The Financial Markets (Regulators and KiwiSaver) Bill has now been through the select committee stage and is expected to complete its passage through Parliament by the end of March.
In the Commerce Select Committee's report released on 1 March, the committee has recommended that the Bill be passed, but with some notable amendments.
The select committee received 33 submissions on the Bill and it is pleasing to see that the committee has addressed some of the key concerns expressed by Bell Gully (click here to read Bell Gully's submissions) and other submitters, particularly in relation to:
- the FMA's power to exercise a person's right of action;
- the proposal to change from a pre-vetting to a post-registration prospectus consideration period for securities offers;
- the proposed changes to the Securities Markets Act regarding registered exchanges and securities markets; and
- the allocation of functions between the manager and the trustee under the proposed amendments to the KiwiSaver Act and the need for appropriate transitional arrangements.
The select committee's key recommendations include:
- retaining the power of the FMA to exercise a person's right of action, but with several changes to the Bill to fine-tune the power and strengthen the rights of individuals. In particular, individual claimants (but not corporate claimants) will be now free to opt-out and take their own action;
- retaining the proposal to introduce an Australian style "consideration period" in connection with the registration of a prospectus, but with various amendments to improve its workability (including a statutory exemption from the consideration period for continuous issuers);
- the withdrawal of a number of proposals with respect to regulation of registered exchanges (e.g. market integrity regulations and the establishment of a statutory Securities Markets Rulings Panel) which are to be considered further as part of the review of securities law; and
- expanding and consolidating levy funding provisions for the FMA to ensure that everyone who benefits from the FMA's activities and oversight contributes to the FMA's funding (with provision for different levies to be imposed for different classes of person).
For further details on the committee's key recommendations see our earlier client update The Financial Markets Authority is a step closer.
New provisions for "low ball" unsolicited offers
The select committee has introduced new provisions in the Bill that target unsolicited offers to purchase securities. These measures were being considered as part of the Ministry of Economic Development's review of securities law but have now been brought forward as part of the Bill in light of recent media attention to the practice on making "low-ball" offers to holders of publicly listed securities.
KiwiSaver Act amendments
The select committee has recommended numerous changes to the proposed amendments to the KiwiSaver Act 2006 in Part 7 of the Bill to improve the workability of provisions, and to clarify the roles and responsibilities of managers and trustees. The main changes involve shifting responsibility for various functions from the trustee to the manager to reflect the manager's primary role in the marketing and operation of non-restricted KiwiSaver schemes and regulatory compliance, and making various transitional provisions to give the schemes time to arrange compliance with the new regime.
Later start date for FMA
The FMA was expected to be operational by 1 April 2011, but in recent Government announcements the date now being given for the establishment of the FMA is May 2011.
The Government has already appointed (subject to the passage of the Bill) Simon Allen as the chair and Sean Hughes as the chief executive of the FMA. Further board appointments are expected to be made by the end of March.