ASIC RG 190 — ASIC Regulatory Guide – RG 190 Offering financial products in New Zealand and Australia under mutual recognition

Page 1 REGULATORY GUIDE 190 Offering financial products in New Zealand and Australia under mutual recognition July 2017 About this guide This is a guide for New Zealand and Australian issuers offering financial products or interests in managed or collective investment schemes in both countries. It explains what issuers have to do under the trans-Tasman mutual recognition scheme for offers of financial products. This is a joint guide published by the Australian Securities and Investments Commission (ASIC) and the New Zealand Financial Markets Authority (FMA). Note: From 27 July 2020, applications for relief should be submitted through the ASIC Regulatory Portal. For more information, see how you apply for relief. Page 2 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This version was issued in July 2017 and is based on legislation and regulations as at the date of issue. The note on the front page was inserted on 27 July 2020. Previous versions:  Superseded Regulatory Guide 190, issued 13 June 2008, reissued 21 January 2009, 17 March 2011, December 2014 and December 2016. Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Australian Corporations Act 2001 or the New Zealand Financial Markets Conduct Act 2013 and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 3 Contents A Overview .................................................................................................4 The mutual recognition scheme ..............................................................4 Requirements for issuers .........................................................................5 Role of regulators ....................................................................................6 How will ASIC, the NZCO and the FMA work together? .........................7 B What must New Zealand issuers do to make offers under the mutual recognition scheme? ................................................................8 Before making an offer (entry requirements) ...........................................8 While the offer is open (ongoing requirements).....................................11 Complying with the dispute resolution condition (ongoing requirements) .........................................................................................12 Ongoing notification requirements (New Zealand issuers) ....................13 What happens if an offering condition is breached? .............................14 What other Australian securities laws apply to a recognised offer? ......14 C What must Australian issuers do to make offers under the mutual recognition scheme? ..............................................................16 Before making an offer (entry requirements) .........................................16 While the offer is open (ongoing requirements).....................................19 Availability of dispute resolution in New Zealand (ongoing requirements) .........................................................................................19 Ongoing notification requirements (Australian issuers) .........................20 What happens if an offering condition is breached? .............................21 What other New Zealand financial products laws apply to a recognised offer? ...................................................................................21 Key terms .....................................................................................................23 Related information .....................................................................................24 Page 4 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 4 A Overview Key points The trans-Tasman mutual recognition scheme allows an issuer in Australia or New Zealand to offer certain financial products in both countries using one disclosure document prepared under regulation in its home country. Issuers who wish to operate under the scheme will be able to comply with minimal entry and ongoing requirements agreed to between the two countries and prescribed in each country’s law. The Australian Securities and Investments Commission (ASIC), the New Zealand Companies Office (NZCO) and the New Zealand Financial Markets Authority (FMA) have established arrangements for cooperation and information sharing between the authorities in administering the mutual recognition scheme. The mutual recognition scheme RG 190.1 The trans-Tasman mutual recognition scheme allows an issuer to offer specified financial products (as defined in RG 190.18 and RG 190.40) in both countries using one disclosure document prepared under the fundraising laws in its home country. RG 190.2 The aim of the scheme is to promote investment between Australia and New Zealand by removing unnecessary regulatory barriers to trans-Tasman financial product offerings and reducing the cost of capital raising in both Australia and New Zealand. At the same time the scheme maintains investor protection through appropriate disclosure and supervision of offerings. RG 190.3 The mutual recognition scheme is contained in the following law: (a) for New Zealand issuers wishing to extend an offer into the Australian market (a ‘recognised offer’)—Ch 8 of the Corporations Act 2001 of Australia (Australian Corporations Act) and the Corporations Regulations 2001 of Australia (Australian Corporations Regulations) (collectively, the Australian securities law); and (b) for Australian issuers wishing to extend an offer into the New Zealand market (a ‘recognised offer’)—Subpart 6 of Pt 9 of the Financial Markets Conduct Act 2013 of New Zealand (NZ FMC Act) and Pt 9 and Sch 25 of the Financial Markets Conduct Regulations 2014 of New