Most Read Contributor in New Zealand, September 2016
Draft regulations covering the implementation of phase one of
the Financial Markets Conduct Act and the new disclosure
requirements have been released by the Ministry of Business
Innovation and Employment (MBIE) for consultation.
Submissions close on 5 December 2013.
We comment on the key topic areas below.
Exclusions to apply from 1 April 2014
These have been selected because they are "growth
focused" and relatively "stand-alone".
Same class listed offers (this exclusion will be particularly
useful for seasoned debt capital market issuers and to facilitate
greater retail participation in placements and block trades)
Small personal offers – a $2 million limit each 12 months
from 20 investors
Crowd funding and peer-to-peer lending service providers (with
a proposed $15,000 per investor limit in addition to the previously
announced caps applying also to small offers –the $2 million
limit each 12 months, although contributions from wholesale
investors will not count toward the cap)
Employee share purchase schemes
Dividend reinvestment plans
Because of the complexity of the disclosure requirements,
Cabinet instructed MBIE to undergo a further round of consultation
before drafting the detailed PDS content regulations.
Industry discussion on the new regime is timely, given the
Financial Market Authority's provocative report earlier this
week on the first year of implementation of its
Guidance Note on effective disclosure.
For equity disclosure, MBIE has floated a possible 80-page limit
on document length as a "circuit breaker" to push market
participants toward shorter documents. This recognises the
considerable adjustment involved.
Feedback is sought on:
the proposed content for the PDS, offer register and on-going
where the appropriate balance sits between flexibility and
standardisation and between simplicity and over-simplification
whether the proposed structure is logical, and
whether there are any technical issues it needs to be mindful
of in the drafting process.
No surprises here. The draft regulations are consistent with the
framework set out in the Cabinet Papers (Chapman Tripp commentary
here) and with the approach followed in the trustee licences
regime. The emphasis is on providing flexible conditions for
different participant categories.
Two other exposure drafts will be released.
Draft regulations covering phase two of the legislation (the
governance regime, financial products markets, DIMS provider and
derivatives issuer obligations) and licensing fees. This is due out
either late this year or in February 2014.
Draft disclosure requirements, presumably incorporating the
response to submissions made in this round.
The Phase One regulations will be replaced by a full set of
regulations in mid-2014.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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