The Cabinet has approved new securities regulations that will improve the quality of disclosure to investors, improve flexibility for issuers, and reduce compliance costs, Commerce Minister Simon Power said today.

The Securities Regulations 2009 implement a range of recommendations made by the Capital Market Development Taskforce. They will replace the Securities Regulations 1983.

In a speech to the 5th Annual Securities Law Update, Mr Power said the regulations provided for the details of the new simplified disclosure prospectus for listed issuers that were established by the recently enacted Securities (Disclosure) Amendment Act 2009. They include a range of other amendments that will benefit issuers and investors.

“These new regulations should make a real difference for companies seeking to raise capital," Mr Power said.

“In particular, the simplified disclosure prospectus will provide a significant reduction in compliance costs for listed issuers by removing the requirement to disclose information that is already available to the market."

The simplified disclosure prospectus provides for:

• Listed issuers who are already subject to continuous disclosure requirements being required to produce only one disclosure document for a securities offering, instead of a full prospectus and an investment statement.


• A simplified disclosure prospectus for offers of securities of the same class as listed securities (which will rely more strongly on continuous disclosure).


• A simplified disclosure prospectus for offers of securities that rank equally or in priority to listed securities (which will rely on continuous disclosure to a slightly lesser extent).


• Listed unit trusts to use the simplified disclosure prospectus for offers of additional listed securities, and to offer higher ranking debt securities.

“As well as giving effect to the new simplified disclosure prospectus, the regulations also contain changes that will reduce compliance costs and improve disclosure for issuers and investors.

Other changes include:

• Aligning the requirements for financial statements in prospectuses with generally accepted accounting practice.


• Aligning the requirements for disclosing directors' and managers' interests across different types of issuer.

The new regulations will come into force on October 1. However, issuers will be able to elect to offer under the existing regulations until June next year.

Background

The Securities Regulations 1983

The Securities Regulations 1983 sets out the required content of prospectuses for equity, debt, participatory securities, unit trusts, life insurance policies, and superannuation schemes. They also set out the required contents of investment statements and provide rules on the material that may be included in advertisements, in addition to setting out the mandatory contents of trust deeds and deeds of participation governing the supervision of issuers of debt and participatory securities by trustees.

The Securities (Disclosure) Amendment Act 2009

In July 2009 the Securities (Disclosure) Amendment Act 2009 was enacted. Amongst other things, the Act provides for a new simplified disclosure prospectus for issuers that are subject to continuous disclosure obligations. The simplified disclosure prospectus aims to reduce compliance costs for issuers by removing the requirement to disclose in offer documents information that is already disclosed to the market.