Stricter disclosure details

The Cabinet yesterday approved a tougher disclosure requirement for finance companies wishing to go into moratoria and for those already operating under such arrangements.

Justice Minister Simon Power said regulations would require companies proposing moratoria to give investors tailored disclosure documents.

"They also require companies already in moratorium to report their progress to investors."

The new regulations, which come into effect at the end of January, also mean investors will be able to vote for the appointment of a receiver should a finance company already in moratorium fail to meet its obligations.

"It is vitally important that investors understand moratorium proposals and compare them with the alternatives, such as receivership," Power said.

Hanover investors will vote tomorrow on whether to accept Allied Farmers' debt for equity proposal or continue with the current moratoria.

They have been told by the company's directors and independent expert Grant Samuel the company is unlikely to meet its future repayment obligations and receivership is likely if the Allied offer does not proceed.

Investors do not have the option of putting the company into receivership at the vote.