Bennett David: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
Bennett David: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
[Volume:654;Page:3110] 
DAVID BENNETT (National—Hamilton East) 
: 
 It is my pleasure to follow that thrilling speech from Raymond Huo. We are talking about the Securities Disclosure and Financial Advisers Amendment Bill— 
Darien Fenton 
: A great topic. 
DAVID BENNETT 
: Yes it is a great topic. Members of the Labour Party are sitting there looking at us in awe of the ability of this National Government to deliver for the country and for business at a time when it is most needed. Those members had their opportunity and they failed to deliver. Now the National Government is actually delivering and it is good to see. 
It is important to think of this bill in the context of what is going on in the worldwide markets at the moment. We have something called a credit crunch which means that basically there is a lack of credit out there for businesses. Businesses are finding it difficult to access the credit they need to keep their organisations and their enterprises going. That is the simple nub of what is happening out there. If we look at the business people who are coming to our constituency clinics we see that their issue is availability of credit so that they can maintain their operations. It is a cyclical approach. Once credit is denied to one company it is denied to the next company and the next. Sales of products go down and down because as one company shuts up shop the next one shuts up shop and the next one. That is the effect of the credit crunch. 
The National Government has seen this and is delivering some solutions. This bill is one part of the solutions that can be made available to New Zealand businesses to help them get through the credit crunch. The overarching aim of the bill is to free up available capital for businesses in order to help businesses do business. That is what we are after. We want to see businesses continue to employ people to produce products for New Zealand and to build the GDP of this country. That is why we need legislation like this which assists that process. We want to make sure that firms have cost-effective access to capital whilst ensuring that investors receive full accurate and timely disclosure of information. 
New Zealand has grappled with the need for disclosure of information in a full accurate and timely manner for a number of years. New Zealand was seen as the Wild West of the financial markets in the late 1980s. That was basically in response to there not being the degree of control that operated in some other markets. I think that is partly why New Zealand felt the sharemarket crash of the mid-1980s a lot more than other countries did. We did not have the right system in place. The sharemarket was on such a big high that New Zealand was seen as the Wild West. A series of measures have been undertaken since that time to try to alleviate that problem and that perception so that we are seen as a stronger market for investment and also so that there is more protection through more information being made available to investors and businesses. That has been a long process I guess in the sense that we are still working on it now. This bill is part of that process in making sure that we have the best laws in operation to protect investors and businesses in a free market. 
The recommendations in this bill were made by the Capital Market Development Taskforce. That task force looked at some of the issues involved in removing unnecessary impediments to raising capital while continuing to ensure that that relevant information was available to prospective investors. It had to deal with the double-edged sword of the financial markets in making sure that capital was available during a credit crunch and also making sure that information was available to protect investors so that we can move away from the Wild West perception. The two elements come together in this legislation in the sense that we not only have to protect investors but also have to protect the market that those funds are being drawn from. This bill has a number of elements in it to do that. 
The bill provides for simplified disclosure prospectuses. The simplified disclosure regime applies only to those securities offered that rank equally and is preferential to the issuer’s existing securities. Essentially the work around prospectuses is very important when one is looking at investing in something. A number of pieces of legislation have been passed since the Wild West days to try to make sure that prospectuses are more certain for investors and to make sure that investors who want to invest in a company find that the prospectus gives them the comfort and degree of reliance that they would expect. A lot of the time when people are investing they do not know the detail of the organisation or company and they are relying on a prospectus in many cases. In the past those prospectuses have been quite flashy documents but sometimes they have not given the detail required. That was tightened up a number of years ago but this bill brings it all together in a sense; it tidies up the total legal framework that those prospectuses deal with and undertake to be part of. It is about giving information to investors—not hiding it—so that they can make the right decisions on the basis of prospectuses and the information available to them. It is not just about having glossy pictures for investors; they need some hard-core information and that is why there are some requirements as to what information needs to be held in prospectuses. 
This is all part of allowing businesses to grow and develop because if businesses can attract capital and if there is a mechanism whereby there is safety for investors in being part of the process of investing so that businesses can have that capital to grow and develop then we avoid a lot of the complications that we have had when companies go under and we reduce the problem of the compliance costs that businesses have to incur in order to provide those prospectuses and information to assist them in raising capital. It is actually there to help ensure that businesses are not disadvantaged by red tape and bureaucracy. You know we want to make sure that businesses can give as much information as they can in a way that does not restrict their activities. This Government is putting business ahead of bureaucracy; we are making sure that we set up the rules and systems so that businesses can flourish and take advantage of what capital is out there and also giving certainty to those investors who are putting up that capital so that they will put up more capital and we get the investment that we need at this point in time with the credit crunch. 
Removing some of the barriers and excessive duplication will not only help growth but create and keep more jobs in the economy and that is crucial at this time because we need businesses to perform. There is no quick-fix solution I guess to these issues. They have been something we have worked on for many years now. It would be nice to think given that over a period of 20 to 30 years we have been working on capital raising prospectuses and confidence in the market that we could have done all of it in one hit and at an earlier time but it has not happened in that way; there has been a series of adjustments to our law in this area and this bill is the next part of that. 
The bill amends two separate pieces of legislation: the Securities Act 1978 and the Financial Advisers Act 2008. By amending those two Acts we set out to create a more simplified system that people can understand and to give that support to businesses and investors that they need. 
The Commerce Committee made a number of recommendations. Its members recommended that certain exemptions for subscriptions up to a certain value be allowed rather than their being limited to securities where the rights privileges limitations and conditions attached are identical to those attached to the initial securities. There was some work around some financial thresholds that were put in place through this legislation which gave the select committee the ability to make certain recommendations. There were also some recommendations around time frames. The 18-month time frame that has been mentioned by other speakers was something that the select committee looked into. It is a practical matter of looking into the way that these securities are offered and the way that investment is made in these organisations and companies. 
The committee also recommended changes to remedy an oversight in the Financial Service Providers (Registration and Dispute Resolution) Act of 2008.