The Regulator Report lists recent changes, decisions and developments at the main New Zealand and Australian corporate, commercial and competition regulatory bodies. This edition of the Regulator Report covers the period from 5 February 2009 to 10 March 2009. For further details on any matter in this report, just click on the hyperlinks in each item.

Prime Minister's Office

Job Summit – the Prime Minister's summit on employment
The government has released copies of speeches and related documentation from the Job Summit held in Auckland on 27 February 2009. One of the outcomes of the Job Summit was the identification of the top 20 core workplace and employment issues. In addition, the Job Summit included outcomes of discussions on six workstreams, two of which ('Helping Firms Survive' and 'Firm Funding') are relevant to the steps being taken by NZX, the Capital Markets Development Taskforce, the Securities Commission and others in relation to making it easier for businesses to raise capital (see the Summer 2009 issue of Bell Gully's Commercial Quarterly for details of the these steps). A brief summary of the key points arising under each of these two workstreams, to the extent that they impact on fundraising issues, is set out below.

Helping Firms Survive
Longer term issues for development and consideration	investigate providing improved access to SMEs
Further investigation required	accelerate the review of the Securities Act to enhance investment streamline the Companies Act to provide a more flexible means for SMEs to raise capital fund business incubators to allow firms to stay longer limit the scope of the Takeovers Panel to large companies with broad shareholder bases
Firm Funding
Near term and high priority	stimulating the development of New Zealand's debt markets equity growth for SMEs government to help remove barriers to outside equity raising for cooperatives (if required) remove obstacles to raising funding directly from offshore investors
Longer term issues for development and consideration	review of the Securities Act in relation to employee share schemes, rights issues and liability issues and matters generally alter the Takeovers Code to exempt unlisted companies with less than $10 million in assets from the requirement to provide an independent adviser's report introduce an investor registration mechanism to allow lower level disclosure for capital raising to registered investors and meet certain criteria whole or partial listing of SOEs and LATEs (CCOs)
Further investigation required	create a pre-IPO fund for the NZX

Click here for more details on the Job Summit

Joint statement on strengthened trans-Tasman cooperation
Prime ministers Kevin Rudd and John Key held their annual talks in Sydney on 1-2 March 2009. The prime ministers committed to, and agreed on the need for substantial progress in, the following areas in 2009:

• accelerate regulatory harmonisation and alignment in order to stimulate business and create jobs;

• finalise in 2009 an Investment Protocol to promote investment between the two economies through a reduction in regulatory barriers and compliance costs for business;

• complete a new comprehensive Tax Treaty between Australia and New Zealand to reduce tax barriers to trade and investment, further protect the tax base in each jurisdiction and simplify and improve certainty for those with Trans-Tasman business interests;

• conclude a scheme for the mobility of trans-Tasman retirement savings which will enable pension funds to be moved between Australia and New Zealand;

• undertake a review of CER Rules of Origin, and an updating of the Australia-New Zealand Joint Food Standards Treaty;

• reduce remaining barriers at the borders to ensure that people and goods can move more easily between the two countries, including through effective air links;

• further strengthen cooperation to promote open markets and trade opportunities for exporters, including through the ASEAN Australia New Zealand Free Trade Agreement signed on the weekend and a successful conclusion of the WTO Doha Development Round;

• expand joint trade promotion activities to increase global market shares for the Trans-Tasman economy; and

• undertake further work on therapeutic product standards between the two countries.

Click here to read the full press release

The Treasury

Deposit Guarantee Scheme - institution approved on 3 March 2009
The latest approval made under the Crown retail deposit guarantee scheme was released on 3 March 2009. A full list of approved institutions is available on the Treasury's website.
Click here to view a list of the approved institutions

Mascot Finance customers covered by Deposit Guarantee Scheme
Mascot Finance was placed under receivership on 2 March 2009. It is the first financial institution approved under the deposit guarantee scheme to have triggered the guarantee since the scheme was established in October 2008.
Click here for more

National Infrastructure Unit
The government has decided to establish a specialist infrastructure unit within the Treasury to assist with the government's objective of permanently lifting the sustainable growth rate of the economy. The National Infrastructure Unit will work closely with the National Infrastructure Advisory Board – a group made up of private sector and local government representatives that the government has announced will be established.
Click here for more

