The Bell Gully Regulator Report lists recent changes, decisions and developments at the main New Zealand corporate, commercial and competition regulatory bodies and also lists relevant updates from the Australian Competition and Consumer Commission. This edition of the Regulator Report covers the period from 8 May 2008 to 5 June 2008. For further details on any matter in this report, just click on the hyperlinks in each item.

Ministry of Economic Development (MED)

Securities (Mutual Recognition of Securities Offerings –Australia) Regulations 2008
New Zealand and Australia are a step closer to implementing the regime for the mutual recognition of securities offerings. Regulations which implement New Zealand's obligations under the Agreement between the Government of Australia and the Government of New Zealand in relation to Mutual Recognition of Securities Offerings dated 22 February 2006 (the Agreement) were passed by Order in Council on 3 June. The regulations will not be in force until the date on which the Agreement comes into force. The Agreement will come into force when both governments have exchanged diplomatic notes confirming the completion of their respective domestic procedures for the entry into force of the Agreement.

Comparable provisions in Australia on the mutual recognition of securities offers came into force on 21 December 2007 under the Corporation (NZ Closer Economic Relations) and Other Legislation Amendment Act 2007 (Cth). This Act introduced a new Chapter 8 of the Corporations Act 2001 (Cth) to provide for the mutual recognition of the regulation and administration of securities offers between Australia and recognised foreign jurisdictions. The Regulations that will extend the operation of the Act to New Zealand are still being finalised.

Once the regime is effective, it will allow an issuer to extend an offer that is being made lawfully in one of the countries to investors in the other country without having to comply with most of the substantive requirements of the host jurisdiction's fundraising laws applying to domestic offers. The practical effect is that the one offer document may be used in both countries, reducing compliance costs and improving integration between the two markets.

For background information on the Securities (Mutual Recognition of Securities Offerings - Australia) Regulations 2008 visit the MED's website at www.med.govt.nz. To access the Securities (Mutual Recognition of Securities Offerings –Australia) Regulations 2008
visit the New Zealand Legislation website.

Update on proposed changes to the Financial Advisers Bill
The Finance and Expenditure Committee re-opened submissions on the Financial Advisers Bill until 16 May 2008 following the release of its interim report on the Bill. The two issues under further consideration centre on the definition of "financial adviser" and the institutional arrangements for supervising them.
Click here for a copy of the Finance and Expenditure Committee's interim report on the Financial Advisers Bill.

To read Bell Gully's latest commentary on the proposed changes to this Bill, click here.

SOEs, CRIs and the Commerce Act
The government has announced a proposal to allow State Owned Enterprises (SOEs) and Crown Research Institutes (CRIs) to cooperate without breaching the Commerce Act. It is proposed that the Commerce Act be amended so that SOEs and CRIs are treated as interconnected bodies and are not subject to Commerce Act restrictions on their ability to cooperate:

• to the extent they are acting in accordance with the requirements of a ministerial direction, and
• where the direction states that shareholding ministers in consultation with the Minister of Commerce consider this to be in the public interest.

The proposed amendment would apply to all SOEs and CRIs except the three electricity generators Meridian Energy, Mighty River Power and Genesis Energy.
Click here for more

Commerce Select Committee reports back on the Companies (Minority Buy-out Rights) Amendment Bill
The Commerce Select Committee has examined the Companies (Minority Buy-out Rights) Amendment Bill and has recommended that it be passed with amendments. The Bill amends the Companies Act 1993 to clarify and improve the existing minority buy-out regime based on recommendations in a 2001 Law Commission Report. The select committee noted that, although the majority of submissions on the Bill were supportive of its general intent, there were various concerns over certain aspects of the Bill. The key changes recommended by the select committee include:

• re-instating the existing requirement for a company to use a "fair and reasonable" valuation method for determining the price it is willing to pay for shares;
• changing the date of valuation to the close of business on the day before the day on which the resolution approving a fundamental change to the company's structure is passed;
• broadening the exception to the default valuation method to allow the use of a different method when it would be "clearly unfair" to either the shareholder or the company;
• providing further clarification to the arbitration provisions;
• giving the arbitrator the discretion to award an appropriate interest rate for outstanding balances, rather than have it linked to the Judicature Act 1908; and
• providing that legal title to shares will pass to a company on notification of the company's decision to purchase the shares (and removing the reference to beneficial interest).

