New amendment regulations will take us “back to the future” on two technical, but important points, in relation to New Zealand’s insider trading and annual reporting regimes.
Insider trading and issues of financial products
The prohibitions in relation to insider trading will not apply to the issue of new financial products, except for certain managed investment products and derivatives.
This removes an ambiguity created in the drafting of the Financial Markets Conduct Act 2013 (FMC Act). Temporary exemptions were put in place to carry forward the position applying under the previous securities legislation, the last of which ran out on 30 November 2017 – although it did not apply to same class offers, a curious distinction which has now been removed.
We support the approach taken, and have done so since the issue was first identified in 2014. The regulatory impact summary clearly explains why these issues should not be subject to the insider trading regime, citing Chapman Tripp’s New Zealand Equity Capital Markets: Trends and Insights publication to bolster its conclusions.
Annual reports and annual meetings
Due to an oversight, the 2017 amendments to reduce the need for listed companies to distribute notices in relation to their annual reports failed to carry forward the provision that the annual report (or notice that it is available) must be sent to shareholders not less than 20 working days before the annual meeting.
This defect has now been remedied, recognising that it is important that shareholders have time to digest the report in advance of the meeting so that they can hold directors to account. We are pleased with this correction – especially given the trend, noted in our Corporate Governance: Trends and Insights document, towards shortening the time gap between the annual report and the annual meeting.
Issuers with a 30 June 2018 balance date will need to ensure that their annual reporting timetable complies with this “new” requirement.
Thanks to Philip Ascroft for writing this client alert.