The Reserve Bank of New Zealand

Non-bank deposit takers prudential regulation regime
The Reserve Bank has released a consultation paper proposing the type of credit rating non-bank deposit takers are required to hold from 1 March 2010. The paper proposes the use of local currency, long term, issuer ratings. Submissions on the paper closed on 9 March 2009.
Click here for more

An address to the Job Summit in Auckland
Reserve Bank Governor Alan Bollard delivered a speech entitled "World recession and how we cope" to the 2009 Job Summit held in Auckland on 27 February.
Click here for more

Ministry of Economic Development (MED)

Securities Disclosure and Financial Advisers Amendment Bill introduced
Commerce Minister Simon Power introduced the new Securities Disclosure and Financial Advisers Amendment Bill into Parliament on 18 February 2009. Mr Power said the bill, which flows from the recommendations of the Capital Market Development Taskforce, will make it easier for businesses to raise capital while ensuring the timely and accurate disclosure of information to prospective investors.  Central to the bill's key provisions is the introduction of a simplified disclosure prospectus regime into the Securities Act 1978, doing away with a lot of duplicated information for NZX-listed issuers. The bill also proposes technical changes to categories of people exempt from disclosure requirements, making it easier for all companies - both listed and unlisted - to raise capital. A number of minor, technical, amendments to the Financial Advisers Act 2008 are also incorporated as part of this bill, which include an amendment to rectify the error relating to the territorial scope of that Act outlined in our article "Financial Advisers Act - territorial scope" in the Spring 2008 issue of Bell Gully's Commercial Quarterly. The bill is now before the Commerce Select Committee which has called for submissions on the bill. The submission period is short, with a closing date of 20 March 2009. The select committee is to report back to Parliament on 30 April 2009.
Click here to read the press release
Click here to read the cabinet paper
Click here to access a copy of the bill
Click here to read Bell Gully commentary on the bill

Taskforce welcomes new Securities Disclosure and Financial Advisers Amendment Bill
Chair of the Capital Market Development Taskforce, Rob Cameron, says the taskforce is pleased that the Government has responded so rapidly to the recommendations it made in its November interim report, which proposed ways to improve businesses' access to capital and reduce the costs of raising capital.
Click here for more
Click here for Bell Gully commentary on the taskforce's interim report

Insolvency Amendment Bill
The Minister of Commerce, Hon Simon Power, introduced the Insolvency Amendment Bill to Parliament on 9 March 2009. The bill proposes to make some amendments to the Insolvency Act 2006 in relation to the following:

• Preventing fraudulent debts under the new No Asset Procedure (NAP) from being potentially cancelled when a person is discharged from that process;

• Allowing the Official Assignee (OA) to extend the time period that a debtor is in the NAP process;

• Strengthening of the insolvent gift provisions to enable the OA to cancel gifts made by a debtor in the period leading up to his or her bankruptcy; and

• Providing improved access to the NAP and bankruptcy public registers to enable creditors to make informed lending decisions.

Click here for more

Government Policy Statement on Electricity Governance
Energy and Resources Minister Gerry Brownlee has released the government's draft revised Government Policy Statement ("GPS") on Electricity Governance. The revisions fall into three broad categories:

• Emphasise the priority the government accords to security of supply policy;

• Express the government's desire to facilitate small grid upgrade investments by streamlining the investment approval process;

• Remove references to the New Zealand Energy Strategy (NZES) and New Zealand Energy Efficiency and Conservation Strategy (NZEECS) which are to be reviewed this year.

