Draft regulations on the trans-Tasman mutual recognition of securities offerings released

Both the Australian and the New Zealand governments have released draft regulations to give effect to the Mutual Recognition of Securities Offerings agreement signed by them earlier in the year.

Under the current regulatory regime, Australian and New Zealand issuers cannot use their home jurisdiction offer documents when making a trans-Tasman offer of securities or managed investment scheme interests. Instead, issuers must comply with the relevant requirements in the host jurisdiction unless the issuer is operating under an exemption in the host jurisdiction.

The trans-Tasman Mutual Recognition of Offers of Securities and Managed Investment Scheme Interests regime will allow an issuer to extend an offer that is being lawfully made in one country (the home jurisdiction) to investors in the other country (the host jurisdiction) without being required to comply with most of the substantive requirements of the host jurisdiction's securities laws that apply to domestic offers.

The draft regulatory frameworks which were released in September cover the activities that are inherent in the making of offers, including:

• content and registration requirements for offer documents;
  
  
• the manner in which offers may be made;
  
  
• advertising and other communications with offerees in relation to offers; and
  
  
• the manner of acceptance of offers and other consequential matters.

The new framework will apply to offers of securities and interests in managed investment schemes.

The home jurisdiction regulator will have all its usual powers (in the home jurisdiction) in connection with offers made in the host jurisdiction under the regime. These powers include the power to suspend or stop the offer being made. These powers will be exercisable in respect of offers to investors in either country.

The host jurisdiction regulator will have certain powers in respect of offers made under the mutual recognition regime if entry requirements are not satisfied, or ongoing requirements are not complied with.

Submissions on the draft Corporations Amendment (NZ Closer Economic Relations) Bill 2006 closed on 13 October 2006 and submissions on the Securities (Mutual Recognition of Securities Offerings Australia) Regulations 2006 closed on 24 October 2006.

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