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Disclosure delay focussed on compliance not policy

10 March 2004 Media Statement
Disclosure delay focussed on compliance, not policy

Commerce Minister Margaret Wilson said today she would not be revisiting the policy requiring directors and officers of publicly listed companies to disclose their relevant shareholdings.

The Securities Markets Act (Disclosure of Relevant Interests by Directors and Officers) Regulations, aimed at better informing the market and discouraging insider trading, were due to take effect on March 1. But the government announced a delay in commencement to May 3, after companies and their management expressed confusion over exactly what was required of them.

“I wish to make it clear that this delay is not about revisiting the disclosure policy enacted by Parliament. I know the market has concerns about the scope of the definition of ‘officer’. But I don’t think it desirable to reconsider a policy that has not yet had the chance to operate.

"Instead, I want to encourage people affected by the new rules to use this time to communicate clearly the practical problems they are having in complying with the new regime.

"In this regard, the Securities Commission’s power to grant class exemptions provides the flexibility to apply the law as intended.”

The Securities Commission, which has the discretion to grant exemptions from the rules, has received a number of applications concerning the new regime, said commission chair Jane Diplock.

“We are already preparing a number of class exemptions that will assist in the sensible application of the law,” Ms Diplock said.

“For example, to the extent that they have already disclosed their relevant interests under the stock exchange’s listing rules, we will exempt company directors from the statutory scheme.

"We will also, in the initial disclosure following commencement of the law, grant an exemption from the requirement to provide historical transaction details.”

The Commission expects to receive further applications for exemptions in the coming weeks.

“Next week we will let the market know what class exemptions we plan to grant”, said Ms Diplock. “We are also looking at issuing a practice note about the regulations.

"But we need to hear from the market now so that all relevant guidance and exemptions can be in place in a timely fashion before the 3 May commencement date.”

Another focus of concern with the regulations is the effect on overseas companies that also maintain a listing on the New Zealand Stock Exchange.

“I am aware of the particular concerns of overseas issuers”, said Margaret Wilson. “This is beyond the purpose of the Securities Commission’s exemption powers and the government itself may need to address that issue directly in the regulations. I have asked my officials to look closely at that specific situation.”


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