Financial Markets Authority
NZBA supports the Financial Markets Authority (FMA) promoting the confident and informed participation of business, investors and consumer in the financial markets, and consultation on effective disclosure in support of FMA’s purpose.
FMA has indicated to NZBA that the objective behind the draft guidance is to:
- provide suggestions as to how to address the disclosure requirements prescribed by law, so as to improve the accessibility of disclosure for investors; and
- encourage issuers and directors to consider the entirety of disclosure within an offer document, rather than take a ‘tick box’ approach to disclosure.
NZBA further understands that FMA is concerned about specific issues in the market and wants to address identified disclosure deficiencies in some sectors. NZBA’s member banks view disclosure seriously and are committed to producing quality disclosure documents. NZBA is therefore in favour of raising the quality of disclosure among sectors where it is deficient.
However, the current draft guidance is problematic. If finalised in its current form it will:
- create uncertainty about its legal status and therefore about how to use it;
- result in longer disclosure documents containing large amounts of immaterial information, which will confuse investors, contrary to FMA’s objectives; and
- lead to significant compliance costs among issuers, with a particular impact on smaller issuers.
The framing of the guidance as a set of new legal requirements creates significant issues. Further to this, there are technical problems with the draft guidance, which will cause the disclosure of immaterial matters.