Investments illegally offered by Global FX
(continued from page 1)
WKF Asset Management Limited,
which was referred to in the offer.
The Commission believed the offer did
not comply with the law.
“To be offered in New Zealand the
scheme required a registered prospectus
and an investment statement,”
Chairman Jane Diplock said.
“Global FX did not have these
documents.”
The Commission also believed the offer
document for Global FX Secure
Trust II was likely to have misled
investors. It claimed that well known
international firms acted as brokers for
Global FX Secure Trust II. However,
these brokers advised the Commission
that they were not contracted to hold
funds or conduct trades for Global FX
Secure Trust II.
The Commission understood that
Global FX had previously issued
securities in Global FX Secure Trust
under an earlier offer document which
made similar claims. Because there was
no registered prospectus, investors in
either of the offers are legally entitled
to get their money back and should
contact Global FX for a refund.
The Commission warns people about
paying money to schemes which do not
have the required offer documents. A
registered prospectus and investment
statement give important information
about the people involved in the
investment and how money is invested.
Exemptions for employee share schemes
A class exemption for unlisted
companies’ employee share purchase
schemes* was gazetted by the
Commission in September 2005. The notice allows unlisted companies
to use an evergreen prospectus, subject
to conditions.
Subsequently the Commission reviewed
the Securities Act (Employee Share
Purchase Schemes) Exemption Notice
2002 SR 2002/320 which exempted
employee share purchase schemes
of listed companies, and unlisted
companies specified in a schedule to the
notice.
The new notice will enable listed
companies to continue to have an
evergreen prospectus for their employee
share purchase schemes. It will provide
exemptions from the usual nine month
life of a prospectus on condition that
the securities are allotted to eligible
people and that up-to-date financial
information is given to prospective
investors with the prospectus.
The new notice differs from the old in
that:
- the exemption for named unlisted companies is removed (the new class exemption for unlisted companies made this exemption redundant);
- the range of people eligible under the exemption is extended to include relatives of eligible people;
- an exemption, is provided, subject to conditions, from the requirement to state the maximum number of securities to be offered and their price; and
- the investment statement must give a brief description of the terms of the scheme and must state the places where the full terms of the scheme are available free of charge.
The provisions which are consistent
with or expand the scope of the
exemptions in the 2002 notice will
come into force when the new notice
is gazetted.
The provision requiring the investment
statement to give a brief description
of the terms of the scheme and to
state the places where the terms
of the scheme are available free of
charge will come into force after a
transitional period. This is to enable
companies currently relying on the
2002 exemption notice to take any
steps needed to comply with the new
condition. However, we think it likely
that many companies already distribute
information about the terms of the
employee share purchase scheme with
the investment statement.
The new notice is expected to be
gazetted in February 2006.
* Securities Act (Employee Share Purchase Schemes - Unlisted Companies) Exemption Notice 2005 SR 2005/276
