The Regulator Report lists recent changes, decisions and developments at the main New Zealand and Australian corporate, commercial and competition regulatory bodies. This edition of the Regulator Report covers the period from 2 April 2009 to 29 April 2009. For further details on any matter in this report just click on the hyperlinks in each item.

The Treasury

Review of Overseas Investment 2009
Treasury has set up a web page and email address dedicated to the Government's review of the Overseas Investment Act 2005 and the Overseas Investment Regulations 2005. The purpose of the review is to create an overseas investment screening regime that promotes and encourages the flow of investment into New Zealand, while addressing valid concerns about foreign investment. The last review of foreign investment was carried out in 2003 and 2004, and resulted in the Overseas Investment Act 2005. Bell Gully partner Andrew Petersen is a member of the Technical Reference Group for the review.
Click here to access the new web page

Compliance and monitoring the Retail Deposit Guarantee Scheme
The Treasury has published information regarding compliance and monitoring in relation to the Crown Retail Deposit Guarantee Scheme.
Click here for more

Reserve Bank of New Zealand

Insurance (Prudential Supervision) Bill – draft for consultation
Draft legislation to give effect to the insurance prudential regulatory framework approved by Cabinet in December 2007 and August 2008 was released on 20 April 2009 for consultation. Submissions on the draft Insurance (Prudential Supervision) Bill close on 22 June 2009 and it is expected that the finalised Bill will be introduced to Parliament later this year. As expected, the Bill:

• requires insurers to be licensed by the Reserve Bank;
• sets out the criteria for obtaining a licence;
• contains provisions specific to overseas insurers, captives and reinsurers;
• requires the Reserve Bank to supervise licensed insurers on an ongoing basis and gives the Reserve Bank the power to investigate insurers;
• contains provisions relating to transactions involving licensed insurers; and
• establishes a regime for managing insurers in distress.

Click here for more
Click here for a copy of the Insurance (Prudential Supervision) Bill
Click here for further background on the changes to the insurance sector

Government appoints Reserve Bank directors
Finance Minister Bill English announced two new appointments to the Reserve Bank's board of directors on 24 April. They are Christchurch consultant and professional director Sue Sheldon, who will begin on 1 May 2009, and Wellington professional director Keith Taylor, who will begin on 1 July 2009.
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Warning: "New Zealand offshore finance companies"
The Reserve Bank has issued a warning that caution should be exercised by anyone considering doing any form of business with entities that promote themselves as "New Zealand offshore finance companies", or use similar descriptions, and that offer financial services either on-line or from locations outside of New Zealand. No such category of entity is recognised under New Zealand law.
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Ministry of Economic Development (MED)

Minister welcomes changes to NZX listing rules
Commerce Minister Simon Power decided not to disallow any of the proposed changes to the NZSX/NZDX and NZAX listing rules (which came into effect on 3 April 2009) according to his statutory obligation under the Securities Markets Act 1988. He noted that the rule changes included relaxation of some rules around transactions between related parties but says he is “satisfied an adequate level of protection for investors is still in place".
Click here for the full press release
For Bell Gully commentary on the new Listing Rules click here

Changes to the Securities Regulations
MED has released a discussion document proposing a number of changes to the securities regulations derived from the Securities Commission's review of the Securities Regulations 1983 (dating back to 1999-2000) and specific recommendations of the Capital Market Development Taskforce. The changes are designed to:

• improve disclosure by issuers;
• remove unnecessary compliance costs;
• provide greater flexibility in the contents of prospectuses; and
• modernise outdated aspects of the regulations.

The discussion paper does not include the draft regulations that are required to implement the simplified disclosure prospectus which features in amendments to the Securities Act 1978 contained in the Securities Disclosure and Financial Advisers Amendment Bill now before Parliament. However, the discussion document asks for views on whether the use of a simplified disclosure prospectus should be restricted to "non-complex" products such as shares, preference shares, securities that convert into ordinary shares of the same issuer and debt securities. Submissions close on 8 May 2009.
Click here for the Commerce Minister's press release
Click here for the online discussion document
Click here for a copy of the discussion document
Click here for Bell Gully commentary on the changes

Telecom requests changes to its Operational Separation Undertakings
On 17 April 2009, the Minister for Communications and Information Technology Steven Joyce called for public submissions on Telecom's proposed variation of the company's Operational Separation Undertakings. The proposed variation relates to Telecom's ability to facilitate more efficient delivery of services to its wholesale customers. It does not relate to the Government's recent announcement of its ultra-fast broadband investment proposal. Submissions close on 1 May 2009.
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Broadband New Zealand
The Minister for Communications and Information Technology and Ministry officials are currently considering submissions made on the government's draft proposal for implementing its broadband initiative. To find out more about New Zealand's broadband initiatives including recent updates and related links visit MED's website here.

