which are voting shares and other securities with voting rights).
In its regulatory impact statement Treasury said the change would ensure consistency with the confidence and supply agreement between National and United Future.
The Government has pledged to retain 51 per cent of the four energy companies it has put on the block, starting with Mighty River Power later this year.
But under the wording originally approved by ministers, the companies could have issuing or sold non-voting shares, diluting the taxpayers' slice of the dividends and profits that the companies generate.
In April a spokeswoman for Ryall said voting rights were the best way to measure ownership, because it was the voting shareholding that determined the ability to control the companies.