Most Read Contributor in New Zealand, September 2016
Now the big one for market participants – draft
point of sale and on-going disclosure regulations under the
Financial Markets Conduct Act (FMCA) to cover the core
The Ministry for Business, Innovation and Employment
(MBIE) has just released an exposure draft and commentary
for Part 3 FMCA disclosure of equity and debt products, managed
funds and other managed investment schemes (for example, forestry
partnerships) and derivatives.
Submissions close on 20 June 2014.
Focus of third exposure draft
exposure draft and accompanying
commentary focus on the core disclosure content requirements
for financial products and on the mutual recognition regime for
securities offerings with Australia.
This third exposure draft reflects
submissions on the disclosure requirements and further thinking
by MBIE and FMA.
PDS page length caps
In December, MBIE floated possible page limits on document
length as a "circuit breaker" to push market participants
toward shorter documents.
MBIE has decided to persist with this, in setting the following
caps. Issuers must comply with at least one of the limits –
page, or word.
In addition, the Key Information Summary (KIS), which
must appear at the front of any PDS, must be no more than two to
four pages depending on the product type.
PDS disclosure will also need to meet the clear, concise and
effective standard in the FMCA.
MBIE has decided to require prominent disclosure of selected key
financial measures, not all of which are GAAP disclosures. The
required disclosures include prospective financial performance
measures of EBITDA and net profit after tax.
We welcome this development, and support some of the more
technical detail and reconciliations being put simply on the online
register rather than in the PDS disclosure for non-expert
It represents a sensible departure from some of the stricter
requirements of recent
FMA guidance on non-GAAP financial information.
Earlier consultation rounds
The earlier consultation phases, with links to Chapman
Tripp's commentary, were:
MBIE plans a more targeted consultation for the narrower
specialist product categories, such as financial products issued by
We understand that FMA plans to consult on class exemptions, and
frameworks and methodologies, to support the new disclosure regime
in the next few weeks.
Additional disclosure matters are still being worked on,
including variations for particular products and issuers, and the
service disclosure statements for discretionary investment
management services (DIMS). MBIE will consult further on
these matters during the exposure period and after.
Chapman Tripp will be holding HotHouse seminars on the
new disclosure requirements in Auckland on 11 June and in
Wellington on 12 June. Please click
here to register, if you have not done so already.
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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