Capital Markets Reforms

This morning, Commerce Minister Andrew Bayly announced that Government is progressing a package of reforms to strengthen New Zealand’s Capital Markets.

?As part of the announcement, he said that MBIE has plans to reform a number of specific elements to address New Zealand’s long-term productivity challenge and enhance economic growth by strengthening our capital markets.

?The reforms will progress in stages. ?Phase 1 is described in the announcements as occurring now, and Phase 2 will commence in 2025.

?Phase 1

?The Phase 1 reforms comprise:

• ?Amendments to the requirements for companies raising equity capital through an IPO - to make the provision of prospective financial information (projections / forecasts) voluntary. ?The goal here is better alignment with market practice in Australia.
• Consultation on proposals for:

o??? adjustments to the climate-related disclosures regime; and

o??? changes to enable KiwiSaver providers to increase investment in private assets.

?Phase 2

?Phase 2 will begin in 2025, and will include work to consider changes to:

• takeovers law as recommended by the Takeovers Panel;
• product disclosure requirements related to equity and debt offers; and
• liability settings for auditors, and for directors of listed companies in relation to their continuous disclosure obligations.?

?More detail will follow as the consultation documents become available.? However, at first glance, it seems that the announcements (and the Cabinet decisions on which they are based) stem from the Capital Markets 2029 report from a steering committee headed by Martin Stearne.? The steering committee generated 42 recommendations to unlock stronger capital markets and canvassed topics such as KiwiSaver, regulation, public sector assets and infrastructure, promotion of public markets, tax, new products and the impact of technology.

This year, particularly, has been a brutal one for local businesses seeking growth capital.? As a result, changes to the regulatory settings that:

• enable companies to access the public capital market – including reducing the barriers to listing and encourage companies to remain listed;
• grow the private capital ecosystem in New Zealand;
• provide greater scope for the use the capital markets to fund infrastructure,

must be welcomed.

For more information, when it becomes available, please see: https://stephenlayburn.co.nz/capital-markets-reforms