3rd review of financial reports

The Commission reviewed issuers' disclosures about the transition to New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) in the third cycle of its financial reporting surveillance programme.

We reviewed 45 financial reports with balance dates from 31 March 2005 to 30 September 2005. More than half either did not include information about the transition to NZ IFRS, or only partially complied with the requirements.

"These disclosures are very important for issuers signalling to the market the likely impact of adopting NZ IFRS," Chief Accountant Alastair Boult said.

The Commission itself changed to NZ IFRS in the 2005-2006 year. "A key lesson from this experience is not to underestimate the work required to make the transition," Alastair Boult said.

In all 19 issuers had matters that needed to be addressed. Three matters relating to continuous disclosure notices have been referred to NZX.

The report is published on the Commission's website. Hard copies are available on request by email from seccom@sec-com.govt.nz or by phone to 04 472 9830.

Working with ASIC

The Commission and the Australian Securities & Investments Commission held their fourth combined meeting last month. The twice yearly meetings provide the opportunity to work together at a strategic level. This builds on the long term operational relationship between the two regulators.

Matters discussed included:

• the proposal by NZX and others to set up an alternative trading platform in Australia in competition with the Australian Stock Exchange;
• mutual recognition of securities offerings in Australia and New Zealand; and
• a joint project to assist Brunei to join the IOSCO Multilateral MOU under the auspices of IOSCO's programme to provide expert advice to jurisdictions seeking help to raise regulatory standards.

Trans-Tasman mutual recognition of offers of securities

Commerce Minister Lianne Dalziel has released draft regulations to implement the next step in co-ordinating business law in New Zealand and Australia.

The draft regulations would enable the mutual recognition of securities offerings, allowing issuers to offer securities in both Australia and New Zealand using the offer documents of their home jurisdiction.

The regime is intended to remove unnecessary regulatory barriers to trans-Tasman securities offerings and reduce the costs of raising capital in both Australia and New Zealand.

"The release of the draft regulations is the next step towards completing one of the major achievements under the Memorandum of Understanding on Business Law Coordination between Australia and New Zealand signed earlier this year," Lianne Dalziel said.

The Government sought feedback through the consultation process on any compliance issues for issuers. The regime aims to reduce costs for issuers, and feedback will enable the regime to be implemented in the most cost-effective way.

The draft regulations are available at www.med.govt.nz.

The agreement between the Governments of Australia and New Zealand relating to mutual recognition of securities offerings contains the principles of the regime. The regulations provide for its implementation. The regulations will be made under the Securities Act 1978, as Part 5 of that Act already sets out the general framework for mutual recognition regimes for securities offerings.

The Australian Government has published the exposure draft of its Bill to implement the regime on www.treasury.gov.au. This, together with the draft New Zealand regulations, enable issuers and their advisers to assess how the regime will operate on both sides of the Tasman.

If you would like to receive The Bulletin by email contact catherine.chapman@sec-com.govt.nz