Huo Raymond: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
Huo Raymond: Securities Disclosure and Financial Advisers Amendment Bill — Second Reading 
[Volume:654;Page:3108] 
RAYMOND HUO (Labour) 
: 
 I rise to support the Securities Disclosure Financial Advisers Amendment Bill at its second reading. The reasons for that can be summarised in one sentence. The introduction of a simplified disclosure regime is not to reduce the amount of information provided to investors but simply to reduce duplication between forms of disclosure. Therefore the primary objective of the bill is to enable New Zealand businesses to have cost-effective access to capital while ensuring that investors continue to receive full accurate and timely disclosure of information. More accurately the bill addresses three areas: firstly the Securities Act 1978 to provide for a simplified disclosure prospectus that may be used by listed issuers who are subject to continuous disclosure requirements; secondly the Securities Act 1978 in respect of the categories of persons who are exempt from the disclosure requirements for offers of securities under the Securities Act 1978; and thirdly the Financial Advisers Act 2008 through the correction of a minor error in the assented version of the Act and a number of other minor tidying-up amendments. 
In the past weeks the Commerce Committee of which I am a proud temporary member received 18 submissions from a variety of sectors. I am very grateful to our officials and parliamentary counsel for the great job they have done in putting together those valuable views. Generally those submissions on the bill welcomed the introduction of the simplified disclosure regime and supported the bill’s proposed amendments to the Securities Act that related to categories of persons who are exempt from the disclosure requirements for offers of securities under that Act. 
Regarding the simplified disclosure prospectus there is currently duplication of the information released by listed issuers under their continuous disclosure obligations and the documents required at the time they make a securities offer. All public offerings regardless of whether the issuer is listed on the registered securities exchange such as the New Zealand Exchange must comply with the disclosure and other requirements of the Securities Act 1978. In the case of an offering by an issuer who is already listed on a registered exchange two disclosure regimes apply: the continuous disclosure requirements for listed companies and the disclosure requirements for a public offering. 
The proposal in this bill is for listed issuers to produce one disclosure document for a securities offering instead of producing both a full prospectus and an investment statement. The intention of the simplified disclosure prospectus as I mentioned at the very beginning of my speech is not to reduce the amount of information provided to investors but simply to reduce duplication between forms of disclosure. In that respect as many submitters rightly stated the regime should and would promote effective disclosure to investors in a streamlined form. 
At the committee meetings members requested an example of what a simplified disclosure prospectus might look like. Consequently an example of what it might look like for the recent bond issue for Auckland International Airport Ltd was prepared and presented. Although the simplified disclosure prospectus for an offer of fixed-rate bonds for the company was prepared purely for what the officials called illustrative purposes I can say that it was very impressive. It was about 25 pages long—yes only 25 pages long—compared with the 300-page length of the original investment statements and prospectus. This demonstrates the simplification that is possible through avoiding duplication of material including material released under continuous disclosure. I agree with the officials that the effect could be even greater as many other offers are likely to contain significantly more information than has been released under continuous disclosure. 
The existing provisions for exemptions from standard disclosure requirements in the Securities Act will be amended in order to allow a single offer of securities to persons who are exempt from disclosure requirements under two different sections of the Securities Act without requiring the issuer to prepare a full prospectus. This would correct the anomaly where issuers are able to take advantage of reduced disclosure requirements for an offer only to persons who qualified under one section but not to persons under both sections together. 
My learned colleagues the Hon David Parker Charles Chauvel and Clare Curran covered this issue in detail in their speeches this afternoon and earlier this evening. I will follow the spirit of the bill and not repeat those points to avoid shall I say duplication. But what is worth reiterating and what I said in my speech during the bill’s first reading is that this bill followed recommendations made by the Capital Market Development Taskforce in November 2008 for steps to respond to current financial conditions that are particularly relevant for listed issuers and also reflect the recommendations made by New Zealand Exchange. To introduce legislation such as this is very important particularly at this time when New Zealand along with the rest of the world is in the midst of a financial crisis. The impact of the financial crisis on businesses and households will depend in large part on how we respond. 
I conclude my contribution by asking the National Government where its real plan is. Thank you.