The ministry has invited feedback on the draft GPS. Submissions close on 16 March 2009.
Click here for further details and to access the draft GPS
Click here for Bell Gully commentary on the draft GPS

Securities Amendment Act 2002 Commencement Order 2009
The Securities Amendment Act 2002 Commencement Order brings into force, on 12 March 2009, section 25 of the Securities Amendment Act 2002. Section 25 amends the Securities Act 1978 to revoke the exclusivity of the Securities Commission's right to recommend regulations made under section 70 of that Act so that regulations can be made on the recommendation of the Minister of Commerce. The minister must consult with the commission before making a recommendation under section 70.
Click here to view the order

Postponement of implementation of Copyright Act section 92A
Prime Minister John Key announced at a post-cabinet press conference on 23 February that Cabinet had agreed to delay the implementation of section 92A of the Copyright Act until 27 March 2009, to give time for participants to agree on a voluntary code of practice to help implement this law. (See the Copyright (New Technologies) Amendment Act 2008 Commencement Amendment Order 2009.) Section 92A requires an Internet service provider (ISP) to adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account with that ISP of a person who repeatedly infringes the copyright in a work by using one or more of the Internet services of the ISP to do a restricted act without the consent of the copyright owner.

Copyright (Artists' Resale Right) Amendment Bill to be withdrawn
The Government Administration Committee has examined the Copyright (Artists' Resale Right) Amendment Bill and recommends by majority that it not be passed. This bill proposes to amend the Copyright Act 1994 by inserting a new part to establish a mandatory resale right, which would entitle an artist to receive a resale royalty payment on his or her original artistic works when they were resold in New Zealand. The minister in charge of the bill has advised the committee of his intention to withdraw the bill once it is reported to the House.
Click here to read the full report

Companies Office

Infringement Notices - Financial Reporting Act 1993
In June 2007 amendments were made to the Financial Reporting Act 1993 (FRA) allowing the Registrar of Companies to issue an infringement notice to directors of a company who fail to file audited financial statements (company and/or group) within the time period prescribed by the FRA. The infringement fee is $7,000 per director in respect of an offending company.  An article released by the MED suggests that a more rigorous approach to non-compliance will be taken by it in the future. If audited financial statements are not submitted, and the $7,000 fee is not paid, the MED states that the matter will be referred to the Department of Courts for collection of the fee, and the company may be referred to the Registrar's National Enforcement Unit for investigation with a view to summary prosecution.
Click here for more

Annual Returns must be filed electronically
The Companies Office no longer distributes paper annual returns to companies in their annual return filing month. Those remaining companies that do receive paper annual return reminders are required to complete their annual return online.
Click here for more

Ministry for the Environment

Resource Management Amendment Bill 2009
The Resource Management (Simplifying and Streamlining) Amendment Bill 2009 has been introduced into Parliament and referred to the Local Government and Environment Committee for consideration. Public submissions are being received until 3 April 2009.  The committee is to report back to Parliament on 19 June 2009.
Click here for a summary of the bill, background papers and related documents
Click here for Bell Gully commentary on the bill

Draft Forestry Allocation Plan
The "Draft Forestry Allocation Plan" issued by the Minister Responsible for Climate Change Issues, which elaborates on the proposed manner in which allocation will occur for pre-1990 forests under the Emissions Trading Scheme (ETS), and the potential exemptions for such forests is currently being consulted on. Submissions on the draft plan were originally due by 28 February 2009 but this date has now been extended to 30 April 2009 to avoid confusion with submissions on the Emissions Trading Scheme Review Committee's review of the ETS.
Click here for further details
Click here for a copy of the Draft Forestry Allocation Plan and accompanying information document
Click here for Bell Gully commentary on the Draft Forestry Allocation Plan

Securities Commission

SECURITIES ACT EXEMPTION NOTICE

The following Securities Act Exemption Notice has been published for this period:

Securities Act (Babcock & Brown Limited) Exemption Notice 2009
This notice, which came into force on 17 February 2009 and expires on 31 March 2009, exempts Babcock & Brown Limited, subject to conditions, from section 37(1) of the Securities Act 1978 in respect of a proposal to vary the terms of subordinated New Zealand dollar denominated notes quoted on the New Zealand debt market operated by NZDX and subordinated Australian dollar denominated notes quoted on the ASX.

