Introduction: changes to the securities regulations
Background
1. The Securities Regulations 1983 set out the required content of prospectuses for equity, debt, and participatory securities, unit trusts, life insurance policies, and superannuation schemes. They also set out the required contents of investment statements and provide rules on the material that may be included in advertisements.
2. In 1999, the Securities Commission commenced a review of the Securities Regulations 1983. The review recommended a number of amendments designed to modernise the regulations and reduce compliance costs. Many of these proposed amendments were consulted on in 2000. However, several of the amendments to the regulations required the incorporation by reference of financial reporting standards in the regulations, and the implementation of the review was delayed by the need to amend the Securities Act 1978 to allow for this.1
3. In November 2008, the Capital Market Development Taskforce (CMDT)2 released a report in response to the current financial crisis. The report made a number of recommendations on how securities law could be improved to increase the availability of capital for New Zealand firms and to reduce the costs of raising capital.
4. In particular, the CMDT made several recommendations relating to making disclosure in prospectuses more meaningful, and also recommended the urgent implementation of the amendments arising from the Securities Commission's review of the securities regulations.
The purpose of this discussion document
5. This discussion document proposes a number of changes to the securities regulations derived from the Securities Commission's review of the Securities Regulations 1983 and specific recommendations of the CMDT.
6. These changes are designed to:
- improve disclosure by issuers;
- remove unnecessary compliance costs;
- provide greater flexibility in the contents of prospectuses; and
- modernise outdated aspects of the regulations.
7. Where the amendment is in response to a specific recommendation of the CMDT this is noted below.
8. In addition, the discussion document seeks submitters views on an entirely separate matter relating to regulations required under the Securities Disclosure and Financial Advisers Amendment Bill. Specifically, whether the use of the simplified disclosure prospectus under the Bill should be restricted to the issue of non-complex products.
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