Click here to read the report

Government Policy Statement on Electricity Governance
On 20 May 2008, the Minister of Energy signed an updated Government Policy Statement on Electricity Governance (GPS). The new GPS takes into account the Government's changes in its security of supply policy in the electricity market and also reflects the Electricity Commission's role under the New Zealand Energy Strategy and New Zealand Energy Efficiency and Conservation Strategy released at the end of 2007. The GPS is also intended as a statement of the economic policy of the Government on the electricity industry (made under section 26 of the Commerce Act) to the Commerce Commission. The GPS and section 26 statement supersede the GPS and section 26 statement released in the past.
For further details visit the Ministry of Economic Development's website.

Improvements in cross-government information sharing proposed
Two areas highlighted for potential improvements in cross-government information sharing in the government's 2007 Quality Regulation Review were the implementation of Standard Business Reporting (SBR) and a "Centralised Information Repository". Following a Cabinet directive, these areas have been addressed further in separate papers released on 19 May 2008. The Standard Business Reporting - Business Case paper proposes that New Zealand proceed with the implementation of Standard Business Reporting (SBR) as a whole-of-government work programme aimed at reducing reporting costs, and thereby compliance costs, for business. The Centralised Information Repository paper proposes to relocate the Business Portal (www.business.govt.nz) so that it can be used as a one-stop-shop for submitting information to and transacting with the government via the portal.

The Treasury

Budget Report 2008
Bell Gully, in conjunction with CCH, has produced a report providing an in-depth analysis of the Budget. As was expected, personal tax cuts were the mainstay this year, although changes to filing thresholds were also foreshadowed, together with announcements concerning proposed changes to the controlled foreign companies regime.
Click here to read the report

Further information on Budget 2008 is available on the Treasury's website

Ministry of Foreign Affairs and Trade

New Zealand-China Free Trade Agreement - Certificates of Origin
The New Zealand Customs Service has issued a consultation document seeking responses from non-governmental entities in New Zealand who wish to be designated as an Authorised Body to issue Certificates of Origin under the New Zealand-China Free Trade Agreement (FTA). The closing date for submissions is 27 June 2008. The FTA, which was signed in Beijing on 7 April 2008, is intended to come into force on 1 October 2008.
Click here to access the document

To view Bell Gully's Guide on the FTA click here

Ministry for the Environment

Report back on development of national environmental standards for electricity transmission
A Cabinet paper released on 27 May 2008 reports on the progress of the development of national environmental standards for electricity transmission.  It proposes that the timeframes be extended so that key issues raised during the public consultation at the end of 2007 can be properly addressed and so that the proposals can be tailored to assist councils to implement the National Policy Statement on Electricity Transmission. The Minister for the Environment is to report back to Cabinet by the end of August 2008 with detailed proposals for regulations setting out consent requirements for electricity transmission activities and establishing permitted activities for electricity transmission activities that do not have significant adverse effects.
Click here to access the paper

Review of New Zealand's 2007 net position report
A review of New Zealand's 2007 net position report (September 2007) into the 2007 estimate of New Zealand's net position on its Kyoto target over the first commitment period has been released. The report suggests that New Zealand's net position is estimated to be a deficit of 45.5 million tonnes of carbon dioxide equivalent over the first commitment period compared to the Kyoto target. This figure has been revised upwards from the May 2006 estimate, which estimated that there would be a deficit of 41.2 million tonnes of carbon dioxide equivalent.
Click here for more

Companies Office

Important changes to the way you do business with the Companies Office
From 1 July 2008, it will become mandatory to file certain documents with the Companies Office via its online services. A complete list of affected documents is outlined on the Companies Office website.
Click here for more

Improved annual return service launched
On 13 May 2008 the Companies Office launched an improved online annual return service to make it easier for companies to fulfil their annual return obligations.
Click here for more

More guidance available on company filing requirements
An update to the Companies Office website will provide information to assist people to prepare, audit and file financial statements under the Financial Reporting Amendment Act 2006.
Click here for more

Securities Commission

Government fund to speed up finance company prosecutions
Commerce Minister Lianne Dalziel has agreed to allow criminal prosecutions against finance companies that have misled investors to be funded from the Securities Commission's Litigation Fund. This will require an amendment to her Output Agreement with the Securities Commission.
Click here for more

New Zealand Securities Commission Chairman re-elected chair of world organization
The Chairman of the Securities Commission, Jane Diplock AO, has been re-elected Chairman of the Executive Committee of IOSCO (International Organization of Securities Commissions) for a third term.
Click here for more

Securities Act Exemption Notices

Securities Act (Mercer Investment Nominees (NZ) Limited) Exemption Notice 2008
This notice affects the offers of units in the Mercer personal savings division and the Mercer defined contributions division of the Mercer Super Trust. It exempts Mercer Investment Nominees (NZ) Limited from complying with certain financial statement date requirements under section 37A(1)(c)(i) of the Securities Act 1978 and with certain content requirements for financial statements under clause 5(2) of Schedule 3C of the Securities Regulations 1983. This notice came into force on 30 May 2008 and expires on 31 August 2008.