FINANCIAL REPORTING ACT EXEMPTION NOTICE

Under section 35A of the Financial Reporting Act 1993, the Securities Commission has issued the following Financial Reporting Act Exemption notice:

Financial Reporting Act (ABB Limited) Exemption Notice 2009
This notice, which came into force on 6 March 2009 and expires on 28 February 2014, exempts ABB Limited (ABB), a company incorporated in Switzerland, from various sections of the Financial Reporting Act 1993. ABB is listed on the SIX Swiss Exchange and the New York Stock Exchange. The effect of the exemptions is to provide relief to the directors of ABB from the preparation, content, auditing, and filing requirements of the Act. The exemptions are granted on the condition that ABB prepares and publicly files financial statements that are required to be prepared under the financial reporting requirements of its jurisdictions of listings, namely Switzerland and the United States of America.

Takeovers Panel

TAKEOVERS CODE EXEMPTION NOTICE

The following Takeovers Code Exemption Notice has been published for this period:

Takeovers Code (Eastern Hi Fi Group Limited) Exemption Notice 2009
This notice applies to acts or omissions occurring on or after 1 February 2009 and expires on 31 July 2009. Eastern Hi Fi Group Limited (EHF) proposes to undertake a two for one rights issue. James Urquhart (who holds 19.68% of the voting rights in EHF) wishes to participate in the rights issue with the goal of converting his loan to the company to EHF shares by taking up his entitlement under the rights issue and any shortfall in subscriptions if the rights issue is undersubscribed. If any under-subscription under the rights issue is insufficient for Mr Urquhart to fully convert his loan, there is proposed to be a supplementary placement to him of the number of shares that would be required to fully convert the loan. The rights issue may result in an allotment to Mr Urquhart that increases his voting control in EHF above 20 percent. The Takeovers Panel has granted exemptions (on conditions that require the maximum percentage to which Mr Urquhart could increase his voting control to be disclosed in the notice of meeting) for:

• Mr Urquhart from rule 7(d) of the Takeovers Code to the extent that rule 7(d) requires the notice of meeting to be in accordance with rule 16(b) of the Code in respect of any increase in the percentage of voting rights held in EHF under a proposed rights issue and supplementary placement; and

• EHF from rule 16(b) of the Code in respect of the notice of meeting.

Australian Stock Exchange (ASX)

Profit warnings and announcements of expected material differences in financial results
ASX has provided a reminder and further guidance to ASX listed issuers on their continuous disclosure obligations in the period leading up to the deadline for lodging periodic reports for half-year or annual reporting periods where there is expected to be a material difference in the issuer's financial results.
Click here for more
Click here for Bell Gully commentary on this ASX update and its relevance to NZX listed issuers

Australian Securities and Investment Commission (ASIC)

ASIC seeks comment on proposals to facilitate equity capital raising and participation by retail investors
ASIC has issued a consultation paper which considers measures to facilitate capital raising and increase the access that retail investors have to equity capital raising opportunities. The proposals for relief largely facilitate equity capital raisings that do not require a prospectus or product disclosure statement (PDS).

In the consultation paper, ASIC is proposing to allow:

• listed managed investment schemes to make placements at a discount of more than ten percent to the current market price of their units;

• more rights issues and placements using a 'cleansing notice' instead of a prospectus or PDS, even if a listed entity has been suspended for more than the current five day maximum period set out in the law;

• underwriters or large shareholders to participate in rights issues and dividend reinvestment plans even if they exceed the twenty percent takeover threshold in doing so.

The consultation paper also sets out ASIC's expectations regarding market practices in effecting placements and other capital raisings, particularly when utilising the 'cleansing notice' exemption from preparing a prospectus or PDS. Submissions on the consultation paper are due by 30 March 2009 with class orders expected to be released in May 2009.

The proposals in this consultation paper add to proposals considered under ASIC's December 2008 consultation paper on changes to the existing thresholds around share purchase plans relief. ASIC sought comments on proposals to increase the monetary limit for share purchase plan disclosure relief from the current $5,000 in any consecutive 12 month period to $15,000 and to make it a condition of the relief that a 'cleansing notice' be lodged with the Australian Securities Exchange. ASIC also proposed to extend the terms of the relief for the issue of interests in an ASX listed managed investment scheme under an interest purchase plan.
Click here to read the full press release
Click here to access the consultation paper on facilitating equity capital raising
Click here to access the consultation paper on share purchase plans

