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Review of the Securities Regulations 1983

First Schedule amendments

Clause 14(1)(a)
108. Clause 14(1)(a) relates to methods of appointment of directors under the Companies Act 1955.
     • This clause is obsolete and it is proposed that it be deleted.

     Clause 14(1)(b)

109. Clause 14(1)(b) requires disclosure of methods of appointment of directors specified in a company constitution that are materially different from those set out in the Companies Act 1993. This clause does not require information about removal of directors, although this information is likely to be useful for investors.
     • It is proposed that this clause be amended so that statements about both appointment and removal of directors are required and possibly also information about the process by which directors retire.

110. This clause also required a prospectus to repeat restrictions of appointment that are set out in the New Zealand Stock Exchange's Listing Rules, which are both publicly available and applicable for all listed companies.
     • We would be interested in any comment about whether this clause should also be amended to clarify that differences need not be specified to the extent they are consistent with the New Zealand Stock Exchange's Listing Rules, or for that matter with the rules of other similar organisations such as overseas stock exchanges.

     Clause 14(2)

111. Clause 14(2) requires disclosure of any rules of the issuer relating to the retirement age of directors.
     • It is proposed that this clause be revoked as retirement ages are no longer enforceable as a result of the Human Rights Act 1993.

     Clause 15(5)

112. Clause 15(5) relates to rules of an issuer within the meaning of the Companies Act 1955.
     • This clause is obsolete and it is proposed that it be revoked.

Third Schedule amendments

Clause 6(6)(ab)

113. Clause 6(6)(ab) requires disclosure of any item of such incidence or size that it is necessary to explain the performance of the Group. The reference to the "Group" in this clause is inconsistent with the rest of clause 6, which refers to the "Scheme".
     • It is proposed that the reference to "Group" in this clause be replaced with a reference to "Scheme" to ensure consistency with the rest of the clause.

     Clause 13(2)

114. Clause 13(2) requires disclosure of the nature of material transactions by the manager of the issuer. This clause is prescriptive, detailed and lacks flexibility.
     • It is proposed that this clause be replaced with an equivalent provision to that in clause 11(2) of Schedule 3A. Clause 11(2) is less prescriptive and allows greater flexibility. In this regard, see also the comments in paragraphs 93 and 94 above.

     Clause 18

115. Clause 18 requires disclosure of all the terms of the deed of participation relating to the scheme. It has been suggested that disclosing all the terms of the deed does not enable the prudent but non-expert investor to identify the significant terms of the deed.
     • It is proposed that this clause be amended to be consistent with the descriptions required by clause 4 of Schedules 3A and 3C and require disclosure of the principal terms of the trust deed. We welcome your comments on this proposal. In particular, do you think that it is sufficient to refer generally to the "principal terms of the deed", or is it preferable to specify the terms that must be disclosed, along the lines of clause 13 of the Second Schedule?

     Clause 35

116. Unlike the equivalent provisions in other Schedules, this clause does not refer to the constitutional documents under which the participatory securities are created. This may be because clause 18 currently requires disclosure of all the terms of the deed of participation in the prospectus.
     • In light of our proposed amendment to clause 18, we propose to amend clause 35 to include the constitutional documents.

Schedule 3D amendments

Clauses 3(1) and 3(2)
117. Clauses 3(1) and 3(2) require disclosure of the name and address of the issuer and of any promoters. The applicable definition of promoter includes directors of the promoter, but the definition of issuer does not include directors. The effect of these clauses is that the directors of a promoter must be included but the directors of the issuer need not be. It has been suggested that the identity of the directors of the issuer is important information.
     • It is proposed that clauses 3(1)(a) and 3(2)(a) be amended to include any directors of the issuer. We welcome comment. Also, is there any other information which should be disclosed in an investment statement that is not currently required? Do these give rise to any special questions about the circumstances in which it may be necessary to amend an investment statement?

     Clause 5(1)(b)

118. Clause 5(1)(b) requires disclosure of the person to whom and place at which payments for the securities may be made. It is unclear how this clause will apply when payments are made by electronic transfer rather than at "a place".
     • It is proposed that this clause be amended to incorporate situations where payment can be made by electronic transfer.

     Clause 20

119. Clause 20 requires a statement of the information that is required to be, or will be, available on request from the issuer. Commentators argue that, as currently worded, this clause does not limit the type of information available on request from an issuer. In particular it could cover information that is not relevant to the offer of securities.
     • It is proposed to clarify that this clause relates to information about the issuer or securities that is material to the offer.

Amending an investment statement

120. The Regulations currently contain no explicit provision for amending an investment statement if information contained in it changes during the offer period. Many commentators consider that if an amendment is required a new investment statement should be issued.
     • We are interested to receive comments on whether it is desirable to provide in the Regulations for amendments to investment statements and if so on appropriate methods of doing so without compromising the objectives of the investment statement.

Fourth Schedule amendments

121. The Fourth Schedule sets out the requirements for a director's statement for an advertisement pursuant to Regulation 17(2). The requirements of (c)(iii) of this Schedule include a statement that the advertisement does not contain any matter that is inconsistent with a prospectus or disclosure statement.
     • It is proposed that this be amended to include a reference to an investment statement.

Seventh Schedule amendments

Clause 4(1)
122. Clause 4(1) requires mandatory annual meetings for participatory schemes. We have received comment to the effect that participatory schemes often undertake few transactions during the period of a year and that this clause be amended to enable members of the scheme to waive the requirement for an annual meeting. We think this matter needs to be examined in the context of the governance and reporting arrangements generally of collective schemes.
     • However we would be interested in receiving comment on this suggestion.

Eighth Schedule amendments

123. The Eighth Schedule sets out the form of a non-disclosure declaration required by section 67 of the Act. Section 67(3) has been repealed.
     • It is proposed that this Schedule be revoked as it is now obsolete.