The Securities Act (Short Form Prospectus) Exemption Notice 2009
(2009 Notice), which replaces the Securities Act
(Short Form Prospectus) Exemption Notice 2002 (2002
Notice), came into force on Monday. The 2009 Notice
retains the existing exemptions in the 2002 Notice, and adds new
exemptions that have the effect of reducing securities law
compliance for companies that are eligible to use a short form
prospectus when issuing securities to their existing security
Under the Securities Regulations 1983 (Regulations), it is
recognised that a reduced level of information (in the form of a
short form prospectus) is appropriate if a company offers equity,
convertible or certain types of debt securities to existing
investors (as those investors would generally be familiar with the
company). Regulation 4 of the Regulations allows this reduced level
of information on the basis that recent financial information has
been provided to those security holders.
CHANGES MADE BY THE 2009 NOTICE
The changes made by the 2009 Notice allow the following:
Interim financial statements compliant with NZ IAS 34
sufficient for short form prospectuses
Previously, if an issuer wanted to include interim financial
statements in a short form prospectus they would have to prepare
full form interim financial statements that comply with all of the
requirements of New Zealand generally accepted accounting practice
(GAAP). This created a situation where a company that may have
previously prepared interim financial information in accordance
with the relevant accounting standards would have to spend more to
make that information meet the further requirements for interim
financial information under the Regulations.
Now, issuers can use interim financial statements that comply
with NZ Equivalent to International Accounting Standard 34 (Interim
Financial Reporting) (NZ IAS 34) for the purposes of short form
prospectuses (these are condensed interim financial statements).
This exemption removes the barrier created under NZ IAS 34, as
generally, this accounting standard does not apply to interim
financial statements included in, or accompanying, a registered
The Securities Commission has indicated that interim financial
statements that are compliant with NZ IAS 34 provide sufficient
information for prospective investors who already hold securities
in the issuer.
Financial statements for guaranteed convertible securities to
comply with GAAP
Financial statements that are disclosed in respect of guaranteed
convertible securities (ie debt securities that will be converted,
or are or will become convertible at the option of the security
holder, into equity securities of the issuer of the debt and that
are guaranteed by guaranteeing subsidiaries of the issuer) must
comply with GAAP, which is a slightly different requirement from
the 2002 Notice.
Consistency with section 209 of the Companies Act 1993
Companies that rely on the notice provisions in section 209 of
the Companies Act 1993 (which allows companies to make their annual
report available to shareholders by notifying shareholders of their
right to receive an annual report rather than sending a physical
copy of the annual report itself) can now use the short form
prospectus exemption. The exemption allows companies that use
section 209 notices to include section 209 wording in the short
form prospectus rather than having to send financial statements to
its shareholders or attach them to the prospectus before those
companies are eligible to use a short form prospectus under the
The changes made by the 2009 Notice will be welcomed by
companies wanting to raise capital from existing security holders
by making the process for preparing a short form prospectus more
cost effective, efficient and easier.
Phillips Fox has changed its name to DLA Phillips Fox
because the firm entered into an exclusive alliance with DLA Piper,
one of the largest legal services organisations in the world. We
will retain our offices in every major commercial centre in
Australia and New Zealand, with no operational change to your
relationship with the firm. DLA Phillips Fox can now take your
business one step further − by connecting you to a global
network of legal experience, talent and knowledge.
This publication is intended as a first point of reference
and should not be relied on as a substitute for professional
advice. Specialist legal advice should always be sought in relation
to any particular circumstances and no liability will be accepted
for any losses incurred by those relying solely on this
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