ASIC extends ban on covered short selling of financial securities
On 5 March 2009 ASIC announced that it would keep the ban on covered short selling of financial securities in place until 31 May 2009, but it will keep this position under review. ASIC advised the market on 21 January 2009 that the current ban on short selling of financial securities (as defined in AD08-65 ASIC lifts ban on covered short selling for non-financial securities of 13 November 2008) would remain in place until 6 March 2009.
Click here for more

New Zealand Commerce Commission (NZCC)

Speeches

Enforcing Competition Law during an Economic Crisis
On 25 February the Commission Chair, Paula Rebstock gave a speech at the 9th Annual Competition Law and Regulation Review conference in Wellington. In her speech, Rebstock discussed:

• the effect of the economic downturn on competition in New Zealand;
• current enforcement action being taken against cartels; and
• the review being undertaken on the leniency and co-operation policies.

Rebstock also discussed the commission's new responsibilities under the Commerce Amendment Act 2008 and the challenges these new responsibilities present to the commission.
Click here for more

Media releases

The NZCC has issued the following media releases:

Industry regulation and regulatory control

• Commerce Commission consults on draft guidelines on carbon claims
  The NZCC has released draft guidelines which inform businesses about their obligations surrounding carbon offset and neutrality claims and how they are affected by the Fair Trading Act. The NZCC is seeking feedback on the guidelines before they are finalised.
  Click here for more

Mergers and acquisitions

• David Ferrier cleared to acquire Godfrey Hirst's wool scours
  The NZCC has given clearance for Auckland businessman Mr David Ferrier, or his company New Zealand Woolscourers Limited, to acquire wool scouring and wool dumping assets of Godfrey Hirst NZ Limited and shares in Cavalier Wool Holdings Limited.
  Click here for more

• Media Monitors granted clearance to acquire Chong
  The NZCC has granted clearance for Media Monitors Pty Limited to acquire all the business and assets of Chong Bureau Limited.
  Click here for more

• Commerce Commission grants clearance to Fletcher Building to acquire Stevenson masonry assets in Auckland and Whangarei
  The NZCC has given clearance to Fletcher Building Limited to acquire up to 100 per cent of the assets of both Stevenson Group Limited's Whangarei masonry business and Stevenson's Auckland masonry business.
  Click here for more

Market behaviour

• Commerce Commission review of enforcement framework relating to single-firm conduct
  The NZCC has commenced a review of the effectiveness of the enforcement framework for addressing allegations under section 36 of the Commerce Act that a firm has taken advantage of its market power.
  Click here for more

Consumer issues

• Xtra fined for false claims of endorsement by Commerce Commission
  Xtra Ltd, a division of Telecom New Zealand Ltd, has been found guilty of breaching the Fair Trading Act and has been fined $45,000 in the Wellington District Court. Xtra must also pay $10,000 in costs.
  Click here for more

• Commerce Commission warns about fakes
  The NZCC is cautioning consumers to be alert after issuing more than 70 warnings relating to the sale of possible counterfeit clothing and footwear on the Trade Me website.
  Click here for more

• The Warehouse fined $209,600 for Fair Trading Act breaches
  One of New Zealand's biggest retail stores has pleaded guilty to multiple breaches of the Fair Trading Act and has been fined a total of $209,600 in the Auckland District Court.
  Click here for more

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

Mergers and acquisitions

• ACCC opposes the proposed acquisition of Bartter Enterprises by Baiada Poultry Pty Ltd
  The ACCC has announced that it intends to oppose the proposed acquisition of Bartter Enterprises by Baiada Poultry Pty Ltd.
  Click here for more

• ACCC not to oppose proposed acquisition of Hans Continental Smallgoods by Primo
  The ACCC will not oppose the proposed acquisition of certain assets of Hans Continental Smallgoods Pty Ltd by P&M Quality Smallgoods Pty Ltd (Primo).
  Click here for more

Market behaviour

• ACCC proposes to grant conditional authorisation to collective bargaining by owner drivers
  The ACCC has issued a draft determination proposing to grant conditional authorisation to a collective bargaining arrangement by owner drivers.
  Click here for more

• ACCC institutes proceedings against more airlines in alleged air freight cartel
  The ACCC instituted proceedings in the Federal Court, Sydney, against a further four airlines seeking penalties for alleged price fixing between early 2003 and 2006.
  Click here for more