The Department of Internal Affairs

Government decisions in response to the Royal Commission on Auckland Governance
On 7 April 2009, the Government announced high-level decisions on Auckland Governance following the release of the Report of the Royal Commission into Auckland Governance in March. A summary of the key decisions is set out in the table below.

	Current situation	Royal Commission recommendations	Government decisions
Structure	1 regional council 3 district councils 4 city councils 30 community boards (145 members)	1 Auckland Council 6 local councils (with reduced powers) plus community boards for Waiheke Island, Great Barrier Island and CBD	1 Auckland Council 20 to 30 new local boards
Representation	13 regional councillors 96 territorial authority councillors 145 community board members	23 councillors (10 elected at large, 10 elected from wards and 3 Maori seats) 106 local councillors 15 community board members	20 councillors (8 elected at large, 12 elected from wards) 125–150 local board members
Leadership	1 chair elected by regional council 7 mayors elected at large, within cities and districts	1 regional mayor with governance powers elected at large	1 regional mayor with governance powers elected at large
Community Plan	8 Long-Term Council Community Plans (LTCCP - a 10 year plan)	1 LTCCP (including a single vision; 10-year plan; spatial plan; regional infrastructure plan; and a district, transport, and economic development plan)	1 LTCCP 1 vision 1 integrated set of plans*
District plan	7 district plans	1 regional spatial plan and regional infrastructure investment plan	1 regional spatial plan and regional infrastructure investment plan
Economic Development	Multiple economic development agencies. Economic development outcomes not factored into local government decisions. Fragmented funding and management of events and facilities	1 regional economic development agency. Economic development plan to guide decisions. Auckland Council to own and operate major facilities and events.	1 economic development plan* to guide decisions. Auckland Council to own and operate major facilities and events.
Waterfront and CBD	2 councils with plans governing waterfront and CBD	1 City Centre and Waterfront Committee 1 Waterfront Development Agency covering the waterfront and city expanded to include Ponsonby, Parnell and Newmarket 1 community board for the city centre and waterfront	1 Waterfront Development Agency
Rates	2 rates bills per property	1 rates bill	1 rates bill
	8 rating authorities	1 rating system	1 rating system
Elections	3-yearly terms for elections	4-yearly terms for elections	3-yearly terms for elections
Transport	8 local transport entities	1 regional transport authority	1 regional transport authority*
Water	8 water and wastewater providers	1 water and wastewater provider	1 water and wastewater provider
Central Government	Ministerial Group working on Auckland governance issues Portfolio ministers engaged on issues as required.	Minister for Auckland and a Cabinet Committee for Auckland A central government partnership agreement with Auckland Council	Temporary Cabinet Committee to oversee transition issues. Portfolio ministers engaged on issues as required.

*Agreed in principle. Detail yet to be confirmed by Government

The Government will appoint an Establishment Board which will be responsible for implementing the reforms and monitoring existing councils' decision-making and operations. It is expected that the transition to the new core arrangements will be largely completed by October 2010 in time for the local body elections in 2010. For further information on the Government's proposals for Auckland and to access the relevant documents released by the Government, visit the new website dedicated to Auckland governance "Making Auckland Greater" at www.auckland.govt.nz

Securities Commission

Securities Commission bans advertising for Propertyfinance Securities Limited moratorium restructure
The Securities Commission has banned advertisements by Propertyfinance Securities Limited for a proposed restructure of its moratorium arrangements. The Commission believes that the advertisements were likely to mislead investors about the relative advantages and disadvantages of the proposal as compared with the alternative option of receivership and did not comply with the law.
Click here for more
Click here for Bell Gully commentary on moratorium proposals

