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2004 Annual Report

ACHIEVEMENTS

PUBLIC UNDERSTANDING AND MARKET PRESENCE

The Commission's goals in this key result area are that people understand the law and practice of securities and that the Commission has a presence in the markets so that people know what we do and where we stand on issues affecting the markets.

Responsibilities

promote public understanding of the law and practice of securities

Achievements this year

published Corporate Governance in New Zealand - Principles and Guidelines, and a corporate governance handbook for directors, executives and advisers
launched a public education programme to help New Zealanders make better investment decisions
published The Bulletin quarterly and maintained the website
responded to 1506 inquiries from the public
maintained good relationships with the news media and issued news releases
spoke to groups and met with market participants
took part in market participant seminars with the NZX
published summaries of exemptions from securities law granted by the Commission

17% of expenditure

Corporate Governance
Our report Corporate Governance in New Zealand - Principles and Guidelines was published in February 2004. This followed a request from the Minister of Commerce for the Commission to take a lead role in developing corporate governance principles that were appropriate for New Zealand and also in line with international best practice. We consulted widely and received much thoughtful and useful feedback from market participants and the public generally. We adopted a principles-based approach to corporate governance and provided guidelines which we believe will help entities apply the principles. We recommended that entities should report to shareholders and stakeholders how they achieved each principle, or why a principle did not apply to them. We are interested to see how entities apply the principles and will comment publicly on this when we think it appropriate. The report was well received. We subsequently published an abbreviated version of the report as a Handbook for Directors, Executives, and Advisers. This was made available at no charge and more than 3,000 copies have been distributed. As well, there have been more than 1,000 copies downloaded from the Commission's website. Members and staff of the Commission have spoken on corporate governance at the request of many interested groups around the country.

Education Programme
Funding was approved in the budget for a public education programme. The Commission was concerned to ensure that it would complement rather than duplicate education work by other agencies, and to benefit from the experience of its counterparts overseas. Where possible it wanted to work with other agencies where there are mutual goals and cooperation would make economic sense. We undertook research to identify the work being done in financial literacy and securities education both in New Zealand and in other jurisdictions. This helped clarify the Commission's point of difference and identify its target market, which is defined as "people with money to invest". This will enable the Commission to build on good work being done by the Retirement Commission and others, and to focus on investment education.

Strategies to "help New Zealanders make better investment decisions" were developed and two projects were implemented this year. The Youth Project targets senior secondary school students who are seen as "potential investors". The project involves support for Enterprise New Zealand Trust's work in schools. The Commission is sponsoring the Saving and Investment Module of ENZT's Financial Literacy Programme which recently gained New Zealand Qualifications Authority status. The Commission is also sponsoring and helping ENZT develop a paper in financial studies which will be part of ENZT's Enterprise Certificate for more senior students. We believe our involvement with the ENZT enables us to provide securities and investment education to young people that the Commission could not reach on its own account. We envisage these sponsorships will be long term and will result in young people moving into higher education and the work force with a good understanding of financial and investment matters.

The second project aims to reach people who are particularly vulnerable to affinity fraud. In the first instance we targeted religious and ethnic groups because of recent high profile cases where fraudsters have used the trust that exists within these groups to peddle their scams. We wrote to a large number of groups explaining this type of fraud and offering brochures on how to recognise and combat these schemes. Initial feedback is that this is being well received. Other education projects are being developed for implementation in the new financial year.

Communications
The quarterly issues of The Bulletin reported our activities and comments on the securities market. The website, www.seccom.govt.nz, brings together all the Commission's efforts to increase public understanding of securities law and practice by including publications, news releases, exemption summaries and warnings. More than 1000 people are registered to receive email alerts to new material on the site. There are many links to related information on other sites in New Zealand and overseas. On average more than 19,000 visitors go to the site each month.

Staff responded to 1,506 public inquiries. We issued 31 media releases and initiated media interviews as well as responded to journalists' inquiries. We have a positive attitude towards the news media and reporters show considerable interest in the Commission's work.

The Chairman, Members and staff maintained an intensive programme to meet with market participants. This included speeches to large groups, and meetings of smaller groups to hear the concerns and interests of people directly involved in the securities markets. Staff took part in market participant seminars with the NZX in Auckland, Wellington, and Christchurch.

The Commission aims to publish on the website a summary of each exemption granted. These describe the effects of the exemption, the conditions of exemption and the Commission's reasons for granting it. Summaries of 53 exemptions were published during the year.

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