• Court orders airlines to pay a total of $16 million in penalties for price fixing
  The Federal Court in Sydney has ordered pecuniary penalties against Société Air France & Koninklijke Luchtvaart Maatschappij NV totalling $6 million, Martinair Holland NV of $5 million and Cargolux International Airlines S.A. of $5 million for breaching the price fixing provisions of the Trade Practices Act 1974.
  Click here for more

• ACCC grants authorisation to David Jones
  The ACCC has granted authorisation to David Jones Ltd to continue to invite retail brand management businesses operating within its stores to participate in certain promotions such as storewide and department-wide discounts.
  Click here for more

• ACCC proposes to deny authorisation of the queue management system at Dalrymple Bay Coal Terminal
  The ACCC has issued a draft determination proposing to deny authorisation to Users of Dalrymple Bay Coal Terminal to extend the operation of their Queue Management System.
  Click here for more

• ACCC proposes to approve coal scheme at Port of Newcastle
  The ACCC has issued a draft decision proposing to grant authorisation to Port Waratah Coal Services and Newcastle Coal Infrastructure Group for a short term capacity balancing system until 30 June 2009.
  Click here for more

Access

• ACCC reviews transmission declaration and issues draft report
  The ACCC has issued its draft declaration report for the domestic transmission capacity service.
  Click here for more

Consumer issues

• Court declares Harris Scarfe misled consumers
  The Federal Court, Adelaide has declared that Harris Scarfe Australia Pty Ltd misled consumers by representing in a catalogue that certain advertised items were discounted by a specific amount when in fact they were discounted by less than that amount, or were not discounted at all.
  Click here for more

• TPG Internet Pty Ltd undertakes to stop misleading advertising
  TPG Internet Pty Ltd has given a court-enforceable undertaking to the ACCC after conceding that advertising for its Unlimited Cap Saver mobile phone plan may have contravened the Trade Practices Act 1974.
  Click here for more

• Beauty companies admit mislabelling product, mis-using Australian Made Logo
  Two small cosmetic manufacturing companies, Natural Beauty Enterprise Pty Ltd and Natural Green Pty Ltd, have admitted supplying cosmetic products which breached the mandatory information standard.
  Click here for more

• Misleading advertising of mobile premium services in youth magazines – ACCC action
  The ACCC has begun court action under the Trade Practices Act 1974 against two overseas based companies for alleged misleading advertising of mobile telephone premium services in Australian youth magazines.
  Click here for more

• ACCC hung up on lack of clarity in phone service advertising
  Parts of the phone industry continue to engage in poor practices that frustrate consumers, despite a string of ACCC enforcement actions dealing with lack of clarity in advertising.
  Click here for more

• ACCC proposes to deny authorisation of Cosmetic Surgery Code of Practice
  The ACCC has issued a draft determination proposing to deny authorisation to a Code of Practice and bylaws developed by the Australasian College of Cosmetic Surgery.
  Click here for more

• False claims of ACCC advertising clearance leads to undertakings
  The ACCC has accepted court enforceable undertakings from Stamford Hotels Pty Ltd over a misleading representation made by a former employee of Stamford Hotels.
  Click here for more

• Selling toys on the internet – it's no game
  Internet toy traders have been reminded they must meet mandatory safety standards for their products after hazardous toys were made available on websites.
  Click here for more

• Court declares bunk bed supplier failed safety standard
  The ACCC has obtained declarations and final orders by consent in the Federal Court, Melbourne against Aziz Properties and Services Pty Ltd, trading as Infinity Megastore, and its sole officeholder, Dr Rodney Aziz.
  Click here for more

• Scams proliferate in global financial crisis
  A new wave of scams sparked by the global financial crisis has significantly increased the chances of Australians falling victim to fraud during 2009, Australasian Consumer Fraud Taskforce Chairman, Mr Peter Kell, has warned.
  Click here for more

• Event promoters engaged in misleading conduct
  The Federal Court, in Perth, has declared that Mr Gregory John Millar and Mr John Raymond Webb engaged in misleading or deceptive conduct when promoting various industry exhibitions.
  Click here for more