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Offering financial products

When financial products such as shares, bonds, and managed funds are offered to the public, the issuer of the product must comply with the:

 

The Securities Act requires issuers to prepare offer documents, such as an investment statement and prospectus. The offer documents are intended to inform investors on the terms, benefits and risks of the financial products. The FMA’s web site has more information on issuer obligations and making informed investment decisions.

Public offers of debt securities and managed investment schemes must generally have a trustee or statutory supervisor. These supervisors are licensed under the Securities Trustees and Statutory Supervisors Act 2011.

 

Related links

Issuer obligations (FMA website)

Making informed investment decisions (FMA website)

Securities Act 1978 and Securities Regulations 2009

 

Securities Act 1978

The Ministry is currently reviewing the Securities Act as part of the Review of Securities Law. The Financial Markets Conduct Bill will replace the Securities Act 1978, the Securities Markets Act 1988 and related laws.

A number of changes have been made to the Securities Act in recent years:

  • The passage of the Financial Markets (Regulators and KiwiSaver) Bill, while creating the FMA and changing the governance of KiwiSaver, also made a number of significant amendments to the Securities Act. These amendments are provided by the Securities Amendment Act 2011. In particular, the previous system of the Registrar of Companies pre-vetting prospectuses has been replaced by a 5 working day period following lodgement in which the FMA considers the prospectus. During this time no allotments may be made, and the FMA has new powers to stop, delay or prohibit allotment under a registered prospectus. There is also provision for a new electronic register of securities offers to be established.
  • The passage of the Securities Disclosure and Financial Advisers Amendment Bill allows listed issuers who are already subject to continuous disclosure requirements to make use of the simplified disclosure prospectus.
  • The Local Authorities Exemption means that local authorities are required to produce only an investment statement with an accompanying certificate signed by two Councillors, rather than a prospectus with full Council sign-off.
  • The Securities Legislation Bill 2006, while mainly focused on securities and derivatives trading, made some changes to enforcement under the Securities Act.

 

Related links

Securities Amendment Act 2011

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Securities Regulations 2009

The Securities Regulations 2009 set out some more detailed requirements, such as the content of investment statements and prospectuses for different kinds of financial products, and terms implied into trust deeds. The 2009 regulations are an update of the Securities Regulations 1983.

A discussion paper [295 kB PDF]  on the regulations was released in April 2009, and policy decisions were made by Cabinet in August 2009.

A discussion paper was released in April 2011 on disclosure requirements for non-bank deposit takers. The proposal was to require non-bank deposit takers to disclose standardised prudential information and for these disclosures to be updated every six months. Submissions closed on Thursday, 19 May 2011.

Other important changes to the Securities Regulations 2009 and Securities Regulations 1983 are:

  • The Securities Amendment Regulations 2011 replace the previous text about financial advice required to be included in investment statements. This aligns it with the Financial Advisers Act 2008, which came fully into force on the same day. They also align with changes made under the Financial Markets (Regulators and KiwiSaver) Bill, including new prospectus requirements for retail KiwiSaver schemes.
  • An investment statement for debt issuers proposing moratoria, introduced in August 2009.
  • The simplified disclosure prospectus regulations may be used by listed issuers who are already subject to continuous disclosure requirements.
  • The Mutual Recognition of Securities Offerings regime allows for the same securities offerings document to be issued in both Australia and New Zealand.
  • The Securities Amendment Regulations 2007 provided for additional clauses to be deemed to be included in the trust deeds of finance companies.

 

Related links

Securities Regulations 2009

 

Last updated 7 December 2011