NZVCA pleased with Financial Markets Conduct Bill

19 September 2011

Media release

NZVCA pleased with Financial Markets Conduct Bill

New Zealand Private Equity and Venture Capital Association (NZVCA) has been pleased with its engagement in the review of Securities legislation.

NZVCA Executive Director Colin McKinnon said “over the course of the last couple of years, the NZVCA has engaged with both the Capital Markets Development Task Force and the Ministry of Economic Development on the need for securities law reform to facilitate efficient capital raising, employee incentivisation and access to capital for the private capital markets.

“This engagement included a substantial paper on suggestions for the review of securities law in August 2010.

“The main focus of NZVCA submissions to date has been on the exemptions regime, but the NZVCA has also submitted on the proposed treatment of interests in limited partnerships.

“Our submissions regarding exemptions recommended clarification of the existing exemptions including bright line tests, self-certification, the inclusion of a small-scale offer exemption (like the Australian 20/12 rule) and changes to the regime to ensure that entire offers were not voidable on account of an ineligible investor being allotted with securities.

“Our submissions regarding interests in limited partnerships recommended that interests be treated as equity securities, or alternatively that limited partnerships be otherwise exempt from the requirement to appoint a supervisor when raising funds from members of the public.

In early August 2011 the Government released the Financial Markets Conduct Bill comprising 380 pages of legislation designed to replace the Securities Act, Securities Markets Act 1988, and various ancillary statutes.

The Ministry of Economic Development has just completed a one month consultation period with the expectation that the Bill will be presented to Parliament prior to the election. Thereafter, it is expected that there will be a reasonably substantial period of further engagement prior to the Bill becoming law. The NZVCA, through its core sponsors engaged with MED during this period.

McKinnon said “the NZVCA is delighted to note that nearly all of its earlier submissions on exemptions were accepted by MED, and that the draft legislation is a substantial step-up from the prior regime.

“A residual concern remains with respect to the changes made to the previous exemption applicable to investors with an income of greater than $200,000 per annum or assets worth more than $2 million.

“However the improved exemptions should at the very least go some way to improving the existing complications experienced when fundraising.

“The NZVCA will continue to engage with MED over the coming months.

ENDS

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