INDEPENDENT NEWS

Exemptions relating to deposit guarantee scheme

Published: Fri 17 Oct 2008 05:10 PM
News release
17 October 2008
Commission exemptions relating to the deposit guarantee scheme
The Securities Commission today decided to grant exemptions to facilitate disclosure by issuers about the New Zealand deposit guarantee scheme.
“These exemptions encourage simple and consistent disclosure so that investors can easily see which institutions are included in the scheme,” Commission General Counsel Liam Mason says.
The exemptions require statements about the Crown guarantee under the scheme to be in a standard form. Financial institutions will be able to refer investors to the Treasury website to obtain further information about the deposit guarantee scheme.
The exemptions prohibit issuers from making any statements about the scheme that are inconsistent with information provided by Treasury. This aims to prevent misleading or confusing information about the scheme being published by issuers.
The exemptions will come into force once notified in the NZ Gazette on Monday 20 October 2008.
A copy of the final form of the exemption notice is available on the Commission’s website at www.seccom.govt.nz.
Background
The Securities Commission has decided to grant exemptions to facilitate disclosure by financial institutions that are parties to a Crown guarantee under the New Zealand deposit guarantee scheme announced on 12 October 2008.
These exemptions will encourage consistent and straightforward disclosure to inform investors about the application of the guarantee scheme.
The exemptions will relieve financial institutions that are accepted under the scheme from the usual detailed requirements about disclosure of guarantees and instead require financial institutions to use a standard form of statement to alert investors to the fact that the guarantee applies in respect of an offer of securities. The standard form statement is:
“[name of issuer] has a guarantee under the New Zealand deposit guarantee scheme”.
Issuers will also be able to refer readers to further information about the scheme published on the Treasury website, and will have to add other information if this is necessary to avoid misleading or confusing investors about the application of the scheme.
The exemptions will also relieve issuers from the need to make immediate amendments to prospectuses and investment statements, in order to avoid unnecessary compliance costs.
The exemption notice contains exemptions, subject to conditions, relating to the following provisions in the Securities Act and the Securities Regulations:
• regulation 9, concerning the consistency of advertisements with registered prospectuses and disclosure statements
• regulation 11, concerning references to guarantees in advertisements
• regulation 17, concerning certificates in respect of advertisements
• clause 4(2) of Schedule 2 of the Regulations, concerning disclosure about guarantees in registered prospectuses for debt securities
• regulation 7A(4) and clause 10 of Schedule 3D of the Regulations, concerning the form and content of disclosure about guarantees in investment statements
section 54B(1) of the Act and clause 20 of Schedule 3D of the Regulations in relation to making available the financial statements of the Crown.
The exemptions in relation to the investment statement will allow issuers to include information about the deposit guarantee scheme in an insert to accompany investment statements distributed after an institution has been accepted into the scheme.
The exemptions relating to prospectus and advertising content will be conditional on issuers delivering to the Registrar a memorandum of amendments to update their prospectus within five working days of acceptance into the scheme. Issuers will be able to alert investors about the application of the scheme as soon as notice of an issuer’s acceptance is made public by the Government, so long as they use the standard wording to describe the guarantee scheme.
The exemption also makes consequential amendments to the Commission’s exemptions for TV and radio advertising and an exemption for banks so that those exemptions can still be used by issuers, but requiring statements about the deposit guarantee scheme to comply with the new exemption.
ENDS

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