News
Securities law changes passed: details on simplified disclosure prospectus to come
New securities laws with measures to streamline raising capital for New Zealand businesses have just come into effect.
The Securities (Disclosure) Amendment Act 2009 and the Financial Advisers Amendment Act 2009 have now been passed and came into force on 28 July.
The changes were first introduced into Parliament in February as one bill and flowed from the first round of recommendations of the Capital Market Development (CMD) Taskforce for steps to respond to financial conditions, and introduce a simplified disclosure prospectus (SDP) regime into the existing Securities Act 1978. In addition, the bill contained changes to the exceptions (safe harbours) in sections 3(2) of the Securities Act and to the "eligible persons" regime.
As the bill progressed through the Parliamentary process it was divided into two bills. Now for the SDP regime to become operative, regulations need to be passed specifying the content. Draft regulations have been released for discussion (see our bulletin of 20 May 2009). The Ministry of Economic Development has indicated that significant progress has been made towards achieving a sensible balance between the twin objectives of streamlining the capital raising process and ensuring that adequate standards of disclosure information are available for investors. At this stage, there is no further information available on when those regulations will be implemented although a 1 September 2009 start date is still likely.
Since the bill was first introduced in February, a number of minor amendments have been made including:
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aligning section 5(2CB)(a) of the Securities Act 1978 with new section 5(2CBA) of the same Act by clarifying that offers of securities that are made to "eligible persons" can also be made to persons outside New Zealand at the same time; and
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providing that new section 5(2CBA) of the Securities Act will permit offers of securities that are made to "eligible persons" and persons who fall within one or more of the categories set out in section 3(2)(a)(i) to (iii) of the Securities Act to be made also to persons outside New Zealand at the same time ( see section 7 of that Act).
A number of minor clarifications have also been made over the additional powers added to the Securities Act enabling the Securities Commission to make certain orders in relation to a SDP which is deficient or defective (including by delaying or prohibiting allotment). One further amendment corrects two typographical errors in the Financial Advisers Act 2008.
As noted in our earlier bulletins, the proposals to introduce the SDP regime are a welcome streamlining of the securities issue process. For this reason, it is hoped that the process of refining the implementing regulations is concluded quickly so that this initiative can become operative.
For further information please contact your usual Bell Gully adviser.