Consultation begins on skills required for financial advisers
The Securities Commission has issued a staff paper on authorised financial adviser competence in relation to standards of competence for authorised financial advisers (AFAs) under the Financial Advisers Act 2008. The intention is for the paper to lay the groundwork for the consultation processes and decision making in relation to competence matters for AFAs under the Act. The views expressed in the paper are preliminary and the Commission is seeking submissions to help provide a more complete picture of current developments and possible approaches. The skills and competencies required for financial advisers will ultimately be determined by the Commissioner for Financial Advisers and the Code Committee. Submissions close on 29 May 2009.
Click here for more

Tranz Rail shareholders yet to claim compensation
The Securities Commission reached a settlement on the Tranz Rail Limited insider trading case with $27. 5 million paid by the defendants in June 2007. So far, approximately $17.3 million has already been paid to 30 counterparties. The names of 535 shareholders who are still eligible for compensation from settlement of the case have been listed on the Commission's website.
Click here for more

SECURITIES ACT EXEMPTION NOTICES

The following Securities Act Exemption Notices have been published for this period:

Securities Act (Fletcher Building Limited) Exemption Notice 2009 (2009/68)
This notice came into force on 10 April 2009 and expires on 31 December 2010. The notice applies to the offer of listed ordinary shares by Fletcher Building Limited under a qualifying share purchase plan. It exempts Fletcher Building, subject to conditions, from sections 37 and 37A of the Securities Act 1978 and from the Securities Regulations 1983 (other than regulation 8).

Securities Act (BBI Networks (New Zealand) Limited) Exemption Notice 2009 (2009/91)
This notice, which came into force on 21 April 2009 and expires on 30 June 2009, exempts, subject to conditions, BBI Networks (New Zealand) Limited (BBINNZ) and certain others from regulation 12(1)(c) of the Securities Regulations 1983 in relation to a proposal to make variations to the terms of issue of subordinated prime adjusting reset convertible securities issued by BBINNZ.

Takeovers Panel

Takeovers Panel consults on upstream takeovers
The Takeovers Panel has published a consultation paper on the implications of the Takeovers Code in relation to upstream takeovers. The consultation paper discusses the Panel's approach in granting exemptions from the Takeovers Code in respect of upstream takeovers, including the problems that the Panel has faced. It discusses and compares how other jurisdictions deal with upstream takeovers and sets out a range of potential options for addressing the problems. Submissions close on 12 June 2009.
Click here for more

TAKEOVERS CODE EXEMPTION NOTICES

The following Takeovers Code Exemption Notices have been published for this period:

Takeovers Code (Rubicon Limited) Exemption Notice 2009
This notice applies to acts or omissions occurring on or after 27 April 2009 and expires on 31 July 2009. The Takeovers Panel has granted an exemption for Rubicon Limited from clauses 18(2) and (3) of Schedule 2 of the Takeovers Code in relation to the proposed partial takeover offer by Knott Partners, L. P., Knott Partners Offshore Master Fund, L. P., Commonfund Hedged Equity Company, Good Steward Trading Company SPC, Mulsanne Partners, L. P., Shoshone Partners, L. P., and Focus 300 Ltd that was announced by way of takeover notice on 31 March 2009. The exemption is subject to the condition that a statement is included in the target company statement advising offerees that they are entitled to obtain a copy of Rubicon Limited's most recent half-yearly report from:

• Rubicon Limited's Internet site; or
• Rubicon Limited on request and free of charge.

Takeovers Code (Opus International Consultants Limited) Exemption Notice 2009
This notice applies to acts or omissions occurring on or after 29 February 2008 and expires on 30 April 2009. The Takeovers Panel has granted exemptions for UEM Group Berhad, Khazanah Nasional Berhad, and the Malaysian Minister of Finance Incorporated from rule 6(1) of the Takeovers Code in respect of any actual or deemed increases to their voting control in Opus International Consultants Limited resulting from certain transactions relating to the reorganisation of Malaysian incorporated companies upstream of Opus International Consultants Limited.

Takeovers Code (Phitek Systems Limited) Exemption Notice 2009
This notice applies to acts or omissions occurring on or after 21 December 2006 and expires on 31 May 2009. The notice exempts, subject to conditions, certain allottees from rule 6(1) of the Takeovers Code in respect of any increase in their voting control resulting from various specified allotments over the period from 21 December 2006 through to 13 September 2007.