Zealand (NZ FMC Regulations) (collectively, the NZ financial markets law). Page 5 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 5 RG 190.4 To help Australian and New Zealand issuers who wish to participate in the scheme, the FMA and ASIC have issued this joint regulatory guide highlighting the key features of each country’s financial products offering regime and key requirements under the scheme. Requirements for issuers RG 190.5 Under the mutual recognition scheme, issuers are not required to comply with most of the requirements of the other country’s fundraising laws. Instead, issuers who wish to operate under the scheme are able to comply with some minimal entry and ongoing requirements. RG 190.6 All offers under the mutual recognition scheme made by: (a) New Zealand issuers must meet the requirements summarised in Table 1 and described in more detail in Section B; and (b) Australian issuers must meet the requirements summarised in Table 2 and described in more detail in Section C. Table 1: Requirements for New Zealand issuers under the mutual recognition scheme Timing of requirement Requirement Further information Before making an offer (entry requirement) The offer must require a disclosure document prepared in accordance with the NZ FMC Act or the NZ FMC Regulations (Australian Corporations Regulations, reg 8.2.01). RG 190.14 Before making an offer (entry requirement) The issuer must be incorporated under the law of New Zealand and not be disqualified or banned (Australian Corporations Act, s1200C(2)(a) and 1200C(3)). RG 190.16– RG 190.17 Before making an offer (entry requirement) The offer can apply to shares, debentures and interests in managed investment schemes, and certain rights, interests and options in these financial products under s1200A of the Australian Corporations Act. RG 190.19 Before making an offer (entry requirement) The issuer must lodge with ASIC a written notice of the intention to make the offer, including an offer document that is accompanied by a prescribed warning statement (Australian Corporations Act, s1200C(5)). The issuer must also notify the NZCO (NZ FMC Regulations, reg 277). RG 190.19– RG 190.25 From commencement of the offer (ongoing requirement) The issuer must comply with specific ongoing conditions, which include ensuring that the offer remains open to investors in New Zealand and notifying ASIC of certain circumstances. Table 3–Table 4 Page 6 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 6 Table 2: Requirements for Australian issuers under the mutual recognition scheme Timing of requirement Requirement Further information Before making an offer (entry requirement) The offer must require disclosure under the Australian Corporations Act (NZ FMC Regulations, reg 263). RG 190.37 Before making an offer (entry requirement) The issuer must be incorporated or established under the law of Australia, or be a registered foreign company under the Australian Corporations Act, and not be disqualified or banned (NZ FMC Regulations, regs 256 and 272). RG 190.38– RG 190.39 Before making an offer (entry requirement) The offer can apply to equity or debt securities, interests in an Australian registered scheme, and any interest in, or option to acquire, these financial products under reg 256 of the NZ FMC Regulations. RG 190.40 Before making an offer (entry requirement) The issuer must lodge with the NZCO a written notice of the intention to make the offer, including an offer document that is accompanied by a warning statement (NZ FMC Regulations, reg 268). The issuer must also notify ASIC (Australian Corporations Act, s1200S). RG 190.41– RG 190.44 From commencement of the offer (ongoing requirement) The issuer must comply with specific ongoing conditions, which include ensuring that the offer remains open to investors in Australia and notifying the NZCO of certain circumstances. Table 5–Table 6 Role of regulators RG 190.7 In Australia, ASIC is the regulator for offers of financial products, and investigates suspected contraventions of Australian law. RG 190.8 In New Zealand, there are two regulators for offers of financial products. The FMA is responsible for market conduct and has enforcement powers to require offer documents and advertisements to comply with New Zealand law. The NZCO is responsible for maintaining various business registers, including registers for managed investment schemes and offers of financial products in New Zealand. RG 190.9 Under the mutual recognition scheme, ASIC, the FMA and the NZCO will exercise their usual powers for offers of financial products. ASIC, the FMA and the NZCO have also established arrangements for cooperation and information sharing in administering the mutual recognition scheme: see RG 190.10–RG 190.12. Page 7 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 7 How will ASIC, the NZCO and the FMA work together? RG 190.10 ASIC and the NZCO have entered into a Memorandum of Understanding (MOU) for the exchange of data and information relating to companies carrying on business on both sides of the Tasman and for mutual assistance. RG 190.11 ASIC and the FMA have also entered into an MOU for the exchange of data and information relating to supervising, assessing, securing compliance with or enforcing the respective laws and regulations of each authority. For example, the arrangements deal with notification by one regulator to the other if it initiates enforcement action against an issuer, where a complaint is made against an issuer, or where changes are made to offer documents. RG 190.12 In addition to this, ASIC, the NZCO and the FMA have established protocols for cooperation between the authorities in administering the mutual recognition scheme. These protocols describe how ASIC, the NZCO and the FMA