Government moves on finance company moratoria

The Government hopes to have regulations simplifying and clarifying disclosure obligations for finance company moratoria introduced by the end of the year.

Commerce Minister Simon Power told the 5th Annual Securities Law Update in Wellington today that Cabinet agreed on Monday to the development of the regulations.

Moratoria proposals are an alternative to receivership for companies that issue debt and are in financial difficulty and unable to pay their investors. Moratoria may involve capital restructuring or repayment plans. So far, 12 finance companies are in moratoria with approximately $2 billion involved.

"These regulations will ensure key information is available to investors who are being asked to make significant decisions about their investments based on onerous and highly complex disclosure documents," Mr Power said.

"The regulations will require debt issuers to provide clear and concise investment statements about moratoria proposals, along with independent expert advice, the views of the trustees, and the considerations of the company directors.

"I am concerned that disclosure currently provided by finance companies does not provide investors with the appropriate information to make sound decisions.

"These regulations will ensure the right information is made available in a transparent and easy-to-understand way.

"Moratoria proposals are an important option for investors to understand, and the regulations will help achieve that objective."