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Securities Legislation Bill under fire

By Rob Hosking

Thursday 17th March 2005

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The Securities Legislation Bill has come under sustained criticism from the investment sector as being too wide ranging and draconian to be workable.

New Zealand Funds Management executives told MPs on Parliaments' commerce select committee that the bill's provisions require automatic disqualification for directors and management of a company which breaches the rules.

"It's the automatic nature which is of concern - someone could fail to sign a statement and be out of work for five years," NZFM's in-house counsel, Mark Hopkins, told the committee.

"We have no problem with the principle of a director ban but it should be openly decided by a court of law."

Banks and other groups have criticised the bill as it would require an investment disclosure statement to be mailed out to someone who wanted to put money in a term deposit.

And the NZX chief executive Mark Weldon says the government will need to restructure the Securities Commission if it is to implement the new laws.

"This [bill] crates the need for a far greater degree of supervision, a greater degree of knowledge, and a far greater degree of oversight than the current law, and the structure of the commission needs to be looked at."

The commission currently has only one full time commission member, and a group of part time commissioners. That is unlikely to be adequate any longer.
That is not because of the size of the market, he said.

NZX head of regulation Helen Campbell told MPs the disclosure rules go too far.
Some members "feel they can only say 'hello' and not much more before they have to provide a disclosure statement," she said.

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