Dated at Wellington this 12th day of December 2018.
Nick Kynoch,
General Counsel.
Statement of reasons
This notice comes into force on 17 December 2018 and is revoked on the close of 16 December 2023.
The notice exempts issuers from the disclosure and governance requirements in Parts 3 and 4 of the Financial Markets Conduct Act 2013 (the Act) in relation to offers of the same class as financial products that are quoted on ASX where the issuer has a secondary listing on a licensed market operated by NZX Limited.
This notice also provides that offers made in reliance on this notice are not regulated offers under the Act. This means that legislative requirements that apply to regulated offers will not apply (unless there is some other reason why they apply). Any other financial markets conduct obligations that the exempt issuer may have, including obligations under Part 2 of the Act, are not affected. Additionally, exempt issuers offering financial products in Australia must comply with the Corporations Act 2001 (Aust) in respect of those offers.
Holders of an exempt issuer’s financial products are also exempt where they are offering those products by way of sale. Those offerors may otherwise have been required to comply with the disclosure requirements because of Part 2 of Schedule 1 of the Act, which requires disclosure under Part 3 of the Act in certain circumstances.
The exemptions are similar to an exclusion relating to same class offers of quoted financial products in clause 19 of Schedule 1 of the Act (the Schedule 1 exclusion). However, the exemptions go further than the Schedule 1 exclusion to cover offers of the same class as ASX-quoted products where the issuer has a secondary listing on a licensed market operated by NZX Limited.
The exemptions are subject to conditions that are consistent, as far as practicable, with the requirements of clause 19 of Schedule 1 of the Act and clauses 19 to 22 and clause 46 of Schedule 8 of the Financial Markets Conduct Regulations 2014 (which relate to the Schedule 1 exclusion). Modifications of these requirements recognise issuers’ compliance with Australian financial reporting and continuous disclosure obligations and require issuers to give notice of a same class offer to ASX and NZX Limited before an offer for issue or sale is made.
Exempt issuers will be FMC reporting entities because they will be listed issuers (see section 451 of the Act) and may be able to rely on the exemptions in the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2016 in respect of their financial reporting and audit obligations under Part 7 of the Act.
The Financial Markets Authority (the FMA), after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because—
the exemptions apply only to offers of financial products of the same class as products quoted on ASX where the exempt issuer has a secondary listing on a market operated by NZX Limited. This may attract ASX-listed issuers to seek a secondary listing on NZX, and in turn enable New Zealanders to participate in offers that might otherwise not be extended to investors in this country due to the cost of compliance; and
the exemptions recognise the general equivalence of the regulation of financial products offered in Australia and listed on ASX, namely,—
Australian laws require disclosure of information by listed issuers to an extent broadly equivalent with New Zealand law. In particular, where products are approved for trading on ASX they are subject to significant listing thresholds, ongoing disclosure, and corporate governance requirements:
the issuers are subject to financial reporting (including Australian generally accepted accounting principles) and audit standards that are broadly comparable to those in New Zealand:
Australian Securities and Investments Commission (ASIC) is an ordinary member of the International Organization of Securities Commissions (IOSCO) and a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. This means that the FMA will be able to obtain co-operation from ASIC if any compliance concerns arise in relation to the issuer; and
as such, the FMA is satisfied that the granting of the exemptions is desirable in order to promote the purposes of the Act. Specifically, it will promote confident and informed participation of businesses, investors, and consumers, facilitate the development of fair, efficient, and transparent financial markets, avoid unnecessary compliance costs, and promote innovation and flexibility in the financial markets; and
given that the exemptions will be limited to financial products of exempt issuers that are subject to regulatory oversight broadly equivalent to that of New Zealand and that have a secondary listing in New Zealand, the FMA is satisfied that the exemptions are not broader than is reasonably necessary to address the matters that gave rise to them.
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 14 December 2018.
This notice is administered by the Financial Markets Authority.