intend to cooperate and share information under the mutual recognition scheme only. Page 8 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 8 B What must New Zealand issuers do to make offers under the mutual recognition scheme? Key points A New Zealand issuer who wants to offer financial products to Australian investors under the mutual recognition scheme must: • be entitled under the NZ financial markets law to offer the financial products; • make a recognised offer of financial products under the NZ financial markets law (i.e. the offer must require a disclosure document prepared in accordance with the NZ FMC Act or the NZ FMC Regulations); and • comply with all applicable New Zealand laws. The issuer must also comply with specified requirements for offering financial products into Australia, including lodging a notice with ASIC and ensuring that the offer document is accompanied by a warning statement. While the offer remains open to Australian investors, the New Zealand issuer must comply with the offering conditions, including ensuring that the offer remains open to New Zealand investors and notifying ASIC of certain circumstances. Before making an offer (entry requirements) What is a ‘recognised offer’? RG 190.13 An offer of financial products by a New Zealand issuer into the Australian market under the mutual recognition scheme is called a ‘recognised offer’. To be a recognised offer, the offer must be an offer for which a disclosure document must be prepared in accordance with the NZ FMC Act or the NZ FMC Regulations. RG 190.14 ASIC considers that recognised offers are only offers: (a) for which a Product Disclosure Statement (PDS) must be prepared under Pt 3 of the NZ FMC Act; or (b) referred to in cl 26(1) of Sch 1 to the NZ FMC Act, for which a limited disclosure document is required by the NZ FMC Regulations. RG 190.15 ASIC also considers that an offer the FMA has exempted from compliance with Pt 3 of the NZ FMC Act in its entirety, as opposed to a partial exemption, is not a recognised offer. Page 9 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 9 Who can make an offer? RG 190.16 The issuer must be incorporated by or under the law of New Zealand, be a natural person resident in New Zealand or be a legal person established by or under the law in New Zealand. An entity that is registered as an overseas company under New Zealand law will not be able to opt into this scheme: Australian Corporations Act, s1200C(2). RG 190.17 There must be no person concerned in the management of the issuer who is: (a) disqualified from managing corporations under Pt 2D.6 of the Australian Corporations Act (e.g. as an undischarged bankrupt or having been convicted of certain offences); (b) disqualified from being concerned in the management of the issuer under New Zealand law; or (c) banned by ASIC from providing financial services (e.g. because the person has not complied with the law, has become insolvent or has committed a fraud) or disqualified by a court from providing financial services under the Australian Corporations Act. Further, the person offering the financial products must not be banned by ASIC from making a recognised offer under s1200P of the Australian Corporations Act: see Australian Corporations Act, s1200C(3) and 1200G(6). What financial products can be offered in Australia? RG 190.18 The financial products that can be offered in Australia are limited to the securities defined in Ch 8 of the Australian Corporations Act. Essentially, the mutual recognition scheme applies to shares, debentures and interests in managed investment schemes, and certain rights, interests and options in these financial products: Australian Corporations Act, s1200A. What must be lodged with the NZCO? RG 190.19 If a New Zealand issuer proposes to make an offer of financial products in Australia, the New Zealand issuer must lodge with the NZCO notice of its intention to make the offer under the mutual recognition scheme. This notification must be no later than the time ASIC is notified of the New Zealand issuer’s intention: see RG 190.21–RG 190.25. Note: The notification form is available on the NZCO website—see Form DMR–8 Notice to Registrar of intention to make an offer under Australian recognition scheme. RG 190.20 The notice must be uploaded against the registered product offer on the Disclose Register. Page 10 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 10 What must be lodged with ASIC? RG 190.21 At least 14 days before the day on which the offer is first made in Australia, and no later than the time the NZCO is notified, the New Zealand issuer must lodge with ASIC a written notice of the intention to make the offer, together with: (a) the offer document required by the NZ financial markets law (e.g. a PDS); (b) the warning statement that is to be included with any offer document; (c) the constitution of the New Zealand issuer or, if the financial products that are to be the subject of the offer are interests in a managed investment scheme, the constituent documents of the scheme; (d) details of any exemption from the NZ financial markets law that applies to the offer, including: (i) details of any general exemption that applies to the offer or to the issuer in relation to the offer; and (ii) a copy of any specific exemption that applies to the offer or to the issuer; and (e) an address for service in Australia. Note 1: See Australian Corporations Act, s1200C(5) and 1200D. As at the date of this guide, there is no prescribed form for the purposes of s1200C(5) of the Australian Corporations Act. Unless a form is prescribed, the written notice can be provided in a covering letter accompanying the documents required under s1200D of the Australian Corporations Act. Note 2: Where