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26 July 1991

News release

Australia and New Zealand Banking Group Limited

The Securities Commission has enquired of ANZ as to the reasons for not extending its recent offer of "converting preference shares" to New Zealand shareholders. There are approximately 12,500 shareholders with registered addresses in New Zealand comprising some 6% of ANZ's issued share capital.

ANZ has responded as follows:

1. The essence of the issue was to raise capital by a fully underwritten placement of preference shares to institutional investors in Australia and elsewhere. Accordingly, the timetable and procedures for the issue were fixed having regard to the requirements of the underwriter.
2. The preference shares were structured to be attractive to institutions, rather than ordinary shareholders of ANZ. Subsequently, it was decided that, if possible, an opportunity to participate in the placement should be extended to shareholders of ANZ, but only if there were no regulatory implications which would affect the timing of the placement.
3. Under the new Corporations Act in Australia, it is no longer necessary for certain prospectuses to be registered by the Australian Securities Commission ("ASC"). Such prospectuses need to be only lodged with the ASC. Lodgement does not involve any pre-vetting on the part of the ASC.
4. The prospectus of ANZ relating to the offer of converting preference shares needed to be only lodged with the ASC. As such it was decided to extend the offer to Australian shareholders because no delay would arise from having to obtain any regulatory approval.
5. The decision not to extend the offer to New Zealand shareholders was taken because ANZ considered there was a need to obtain regulatory approval in New Zealand, which would have delayed the offer exercise. Either the Registrar of Companies would have had to register the New Zealand prospectus, or, the Securities Commission would have had to grant an exemption. ANZ says that it ascertained that there was no available existing exemption from the New Zealand prospectus requirements, since the Securities Act (Australian Issuers) Exemption Notice 1987 applies only to prospectuses "registered" in Australia, and would not cover a prospectus which was "lodged".

The Securities Commission considered the response of ANZ at its meeting on Thursday, 18 July 1991. The Securities Commission observed that the 1987 exemption notice was designed to give effect to a policy under which, in the spirit of CER, equity prospectuses which have been registered in Australia are granted reciprocal recognition in New Zealand, particularly in the case of listed companies. Subject to certain conditions, a company which makes an equity prospectus issue in Australia is exempted from compliance with the New Zealand regulatory provisions. This exemption provision is now well known, and has been widely used to offer Australian equities in New Zealand.

The Securities Commission is disappointed that ANZ did not approach it for an exemption in the case of a "lodged" prospectus under the new Australian Corporations Act. Such an exemption would have been clearly within the intent of the 1987 exemption notice, and would certainly have been given favourable consideration had it been put before the Securities Commission.

The 1987 exemption notice is currently being reviewed to take into account the new requirements of the Australian Corporations Act 1989. It is expected that exemption will be extended to encompass Australian prospectuses which are lodged with the ASC. In this regard, the Securities Commission observes that while lodged prospectuses are not pre-vetted by the ASC, they may be subject to "stop orders" if the ASC considers they contain information which is false or misleading.

It is the Securities Commission's practice to deal expeditiously with any application for exemption where urgency is required, so as to avoid any delay with an offer exercise. The Commission is not convinced that the difficulties perceived by ANZ, in extending the offer to New Zealand shareholders, would have given rise to any actual difficulties had an application for exemption been made. The Securities Commission's exemption process is well known to companies which are active in the New Zealand market, and has previously been used by ANZ in New Zealand.

The Securities Commission also observes that ANZ could have given consideration to whether the Securities Act (Overseas Companies) Exemption Notice (No.2) 1986 might have been suitable for the purpose of extending the offer to its New Zealand shareholders in the present circumstances. This exemption has been in force since 28 May 1986. It exempts overseas companies whose securities are listed, or have been accepted for listing, in Australia, Canada, the United Kingdom the United States of America, or Hong Kong, from compliance with Part II of the Securities Act 1978 where those companies offer their securities to persons who are already holders of securities in the companies. This exemption notice draws no distinction between "lodgement" and "registration".

It is therefore disappointing that, as a result of claimed technical difficulties, New Zealand shareholders have been denied equal treatment in the company. It is the policy of the regulatory authorities in both Australia and New Zealand to remove regulatory obstacles to trans-Tasman issues of equity securities and thereby to foster closer economic relations between the two countries. It is regrettable that ANZ was not more active in pursuing that goal in the present case.

P.D. McKenzie
Chairman