Takeovers Code (Westgate Power Centre Limited) Exemption Notice 2009
This notice applies to acts or omissions occurring on or after 23 August 2002 and expires on 31 May 2009. It exempts certain trustees (as controllers of voting rights in Westgate Power Centre Limited) from rule 6(1) of the Takeovers Code arising from the appointment of the trustees and resettlement of trust assets.

New Zealand Exchange (NZX)

NZX Regulation Announcement - Listing Rule Amendments
Changes sought to the NZSX/NZDX and NZAX Listing Rules to maximise flexibility and reduce the cost and time delay for listed issuers raising capital became operative on 3 April 2009. NZX Regulation made the announcement on 3 April.
Click here to read the full announcement
For Bell Gully commentary on the new Listing Rules click here

Electricity Commission

Electricity Market Compliance Framework Review - Update
The Electricity Commission is seeking submissions on the paper Electricity Market Compliance Framework Review - Update. The paper provides an update on the actions the Commission has taken to implement the outcomes of the compliance framework consultation. It also asks for feedback on what further steps the Commission might take. The closing date for submissions on the proposal is 15 May 2009.
Click here for more

Australian Securities Exchange (ASX)

New rule for trading partly paid securities
On 6 April 2009 ASX announced that it will introduce a market rule requiring brokers to alert retail clients of the need to inform themselves of the rights and obligations associated with trading partly paid securities. The rule will take effect from 1 May 2009.

New Zealand Commerce Commission (NZCC)

Media releases

The NZCC has issued the following media releases:

Mergers and acquisitions

• Reasons published for clearance granted to Fletcher Building to acquire Stevenson masonry
  The NZCC has published its reasons for granting clearance to Fletcher Building Limited to acquire up to 100 per cent of the assets of both Stevenson Group Limited's Whangarei masonry business and Stevenson's Auckland masonry business.
  Click here for more

Telecommunications

• Arrangements to ensure continuity of telecommunications decisions at Commerce Commission
  Plans have been put in place at the NZCC to ensure continuity of the large workload of telecommunications decisions during a period of transition. The new Chair Dr Mark Berry has asked Paula Rebstock to remain in her role as a member of the Commission to complete a number of determinations pending in the telecommunications work.
  Click here for more
  

• Telecommunications market monitoring report for 2008 released by Commerce Commission
  The NZCC has released its 2008 telecommunications monitoring report analysing the state of New Zealand telecommunications markets.
  Click here for more

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

Mergers and acquisitions

• ACCC commences market inquiries on proposed divestiture undertakings from Baiada Poultry Pty Ltd
  The ACCC has commenced market inquiries about a proposed section 87B undertaking from Baiada Poultry, which seeks to address competition concerns previously identified by the ACCC.
  Click here for more
  
  
• ACCC calls for comment on the proposed acquisition by Rheem Australia Pty Ltd of Aqua-Max Pty Ltd
  The ACCC has issued a Statement of Issues on the proposed acquisition by Rheem Australia Pty Ltd of Aqua-Max Pty Ltd. The Statement of Issues seeks further information on certain competition issues, which have arisen from the ACCC's market inquiries to date.
  Click here for more

Market behaviour

• Federal Court dismisses airlines' challenge to ACCC enforcement powers
  The Federal Court in Melbourne has dismissed the applications by Singapore Airlines Pte Ltd, Singapore Airlines Cargo Pte Ltd and Emirates challenging the validity of compulsory notices issued by the ACCC. The notices, issued under section 155 of the Trade Practices Act 1974 in 2007 and 2008, required production of documents and information as part of the ACCC's investigation into alleged international air cargo cartel activity.
  Click here for more
  
  
• ACCC sees benefit in mortgage and finance body's disciplinary rules
  The ACCC proposes to grant conditional authorisation to the Mortgage and Finance Association of Australia to enable it to continue to use its disciplinary rules, said ACCC Chairman, Mr Graeme Samuel.
  Click here for more
  
  
• Traffic management and security contractors may collectively bargain with Guardrite: ACCC
  The ACCC has allowed nine traffic management and security contractors to seek to collectively negotiate the terms and conditions of their contracts with Guardrite Security and Traffic Management Pty Ltd. This provides the nine contractors with immunity from court action for collective bargaining conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.
  Click here for more
  
  
• Collective bargaining by newsagents in public interest: ACCC
  Newsagents have been granted authorisation to enable them to collectively negotiate certain terms and conditions of their contracts with major publishers and distributors of newspapers and magazines.
  Click here for more
  
