18 May 2004

Mutual recognition of securities offers proposed

New Zealand Commerce Minister Margaret Wilson and Ross Cameron, Australian Parliamentary Secretary to the Treasurer, today released a joint discussion paper on the trans-Tasman mutual recognition of offers of securities and managed investment scheme interests.

“The proposed regime will allow issuers to offer securities in both Australia and New Zealand, using the same offer documents and offer structure”, said Margaret Wilson.

“The objective of the proposed regime is to remove unnecessary regulatory barriers to trans-Tasman securities offerings. This will promote investment between Australia and New Zealand, enhance competition in capital markets, reduce costs for business, and increase the choice for investors.”

“The regime proposed in the discussion paper is being developed as part of a general initiative for greater co-ordination of business law between Australia and New Zealand and is an important step in achieving a more integrated trans-Tasman financial market”, said Ross Cameron.

“A mutual recognition regime will reduce the costs of raising capital in both Australia and New Zealand while maintaining investor protection through appropriate disclosure.”

Background

In October 2001, the Australian Government invited New Zealand to work towards a regime for co-ordination in the recognition of securities offerings. After deciding on the broad parameters of the mutual recognition regime, New Zealand and Australian officials developed detailed proposals for the regime in 2003. These proposals are contained in the discussion paper.

The paper includes a description of the current position for Australian and New Zealand issuers making trans-Tasman offers of securities and then discusses the proposed mutual recognition model.

Currently, New Zealand and Australian issuers cannot use their home jurisdiction offer documents when making a trans-Tasman offer of securities. The issuer must comply with the relevant fundraising requirements in the host jurisdiction, unless operating under an exemption in the host jurisdiction.

The proposed model would allow an issuer offering securities or managed investment scheme interests to the public to extend an offer that is being lawfully made in one country (the home jurisdiction) to investors in the other country (the host jurisdiction) using the same offer documents and offer structure.

Details of the proposal are discussed, including the scope of the regime, the requirements to be met by issuers operating under it, how the laws of the host and home jurisdiction will apply, the role of the regulators, and jurisdiction and enforcement regarding civil and criminal proceedings for breaches of the regime.

ENDS

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