an issuer seeks to maintain the confidentiality of an offer in New Zealand, ASIC may (in response to an application for relief) shorten the 14-day notification period by making a declaration under s1200B(3) of the Australian Corporations Act: see RG 190.26. In these cases, ASIC may permit the required documents to be lodged in both jurisdictions on the same day. RG 190.22 The information placed on the NZCO’s Disclose Register (other than the offer document itself) will not form part of the offer document required to be lodged with ASIC for the purposes of s1200D(1)(a) of the Australian Corporations Act. RG 190.23 As mentioned at RG 190.21(b), the offer document must be accompanied by a prescribed warning statement that the offer is principally governed by the NZ financial markets law rather than Australian law, along with certain prescribed warnings about the rights, remedies and compensation arrangements, tax differences and any currency risk: Australian Corporations Act, s1200E and Australian Corporations Regulations, regs 8.2.02–8.2.03. Note: If the issuer chooses to include the warning statement in its offer document, it must be included in a clear and prominent manner that is likely to be observed by a person considering the offer. Page 11 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 11 RG 190.24 There is a requirement to notify ASIC of certain events that have occurred after the information or document has been lodged with ASIC. ‘Certain events’ may include a change in the address for service in Australia (s1200C(6)(d) of the Australian Corporations Act) or those which are outlined in Table 4. RG 190.25 The notice and related documents should be sent to ASIC: FE Registration Services Australian Securities and Investments Commission GPO Box 9827 in your capital city AUSTRALIA ASIC’s power to declare an offer a ‘recognised offer’ RG 190.26 If a New Zealand issuer’s offer would be a recognised offer except for a failure to meet the conditions in s1200C(5) and 1200C(6) of the Australian Corporations Act and ASIC is satisfied that the failure is minor or technical, ASIC may declare in writing that the offer is a recognised offer: Australian Corporations Act, s1200B(3). ASIC does not have a general exemption or modification power regarding Ch 8 of the Australian Corporations Act. Note: See ASIC’s Regulatory Guide 51 Applications for relief (RG 51) for information relating to applying to ASIC for relief, including declarations under s1200B(3) of the Australian Corporations Act. While the offer is open (ongoing requirements) RG 190.27 At all times while the offer remains open to Australian investors, the New Zealand issuer must comply with the offering conditions (see Table 3), which include ensuring that the offer remains open to New Zealand investors and notifying ASIC of certain circumstances (see Table 4). Table 3: Offering conditions for New Zealand issuers The offer At all times while the offer is open to Australian investors, the offer must:  remain a recognised offer in New Zealand (Australian Corporations Regulations, reg 8.2.01);  comply with the NZ financial markets law (Australian Corporations Act, s1200G(5)); and  be open to acceptance by persons in New Zealand (Australian Corporations Act, s1200G(1) and 1200G(2)). Page 12 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 12 The issuer At all times while the offer is open to Australian investors, the New Zealand issuer must:  ensure that the person offering the financial products remains incorporated, a natural person resident, or a legal person established by or under New Zealand law, and is not banned from making recognised offers (Australian Corporations Act, s1200C(2), 1200C(3) and 1200P);  have lodged a current warning statement or any changed warning statement with the offer document (Australian Corporations Act, s1200G(7));  give a prospective investor, on request and free of charge, copies of the constitution of the issuer or constituent document of the scheme (Australian Corporations Act, s1200G(8));  comply with the notification requirements (Australian Corporations Act, s1200G(9))— see Table 4;  maintain an address for service in Australia (Australian Corporations Act, s1200H); and  ensure that the following persons are not concerned in the management of the issuer (Australian Corporations Act, s1200G(6)): − anyone who is disqualified from managing corporations in Australia, or from being concerned in the management of the issuer in New Zealand; or − anyone who is subject to a banning order under s920A or a court order under s921A(2)(a) of the Australian Corporations Act. If the offer is an offer of interests in a managed investment scheme and the issuer’s records indicate that interests are held by someone who resides in Australia, the issuer must comply with the dispute resolution condition under s1200J of the Australian Corporations Act: see RG 190.28–RG 190.30. Note: A New Zealand issuer may be required to comply with the requirements in s1200G(9), 1200H and 1200J of the Australian Corporations Act after the offer has closed in Australia. Complying with the dispute resolution condition (ongoing requirements) RG 190.28 Where a New Zealand issuer’s offer relates to interests in a managed investment scheme, the New Zealand issuer must have a dispute resolution process that complies with s1017G(2) of the Australian Corporations Act: Australian Corporations Act, s1200J. RG 190.29 This dispute resolution system must consist of: (a) an internal dispute resolution procedure that: (i) complies with the standards and requirements made or approved by ASIC; and (ii) covers complaints made by retail clients against the issuer about the financial services provided for the interests; and (b) membership of one or