
	Advanced Search

...PREV | CONTENTS | NEXT...

2005 Annual Report

ACHIEVEMENTS

EXEMPTIONS AND AUTHORISATIONS

The Commission's goal in this key result area is that the securities law regimes are tailored to the needs of the market.

Responsibilities

consider applications for exemption from securities law
review existing exemptions
authorise futures dealers and exchanges
review existing authorisations
approve amendments to futures exchange rules
approve trustees and statutory supervisors
designate certain substantial security holders
approve electronic systems for the transfer of securities

Achievements this year

considered 85 applications for exemption from securities law
granted / reviewed 8 class exemptions
granted 61 individual exemptions
authorised 6 futures dealers
made 2 futures contract declarations
completed our review of trustee and statutory supervisor authorisations
approved 7 applications for authorisation as statutory supervisor
approved 4 applications for authorisation as trustee

11% of expenditure

Exemptions

The Securities Act empowers the Commission to exempt people from compliance with various provisions of securities law. The power to grant exemptions from the law is very significant. We aim to base all exemptions soundly on the policy of securities law. Conditions of exemption provide alternative compliance procedures so that the spirit of the law, particularly the requirement to provide investors with relevant information on which to base investment decisions, is complied with. Directors and advisers of issuers who are granted exemptions, or who rely on class exemptions, should be aware of this.


Keegan Toft	Narmada Patel

We use our exemption power to remove rigidities in the law for traditional investment products and to facilitate offers of new products, and products offered by overseas issuers, so that they are available to the public cost-effectively and without delay. We prefer to grant class exemptions rather than individual exemptions. When time allows we consult publicly, particularly where an application involves significant policy questions. We recognise that an applicant company may incur costs in time and resources for this public benefit and we are grateful for this.

The continuing high demand for exemptions, often required urgently, placed pressures on the resources of both the Commission and the Parliamentary Counsel Office. We have endeavoured to meet the reasonable needs of market participants when considering exemptions.


Rebecca Riddell	Meredith Pearson	Pru Craig

Specific Work on Exemptions

NZAX Market
The Commission reviewed and renewed, for a period of five years, its class exemption for offers of shares by issuers on the NZAX market. This exemption allows NZAX issuers to use a single offer document for offers of shares, and to utilise the continuous disclosure mechanism of the listed market to reduce distribution costs for second and subsequent offers of securities. The exemption aims to reduce costs for NZAX issuers, reflecting the particular goals of this market, while still providing investors in these companies the information needed to make informed investment decisions.

The renewed exemption retains the basic structure of the previous notice. Changes were made to provide more flexibility for issuers undertaking rights offers and for those whose offers may include the sale of shares by existing shareholders. Other minor changes were made to clarify disclosure obligations and to increase consistency with the requirements of the Securities Act 1978 and Securities Regulations 1983.

Employer Superannuation Schemes
Changes to the Securities Act 1978 in early 2004 removed the need for many employer superannuation schemes to have a registered prospectus, subject to conditions requiring enhanced disclosure in annual reports. These amendments provided an exemption from the registered prospectus for "employer superannuation schemes". This was intended to benefit all single-employer superannuation schemes where the employer meets the costs of administering the superannuation scheme. However, it was brought to the Commission's attention that some schemes which met the policy of the amended legislation were not able to fit within the definition of "employer superannuation scheme" in the amended legislation.

The Commission granted an exemption for these schemes on conditions generally consistent with those applying to schemes that can rely on the statutory exemption. The Commission also provided transitional relief for "small employer schemes" that previously had a statutory exemption that was subject to different conditions from those which apply now. The Commission granted a further exemption for specified superannuation schemes where the scheme accords with the policy of the law but where there is not, technically, an employer/employee relationship (for example, certain churches and their clergy).

Great Britain Collective Investment Schemes
The Commission renewed the class exemption for Great Britain collective investment schemes. In renewing this class exemption notice the Commission took the opportunity to align the conditions of the exemption more closely with the provisions of the 2003 class exemption for offers of Australian registered managed investment schemes.

Takeovers Exemption Notice
The Commission amended the takeovers class exemption notice to allow this to be used for scrip offers involving units in unit trusts.

Overseas Companies Exemption Notice
The Commission added Spain to the list of jurisdictions that can take advantage of the wide exemptions in the overseas companies class exemption notice. This was the first addition to this list since 1986.

The Commission took account of Spain's membership of IOSCO and the IOSCO Multilateral MOU on information sharing, its broadly equivalent disclosure regime for securities offerings, and that its stock exchanges are members of the World Federation of Exchanges.

International Financial Reporting Standards - Prospective Financial Information
The Commission granted a class exemption to allow auditors' statements relating to prospective financial information in registered prospectuses to refer to compliance with International Financial Reporting Standards. The exemptions allow the use of accounting policies that are consistent with accounting policies that are reasonably expected to be used in the future, once New Zealand Equivalents to International Financial Reporting Standards are adopted.

Class Exemption Renewals
The Commission renewed the class exemptions for credit unions and multiple participant superannuation schemes.

Employee Share Purchase Schemes
The Commission is proposing to extend its class exemption for employee share purchase schemes to include employee share purchase schemes operated by unlisted New Zealand companies. The Commission issued a discussion paper on the proposed extension. The Commission is consulting on a draft exemption notice.

Share and Unit Purchase Plans
The Commission issued a discussion paper on a proposed class exemption for share and unit purchase plans offered by NZX issuers. The Commission sought submissions on the proposal and is currently considering the responses received. The Commission intends to consult further on the drafting of an exemption notice.


Natalie Muir	Tui Farrell

Specific Work on Authorisations

NZFOX Share Options
The Commission declared that equity options to be traded on the Sydney Futures Exchange as NZFOX share options are futures contracts under the Securities Markets Act 1988. This followed public consultation. NZFOX share options are options to buy and sell New Zealand equity securities listed on NZX's market. They are third party options created independently of the issuer of the securities. The NZFOX share option contracts are created and traded on the Sydney Futures Exchange Limited and are marketed by NZX. The declaration provides certainty that these equity options are regulated as futures contracts, not as securities. Consequently, any person dealing in the NZFOX share options will need to be authorised as a futures dealer by the Commission. Class authorisations are available for NZX Futures and Options Participants and Sydney Futures Exchange Participants.

Regulation of Dealers
The Commission has had discussions with New Zealand Exchange Limited regarding the ongoing regulation of futures dealers in New Zealand. Futures dealers can seek accreditation as Futures and Options Participants of NZX, in which case a class authorisation allows them to deal in futures contracts under the Securities Markets Act. Other dealers need to obtain individual authorisation from the Commission.

Given the broad definition of "futures contract" in the Securities Markets Act 1988, there are some dealers whose business activities do not fit well within the design of the NZX Futures and Options Rules. This includes some wholesale, foreign exchange, and principal dealing firms. The Commission has granted individual authorisations where appropriate to enable such businesses to deal in futures contracts. More generally, the Commission is preparing a consultation paper on the regulation of futures dealers, including whether greater certainty can be provided around the definition of "futures contract".

Trustees and Statutory Supervisors
The Commission completed its review of trustees and statutory supervisors. We revoked six approvals as statutory supervisor and re-approved five; we revoked eight approvals to act as trustee and re-approved four. The revocations principally related to persons who were no longer acting as trustees or statutory supervisors. The Commission considered and approved two new applications for statutory supervisor during the year.

...PREV | CONTENTS | NEXT...