Chief executive of the Financial Markets Authority says there has to be some element of buyer beware.

The boss of New Zealand's investment watchdog says he doesn't like "low-ball" share offers but won't be telling the Government to ban them because that would be going too far.

Several top executives including Vector chairman Michael Stiassny and Tower managing director Rob Flannagan have said the offers should be stopped after shareholders received offers to buy shares at a significant discount to what they trade at on the sharemarket.

But Sean Hughes, chief executive of the Financial Markets Authority, said there had to be some element of buyer beware.

"We can't stand over shareholders and say 'don't sell'. It's not the place of the regulator. That would be giving investment advice."


Hughes said it was also difficult to ban a practice in one class of assets such as shares and not in another such as property.

"There is nothing to stop homeowners from selling at a lower price if they need the money. The situation around low-ball offers is essentially an economic one."

The Government is in the process of tightening legislation around low-ball offers but changes, which are expected to come in by the end of this year, won't include a ban.

Commerce Minister Craig Foss said he did not believe the issue was around the sale of shares from one person to another.

"The problem is with the misleading techniques used during low-ball offers," Foss said.

"The regulations being developed will address this through greater disclosure requirements from the offerer, and stronger rights and remedies for shareholders."

The proposed changes include setting minimum information requirements including stating the market price or a fair estimate of the value of the shares, specifying a minimum offer period and cancellation period and setting out the rights for those approached with the offers.

But Tower boss Flannagan said he did not believe the proposed law changes would make a difference.


"Frankly I don't. The concern we have as a country is that financial literacy is low."

Flannagan said the low-ball offers, which are not illegal, took advantage of vulnerable shareholders

"We are particularly concerned because a lot of our shareholders are as a result of demutualisation."

He said many were elderly and relied on dividends to boost their income and in the present low-interest rate environment it was easy for many to see the offer as an easy cash boost.

Flannagan said Tower had tried to block Stock & Share Trading from applying for its register of shareholders but had to hand it over in the end. "There is a view out there that people who own shares should be astute enough to question the offer. But I don't think that is the case."

There are plans to give the Financial Markets Authority and companies the grounds to decline certain requests in regards to their share register as part of the Financial Markets Conduct Bill.

Hughes said it was important that registers were available but he said there needed to be more guidance around releasing the information for improper purposes and he was keen to talk to companies and the institute of directors about this issue.