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Binding Rulings on Securities Law
A Discussion Paper

APPENDIX:    DISCUSSION QUESTIONS

We invite comment on the issues raised in this paper and would be grateful to have our attention drawn to any important considerations that we may have overlooked. We should also appreciate it if submissions were to include views in respect of the range of questions set out in the paper (repeated below), but particularly those in bold type. Submissions should be sent to the Commission by Friday 4 August 2000.

Chapter 2.

1. Is there a need for binding rulings to be available on aspects of the securities law?

2. If yes, on what aspects of the securities law should rulings be available?

3. Would such a regime disturb the proper balance between the courts and an administrative agency such as the Securities Commission?

4. As the Commission has few lawyers as Members (and suggestions have been made that the Chairman should not be required to be a lawyer), is the Commission competent to make rulings on the interpretation of complex questions of the securities law?

Chapter 3.

5. Is it a proper administrative function for a body such as the Commission, which is not a tribunal of lawyers, to give greater certainty to the law (i.e., through giving rulings) in areas where the law is doubtful?

6. Should rulings be made for a specified period of time, for example, say, five years, or should they remain in force indefinitely (until revoked or amended)?

7. Should rulings be made specifically for the applicant alone, or should general or "class" rulings also be available?

Chapter 4.

8. Should the Commission give rulings on the exercise of its discretionary powers?

9. Should the Commission provide "no-action" rulings as part of a binding rulings function?

10. Should the Commission have a discretion to refuse to make rulings? If so, in what circumstances?

11. How might Securities Commission rulings affect or be affected by past, current and future Inland Revenue rulings? What if they conflict?

Chapter 5.

12. Should the Commission have a panel of expert legal advisers from whom to seek advice in respect of rulings?

13. Should offerors who have obtained a ruling to the effect that the securities law does not apply to their offer, be required to disclose to prospective investors the nature and effect of such a ruling? How would such a requirement be enforced?

14. Should consultation on rulings extend to potential investors? Should the Commission be free to publish rulings applications for public comment?

Chapter 6.

15. Would safe harbour provisions provide satisfactory protection to directors (and others with potential liability) acting bona fide in reliance on a ruling that is overruled in an appeal?

16. Should such safe harbours extend to remove potential liability under other legislation, e.g., the Fair Trading Act, or the common law?

17. Would the effects of such safe harbours on investors' remedies be justified?

18. Should there be a requirement that the court considers the provisions of the Illegal Contracts Act, if it overturned a Commission ruling, the result of which would otherwise be the invalidating of the allotment of securities?

Chapter 7.

19. Should all rulings be published?

20. Should the parties who sought the ruling be named in the published ruling?

21. Should any legal opinion referred to by the Commission in coming to its decision for the ruling be published in conjunction with, or as part of, the ruling?

22. What would be the legal status of such opinions, especially if the Commission stated in the ruling that it had had regard to, or had drawn upon, the opinion?

23. Should it be an offence for an issuer to fail to disclose or accurately refer to a ruling it has obtained in respect of its offer?

Chapter 8.

24. Should the Commission have an explicit power to grant exemptions for the avoidance of doubt?

25. Would such an exemption power achieve the benefits of a ruling power as described in this paper?

26. Are there any other matters that should be taken into account in considering whether the Commission should have a power to make binding rulings?