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Summary of

Securities Act (Overseas Companies) Exemption Amendment Notice (No 2) 2004

2004/426

Gazetted on 9 December 2004

Effects of the exemption
Existing exemptions for overseas companies, that are provided by the Securities Act (Overseas Companies) Exemption Notice 2002 ("principal notice"), are extended to include overseas companies offering quoted securities to holders of certain unquoted securities in a related overseas company, subject to conditions.

Overseas companies relying on the exemptions in the principal notice are also able to vary certain terms and conditions of an existing security of which the company is the issuer, subject to conditions.

Background
The principal notice exempts overseas companies which are listed, or have applied for listing, on the specified exchanges from the prospectus, investment statement, statutory supervisor and trustee requirements and various other requirements of the Securities Act 1978 and the Securities Regulations 1983, for offers of their securities to specified persons in New Zealand.

The exemption
Clause 5(1)(b)(ii) of the principal notice is amended to include securities that confer the right to subscribe for, or will or may be converted into other securities of which the overseas company is also the issuer, where those other securities are of a class that is quoted on a specified exchange.

A new clause 5A is inserted after clause 5 of the principal notice, to include any security that varies the terms or conditions of an existing security of which the overseas company is an issuer if: -

• the existing security is of a class that is quoted on a specified exchange; and
• the other security does not: -
  • change the issuer of the existing security; or
  • extend the time for payment of money due under the existing security by the issuer; or
  • decrease the amount of money that is to become due under the existing security by the issuer.

Conditions
The conditions for existing exemptions under the principal notice are unchanged.

The exemptions for securities that vary overseas quoted securities are subject to the condition that the offer of securities to the public in New Zealand is made in compliance with:

• the law of the country in which the relevant stock exchange is situated; and
• any rules or other requirements relating to the offer that apply in that country or part of the country.

Reasons
The Commission considers it appropriate to make the amendment to clause 5(1)(b) of the principal notice because -

• clause 5 of the principal notice already allows the exemptions contained in that clause to apply where quoted securities are to be offered to holders of quoted securities in a related company, therefore allowing New Zealand shareholders in overseas companies to participate in offers arising from reconstructions; and
• the amendment is consistent with this because it allows quoted securities to be offered to holders of unquoted securities in a related company if the securities held in the related company confer the right to subscribe for, or can be converted into, other securities of the related company that are of a class that is quoted on a specified exchange.

The Commission considers it appropriate to grant the exemptions contained in new clause 5A because -

• clause 6 of the principal notice allows quoted securities to be offered as the whole or any part of the consideration for the acquisition or cancellation of securities of which another overseas company is the issuer if those other securities are quoted on a specified exchange; and
• it is consistent with this to allow an overseas company to extend a variation of its securities to holders in New Zealand if the securities that are already held are quoted on a specified exchange.