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1997 Annual Report

PUBLIC UNDERSTANDING

We are at present undertaking an audit of our communications procedures. We wish to improve our ability to promote public understanding of securities law and practice without significantly increasing our expenditure. We expect to inaugurate a regular Securities Commission bulletin in the new financial year.

We continue to communicate our views in a variety of settings and we enter into numerous exchanges of correspondence with interested persons.

LITIGATION

The Commission was not a party to any action in the Courts during the year. We received a request to become a party to proceedings in the High Court. We declined that request and the matter was not pursued.

ROLE, FUNCTIONS AND POWERS

We commenced a review of our role and functions in early 1996. In early 1997 we agreed that the Ministry of Commerce should assume responsibility for this review. We are informed that the Ministry will consider the present operations of the Commission and will seek public comment on the effectiveness of the Commission's present role and functions for regulating capital markets in New Zealand. The review will take into account Government policy for retirement savings following the September 1997 referendum on retirement savings.

It is possible that after the review the Minister of Commerce may wish to recommend changes to the role, functions and powers as now stated in the Securities Act and other statutes. We shall follow the Ministry's deliberations with great interest.

Our functions under the Securities Act at present include:

to keep under review the law relating to bodies corporate, securities and unincorporated issuers of securities, and to recommend changes to the Minister of Commerce,
to keep under review practices relating to securities and to comment to any appropriate body,
to co-operate with overseas securities commissions,
to promote public understanding of the law and practice of securities, and
to perform any other functions conferred by statute law.

To perform these functions we have a number of powers. These include:

to receive evidence as to securities law and practice, with power for this purpose to summon any person to appear before us;
to publish any report or comment made by us in the course of the exercise of our functions;
to exempt persons from compliance with provisions of the Securities Act or of Regulations under the Act;
to suspend or cancel a registered prospectus;
to prohibit advertising of any securities;
to approve trustees and statutory supervisors;
to request, or to approve the request of, the Registrar of Companies to inspect the books of any issuer or promoter of securities to the public;
to hear appeals against certain decisions of the Registrar of Companies;
to recommend regulations;
to approve procedures in relation to share dealing by directors and employees of listed companies;
to approve preliminary steps for determining whether a listed company has a cause of action against an insider who has dealt in its securities;
to apply to the High Court for orders in respect of substantial security holders in New Zealand listed securities;
to relieve financial and securities market entities from the obligation to give notice of substantial interests in New Zealand listed securities;
to authorise futures exchanges and futures dealers;
to declare agreements, options and rights to be futures contracts;
to prescribe terms and conditions under which life insurance companies may be exempted from provisions of the Securities Act including terms and conditions about -
1. standards for the carrying on of business,
2. the publication of financial statements;
to recommend approval to electronic systems for the transfer of securities;
to consult with the Reserve Bank of New Zealand on the regulation of public disclosure statements and advertising of registered banks;
to receive financial statements of issuers which do not comply with the Financial Reporting Act 1993.

The Commission is required to consider certain matters arising under the Corporations (Investigation and Management) Act 1989 (in particular, directions to "at risk" corporations and declarations of statutory management) and under the Companies Act 1993 (in particular, the prohibition of directors, promoters and managers of companies).

Signature
J. Farrell
Chief Executive

WORK PROGRAMME 1997/1998

Our work programme for the new year is set out below, divided into five categories:

Exemptions,
Market Authorisations,
Market Intervention,
Reform,
Public Understanding.

To undertake this work programme we expect to have up to 16 staff members and to receive a grant appropriated by Parliament of $2,111,111 million (net of GST) plus miscellaneous other income.

CATEGORY ONE - EXEMPTIONS