Reprint as at 29 February 2008

Securities Markets Amendment Act 2006

Public Act	2006 No 47
Date of assent	24 October 2006

Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this eprint.

A general outline of these changes is set out in the notes at the end of this eprint, together with other explanatory material about this eprint.

The Act is administered by the Ministry of Economic Development

1 Title

2 Commencement

3 Principal Act amended

Amendments to interpretation

4 New sections 2 to 6 substituted

2 Interpretation

3 What is material information in relation to public issuer

3A What is material information in relation to futures contract

4 What information is generally available to the market

5 Relevant interests in securities (basic rule)

5A Extension of basic rule to powers or controls exercisable through trust, agreement, etc

5B Extension of basic rule to interests held by other persons under control or acting jointly

6 Situations not giving rise to relevant interests

Insertion of new dealing misconduct provisions

5 New Part 1 substituted

Part 1
Dealing misconduct

Subpart 1—Insider conduct and market manipulation prohibitions

Insider conduct prohibited

8 Prohibition of insider conduct

8A Who is information insider

8B Meaning of inside information

8C Information insider must not trade

8D Information insider must not disclose inside information

8E Information insider must not advise or encourage trading

8F Criminal liability for insider conduct

When prohibition on insider conduct does not apply

9 Exception for trading required by enactment

9A Exception for disclosure required by enactment

9B Exceptions in respect of underwriting agreements

9C Exception in case of knowledge of person's own intentions or activities

9D Exception for agent executing trading instruction only

9E Exceptions for takeovers

9F Exception for redemption of units in unit trust

9G Exception for Reserve Bank

Affirmative defences

10 Absence of knowledge of trading

10A Inside information obtained by independent research and analysis

10B Equal information

10C Options and trading plans

10D Chinese wall defence

Market manipulation

11 False or misleading statement or information

11A Criminal liability for false or misleading statement or information

11B False or misleading appearance of trading, etc

11C Presumption as to false or misleading appearance of trading, etc

11D Criminal liability for false or misleading appearance of trading, etc

Futures contracts

11E Application of subpart 1 to insider conduct in relation to futures contract

Subpart 2—General dealing misconduct prohibition

General dealing misconduct prohibition

13 Misleading or deceptive conduct generally (for dealings in listed and non-listed securities)

Exceptions

14 Exceptions for takeovers

15 Exception for repurchase of shares by company

16 Exception for offers of securities to public

17 Exception for disclosure by investment advisers or brokers

Territorial scope

18 Territorial scope of general dealing misconduct prohibition

Liability under Fair Trading Act 1986

19 No liability under Fair Trading Act 1986 if not liable under this Part

Amendments to continuous disclosure by public issuers

6 New section 19PA inserted

19PA No contravention of continuous disclosure provisions by person who takes reasonable steps to ensure public issuer complies

Amendments to disclosure of relevant interests by directors and officers of public issuers

7 New section 19SA inserted

19SA Purpose of subpart

8 Public issuer must keep interests register

9 Inspection and copying of interests register

10 New section 19ZF substituted

19ZF Offences relating to interests register

Amendments to disclosure of interests of substantial security holders in public issuers

11 New subpart 3 of Part 2 substituted

Subpart 3—Disclosure of interests of substantial security holders in public issuers

20 Purpose of subpart

21 Meaning of substantial security holder, substantial holding, and percentage

Event disclosure obligations

22 Persons must disclose if begin to have substantial holding

23 Substantial security holders must disclose if subsequent movement of 1% in holdings

24 Substantial security holders must disclose if subsequent changes in nature of relevant interests

25 Persons must disclose if cease to have substantial holding

26 What disclosure required

27 Form and method of disclosure

28 Public issuer must give acknowledgment of disclosure

29 How to ascertain total voting securities in class of public issuer's voting securities for purposes of disclosure

30 Exemption for persons with interest in other substantial security holders who comply

31 Exemption for trustee corporations and nominee companies

32 Conditions of exemption for trustee corporations and nominee companies

32A Exemption for persons under control or acting jointly with trustee corporations and nominee companies

33 Extended time for disclosure for trustees, executors, and administrators

Required disclosure obligations

34 Commission may require persons to disclose to market relevant interests and powers to get relevant interests

35 Public issuer may require registered holder to disclose relevant interests to it

35A Public issuer may require person who has relevant interest to disclose information to it

35B Form and method of notice requiring disclosure

Offence

35BA Offence for failure to comply with substantial holding disclosure obligation

35C Public issuers must maintain register of disclosures of substantial holdings

35D Inspection and copying of substantial holdings register

35E Offences relating to substantial holdings register

35F Public issuers must publish information on substantial holdings

35G Registered exchange must publish disclosures

35H Offence for failing to publish information on substantial holdings or disclosures

35I No liability for publication of substantial holdings

35J Notice under this subpart not to affect incorporation of public issuer or constitute notice of trust

Insertion of new Part 4 on investment advisers and brokers and new Part 5 on enforcement and remedies

12 New Parts 4 and 5 substituted

Part 4
Investment advisers and brokers

Application of this Part

41 When investment advice given to public, etc

Disclosure by investment advisers

41A Investment advisers' disclosure obligation

41B Investment adviser must disclose experience, qualifications, professional standing, etc

41C Investment adviser must disclose certain criminal convictions, etc

41D Investment adviser must disclose fees

41E Investment adviser must disclose other interests and relationships

41F Investment adviser must disclose details of securities about which advice given

Disclosure by investment brokers

41G Investment brokers' disclosure obligation

41H Investment broker must disclose certain criminal convictions, etc

41I Investment broker must disclose procedures for dealing with investment money or investment property

Method of disclosure

41J How disclosure must be made

Other requirements relating to disclosure

41K Disclosure must not be misleading

41L Disclosure of additional information

41M No compliance with disclosure obligations if disclosure statement out of date

