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Securities Disclosure Bill (Consistent) (Sections 6, 27(1)) [2009] NZBORARp 1 (28 January 2009)

Last Updated: 23 April 2020

Securities Disclosure Bill

Note - the name of the Securities Disclosure Bill was changed to the Securities Disclosure and Financial Advisers Amendment Bill prior to introduction.

28 January 2009

Attorney-General

LEGAL ADVICE

CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990: SECURITIES DISCLOSURE BILL

1. We have considered whether the Securities Disclosure Bill (PCO 13557/3.0) ('the Bill') is consistent with the New Zealand Bill of Rights Act 1990 ('the Bill of Rights Act'). We understand that the Bill is likely to be considered by the Cabinet Business Committee ('CBC') at its meeting on Monday, 2 February 2009.

2. We also understand the Bill may be subject to further minor changes before it is submitted to CBC. We will provide you with further advice should this be necessary.

The Bill

3. The Bill proposes to amend the Securities Act 1978 (the 'Act').

4. The Bill responds to the current international financial crisis by removing unnecessary impediments to capital raising, while ensuring the timely disclosure of relevant information to prospective investors, which is the objective of the Act.

5. To that end, the Bill proposes to provide for the use and regulation of a simplified disclosure prospectus. This new type of prospectus will, in connection with regulations to be made under existing regulation-making powers, enable stock exchange listed issuers to offer certain debt and equity securities without the unnecessary duplication of information that they have publicly disclosed under their continuous disclosure obligations.

6. The Bill proposes that simplified disclosure prospectuses will be sent to investors instead of an investment statement and that all prospectus amendments will be sent to investors before subscription.

7. The Bill also provides the Securities Commission with additional powers to ensure that these prospectuses are used only by appropriate issuers and that potential investors will have sufficient time to consider adverse information before subscribing.

8. The Bill further proposes to improve the workability of rules for exempt persons and people deemed by the Act not to be members of the public, for whom disclosure under the Act is not required.

9. Finally, the Bill proposes an amendment to the Financial Advisers Act 2008 to correct an error made in the assent version of the Act.

Potential issue under section 27(1) BORA (right to natural justice)

10. Section 27(1) of the Bill of Rights Act provides that every person whose interests are affected by a decision by a public authority has the right to the observance of the principles of natural justice. One of the fundamental principles of natural justice is the right to be heard.

11. Clause 11 of the Bill proposes new sections 44AC (Notices and submissions concerning extension orders) and 44AD (Limited notice and submissions for urgent extension orders). Section 44AC enables the Securities Commission to make an extension order, inter alia, after giving the issuer of the prospectus at least 3 days' written notice, and giving the issuer an opportunity to make a written submission within that notice period. Section 44AD allows the Commission, if it thinks it is necessary or desirable in the public interest for an extension order to be made more urgently than section 44AC permits, to give less than 3 days' notice before it makes the order. In this case, the notice and submissions may be given orally.

12. We have considered whether the notice periods within which the issuer may make submissions pursuant to sections 44AC and 44AD limit the right of the issuer to be heard to a degree that it raises a prima facie issue of inconsistency under section 27(1) of the Bill of Rights Act.

13. The proposed section 44AC includes the words 'at least'. Therefore 3 days is the minimum notice requirement and the Commission has a discretion to give a longer notice period. This enables the Commission under section 6 of the Bill of Rights Act to apply section 44AC consistently with section 27(1) of that Act. Where in an individual case the notice period would appear to be too short to give the issuer an adequate right to be heard, the Commission would be required to grant the issuer a longer notice period.

14. Section 44AD will only be invoked if it is necessary or desirable in the public interest that an extension order be made more urgently than section 44AC permits. This section proposes a test with a high threshold which will only be met in limited circumstances, and the Commission will have a discretion to provide a longer notice period in order to be consistent with section 27(1) of the Bill of Rights Act. Like section 44AC, section 44AD provides the Commission with a discretionary power that must be exercised consistently with section

27(1).

15. We have concluded that sections 44AC and 44AD do not appear to raise an issue under section 27(1) of the Bill of Rights Act.

Conclusion

16. We have concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act.

Melanie Webb

Acting Chief Legal Counsel

Office of Legal Counsel

Benesia Smith

Acting General Manager

Public Law

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a

report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Securities Disclosure Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.