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Hon Margaret Wilson

07 April 2004

New Disclosure Rules Clarified

Commerce Minister Margaret Wilson announced today clarifications to new laws requiring directors and officers of publicly listed companies to disclose their relevant shareholdings.

"The changes we have made will make it easier for people to understand the rules and comply with them. In particular, we've amended the regulations to make clearer the difference between initial disclosures and ongoing, transaction disclosures. Also, directors and officers of overseas companies listed on the New Zealand Stock Exchange are exempted from the regime", Margaret Wilson said.

The Securities Markets (Disclosure of Relevant Interests by Directors and Officers) Regulations were due to take effect on 1 March.

"We announced a delay in commencement to 3 May to allow companies and their management to become more familiar with the disclosure obligations and to clarify how the scheme will work. What we're doing is asking those people in a company who make strategic policy decisions to disclose to the market their personal holdings and dealings in the shares of the company. Investors ought to have access to this sort of information as a guide to how a company's decision-makers are themselves trading in that company's shares.

"These disclosures are also a useful tool for detecting insider trading and are, therefore, a deterrent to unconscionable behaviour. I am satisfied that, together with some guidance from the Securities Commission on how it will approach the new rules, the directors and officers disclosure regime is now pitched consistently with the intent of the act", Margaret Wilson said.

In the amending regulations the exemption for overseas companies distinguishes between two categories. Directors and officers of foreign-incorporated companies with home listings on both the New Zealand and Australian Exchanges are exempted from the disclosure obligation for a 12-month transition period only. Directors and officers of other overseas companies with a secondary listing on the New Zealand Exchange are exempted permanently.

Changes to the regulations follow last week's announcement by the Securities Commission of several class exemptions from the disclosure obligation.

"The Securities Commission has an important role to play in assisting people to understand the law. I have seen a draft practice note that I understand the commission will release later today setting out how it will approach the question of who is an "officer" for the purposes of the legislation. I think people will find it very helpful in clarifying the practical application of the disclosure scheme", Margaret Wilson added.

Media enquiries to Elinore Wellwood 04 471 9337 or 021 864 811.

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