Securities Act (Local Authority and Other Venture Capital Schemes) Exemption Notice 2008
This notice came into force on 30 May 2008 and extends the expiry date of the 2003 Securities Act (Local Authority and Other Venture Capital Schemes) Exemption Notice to 31 July 2008 to give the Securities Commission further time to consult on proposed amendments to the 2003 Notice.

Securities Act (Externally Managed KiwiSaver Schemes and Superannuation Schemes) Exemption Notice 2008
The notice exempts trustee corporations that distribute advertisements relating to externally managed KiwiSaver schemes and superannuation schemes for which the trustee corporations are trustees from regulation 17 of the Securities Regulations 1993 in respect of the distribution of those advertisements. This notice came into force on 9 May 2008 and expires on 8 May 2013.

Financial Reporting Act Exemption Notices

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

Financial Reporting Act (Crédit Agricole S.A.) Exemption Notice 2008
This notice, which came into force on 30 May 2008 and expires on 30 April 2013, provides relief to the directors of Crédit Agricole S.A from the preparation, content, auditing, and filing requirements of the Financial Reporting Act 1993. These exemptions are granted on the condition that the directors of Crédit Agricole S.A prepare and publicly file the financial statements that they are required to prepare under the financial reporting requirements of its own jurisdiction with a statement on the material differences between EU IFRS and International Financial Reporting Standards. The exemption is consistent with the Securities Act (Crédit Agricole S.A.) Exemption Notice 2007 which allowed the directors of Crédit Agricole S.A to provide offer documents that complied with overseas requirements.

Takeovers Panel

Takeovers Code Exemption Notices

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

Takeovers Code (Abano Healthcare Group Limited) Exemption Notice 2008
This notice was issued by the Takeovers Panel in relation to an offer by Crescent Capital Partners Limited for all of the shares in Abano Healthcare Group Limited not already held by Crescent in December 2007 (the Crescent offer). Following a complaint made to the Takeovers Panel alleging that Crescent had made a statement in its offer document in respect of its intentions in relation to Abano which was inconsistent with other statements made by Crescent to the media and to certain Abano shareholders, Crescent issued a statement clarifying its intentions in relation to Abano should its takeover offer be successful. Crescent also wrote to Abano shareholders who had accepted the offer prior to the release of the clarifying statement asking whether they wished to withdraw their acceptances in light of the statement. In order to vary the Crescent offer to permit a shareholder to withdraw its acceptance of the offer, the Panel granted exemptions from the following rules of the Takeovers Code:

• rule 20 (requiring the Crescent offer to be made on the same terms to all shareholders);
• rule 27 (prescribing the circumstances in which the Crescent offer may be varied);
• rule 28(1) (requiring a notice of variation to be given to every Abano shareholder and to NZX); and
• rule 29 (specifying the time period in which the Crescent offer may be varied).

New Zealand Exchange (NZX)

New NZX website launched
On 26 May, NZX re-launched its website, www.nzx.com. The new site provides a complete offering of NZX sharemarket data, listed company market announcements, interactive portfolio tools and advanced charting alongside business news and commentary.
Click here for more

New Zealand Commerce Commission (NZCC)

Speeches

The role of the Telecommunications Commissioner
On 8 May 2008, the Telecommunications Commissioner, Dr Ross Paterson, gave a speech to the Telecommunications Users Association of New Zealand providing a brief overview the current work being undertaken by the commission in the telecommunications industry. In the speech, Dr Patterson discussed:

• the implementation of the new regime in 2006; and
• the changes in the nature of draft determinations.

