Australia introduces Bill for trans-Tasman mutual recognition of securities

Progress continues on bringing into effect the Australian and New Zealand governments' agreement to introduce a mutual recognition of securities regime. Australia's Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Bill 2007 was introduced at the end of March and it is expected to be passed during Australia's winter parliamentary sessions. The necessary approvals to finalise the equivalent New Zealand regulations will be sought once the Australian legislation has been passed.

The Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Bill 2007gives effect to the Trans-Tasman Mutual Recognition of Offers of Securities and Managed Investment Scheme Interests regime.  When enacted, the legislation will allow the offer of securities and managed investments to be made by a New Zealand company in Australia using the same offer documents that the company uses in New Zealand.  Similarly, the equivalent New Zealand legislative amendments, the Securities (Mutual Recognition of Securities Offerings Australia) Regulations 2006, will allow Australian companies to offer securities in New Zealand using the Australian offer document.

The objective is to reduce duplicated and costly regulation, and thereby facilitate investment between New Zealand and Australia, enhance competition in capital markets, and reduce costs for business and increase choice for investors.  The scheme achieves this by allowing entities from New Zealand to offer securities into Australia on the basis of compliance with the New Zealand fundraising requirements and with minimal additional requirements imposed by Australian law.  This is intended to reduce costs significantly for New Zealand issuers, as they will no longer be required to prepare separate documents to comply with Australian regulation, and vice versa. 

This new regime can come into force as soon as New Zealand’s draft regulations under the Securities Act and the Australian Bill (together with any necessary regulations) have been passed.

In addition to providing for the mutual recognition of securities offerings, the Australian Bill makes provision for:

• reduced filing requirements for certain foreign companies carrying on business in Australia;

• information sharing between the Australian Competition and Consumer Commission and other agencies, bodies and persons; and

• the protection of certain information that is given to, or obtained by, the Commission.

The Bill also makes amendments to the Trade Practices Act 1974 following recommendations made by the Productivity Commission in its 2004 Research Report “Australian and New Zealand Competition and Consumer Protection regimes”.

The Bill is available on the Australian Commonwealth Law website.

For further information on the proposed Securities (Mutual Recognition of Securities Offerings Australia) Regulations 2006 visit the Ministry of Economic Development's website at www.med.govt.nz. For background information on the Australian Bill visit the Australian Government's website at www.treasury.gov.au.

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