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Guidelines for applications
Guidelines for applications
The Trust's intention is to focus on claims where a business wrongdoing will otherwise go unremedied, or where the legality of an alleged wrongful act would not be tested if the Trust did not provide assistance. This may occur where an action raises questions of principle that ought to be fully explored, but that would not be worth pursuing by an individual plaintiff or a collection of plaintiffs on a strict cost/risk/benefit analysis.
The Trust would choose not to participate where shareholders could recover without its assistance.
The Trust's policy is to apply its resources to cases with compelling moral merit, i.e. where there is very clear dishonesty or impropriety. It is not much interested in negligence or lack of diligence. It would not consider supporting actions where success would rely on technical infringements or might be something of a windfall.
Types of business wrongdoing that would interest the Trust may involve:
insider trading
unethical conduct
suspected fraud
conflict of interest
deliberate deception
The Trust wants to target dishonest conduct, not carelessness or poor judgement.
The Trust will also consider opposing or assisting in opposing proceedings which may have the effect of deterring investigation or reporting of actions to promote integrity in the governance of businesses or regulatory agencies in New Zealand. For example it would consider opposing a 'gagging' order or defamation action.
In some cases, the Trust can reassure plaintiffs pursuing legal action about their downside risk. For example, the Trust has twice underwritten the exposure of shareholder action groups pressing claims against well funded insiders who appear to have adopted a strategy of exhausting challengers with delay and expense. The Trust has undertaken to meet or to share the exposure to adverse cost orders. The first such case arose out of the Fletcher Challenge takeover of Southern Petroleum in 1995. In the result the plaintiffs obtained the necessary order and further Trust assistance was not required.
The Trust was similarly involved in supporting Feltex shareholders, though their class action ultimately failed.
If an action results in financial compensation the Trust would normally expect to share in the proceeds.
Decisions of the Trust on whether or not to support an application are final.
A checklist for applicants
A checklist for applicants
For guidance on whether your application fits within the Trust's guidelines, check the following questions:
Is the cost of pursuing a remedy likely to outweigh any possible court order in your favour? Yes /No
Will the wrongdoing go unremedied if the Trust does not assist? Yes /No
Is the conduct concerned basically a technical infringement? Yes/ No
If successful could the result be regarded as a 'windfall'? Yes/ No
Is there a clear case of dishonest or improper conduct as opposed to carelessness or poor judgement? Yes /No
Will the case send a message on an issue of general importance? Yes /No
Have you already taken legal advice? Yes /No
If your answers are those in bold, an application for assistance may be considered by the Trust.
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