Finance authority revamps advice after feedback

New Zealand's investment watchdog has revamped its advice on how the finance industry should present offer documents to the public after receiving heavy criticism for being too prescriptive.

The Financial Markets Authority this week released a second draft guidance note on disclosure for investment statements and prospectuses after receiving more than 60 responses to its January note.

Sue Brown, FMA head of primary regulatory operations, said one of the key themes from the feedback was concern that the guidance was creating new legal requirements.

"We are not trying to change the law. We are looking to help issuers comply with the existing law."

The FMA was also criticised for requirements that would have added length to the documents which are already considered too long by many.

Brown said the new guidance made it clear the FMA was not providing a checklist which needed to be adhered to, but a desire to see companies put anything that was considered to be material to the offer into the documents.

It had also softened its stance on using images and branding in the first few pages of the document. "What we want to see overall is documents that are accessible to investors."

Brown said the collapse of the finance company sector had bought offer documents and their contents into sharp focus.

The guidance note had also been spurred by the FMA's experience after taking over pre-registration checks for the documents from the Ministry of Economic Development.

"We have seen some documents that have a number of issues, they are far too long, are very text-dense or the key information has been buried at the back."

In some cases, the risks to investors had not been spelled out clearly enough, Brown said.

Law firm Chapman Tripp, which was one of the submitters, welcomed the changes.

"[It] ... shows that the FMA has taken on board the criticisms made of its first effort," a statement said.

"As this is the first significant consultation process that the new regulator has run, it was always going to be something of a test case. A failure to listen may have undermined market confidence in the FMA - but it has now successfully dodged that bullet."

The industry has until May to provide feedback on the new guidance before it is finalised at the end of May. The guidance is expected to come into force from June 1 for new documents and new documents by continuous issuers will need to comply by January 2013.