New rules will streamline transtasman capital flow

New Zealand companies will benefit from cheaper, easier access to Australia's capital markets and investors will enjoy a wider range of investment opportunities under new regulations likely to come into force in April.

This week, regulators on both sides of the Tasman released draft regulations which effectively mean the offer documents produced by the issuers of securities such as shares, debt securities or debentures in their home country will be good for both jurisdictions.

Issuers offering investments in both countries now must file separate sets of documents with the Companies Office in New Zealand and the Australian Securities and Investments Commission (ASIC).

Chairwoman of the New Zealand Securities Commission Jane Diplock said the proposal was "a streamlined process for offering securities in both markets at the same time".

The aim was to promote investment in Australia and New Zealand, while increasing capital market competition in both countries and giving investors more choice.

"Over time, the mutual recognition of securities offerings will give a substantial boost to investment and capital flows across the Tasman in both directions."

Bell Gully partner Brynn Gilbertson said the proposals were an important development in the co-ordination of transtasman business law and a "significant" expansion of capital market access.

The cost to New Zealand issuers of producing offer documents for the Australian regulator at present was likely to exceed $50,000.

Under the new proposals, issuers will be subject to the regulations in their home jurisdiction and their offer documents will need to include certain additional information prescribed by the regulator in the other jurisdiction.

The Securities Commission and ASIC will have supervisory powers in both countries for transtasman offers originating in their home jurisdictions.

Diplock said the regime recognised "the fundamental strengths of existing securities regulation in both countries".

While New Zealand still had work to do to strengthen its regulatory framework, both countries were comfortable enough with each other's regulatory standards and market practices to take the next step to coordinate their frameworks around transtasman capital raising.

Less red tape

* New regulations will slash the cost of raising capital across the Tasman from April on.

* The Securities Commission and its Australian counterpart ASIC have reached an agreement on "mutual recognition of securities offerings".

* Investors will also benefit from a wider range of investment opportunities.