On 28 August 2013 the Financial Markets Conduct Bill had its Third Reading in Parliament, marking the end of this stage of the reform of New Zealand's securities laws. For procedural reasons the Bill was divided into two (the main body of the legislation, and a separate Bill with the various amendments to other legislation) and these are expected to receive the Royal Assent and become law in the week beginning 2 September 2013. As we have explained in our previous updates, the new legislation will replace the Securities Act, Securities Markets Act, Superannuation Schemes Act 1989, Securities Transfers Act 1991, and the Unit Trusts Act 1960, together with making substantial amendments to numerous pieces of legislation including the KiwiSaver Act 2006 and the Financial Advisers Act 2008.

The Bill's passage through Parliament, however, was only ever part of the process. Much of the necessary detail was always intended to be set out in regulations, and the key information for market participants was the content of the regulations and the commencement date for the new regime. The Minister of Commerce has announced that the new legislation will come into effect in a two stage process, on 1 April and 1 December next year. The decision to delay full implementation to provide for further consultation, particularly on disclosure, is welcome. Adopting a two stage process of implementation, with some parts cherry-picked for earlier commencement, may present technical problems. Final stage amendments to the Bill in an additional Supplementary Order Paper appear to have dealt with these, but further detail or guidance may be required.
 
On 1 April 2014, according to the Minister's statement, we can expect to see the following key parts of the new legislation come into force:
  • The fair dealing provisions
  • An exemption from disclosure requirements for employee share purchase schemes
  • Initial licensing provisions for some aspects of the licensing regime, including crowd-funding.
On 1 December 2014 we can expect to see the remainder coming into force, including the disclosure and licensing regimes, and the new registers for offers of financial products and managed investment schemes. There will be a transitional period, lasting for one or two years depending on the type of issuer, where issuers can choose whether to continue offering under the existing Securities Act or move to the new requirements.
 
There is still a large amount of detail to be settled. The financial community had been primed to expect draft regulations in October 2013, but in addition to this the decision to divide the implementation of the new regime into two phases may mean additional points of detail to consider. Buddle Findlay will continue to keep you updated as matters progress, through seminars and client updates.