Note: the following statement of reasons should be read in conjunction with the statement(s) of reasons appended to:

• Securities Act (Overseas Companies) Exemption Amendment Notice 2013

This notice, which comes into force on 1 April 2013 and is revoked on the close of 30 September 2017, replaces the Securities Act (Overseas Companies) Exemption Notice 2002 (the 2002 notice). The notice exempts, subject to conditions, overseas companies who issue quoted securities to existing security holders in New Zealand from—

• the requirements in section 33(2) of the Securities Act 1978 (the Act) that no debt security may be offered to the public unless the issuer has appointed a trustee and registered a signed trust deed that complies with the Act and the Securities Regulations 2009 (the regulations):

• the requirements in section 33(3) of the Act that no participatory security may be offered to the public unless the issuer has appointed a statutory supervisor and registered a deed of participation that complies with the Act and the regulations:

• the requirements of section 37 of the Act that securities offered to the public for subscription may not be allotted unless at the time of the subscription for the security there was a registered prospectus in relation to the security:

• the requirements in section 37A of the Act in relation to the provision of investment statements, the prohibition on false or misleading statements in investment statements and prospectuses, and the date of allotment:

• the requirements of section 38A of the Act in relation to statements in advertisements by experts:

• the requirements in sections 51 to 54B of the Act in relation to registers of securities, accounting records, financial statements, security certificates, and the disclosure of information to investors:

• the regulations (except regulation 23):

The provisions of the 2002 notice are carried forward with the following amendments:

• Austria is included in the definition of specified exchange as an additional jurisdiction:

• the following types of offers are permitted:

  • an offer of unquoted interim securities, in consideration for the acquisition of the quoted securities of another overseas issuer, where those interim securities will be exchanged on allotment for securities that are quoted:

  • an offer of unquoted securities where it is a term of the offer that those securities will be quoted on a specified exchange at the time of allotment:

• the conditions of the notice are amended so that all exemptions are conditional on the offer being made in compliance with the laws and other requirements of the jurisdiction in which the relevant securities are quoted:

• references to the Securities Regulations 1983 are replaced with equivalent references to the Securities Regulations 2009:

• the name of one of the additional overseas companies in the Schedule is updated.

The Financial Markets Authority, after satisfying itself as to the matters set out in section 70B(2) of the Act, considers it appropriate to grant the exemptions because—

• this notice applies only to offers made to people who already hold shares in overseas companies listed on exchanges in relatively familiar jurisdictions, and who can be taken to have assumed the degree of risk that might accompany overseas investment. This notice cannot be used for an offer of securities to the general public. It allows New Zealanders who are shareholders in overseas companies to participate in rights offers and offers arising from reconstructions that might otherwise not be extended to shareholders in this country due to the cost of compliance:

• the notice recognises the adequacy of the regulation of securities offerings in certain overseas jurisdictions. Regulation in such jurisdictions generally has the following characteristics:

  • the laws of the jurisdiction require disclosure of information for investors to an extent broadly comparable with New Zealand securities law:

  • the regulatory body in the jurisdiction 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:

  • the jurisdiction is a member of the World Federation of Exchanges and the Federation of European Securities Exchanges:

• it is consistent with the policy of the notice for the exemption for offers of shares quoted on a specified exchange as consideration for the acquisition or cancellation of shares in another overseas company also to apply to offers of unquoted securities where subscribers will receive securities which are quoted on a specified overseas exchange in exchange for those securities on allotment:

• amending the notice so that the exemptions apply to offers of securities where it is a term of the offer that those securities will be quoted at the time of allotment is appropriate in view of the different process for quotation in some overseas jurisdictions which means that a listing application cannot always be made for securities before an offer is made:

• additional conditions that an offer of overseas quoted securities to existing security holders complies with the laws of the jurisdiction where the exchange on which the securities are quoted is situated and that the exemptions do not apply to securities that can be converted into or exchanged for the securities of another issuer are consistent with the policy of the notice that the overseas company who issued the securities is subject to an equivalent statutory regime under the laws of a reputable home jurisdiction:

• the exemptions under the notice have been in place a number of years and the policy reasons for the notice remain valid and relevant. Consultation with market participants demonstrates continued reliance on these exemptions:

• in consideration of the matters noted above, the Financial Markets Authority considers that the exemptions will not cause significant detriment to subscribers, and that they are not broader than reasonably necessary to address the matters that gave rise to the exemptions.

Note: the preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to:

• Securities Act (Overseas Companies) Exemption Amendment Notice 2013