Statement of reasons

This notice, which comes into force on the day after the date of its notification in the Gazette, amends the Securities Act (Short Form Prospectus) Exemption Notice 2002 (the principal notice). The amendment adds an exemption to the principal notice, exempting issuers from section 34(2)(a) of the Securities Act 1978 (the requirement that a registered prospectus must not be distributed unless it is accompanied by financial statements registered under the Financial Reporting Act 1993) in respect of a registered prospectus that complies with either

• regulation 4 of the Securities Regulations 1983; or

• the combined effect of regulation 4 of the Securities Regulations 1983 and an exemption and condition of the principal notice.

The Securities Commission considers that the amendment is appropriate for the following reasons:

• regulation 4 of the Securities Regulations 1983 allows issuers to make rights offers to existing security holders using a short form prospectus. This reduces costs for issuers:

• the short form prospectus can, under regulation 4, omit financial statements of the issuer if these have already been sent to security holders. However, section 34(2)(a) of the Securities Act 1978 conflicts with this, requiring financial statements to accompany every prospectus:

• the exemption relieves issuers using short form prospectuses from the requirements of section 34(2)(a), allowing the purpose of the short form prospectus to be achieved:

• shareholders’ entitlement to receive a copy of the most recent financial statements on request remains unchanged.