Government announces commencement date for new securities law

Cabinet has finally approved the regulations giving effect to the remaining changes to the securities law made when the Securities Legislation Bill was passed in October 2006. Market participants have been told they have three months to prepare for the implementation of the new law on 29 February 2008.

Most of the amendments to the Securities Act and Takeovers Act made under the omnibus Securities Legislation Bill came into effect after it was passed in October 2006. However, four key components of the new securities law have been kept on hold pending the approval of regulations. These include new law on market manipulation, new disclosure requirements for investment advisers, changes to the insider trading law, and some minor changes to the substantial security holders’ disclosure regime. All of these changes are set out in the Securities Markets Amendment Act 2006 and its accompanying regulations. Some outstanding provisions in the Securities Amendment Act 2006, the Takeovers Amendment Act 2006 and the Fair Trading Amendment Act 2006 (which have been dependent on the implementation of the Securities Markets Amendment Act) will also come into effect on 29 February 2008.

The regulations which were enacted by Order in Council on 3 December are:

• the Securities Markets (Substantial Security Holders) Regulations 2007 which prescribe the form, delivery method and specific disclosure required for disclosures by substantial security holders under the Securities Markets Act 1988 (the Act) and related matters;

• the Securities Markets (Market Manipulation) Regulations 2007 which exempt two categorises of securities market conduct from the Act namely, market stabilisation following the first offer of securities for sale to the public, and short selling and crossings; and

• the Securities Markets (Investment Advisers and Brokers) Regulations 2007 which:

• contain five exemptions relating to aspects of disclosure;

• for advice on specific investments, increase the scope of disclosure by requiring disclosure of the dollar amount, or a percentage formula, of fees and remuneration;

• prescribe standards of clarity and prominence in setting out information in a disclosure statement; and

• define meaning of the term bank term deposit.

For commentary on the securities law amendments, refer to the following articles and papers prepared by Bell Gully on this topic:

• "Securities Legislation Bill completes the parliamentary process" in the Spring 2006 Commercial Quarterly, which provides an overview of the regulatory process leading up to the passage of the bill and a summary of the key changes;

• "Update on regulations for new securities law" in the Summer 2007 Commercial Quarterly;

• "Expanded liability under the continuous disclosure regime" in the Winter 2007 Commercial Quarterly; and

• A paper on "The New Insider Trading Laws" presented by Bell Gully senior associate, Jenny Cooper, to the Securities Legislation and Capital Markets Update conference held in Auckland in September 2007.

The Securities Commission is preparing a Guide to the New Securities Law 2008 which will explain the changes made to the Securities Act 1978 and the Securities Markets Act 1988. The Commission has stated that the Guide will be available electronically from its new securities law website (www.newsecuritieslaw.govt.nz) before the end of the year.

Enquiries and information

For more information on any of the cases, articles and features in Commercial Quarterly, please email Diane Graham or call her on 64 9 916 8849.