Amendments to Securities laws passed

The Securities Amendment Act 2006, the Takeovers Amendment Act 2006, the Securities Market Amendment Act 2006 and the Fair Trading Amendment Act 2006 were all enacted by Parliament on 12 October 2006 (amendments all contained in an omnibus Bill, the Securities Legislation Bill).

The Ministry of Economic Development is currently drafting regulations for the Takeovers Act and the Securities Market Act which will cover the areas set out in the discussion documents released earlier this year.  

Investment advisers' and brokers' disclosure obligations are set in the Securities Markets Act.  The proposed regulations:

• provide a legislative definition for "bank term deposit"; and
  
  
• exempt some classes of investment advice (telephone) and adviser (lawyers and chartered accountants, and advisers isolated from certain relationships) from the full requirements of the Act.

It is also proposed that the regulations require disclosure to be concise, clear and effective in plain English with specific requirements in respect of placement of disclosure, format, style and set headings. 

The regulations are also expected to clarify that where an adviser is giving general advice on securities, disclosure can be general (for example, remuneration can be described within a range).  However, where advice on set securities is provided, then disclosure will be expected to be more specific.

In addition, minor amendments are intended to be made to the Substantial Security Holder Regulations to make them consistent with the changes contained in the Securities Legislation Bill.

The substantial security holder regime requires persons who control 5% or more of securities in a public issuer to disclose that fact to the issuer and to the exchange on which they are registered.

The Securities Markets Act 1988 specifies who must disclose, and when disclosure must be made.  What must be disclosed is set out in the Securities (Substantial Security Holders) Regulations 1997 (which contain detailed requirements and forms for disclosure of substantial security.

Regulations have been proposed to:

• reduce the burden of providing historical information;
  
  
• to exempt overseas-listed companies who are already complying with similar local requirements from the regime; and
  
  
• to move an exemption notice for investment management contracts into the main body of regulation.

It has also been recommended that the disclosure form be redesigned and that the regulations require compulsory electronic filing (unless that would unduly delay the filing).

Enquiries and information

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