UPDATE: Clarification of directors' and officers' disclosure regime

Bell Gully has welcomed the Securities Commission's clarification of the application of the new disclosure regime for directors and officers of publicly listed companies, due to come into force on 3 May.

In a practice note released on 8 April, the Securities Commission suggested that the disclosure regime is aimed at employees of publicly listed companies with responsibility for making decisions that are significant to the financial standing and conduct of the company.

"The Commission has adopted a sensible and workable approach to the issue and focused on the disclosure regime's main objective: enhancing the efficiency of the market by providing valued information to investors on a timely basis," said Bell Gully Partner Peter Castle.

"We are also pleased that many of the issues raised in Bell Gully's submission to the Commission in February have been considered and addressed by this new advice and that the approach taken by the Commission is broadly consistent with the approach suggested in our February newsletter.

"Market comment in the last few weeks has tended to focus on the breadth of the concept of "officer" in the disclosure regime. Some commentators have suggested that, in any particular issuer, scores of employees would be required to make disclosures under this new regime.

"In our view, this approach to the regime has never been supported by the text of the proposed legislation or by the underlying policy of the regime, and may have contributed to some complaints levied at the regime.

"Our view has always been that the underlying policy meant that the new regime would affect only a very limited class of employees, even in New Zealand's largest issuers. We are pleased that this view is now supported by the Commission's published practice note.

"Coupled with practical exemptions that avoid double-reporting and needless detail, the new regime should achieve its aims without needlessly increasing the compliance workload of most companies," he said.

The practice note is available online at www.sec-com.govt.nz and Bell Gully is preparing further analysis and guidance on this issue. Background information on the disclosure regime is available from Bell Gully's earlier newsletters.

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