more ASIC-approved external dispute resolution schemes that cover complaints made by retail clients against the issuer about the financial services provided for the interests. RG 190.30 The New Zealand issuer must maintain the dispute resolution processes in Australia for as long as the issuer’s records show that an Australian resident Page 13 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 13 holds financial products in the class of interests that was the subject of the offer. Note: See ASIC’s Regulatory Guide 165 Licensing: Internal and external dispute resolution (RG 165) and Regulatory Guide 139 Approval and oversight of external dispute resolution schemes (RG 139) for information relating to Australian dispute resolution requirements. Ongoing notification requirements (New Zealand issuers) RG 190.31 The New Zealand issuer must notify ASIC of certain events, set out in Table 4. Table 4: Notification requirements for New Zealand issuers (s1200G(9) of the Australian Corporations Act) If … You must lodge with ASIC … By this time … a change is made to an offer document, or any other document, required by the NZ financial markets law a copy of the document as changed. no later than 7 days after the day on which the issuer notified (or should have notified) the NZCO of the change. a change is made to the warning statement that is included with the offer document in Australia a copy of the warning statement as changed. no later than 7 days after the day on which the issuer notified (or should have notified) the NZCO of the change. a supplementary or replacement offer document is required by the NZ financial markets law a copy of the supplementary or replacement offer document. no later than 7 days after the day on which the issuer notified (or should have notified) the NZCO of the change. a change is made to the constitution or constituent document of the entity whose financial products are being offered a copy of the constitution or constituent document as changed. no later than 7 days after the day on which the issuer notified (or should have notified) the NZCO of the change. the FMA makes, changes or revokes an exemption that applies exclusively to the offer or the issuer under the NZ financial markets law a copy of the exemption, the exemption as changed, or notice in the prescribed form (if any) of the details of the revocation. no later than 7 days after the making, change or revocation of the exemption occurs. the FMA makes, changes or revokes an exemption that applies, but not exclusively, to the offer or the issuer under the NZ financial markets law written notice in the prescribed form (if any) of the details of the exemption, change or revocation. no later than 14 days after the making, change or revocation of the exemption occurs. the FMA or the NZCO begins enforcement action, or exercises a power it has under law, in relation to the issuer or offer written notice in the prescribed form (if any) of the details of the action taken or power exercised. no later than 7 days after the action is taken or the power is exercised. Page 14 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 14 What happens if an offering condition is breached? RG 190.32 A breach of an offering condition, address for service condition or dispute resolution condition amounts to a breach of Australian law, which ASIC can investigate: Australian Corporations Act, s1200Q. In addition, under Ch 8 of the Australian Corporations Act, ASIC may: (a) make a stop order under s1200N; or (b) ban the issuer from making a recognised offer for a specified period under s1200P. What other Australian securities laws apply to a recognised offer? RG 190.33 A recognised offer is exempt from many of the provisions of the Australian Corporations Act, including the requirements: (a) in Ch 2L, if the offer relates to debentures, and in Ch 5C, if the offer relates to a managed investment scheme; (b) for disclosure for the offer of securities (Ch 6D), except for the hawking provisions, which still apply (see RG 190.34); and (c) to be licensed or authorised to provide certain financial services and to provide disclosure for financial products (Pts 7.6, 7.7, 7.8 and 7.9 of Ch 7, except for the hawking and short selling provisions). Note: See Australian Corporations Act, s1200F. RG 190.34 Other Australian laws apply to recognised offers. In Australia, there is a broad-ranging prohibition on dealing in securities (including offers of securities) in a manner that is likely to mislead or deceive. There are also general content rules for pre-offer advertising for securities and for interests in managed investment schemes. In addition, a person must not offer securities for issue or sale in the course of, or because of, an unsolicited meeting with another person or an unsolicited telephone call to another person (this is known as ‘hawking’). Note: See, for example, Australian Corporations Act, s736, 992AA, 1041E and 1200L. RG 190.35 Under Australian law, even if the issuer or scheme is not listed on a financial market, you may have to comply with the continuous disclosure rules if you are: (a) a debenture issuer who has made a recognised offer; and (b) an issuer of shares and interests in a managed investment scheme who has made a recognised offer and who has had at least 100 members in a class. Note: See, for example, Australian Corporations Act, s111AC, 111AD, 111AF(2), 111AFA(2), 111AI(b) and 1200K. Page 15 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 15 RG 190.36 Various obligations apply to an entity that is a disclosing entity—for example, the issuer must lodge with ASIC on an ongoing basis information that a reasonable person would expect to have a material effect on the price or value of the securities, or undertake