Bennett David: Securities Disclosure and Financial Advisers Amendment Bill — In Committee 
Bennett David: Securities Disclosure and Financial Advisers Amendment Bill — In Committee 
[Volume:655;Page:4976] 
DAVID BENNETT (National—Hamilton East) 
: 
 Having heard that introduction from the Minister Simon Power I think it is important that we get a feel for the Securities Disclosure and Financial Advisers Amendment Bill. It is a very topical issue when we consider the nature of the financial stress that much of New Zealand and the world economy is under at the moment and has been under in the last 9 months or so. There is always talk about what can be done to avoid that kind of stress occurring in the future. One of the ways of doing this is around securities disclosure and financial advice. It has been a perennial problem from the time of the old days when New Zealand was seen as the Wild West of financial markets. Various Governments have tried to address this and they have done so with a piece by piece approach. This is another piece in that jigsaw; it is very difficult to set up one of those systems straight away from scratch that covers all of the issues. 
Part 1 deals with the Securities Act 1978. A number of clauses in Part 1 which we will debate over the course of this evening are there to aid in the disclosure and also to assist investors so that they get the fullest information they can in order to make the right investment decisions. That is a crucial part of the Government’s role in this Securities Disclosure and Financial Advisers Amendment Bill. The Commerce Committee which I was not on considered this legislation and I am sure under the guidance of the Minister the Hon Simon Power it has done a very detailed and thorough analysis of what is required to deal with some of the issues. 
The objectives of the bill are twofold: to respond to the global financial crisis by removing unnecessary impediments to raising capital in New Zealand and to ensure the timely disclosure of relevant information to prospective investors. That is the nature of the objectives of this legislation. The Securities Act 1978 provides exemptions from standard disclosure requirements for certain investors who because of their experience and knowledge for example are assumed not to require the standard level of protection that the Act offers. The appropriateness of these exemptions will be reviewed in the current full review of the Securities Act. In the meantime however this bill proposes some amendments that by removing minor anomalies in the law will make it easier for businesses to raise capital. Although those changes would apply to both listed and unlisted companies they would particularly benefit private companies that tend to approach investors for capital directly often in cases where the investor is well known to the issuer. That is what we often call a closely held company; it may not be listed but it is a company that has issues around the investment and the capital that is needed. Basically that covers a lot of New Zealand investment because we have a very big small-business community in New Zealand that makes up a huge part of our business community. So the investment in those small to medium sized businesses is crucial to the economic growth of this country especially in these uncertain economic times. 
The select committee recommended exemptions from standard disclosure for subsequent offers which after an initial subscription of $500000 would be allowed to include offers for different types of security rather than just being limited to securities where the rights privileges limitations and conditions attached are identical to those initial securities. Basically what the select committee is doing there is looking at the different types of securities that are outside the previous ambit of the initial security offer to give a little bit of flexibility to those that are making the offer so that investors have a bit more comfort in investing in the company at stake. The committee looked at the extension of offers to subsequent offers made within 18 months of the first allotment rather than the 12-month process.