Securities Commission | Publications: Annual report 2009

The Commission recommends to the Minister of Commerce securities law improvements that will give New Zealand an internationally acceptable, cost-effective regulatory regime that suits our markets.

We advised and assisted the government on legislation, as well as advising and assisting with Capital Market Development Taskforce recommendations.

Securities Disclosure and Financial Advisers Amendment Bill

The Capital Market Development Taskforce recommended in November that the Government include measures to streamline fundraising under the Securities Act. The Securities Disclosure and Financial Advisers Amendment Bill was introduced in February.

The Commission helped Government develop policies, and advised the Commerce Committee when the Bill was in the House. We have also been working on the regulations. The Bill will streamline non-public offers and allow a “simplified disclosure prospectus” to let listed issuers raise capital efficiently and cost-effectively from existing investors, while still ensuring investors get enough information.

Securities Act review and trustee supervision

Government confirmed earlier this year it will thoroughly review the Securities Act, including issues arising from the Review of Financial Products and Providers which are yet to be addressed.

It indicated it would make it a priority to introduce supervision of trustees, possibly by the Securities Commission. We have been working with the Ministry of Economic Development to review the Act.

Securities regulations review

We expect the long-awaited securities regulations review to be completed early in 2009/10. Changes to the Securities Act, which came into force in March, shifted responsibility for its regulations from the Commission to the Ministry of Economic Development.

The Commission helped the Ministry review regulations and publish a discussion document in April. The document's recommendations are based on our review of the Securities Regulations and on specific Capital Market Development Taskforce proposals.

Financial adviser reforms

The Financial Advisers Act is a major piece of legislation resulting from several years' intensive work. It addresses shortcomings raised by the International Monetary Fund's 2003 Financial Sector Assessment Programme evaluation, and brings New Zealand up to international standards of financial adviser regulation.

In the lead-up to the September passing of the Act, the Commission made submissions and spoke to the select committee on Finance and Expenditure.

The Financial Service Providers (Registration and Dispute Resolution) Act, also passed in September, requires providers to be on a national register and belong to independent dispute resolution services, to ensure low-cost consumer redress.

We have been working with the Ministry of Economic Development and other government agencies to develop a framework for this requirement.

Anti-money laundering

We have been working on the Ministry of Justice-led inter-agency project aimed at strengthening New Zealand's anti-money laundering laws.

The Anti-Money Laundering and Countering the Financing of Terrorism Bill (AML/CFT), introduced into Parliament in June, makes the Commission responsible for supervising various financial institutions for anti-money laundering compliance.

In March, New Zealand was evaluated by the Financial Action Task Force to assess its compliance with AML/CFT principles.

Other law reform

The Commission also made submissions and spoke to the select committee on Commerce on the Settlement Systems, Futures, and Emissions Units Bill.

We advised the Minister on legal issues related to real estate and securities law, and on the treatment of carbon credits in securities law.

MEDIUM-TERM PERFORMANCE

Measure: Laws are enacted to address shortcomings identified by the Securities Commission.

The Financial Advisers Act reflects recommendations made by the Commission to address regulatory shortcomings

Exemptions and authorisations

Exempting issuers from the law reduces their costs in bringing new and overseas investment products to New Zealand markets.

Our work this year focused on allowing companies to raise capital to meet urgent needs resulting from economic conditions. The increased number of urgent applications caused delays in dealing with some other applications.

The Commission received 50 applications for exemptions. We granted 42 exemptions including three new class exemptions and reviewed and/or amended six class exemptions. We authorised six futures dealers on Securities Markets Act-compliant terms and conditions.

Share purchase plans

We issued a consultation document on class exemptions, aiming to help listed companies reduce the cost of raising money through share purchase plans.

We granted individual exemptions to help listed companies extend share purchase plans so retail investors can participate in raising capital following institutional placements.

We also decided to extend class exemptions for share purchase plans, allowing issuers to raise up to $15,000 per shareholder per year, instead of the previous $5,000 maximum.

Deposit guarantee scheme

We granted two class exemptions for New Zealand deposit guarantee schemes, and issued a related note to ensure individuals get clear, consistent information about the scheme and how it affects their investment.

Collective investment schemes

In December, the Commission granted a temporary exemption to allow, under certain conditions, managed funds to keep offering securities for three months on existing prospectuses. Conditions include monthly registration of a directors' certificate containing warnings, updated financial information, and a statement that the prospectus is not false or misleading.

Venture capital schemes

We reviewed the class exemption for venture capital fund-raising, granted a new notice and approved a new Code of Practice.

Exempting overseas issuers from the Financial Reporting Act

We granted named US- and UK-incorporated issuers a class exemption from various financial reporting requirements so they could use their overseas GAAP-compliant financial statements.

Australian registered managed investment schemes

With the introduction of regulations for trans-Tasman mutual recognition of securities offerings, the Commission reviewed the longstanding class exemption for Australian Registered Managed Investment Schemes.

We revoked the notice, but kept the exemption for distribution reinvestment schemes not covered by the regulations.

Electronic transfer systems

The Commission makes recommendations for approval of electronic securities transfer systems under the Securities Transfer Act. We consulted and have been working with the Reserve Bank on Austraclear NZ's proposed electronic registry interface.