website-based disclosure in accordance with ASIC’s good practice guidance: see Regulatory Guide 198 Unlisted disclosing entities: Continuous disclosure obligations (RG 198). Page 16 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 16 C What must Australian issuers do to make offers under the mutual recognition scheme? Key points An Australian issuer who wants to offer financial products to New Zealand investors under the mutual recognition scheme must: • be entitled under the Australian securities law to offer the financial products; • make a recognised offer of financial products under the Australian securities law (i.e. the offer of financial products must require a disclosure document or a PDS under the Australian Corporations Act); and • comply with all applicable Australian laws. The issuer must also comply with specified requirements for an offer of financial products in New Zealand, including lodging a notice with the NZCO and ensuring that the offer document is accompanied by a warning statement. While the offer remains open to New Zealand investors, the Australian issuer must comply with the offering conditions, including ensuring that the offer remains open to Australian investors and notifying the NZCO of certain circumstances. Before making an offer (entry requirements) What is a ‘recognised offer’? RG 190.37 An offer of financial products by an Australian issuer into the New Zealand market under the mutual recognition scheme is a ‘recognised offer’. To be a recognised offer, the offer of financial products must require a disclosure document or a PDS under the Australian Corporations Act. The Australian issuer must be entitled under Australian law to offer the financial products. If the disclosure document or PDS is required to be lodged with ASIC under Australian law, then the issuer must lodge the disclosure document or PDS with ASIC. Note 1: An offer can still be a recognised offer even if the PDS does not need to be lodged with ASIC under s1015B of the Australian Corporations Act. In this situation, s1015D of the Australian Corporations Act will instead require the Australian issuer to lodge an in-use notice with ASIC. Note 2: An exposure period under the Australian Corporations Act may apply to the disclosure document. If an exposure period applies, a person must not accept an application for securities offered under the disclosure document until the exposure period has ended. Page 17 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 17 Who can make an offer? RG 190.38 The issuer must be incorporated under the law of Australia, be a natural person resident in Australia, be a legal person established under the law of Australia or be a registered foreign company under the Australian Corporations Act. RG 190.39 The issuer or any person concerned in the management of the issuer must not be: (a) prohibited by, or under a power exercised under, Australian law from being concerned in the management of a company in Australia (NZ FMC Regulations, reg 272(b)); (b) prohibited by, or under power exercised under, New Zealand law from being concerned in the management of a company in New Zealand (NZ FMC Regulations, reg 272(b)); or (c) previously banned by the FMA from making a recognised offer (NZ FMC Regulations, reg 258(2)(a)). What financial products can be offered in New Zealand? RG 190.40 The mutual recognition scheme applies to equity or debt securities, interests in an Australian registered scheme, and any interest in, or option to acquire, these financial products: NZ FMC Regulations, regs 256 and 263. What must be lodged with ASIC? RG 190.41 If an Australian issuer proposes to make an offer of financial products in New Zealand, the Australian issuer must lodge with ASIC a written notice of its intention to make the offer under the mutual recognition scheme: see Australian Corporations Act, s1200S. An Australian issuer may provide written notice of its intention to offer under the mutual recognition scheme by selecting the option that confirms the offer will be made available in a recognised jurisdiction (e.g. New Zealand) under the mutual recognition scheme when completing either the ASIC OFFERlist form or PDS in-use notice and submitting it to ASIC in the usual way. This notification must be no later than the time the NZCO is notified of the Australian issuer’s intention: see RG 190.43–RG 190.44. RG 190.42 The notice should be sent to ASIC: FE Registration Services Australian Securities and Investments Commission GPO Box 9827 in your capital city AUSTRALIA Page 18 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 18 What must be lodged with the NZCO? RG 190.43 Before making the offer in New Zealand, an Australian issuer must lodge with the NZCO notice of its intention to make the offer under the mutual recognition scheme under the NZ FMC Regulations in the NZ financial markets law: NZ FMC Regulations, reg 266. Issuers will receive confirmation from the NZCO that their offer documents have been accepted, and should await this notice before making the offer. The notice must: (a) state that the issuer intends to make an offer according to the mutual recognition scheme under the NZ FMC Regulations in the NZ financial markets law; (b) specify the financial products to be offered; (c) specify the proposed offer period for: (i) the offer of the financial products in New Zealand; and (ii) the offer of the financial products in Australia; (d) state the full name and address of a person who is authorised to accept service in New Zealand; (e) state that the Australian issuer submits to the jurisdiction of the courts of New Zealand; (f) state the Australian issuer’s New Zealand overseas issuer registration number (if any); (g) be signed by a person who is authorised to act