Dated at Wellington this 22nd day of March 2011.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
Note: The following statement of reasons should be read in conjunction with the statement(s) of reasons appended to the:
This notice, which comes into force on the day after its notification in the Gazette and expires on 30 September 2012, replaces the Securities Act (Employee Share Purchase Schemes—Unlisted Companies) Exemption Notice 2005 (the 2005 notice).
This notice is on substantially the same terms as the 2005 notice. However, the notice relates to the Securities Regulations 2009 (rather than the Securities Regulations 1983).
This notice exempts unlisted companies (subject to conditions) in respect of equity securities issued by those companies that are offered under employee share purchase schemes from section 37A(1)(c) of the Securities Act 1978 (the Act) and from various prospectus content requirements in Schedule 1 of the Securities Regulations 2009 (the 2009 regulations). The effect is to allow unlisted companies to use an evergreen short form prospectus.
Consequential changes are made to clause 14 of the Securities Act (Employee Share Purchase Schemes—Listed Companies) Exemption Notice 2011 (which relates to transitional matters) to ensure that it is consistent with this notice and other class notices that have been reviewed in light of the 2009 regulations.
The Securities Commission considers it appropriate to grant the exemptions because—
the Commission recognises the desirability of encouraging employee participation in a company that an employee works for through share ownership. The compliance costs involved in registering a full prospectus every year could be prohibitive for an unlisted company operating an ongoing employee share purchase scheme. The exemptions in this notice strike a balance between lowering compliance costs for companies offering securities under employee share purchase schemes and providing sufficient information for employees to make informed decisions about participation in these schemes:
the same basic level of disclosure is required as for listed companies, but there are conditions particularly relevant to unlisted companies such as the provision of a repurchase facility where there is no other established market for the securities. Compliance costs are reduced because some disclosures can be made in the financial statements and by additional information in the annual report. This saves the need to prepare a new disclosure document, but provides investors with relevant information:
the exemptions granted are not intended to allow employee share purchase schemes to be used as avenues for significant capital raising by companies on the basis of limited disclosure. For this reason the number of shares that can be allotted is limited:
issuers may provide eligible persons with personalised offer documents. This recognises that the details of the offers may differ from one employee to the next, particularly in respect of schemes which provide performance based incentives:
the transitional provisions reduce the compliance costs resulting from the regulatory changes for issuers that have previously relied on the 2005 notice. These issuers may continue to rely on the 2005 notice in respect of securities offered under an existing registered prospectus unless the prospectus needs to be amended to prevent it from being false or misleading in a material particular (see section 37A(1)(b) of the Act).
Note: The preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to the: