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29 May 2001

News Release

COMPLY WITH THE LAW - COMMISSION WARNS PROMOTERS OF FORESTRY INVESTMENT SCHEMES

The Securities Commission has warned promoters of forestry investment schemes about the quality of many offer documents, including advertisements and website offers. Some of these do not comply with the law and are likely to mislead investors.

Some promoters quote an "equivalent bank interest rate" prominently in their advertisements and represent it as the expected rate of return on forestry investments.

This gives the impression that returns from forestry investments are equivalent to returns on bank deposits. This is not so. This is likely to mislead investors. The rate of return from a forestry investment differs from a bank interest rate in risk profile, timing of returns and the nature of returns.

Advertisements for securities on the internet must also comply with securities law. Many of them do not.

Website advertising for forestry investment schemes must:

refer to the investment statement;
have a regulation 17 certificate signed by the directors;
be consistent with information in the registered prospectus; and
be current.

Website advertising must not contain information that is likely to mislead, deceive or confuse the potential investor.

Website advertising should not include forecasts or projections unless they are also published in the registered prospectus. The registered prospectus will also contain a statement of the assumptions on which the forecasts or projections have been made.

The Commission has written to 15 promoters of forestry schemes advising them of the consequences if they do not comply with the law.

The Commission may ban advertisements and offer documents, including the content of web sites, that do not comply. It also may invite the Registrar of Companies to consider prosecution.

A copy of the letter sent to promoters follows this page.

Further information:
Catherine Chapman, Communications Manager
Direct 04 471 7659

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