on the issuer’s behalf; and (h) be accompanied by the following documents: (i) an offer document required by Australian law (e.g. a prospectus or, if the offer relates to a managed investment scheme, a PDS); (ii) details of any exemption or declaration under the Australian Corporations Act that is relevant to the offer (whether applying specifically to the issuer or the offer, or generally); (iii) the constitution of the company or scheme; and (iv) a copy of the prescribed warning statement that the offer is principally regulated under Australian rather than New Zealand law (as required under reg 271 of the NZ FMC Regulations and in the form set out in Sch 25 of the NZ FMC Regulations), along with disclosure of any dispute resolution process or other tax differences and currency risks. Note: Notification forms and information on registering offers on the Disclose Register are available on the NZCO website. RG 190.44 The notice, offer details and related documents must be submitted to the NZCO online on the Disclose Register. Page 19 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 19 The FMA’s power to declare a failure to meet a requirement as non-material RG 190.45 If an Australian issuer’s offer of financial products would be exempt except for a failure to meet a requirement contained in regs 267 and 268 of the NZ FMC Regulations and the FMA is satisfied that the failure is minor or technical only, the FMA may declare in writing that it is a non-material breach: NZ FMC Act, s578. The effect of a declaration of a non-material breach is that the requirement in question is deemed to have been complied with: NZ FMC Act, s578. While the offer is open (ongoing requirements) RG 190.46 At all times while the offer remains open to New Zealand investors, the Australian issuer must comply with the offering conditions (see Table 5), which include ensuring that the offer remains open to Australian investors and notifying the NZCO of certain circumstances (see Table 6). Table 5: Offering conditions for Australian issuers The offer At all times while the offer is open to New Zealand investors, the offer must:  remain a recognised offer in Australia (NZ FMC Regulations, reg 270(a));  comply with Australian securities law (NZ FMC Regulations, reg 270(b));  be open to acceptance by persons in Australia (NZ FMC Regulations, reg 270(c)); and  ensure that an offer document given to a person is accompanied by the prescribed warning statement (NZ FMC Regulations, regs 271(a)–(d)). The issuer At all times while the offer is open to New Zealand investors, the Australian issuer must:  give a prospective investor, on request and free of charge, copies of the constitution of the company or scheme (NZ FMC Regulations, reg 272(a));  comply with the notification requirements (NZ FMC Regulations, reg 273)—see Table 6;  maintain an address for service in New Zealand (NZ FMC Regulations, reg 272(c)); and  ensure that anyone who is prohibited by, or under a power exercised under, Australian or New Zealand law from being concerned in the management of a company in Australia or New Zealand is not concerned in the management of the issuer (NZ FMC Regulations, reg 272(b)). Availability of dispute resolution in New Zealand (ongoing requirements) RG 190.47 Where an Australian issuer’s offer relates to interests in a managed investment scheme and any dispute resolution process described in the offer document is not available in New Zealand, reg 271(d) of the NZ FMC Regulations provides that the offer document must be accompanied by the following additional warning statement: The dispute resolution process described in this offer document is only available in Australia and is not available in New Zealand. Page 20 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 20 Ongoing notification requirements (Australian issuers) RG 190.48 The Australian issuer must notify the NZCO, by amending the offer registered on the Disclose Register, of certain circumstances set out in Table 6. Table 6: Notification requirements for Australian issuers (including regs 273, 274 and 275 of the NZ FMC Regulations) If … You must lodge with the NZCO … By this time … a change is made to an offer document, or any other document, required by the Australian securities law notice of change to the offer document stating the date on which the Australian issuer notified (or should have notified) ASIC of the change and a copy of the document as changed with the changes marked. no later than 5 working days after the day on which the issuer notified (or should have notified) ASIC of the change. a supplementary or replacement offer document is required by the Australian securities law notice of supplementary or replacement offer document stating the date on which the Australian issuer filed (or should have filed) the supplementary or replacement document and a copy of the supplementary or replacement offer document. as soon as practicable and no later than 5 working days after the day on which the issuer filed (or should have filed) the supplementary or replacement offer document with ASIC. the issuer’s address for service changes notice of change of address for service containing the new address for service and the date on which the change takes effect. at least 5 working days before the change takes effect. a change is made to the constitutional document of the entity whose securities are being offered notice of change to the constitutional document stating the date on which the Australian issuer notified (or should have notified) ASIC of the change and a copy of the constitutional document as changed with changes marked. no later than 5 working days after the day on which the issuer notified (or should have notified) ASIC of the change. ASIC makes, changes