The Minister of Commerce and Consumer Affairs has announced changes to be made to the Financial Markets Conduct Regulations 2014 later this year, allowing issuers of certain financial products to make their annual reports available electronically rather than having to send copies (or alternative notices) as currently required by section 209 of the Companies Act 1993. You can get a copy of the Cabinet paper here.
An 'alternative process' is proposed, which will involve:
- Product holders elect to receive reports electronically: the issuer must send its product holders a notice at least once, asking them if they would like to receive annual reports (free of charge) either in hard copy or by email. This notice must include details of the issuer's website and can be sent electronically (if the product holder previously elected to receive electronic communications) or by the holder of the issuer's register. Product holders who do not respond will not be sent a copy of the annual report.
- Issuer publishes report on its website: the issuer must make its annual report available on its website for at least 5 years.
Once the amended regulations are in place:
- The alternative process will be mandatory for issuers of equity securities who are FMC Reporting Entities, who will be given a few months to comply. Currently, issuers with fewer than 50 shareholders are not FMC Reporting Entities.
- Other FMC Reporting Entities such as licensed supervisors, issuers of debt securities, banks and licensed insurers will have the option of adopting the alternative process.
The Government intends to consult on whether the alternative process should be available to managed investment schemes as well.
We applaud the Minister's move in this regard which can only be beneficial to both issuers and product holders.