Dr Patterson also discussed the commission's current study of Next Generation Networks. The study will look at both core and access network issues. This includes consideration of the potential of different fixed and wireless technologies, how they are being adopted overseas and how New Zealand may be able to build on that experience.
Click here for more

Media releases

The NZCC has issued the following media releases:

Industry regulation and regulatory control

• Commerce Commission accepts settlement proposal from Vector
  The NZCC has announced its acceptance of the settlement proposal put forward by Vector as an alternative to regulatory control being imposed in respect of its electricity distribution business.
  Click here for more

Mergers and acquisitions

• Flint Group Holdings S.A.R.L. cleared to acquire Siegwerk New Zealand Limited
  The NZCC has cleared Flint Group Holdings S.A.R.L. to acquire, directly or indirectly, up to 100 percent of the assets of the business of Siegwerk New Zealand Limited.
  Click here for more

• Redeal Limited applies for clearance to acquire Egley Electrical businesses
  The NZCC has received an application from Redeal Limited seeking clearance to acquire the assets and business of Egley Electrical Co Limited and Egley Electrical Petone Limited.
  Click here for more

• Tegel Foods Limited applies for clearance to acquire Brinks group
  The NZCC has received an application from Tegel Foods Limited to acquire the assets of the poultry businesses of P H Van den Brinks Limited, VDB Industries Limited, Brinks South Island Limited, Southland VDB Limited and BAT Promotions Limited, collectively known as Brinks.
  Click here for more

Market behaviour

• Greater certainty for regulated businesses
  The NZCC has launched a significant new project to create a series of regulatory guidelines and principles that will apply to the regulated businesses in the electricity and gas sectors.
  Click here for more

Telecommunications

• Telecommunications Act: Commerce Commission releases Revised Draft Telecom TSO cost calculation for 2004/05
  The NZCC has released a revised draft telecommunication service obligations (TSO) determination for 2004/05. The initial 2004/05 draft TSO, released in July 2007, had been assessed at $71.4 million. The revised draft TSO cost has been reduced to $57.3 million.
  Click here for more

• Commerce Commission appeals 0867 High Court judgment
  The NZCC will appeal a judgment by the High Court in Auckland in the long-running case against Telecom Corporation of New Zealand Limited.
  Click here for more

• Commerce Commission releases Revised Draft TSO cost calculation for 2005/06
  The NZCC has released a revised draft telecommunication service obligations (TSO) determination for 2005/06. The initial 2005/06 draft TSO, released in July 2007, had been assessed at $78.2 million. The revised draft TSO cost is $64.6 million.
  Click here for more

• Next Generation Network study terms of reference announced
  Telecommunications Commissioner Dr Ross Patterson has released the final terms of reference for the NZCC's study into Next Generation Networks. The terms of reference outline the aims and scope of the study, as well as giving an indicative timeframe.
  Click here for more

Consumer issues

• Commerce Commission accepts Transpower's administrative settlement offer
  The NZCC has announced its decision to accept Transpower's administrative settlement offer instead of placing Transpower's transmission services under regulatory control.
  Click here for more

• False information costs Christchurch car company
  A Christchurch motor vehicle dealer has pleaded guilty to providing a buyer with incorrect information, falsely describing the vehicle as undamaged.
  Click here for more

• Placemakers admits breaching Fair Trading Act over incorrect timber labels
  The NZCC has reached a settlement with Fletcher Distribution Limited, trading as Placemakers, regarding the incorrect in-store description, labelling and supply of a treated timber framing product, TimberSaver.
  Click here for more

• Commerce Commission warns property company
  A Wellington property investment company and one of its directors have been warned by the NZCC for making a misleading representation about a property they were selling.
  Click here for more

• Refunds for consumers who bought bogus "weight loss" pills
  Consumers who bought Celluslim, a product that claimed to "melt away fat and cellulite", are finally able to receive refunds.
  Click here for more

• Commission making enquiries into dairy pricing
  The Commerce Commission is making preliminary enquiries in order to determine whether to open an investigation into dairy retail pricing, under any of the Acts for which the Commerce Commission has jurisdiction.
  Click here for more

• Wings and Wheels over Waikato to refund ticket holders
  In a settlement reached with the organisers of the postponed air show, Wings and Wheels over Waikato, the Commerce Commission has secured refunds for those ticket-holders who were misled by the air show's marketing and advertising.
  Click here for more

Footnote

Progressive Enterprises appeals District Court's decision on cereal promotion
Progressive Enterprises Limited is appealing its recent convictions under section 17 of the Fair Trading Act for continuing to display and sell promotional packs of cereal offering consumers the opportunity to enter into a prize draw for a competition which had already closed. The convictions are being appealed on the ground that section 17 of the Fair Trading Act requires proof that Progressive Enterprises had an actual intention not to provide a prize at the time it offered it.
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 calls for comment on the proposed acquisition of the Karabar Supabarn supermarket by Woolworths
  The ACCC has issued a Statement of Issues on the proposed acquisition of the Karabar Supabarn supermarket by Woolworths Limited.
  Click here for more

