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Brief Counsel

FMA's final disclosure note better again for third look

08 June 2012

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​The final guidance note issued today by the Financial Markets Authority will make a useful contribution to the smooth operation of the securities market and reflects well on the FMA and on the consultation process.

The FMA put out a revised draft note in April and called for further feedback after it became clear from the first submission round that there were a number of issues of substance to be addressed.

The result is a much better and more workable document.

Key changes

  • The final note is explicit about which aspects of the advice apply to prospectuses and which to investment statements and that you don’t need to repeat in full all of the information in your prospectus in your investment statement.  Where both documents are combined into a single document, the guidance applies to that document.
  • Express acknowledgment that registered banks are already subject to a rigorous disclosure regime through the Reserve Bank of New Zealand Act 1989 and that their disclosure statements under the Reserve Bank Act align with the prospectus requirements. 
  • Clarifying that the note is not specifically directed at advertisements and that these will be dealt with separately later.
  • Further clarification that the guidance note does not change the legal requirements for disclosure documents but is intended simply to assist compliance with those requirements.
  • Acknowledgment that the test for materiality is information that is likely to affect the judgement of a prudent but non-expert investor when making a decision about whether to invest.

Timetable

The guidance will apply to new issues from 9 July and, for continuous issuers, to new documents issued after 1 January 2013.  Initially 1 January was to be the deadline for compliance for continuous issues but the FMA has recognised that this would have entailed significant time and expense for many issuers.

Chapman Tripp comments

Both sets of changes made by the FMA in response to the two consultation rounds are changes for the better and address many of the points we made in our submissions (here and here).
The FMA  has provided summaries of the submissions it received in the first round and the second round on its website.  Our other commentaries on the note are available here, here, and here.
For further information, please contact the lawyers featured.
Chapman Tripp will conduct a Hothouse later this month that includes discussion on the final guidance note.  Register here.