New Securities Law for Investment Advisors and Market Participants
Printed from : www.newsecuritieslaw.govt.nz//overview/holder-disclosure/index..php
24th November 2009

Overview

Substantial security holder disclosure

The aim of substantial security holder disclosure is to promote an informed market, and deter insider conduct, market manipulation, and secret dealing in potential takeover bids, by ensuring that all market participants have information about trading by persons who control or influence significant voting rights in a public issuer.

The basic features of this law remain the same. Disclosure must be made when:

  • a person becomes a substantial security holder (at the 5% threshold);
  • whenever a shareholding changes by 1%;
  • when there is a change in the nature of any relevant interest held by a substantial security holder; and
  • when a person ceases to be a substantial security holder.

However, there have been some important changes. These include-

  • a person becomes a substantial security holder by having a relevant interest in 5% of the listed securities in any class (rather than 5% of the total number of voting securities of an issuer); and
  • disclosure applies to listed voting securities only, not to unlisted securities; but
  • the Securities Commission can require any person to disclose the nature and extent of any relevant interests in securities of a public issuer, including in unlisted and non-voting securities.

The forms to be used for substantial security holder disclosure have been re-designed to simplify disclosure and to promote electronic disclosure of holdings.

Failure to comply with substantial security holder obligations will be a criminal offence, subject to a fine of up to $30,000. Civil penalties of up to $1 million can be imposed by the Court, which can also make a range of orders relating to any holding of securities, including orders to forfeit or dispose of securities.

The Commission gains new administrative powers to prohibit substantial security holder notices or to require them to be corrected.

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