Market behaviour

• ACCC grants authorisation to the Rural Doctors Association of Australia
  The ACCC has issued a determination granting authorisation to a collective bargaining arrangement put forward by the Rural Doctors Association of Australia.
  Click here for more

• ACCC allows an increase in refrigerant gas levy
  The ACCC has issued a determination allowing Refrigerant Reclaim Australia to increase the industry levy on refrigerant gas imported to and sold in Australia.
  Click here for more

• ACCC powers upheld
  The Federal Court has dismissed an application by Korean Air Lines Co Ltd challenging a statutory demand for information and documents issued by the ACCC under the Trade Practices Act.
  Click here for more

Telecommunications

• ACCC continues to set reasonable terms of access to unconditioned local loop service
  The ACCC has published the final determinations made in two arbitrations concerning disputes over access to the Unconditioned Local Loop Service.
  Click here for more

• ACCC begins consultation on procedural rules in telecommunications regulation
  The ACCC has begun consultation on a set of procedural rules to apply to the telecommunications-specific regulatory provisions under the Trade Practices Act. Submissions on the rules are due by 23 June 2008.
  Click here for more

• ACCC proposes to oversee access to Telstra exchange facilities
  The ACCC has published a draft record keeping rule it proposes to issue requiring Telstra to keep records and give reports to the ACCC relating to access to Telstra exchange facilities.
  Click here for more

• ACCC sets ULLS indicative prices for 2008-09, issues discussion paper on Telstra's ULLS undertaking
  The ACCC has set final copper local loop indicative prices for 2008-09 and issued a discussion paper on Telstra's ULLS undertaking. The final indicative prices for the ULLS monthly charge for 1 July 2008 to 31 July 2009 include price increases from the previous period reflecting the rise in interest rates and input costs.
  Click here for more

• ACCC reducing regulation of DDAS and ISDN services
  The ACCC has issued its Final Report on declaring the Digital Data Access and Integrated Services Data Network Services and accompanying pricing principles with respect to the services.
  Click here for more

Access

• Notification of telecommunications access disputes
  The following access disputes have been notified to the ACCC under Part XIC of the Trade Practices Act:
• Optus Mobile Pty Limited and Telstra Corporation Limited
• Optus Networks Pty Limited and Telstra Corporation Limited
Click here for more

• ACCC issues legislative instruments on digital radio access regime
  The ACCC has issued legislative instruments – the Digital Radio Multiplex Transmitter Licences (Decision-Making Criteria) Determination 2008 and the Digital Radio Multiplex Transmitter Licences Procedural Rules 2008 in regard to the access regime that will apply to digital radio.
  Click here for more

• Notification of telecommunications access disputes
  The following access disputes have been notified to the ACCC under Part XIC of the Trade Practices Act:
• Optus Mobile Pty Limited and Telstra Corporation Limited
• Optus Networks Pty Limited and Telstra Corporation Limited
Click here for more

• ACCC issues legislative instruments on digital radio access regime
  The ACCC has issued legislative instruments – the Digital Radio Multiplex Transmitter Licences (Decision-Making Criteria) Determination 2008 and the Digital Radio Multiplex Transmitter Licences Procedural Rules 2008 in regard to the access regime that will apply to digital radio.
  Click here for more

Consumer issues

• ACCC focuses on soaring diesel prices
  The price diesel consumers are paying has substantially increased in recent weeks, and particularly in the past few days. The average daily retail diesel price in the five largest Australian capital cities (that is, Sydney, Melbourne, Brisbane, Adelaide and Perth) has risen by more than 17 percent in 2008, from 148.7 cents per litre to 174.7 cents per litre.
  Click here for more

• ACCC allows exclusive supply arrangement between Techtronic, Bunnings
  The ACCC has issued an assessment not opposing notifications lodged by Techtronic and Bunnings relating to an exclusive supply arrangement for Ryobi products.
  Click here for more

• Online trader recalls baby cots due to safety concerns
  DVIN Corporation Australia Pty Ltd has issued a national voluntary recall of three models of baby cots following the ACCC raising concerns about safety.
  Click here for more

• Harvey Fresh corrects '100% juice' claim
  Harvey Fresh (1994) Ltd has acknowledged the '100% juice' claim on the label of its 250mL Apple & Blackcurrant fruit juice product was wrong and may have misled consumers.
  Click here for more