Commerce Minister Craig Foss has introduced new regulations to keep a lid on low-ball offers for stocks, bonds and other securities starting from next month.
The regulations come into force from December 1 and will govern how unsolicited offers to investors can be made, including stricter disclosure requirements and imposing minimum offer and cancellation periods, Foss said in a statement. The new rules come a year-and-a-half after Parliament's commerce committee recommended granting the Financial Markets Authority powers to capture low-ball offers.
"Predatory or low-ball offers damage the health of our capital markets," Foss said. "The new regulations govern how unsolicited offers can be made and protect shareholders from misleading offers."
Deeply discounted bids raised the ire of regulators after Christchurch businessman Bernard Whimp embarked on a spree of offers below market pricing. Whimp has since retired from making the bids, though Melbourne-based Stock & Share Trading has continued the practice.
The regulations would cover unsolicited offers made to at least 20 investors, and would force the bidder to notify the securities issuer of the offer, including marking or fair estimate pricing, the material terms of the bid, any warnings issued by the FMA and the sellers right to cancel the agreement.
The FMA will be able to make orders to comply with the regulations, with up to a $30,000 fine for breaching the rules.