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2008 Annual Report

Public understanding

It is important for the public and advisers to have an understanding of the securities markets and the law relating to these because well-informed investors are an essential ingredient for robust capital markets. As New Zealand's securities regulatory regime is disclosure-based, it is important that people understand information they are entitled to before making investment decisions.

Services

The Commission's websites, publications, media releases and speeches provided information to help people understand the securities markets and how they are regulated. The website www.seccom.govt.nz averaged 37,000 visitors per month, and some 2450 subscribers received email alerts to new information on the site. The Commission produced a quarterly Bulletin, and issued 23 news releases which were widely reported. Publications included Feltex Carpets Limited's IPO, Prospectus, Financial Reporting and Continuous Disclosure, and Responsible Investment Disclosure by KiwiSaver Scheme Providers. The Chairman, Members and staff spoke to groups and conferences in New Zealand and overseas on 33 occasions.

Education

An education campaign alerting market participants to the new securities law included advertising to promote a dedicated website www.newsecuritieslaw.govt.nz, and targeted magazine articles and presentations. A guide, New Securities Law for Investment Advisers and Market Participants 2008, was published and more than 5000 copies distributed. Market testing with investment advisers and company directors indicated that the publication was welcome and useful.

A project to alert people to the new disclosure requirements for investment advisers included a brochure, How to choose an investment adviser, and involved working with the Retirement Commission to update the Sorted website and publish a brochure.

In response to its concerns about lack of understanding about risk on the part of investors in finance companies, the Commission undertook the Be a smart investor campaign. This comprised advertising, a brochure and a dedicated website www.looklearninvest.org.nz.

The Commission continued its sponsorship of Enterprise New Zealand Trust's Financial Studies Course for senior secondary school students. This covers investment, external influences on investment decisions, financial planning and student loans. It is now well resourced with teacher resource materials and a teacher training programme. A student resource pack will be finalised when the New Zealand Qualifications Authority completes unit standards for financial studies.

Effectiveness and organisational health

Capability and risk

The Commission has a risk management framework which identifies its key areas of capability and associated risks. The Commission has developed responses to the main risks as follows:

Staff recruitment and retention
The Commission has 49 staff positions (44 in 2006/07) and 42 full time equivalent employees (42 in 2006/07). The risk that the Commission may not be able to recruit suitably qualified staff was countered by graduate recruitment, overseas recruitment, and targeting New Zealand recruitment campaigns effectively.

The Commission minimises the risks associated with retaining staff by its commitment to being a good employer. It was placed in the top ten small employer category (up to 50 staff) of the Unlimited/JRA Best Places to Work in New Zealand Survey in 2007, for the fourth consecutive year. The Commission continues its values-based culture, maintains high professional standards and is responsive to staff feedback.
Physical event/disaster
The Commission's offices are code compliant under section 95 of the Building Act 2004. Its earthquake and disaster plan includes emergency food, water and first aid supplies, staff trained in first aid, and document and IT recovery systems. Key staff have access to the Commission's computer network enabling them to work from home.
Reputation and integrity
As the Commission promotes high ethical standards in the securities markets, it is essential that people have confidence in the Commission itself. The integrity of its approach, quality of the work and maintenance of confidentiality are managed though adoption of the Values and the Code of Ethics.
Confidentiality of information
New Members and staff sign a confidentiality agreement when they join the Commission and this is reinforced in the induction process. Security around the IT systems and files is robust and effective physical security is in place at the Commission's office.
Knowledge available
Institutional knowledge is available from the Commission's document management and records systems. The Commission's virtual teams' work structure is conducive to effective knowledge sharing.
Future capability
The Ministry of Economic Development is proposing reforms which would significantly increase the Commission's responsibilities. The Commission has updated a 2006 estimate of the likely resource requirements of these new responsibilities as further policy decisions have been taken.
Organisational health and capability building
The Commission worked with the following agencies on its organisational capability and health initiatives:
- the State Services Commissioner - Development Goals for the State Services
- the Equal Employment Opportunities Unit (EEO Unit) of the Human Rights Commission - Good Employer Guidance under the National Equal Opportunities Network.
The Commission's good employer programme reflects its commitment to EEO under which staff are recruited and rewarded on the basis of merit. The statement "This organisation is an equal opportunities employer" was ranked first out of the 60 statements in the Unlimited/JRA Best Places to Work Survey 2006.

Financial objectives

The Commission achieved its main financial objective for the 2007-2008 year by carrying out its strategic plan on time and within budget and resources. It delivered the outputs, as detailed in the Statement of Service Performance, within the funds appropriated by Parliament for this purpose.

The Commission applied its policies for expenditure, financial delegations, and acquisitions. Detailed planning and management procedures based on the Auditor-General's guidelines are followed for significant acquisitions including planning and managing litigation expenditure.

Working with others

The Commission has a wide range of stakeholders and the policy on stakeholders is published on its website.

The Commission worked with the Minister of Commerce and the Ministry of Economic Development in accordance with its statutory functions and powers, on policy, regulatory matters, law reform, and appropriations. It reported to the Minister under the Crown Entities Act.

The Commission carried out its co-regulatory role with the NZX covering the markets operated by that exchange as required by the Securities Markets Act 1988.

The Commission is grateful for the good working relationship it has with the Parliamentary Counsel Office. It worked with other government agencies including the Commerce Commission, Police, Registrar of Companies, Reserve Bank of New Zealand, Retirement Commission, Serious Fraud Office, State Services Commission, and Takeovers Panel as appropriate and in accordance with its statutory functions and powers. The Commission worked with overseas securities regulators and agencies in accordance with the IOSCO MMOU, bilateral MOUs and applicable law, as well as a variety of industry organisations and professional bodies.

Takeovers Panel

The Commission provides administrative and support services to the Takeovers Panel in accordance with the Securities Act and under the terms of an MOU. The income received from the Panel and the costs of providing these services are recorded in the financial statements. The Panel is working towards employing its own staff and consequently the level of recovery for services for the 2007/2008 year was $1,026,782 (budget $1,242,000). The Panel is expected to relocate to separate premises in the 2008/2009 year.

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