Join the disclosure disclaimer discussion

After recently incurring the wrath of a legal practitioner I think it's safer to begin this blog with a disclaimer:"Readers are advised to seek specific advice from an appropriately qualified professional before undertaking any action in reliance on the contents of this discussion document."

Although this sounds like a brand-awareness campaign for lawyers, this responsibility-outsourcing device is actually to be found on page three of a Ministry of Economic Development (MED) document  laying out proposed changes to investment disclosure rules.

Don't try reading the entire MED discussion document in one sitting because, like most bureaucratic publications, it could turn your brain to mush. The MED is aware of this danger, ending its disclaimer with: "The Crown does not accept any responsibility, whether in contract, tort, equity, or otherwise, for any action taken, or reliance placed on, any part, or all, of the information in this document, or for any error or omission from this document."

That's quite a get-out clause for what is only a discussion document - most likely a government best practice standard inserted on legal advice in the interests of full disclosure.

See what I mean about mush?

But if you can push through the jargon barrier the MED paper contains some sensible revisions of how to disclose relevant information in investment documents. The MED says one of its main aims is to make "disclosure in prospectuses more meaningful".

For instance, the MED suggests replacing the word 'interest' with 'returns' (meaning earnings but not capital) in prospectuses to make it easier for investors "to compare the returns advertised by different issuers for different products".

Regulation 20 is also getting a slight makeover with the insertion of the words 'or imply' after the word 'state' in the following sentence: "No registered prospectus or advertisement shall state that investment in the securities to which it relates is safe or free from risk".

(The final version of Reg 20 should have another tiny difference - the MED is proposing the replacement of the word 'shall' with 'must' in keeping with "modern drafting language".)

With 56 "issues" and 16 questions to consider anybody interested in responding to the MED disclosure proposals should get cracking. Deadline for submissions is May 8.

Send any questions to Ashley Tomlinson at the MED Competition, Trade and Investment Branch - don't ask me.

 

David Chaplin