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New Zealand

Amendments to the Securities Act 1978 which came into force on October 1 will almost certainly increase costs for overseas issuers of securities to the New Zealand public. The Securities Commission recently declared that overseas issuers will need to meet the new requirements.

Issuers are now required to give each prospective investor an 'investment statement' about the securities they offer. This is a summary of key information about the issue that a non-expert investor will understand. The issuer must still prepare and register a prospectus, but this will only be given to investors who request it.

In the past most overseas issuers have relied on class exemptions (or successfully sought specific exemptions) enabling them to use a foreign prospectus in relation to an offer to the New Zealand public, usually in conjunction with a brief document providing additional information. While the Securities Commission may continue to give exemptions in relation to a prospectus, it has stipulated that, as a rule, overseas issuers should not be exempted from the requirement to produce an investment statement.

Experience has already shown that an investment statement can be expensive to produce. This is because it is often difficult to summarize the complex information in a prospectus in a way that keeps the investment statement from being misleading.

James Aitken and Vaughan Spurdle

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