41N Advertisement must refer to disclosure statement

41O Advertisement must not be deceptive, misleading, or confusing

Offences

41P Offence for failure to comply with disclosure obligation

41Q Offence of deceptive, misleading, or confusing disclosure

41R Offence of deceptive, misleading, or confusing advertisement

41S Recommending, or receiving money for, acquisition of securities prohibited if offer for subscription illegal

41T Defence of immateriality

Territorial scope of this Part

41U Territorial scope

Miscellaneous

41V No contracting out

41W No liability under Fair Trading Act 1986 if not liable under this Part

Part 5
Enforcement and remedies

Subpart 1—Commission's enforcement powers

Prohibition and corrective orders

42 When Commission may make prohibition and corrective orders

42A Terms of prohibition and corrective orders

Disclosure orders

42B When Commission may make disclosure orders

42C Terms of disclosure orders

Temporary investment adviser and broker banning orders

42D When Commission may make temporary banning orders for investment adviser or broker activities

42E Terms of temporary banning order for investment adviser and broker activities

Process for Commission's orders

42F Commission must follow steps before making orders

42G Commission may shorten steps for specified orders

42H Commission must give notice after making orders

General provisions

42I General provisions on Commission's orders

42J Offence of failing to comply with Commission's orders

Subpart 2—Court's enforcement powers

Injunctions

42K What Court may injunct

42L When Court may grant injunctions and interim injunctions

42M Undertaking as to damages not required by Commission

Corrective orders

42N When Court may grant corrective orders

42O Terms of corrective orders

Disclosure orders

42P When Court may make disclosure orders

42Q Terms of disclosure orders

Subpart 3—Civil remedies

Overview of civil remedies

42R Overview of civil remedies

42S What are civil remedy provisions

Pecuniary penalty orders and declarations of contravention

42T When Court may make pecuniary penalty orders and declarations of contravention

42U Purpose and effect of declarations of contravention

42V What declarations of contravention must state

42W Maximum amount of pecuniary penalty

42X Guidance for Court on how to determine gains made or losses avoided for purposes of maximum amount

42Y Considerations for Court in determining pecuniary penalty

42Z Court must order that recovery from pecuniary penalty be applied to Commission's actual costs

Compensatory orders

42ZA When Court may make compensatory orders

42ZB Terms of compensatory orders

Civil remedy order for investment advisers' or brokers' disclosure obligations

42ZC When Court may make civil remedy order for investment advisers' or brokers' disclosure obligations

42ZD Terms of civil remedy order for investment advisers' or brokers' disclosure obligations

Other civil remedy orders

42ZE When Court may make other civil remedy orders

42ZF Terms of other civil remedy orders

Interrelationship of civil remedies

42ZG More than 1 civil remedy order may be made for same conduct

42ZH Only 1 pecuniary penalty order may be made for same conduct

General

42ZI Standard of proof for civil remedies

42ZJ Time limit for applying for civil remedies

Subpart 4—Criminal offences and penalties

Penalties for offences

43 Penalties for failing to comply with Part 1

43A Penalties for failing to comply with Part 2

43B Penalties for failing to comply with Part 2B

43C Penalties for failing to comply with Part 3

43D Penalties for failing to comply with Part 4

43E Penalties for failing to comply with this Part

Subpart 5—Other Court orders

Management bans

43F When Court may make management banning orders

43G Terms of management banning orders

43H Offence of contravening management banning order

43I Persons automatically banned from management

43J Only one management ban may be made for same conduct

Investment adviser or broker bans

43K When Court may make banning orders for investment adviser or broker activities

43L Terms of investment adviser or broker banning orders

43M Offence of contravening investment adviser or broker banning order

43N Persons automatically banned from investment adviser or broker activities

43O General provisions for bans and banning orders

Orders to preserve assets to satisfy claims

43P When Court may prohibit payment or transfer of money, securities, or other property

43Q What orders may be made

43R Interim orders

43S Relationship with other law

43T Offence

Subpart 6—General

43U Time for laying information for summary offences

43V Evidence not otherwise admissible

43W Court may order payment of Commission's costs

43X Orders to secure compliance

43Y Giving notice of applications for Court orders

43Z General provisions as to Court's orders

43ZA Persons entitled to appear before Court

43ZB Knowledge of matters presumed if employee or agent knows matters

43ZC No pecuniary penalty and fine for same conduct

Amendments to exemption and regulation empowering provisions

13 New sections 48 to 49F and heading substituted

Exemptions granted and removed by Commission

48 Exemptions granted by Commission

48A Commission must notify reasons for exemption

48B Commission may vary or revoke exemption

48C Commission may designate persons as not exempt from disclosure obligations

48D Requirements for Commission for designations of persons as not exempt

Regulations

48E Regulations requiring continuous disclosure by public issuers

48F Requirements for regulations replacing continuous disclosure listing rules

48G Ongoing requirements for continuous disclosure regulations

49 Regulations concerning directors' and officers' disclosure obligations

49A Regulations concerning substantial holding disclosure

49B Regulations concerning dealing in futures contracts

49C Regulations concerning investment advisers and brokers

49D Other regulations

49E Breach of exemption conditions

49F Regulations or exemptions in respect of specified overseas jurisdictions

Miscellaneous

14 Related amendments

15 Transitional provisions relating to new subpart 3 of Part 2 of principal Act

16 Transitional provision for existing offences and contravention

Schedule
Amendments related to Securities Markets Act 1988

Reprint notes

The Parliament of New Zealand enacts as follows:

New Zealand Legislation: Acts

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Securities Markets Amendment Act 2006 No 47 (as at 29 February 2008), Public Act

Securities Markets Amendment Act 2006

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