or revokes a general exemption relevant to the offer notice of grant of, amendment to, or revocation of general exemption, specifying the general exemption, stating whether it has been granted, amended or revoked and the date of its grant, amendment or revocation. no later than 10 working days after the day ASIC made, changed or revoked the exemption or modification. Page 21 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 21 If … You must lodge with the NZCO … By this time … ASIC makes, changes or revokes an exemption or modification relevant to the offer that is specific to the offer or the issuer notice of grant of, amendment to, or revocation of specific exemption, specifying the specific exemption and, if the exemption has been granted or amended, a copy of the exemption or amended exemption (with changes marked), and the date the exemption was granted, amended or revoked. no later than 5 working days after the day ASIC made, changed or revoked the exemption or modification. ASIC begins enforcement action, or exercises a power it has under law, in relation to the issuer or offer notice of enforcement action taken or power exercised stating the date on which the enforcement action began or the power was exercised and giving details of the nature of the enforcement action or the exercise of the power. no later than 5 working days after the day on which ASIC took the action or exercised the power. What happens if an offering condition is breached? RG 190.49 A breach of a term or condition that must be complied with under the mutual recognition scheme is an offence under New Zealand law: NZ FMC Act, s579. In addition, the FMA may make an order prohibiting a person from making an offer under the mutual recognition regime if the FMA is satisfied that: (a) one of more of the requirements of the NZ FMC Regulations have been breached in relation to a previous offer by the issuer, or a person associated with the issuer; and (b) the contravention was not minor or technical only (NZ FMC Act, s471). What other New Zealand financial products laws apply to a recognised offer? RG 190.50 A recognised offer is exempt from many of the provisions of the NZ FMC Act, including the: (a) disclosure requirements for offers of financial products under Pt 3; (b) governance of financial products under Pt 4; and (c) unsubstantiated representation requirements (NZ FMC Act, s23 and NZ FMC Regulations, reg 261). RG 190.51 All other provisions of the NZ FMC Act and NZ FMC Regulations will apply to a recognised offer. In particular, the provisions in Pt 6 (dealing with licensing and other regulation of market services) and Pt 2 (dealing with fair Page 22 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 22 dealing) of the NZ FMC Act will apply. Part 2 has a broad-ranging prohibition on dealing in financial products (including offers of financial products) in a manner that is likely to mislead or deceive. It also prohibits offers of financial products for issue or sale in the course of, or because of, an unsolicited meeting with another person or an unsolicited telephone call to another person. Page 23 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 23 Key terms Term Meaning in this document ASIC Australian Securities and Investments Commission Australian Corporations Act Corporations Act 2001 (Cth) of Australia Australian Corporations Regulations Corporations Regulations 2001 (Cth) of Australia Australian securities law Australian Corporations Act and Australian Corporations Regulations financial product A financial product as defined under:  Australian securities law (see RG 190.18); and  NZ financial markets law (see RG 190.40) FMA New Zealand Financial Markets Authority home jurisdiction The country in which the issuer of the financial products is domiciled mutual recognition scheme The trans-Tasman mutual recognition scheme for offers of financial products as contained in the law referred to in RG 190.3 NZCO New Zealand Companies Office NZ financial markets law NZ FMC Act and NZ FMC Regulations NZ FMC Act Financial Markets Conduct Act 2013 of New Zealand NZ FMC Regulations Financial Markets Conduct Regulations 2014 of New Zealand PDS Product Disclosure Statement recognised offer An offer of financial products by a New Zealand issuer into the Australian market or an offer of certain financial products by an Australian issuer into the New Zealand market, unless otherwise specified Page 24 REGULATORY GUIDE 190: Offering financial products in New Zealand and Australia under mutual recognition © Australian Securities and Investments Commission July 2017 Page 24 Related information Headnotes Australia, collective investment schemes, disclosure document, entry requirements, financial products, fundraising, information sharing, issuers, managed investment schemes, mutual recognition, New Zealand, notification requirements, offer document, offering conditions, offerings, ongoing requirements, Product Disclosure Statement (PDS), recognised offer, trans-Tasman Regulatory guides RG 51 Applications for relief RG 139 Approval and oversight of external dispute resolution schemes RG 165 Licensing: Internal and external dispute resolution RG 198 Unlisted disclosing entities: Continuous disclosure obligations Legislation Australian Corporations Act, s111AC, 111AD, 111AF(2), 111AFA(2), 111AI(b), Pt 2D.6, Chs 2L, 5C, 6D, Pts 7.6, 7.7, 7.8, 7.9, 7.10, Ch 8, s920A, 921A(2)(a), 1015B, 1015D, 1017G, 1200A, 1200B, 1200C, 1200D, 1200E, 1200F, 1200G, 1200H, 1200J, 1200K, 1200L, 1200N, 1200P, 1200Q, 1200S; Australian Corporations Regulations, regs 8.2.01, 8.2.02, 8.2.03 NZ FMC Act, Pt 2, Pt 3, Pt 4, Pt 6, Subpart 1 of Pt 8, Subpart 6 of Pt 9, cl 26(1) of Sch 1; NZ FMC Regulations, Subparts 1, 2, and 3 of Pt 9 and Sch 25