CBL drives FMA to seek clarity over continuous disclosure obligations in voluntary administrations
By Paul McBeth
May 17 (BusinessDesk) - The Financial Market Authority will go to the courts for help in unpicking whether continuous disclosure rules still apply to listed companies if they enter voluntary administration.
The market watchdog said in a statement it intends to file a case stated procedure on the issue, which lets the regulator seek the court's opinion on a point of law without taking action against a particular party. The FMA expects the case will provide greater clarity for all parties and set future expectations around how continuous disclosure interacts with the orderly insolvency actions.
"The circumstances surrounding the voluntary administration of CBL Corporation Limited have illustrated the legal complexity of ensuring compliance by a listed issuer in voluntary administration," the regulator said. "The FMA acknowledges that the case stated procedure will not result in timely information being provided to shareholders of CBL in this instance, and the FMA will continue to consider other avenues for securing the release of some information for their benefit."
CBL's administrators last week recommended liquidators be appointed, enabling deeper investigation into the insurer's insolvency procedures. It appointed voluntary administrators in March after the Reserve Bank sought an interim liquidation of the New Zealand supervised arm and the Central Bank of Ireland made similar moves against CBL's European division.
The Auckland-based insurer had its stock suspended from the NZX on Feb. 8 amid concerns from NZX Regulation about the information it had given the market, following engagement between it, CBL, the Financial Markets Authority, the Reserve Bank, and a number of overseas regulators with prudential oversight of CBL’s international insurance business. On Feb. 20, CBL Insurance told the Reserve Bank it was continuing to operate despite being below the minimum regulatory solvency level.
The FMA today said continuous disclosure is an important feature of maintaining a fair, orderly and transparent market.
"We consider the information released under continuous disclosure remains important to shareholders even when a listed Issuer is in voluntary administration, as shareholders seek to make assessments of the valuation of their holdings and how they may exercise any other rights they have in relation to those holdings," it said.
The regulator said it won't comment further at this stage.