Capital Markets 2029, an industry-led group, sponsored by
the NZX and FMA, has today released its much anticipated report. The report takes a 10 year view and
identifies steps that can be taken by the government, regulators and industry
participants to strengthen New Zealand’s capital markets.
Why are capital markets important?
As outlined in the report, New Zealanders benefit in many
ways from having successful capital markets in New Zealand. These include use
of the products and services that are able to be efficiently funded through
capital markets, as well as the returns from direct and indirect investment in
the capital markets.
With the growth in KiwiSaver to over 2.9 million members,
capital markets are becoming even more important to everyday New Zealanders.
The report contains a wealth of recommendations in relation
to KiwiSaver, financial capability, regulation, public sector assets and
infrastructure, market development, new listings, tax and technology.
While all of the recommendations are valuable and
interesting, the regulatory recommendations include some particularly innovative
ideas, such as:
- Removing the requirement for prospective financial information for IPOs. This is identified as a significant impediment to new listings, and is not a requirement in other major jurisdictions, such as the US and UK.
- Simplifying disclosure requirements for regulated offers, with a further review to determine the level of information required within the PDS versus that which is made available via the offer register.
- Reviewing the continuous disclosure liability settings to assess whether the current “no fault" regime remains appropriate.
- Amending the definition of overseas person under the Overseas Investment Act to only capture listed issuers where one overseas person holds more than 25% of the shares in the listed issuer. This has been a perennial issue, and hopefully the wide support for change will result in an improved outcome through The Treasury's consultation process on this topic.
- Creating a more streamlined and centralised process for completing AML checks by capital market participants.
We look forward to digesting the report in more depth and
thinking about how we can contribute to pushing forward the recommendations
from our perspective as New Zealand’s leading commercial law firm. We encourage
all capital markets participants, regulators and relevant parts of government
to read the report and take up the recommendations. As the report concludes, it
is important to note that there is no silver bullet – the best chance of
improving the vibrancy of New Zealand’s capital markets will be had through collaboration across the
industry to implement as many recommendations as possible.
NZX has undertaken to report on progress made in respect of
all recommendations, with a first assessment in 18 months’ time.
Rachel Dunne is a member of the Capital Markets 2029 Steering Group.