  
• ACCC proposes to allow agents to collectively bargain with Tabcorp
  The ACCC proposes to allow the TAB Agents' Association of New South Wales, on behalf of its members, to collectively negotiate agency terms and conditions, and resolve any disputes, with Tabcorp Holdings Limited.
  Click here for more
  

Access

• ACCC issues draft advice on water infrastructure charge rules
  The ACCC has issued its draft water infrastructure charge rules and draft advice to the Minister for Climate Change and Water for public consultation.
  Click here for more
  
  
• ACCC finalises access arrangements for digital radio
  The ACCC has finalised the access undertakings which set out the terms and conditions to apply to digital radio broadcasters and digital radio multiplex transmission service providers. The decision concludes 18 months of extensive consultation by the ACCC with industry and other interested stakeholders.
  Click here for more
  
  
• ACCC begins consultation on wheat export undertakings
  The ACCC has invited submissions from participants in the wheat export industry on proposed undertakings lodged by Co-operative Bulk Handling Ltd, GrainCorp Operations Limited and ABB Grain Ltd relating to access to port terminal services for bulk wheat export at each of the export terminals they operate.
  Click here for more

Consumer issues

• ACCC acts on Coca-Cola myth-busting
  Coca-Cola will publish corrective advertisements in newspapers across the country about its 'myth-busting' campaign following action by the ACCC. "The ACCC has accepted court-enforceable undertakings from Coca-Cola South Pacific Pty Ltd (CCSP), about statements published in Coca-Cola's Kerry Armstrong on Motherhood & Myth-Busting advertisement", said ACCC Chairman, Mr Graeme Samuel.
  Click here for more
  
  
• National attack on dodgy cots
  IGC Dorel Australia Pty Ltd has agreed to voluntarily recall Kensington cots which have faulty drop sides.
  Click here for more
  
  
• Easter—DIY safely
  For many Australians the Easter break is the ideal time to catch up on those 'little jobs' that go undone on a normal weekend. "Safety should be at the forefront of everyone's mind... we can avoid a large number of accidents and injuries," said ACCC Deputy Chair, Mr Peter Kell.
  Click here for more
  
  
• ACCC institutes proceedings against bed salesmen
  The ACCC has instituted civil proceedings against Craftmatic Australia Pty Ltd, its former managing director, Mr Ashley Francis Day, and former sales representative, Mr Wayne Lugg. The ACCC alleges that since 2005, certain sales and marketing methods employed by Craftmatic were unconscionable, in breach of section 51AB of the Trade Practices Act 1974, and misleading or deceptive, in contravention of section 52.
  Click here for more
  
  
• ACCC targets blemish in cosmetics labelling
  Australian cosmetics manufacturer Natural Products of Australia Pty Ltd will publish corrective notices in national newspapers and magazines, following action by the ACCC Commission about incorrect labelling on Natural Instinct and Organic Instinct hair and skin care products.
  Click here for more
  
  
• ACCC institutes proceedings against CardCall over pre-paid phone cards
  The ACCC has instituted legal proceedings in the Federal Court, Sydney against CardCall Pty Ltd for alleged contraventions of the Trade Practices Act 1974 in relation to the sale of its Talk Tomato, Daybreak, OZcall and Its Green pre-paid phone cards.
  Click here for more
  
  
• Mobile phone retailer offers consumer redress for misrepresentations
  Some M2 Telecommunications Pty Ltd customers will be offered a replacement mobile phone or refund following an investigation by the ACCC. "The ACCC was concerned consumers may have been misled or deceived about their statutory warranty rights or the performance of their mobile phones by M2 Telecommunications," said ACCC Chairman, Mr Graeme Samuel.
  Click here for more
  
  
• Misleading savings claims by entertainment products trader
  An online retailer, Kogan Technologies Pty Ltd has modified its advertising after the ACCC raised concerns Kogan's representations on its website and in the Herald Sun may mislead consumers about savings.
  Click here for more
  
  
• Hair replacement ex-franchisee fined for providing false, misleading information - consumer compensated
  Following criminal proceedings Mr Simon Charles Clarke and his company Narnia Investments Pty Ltd were convicted and fined a total of $7,000 after pleading guilty to providing false or misleading information in response to an information notice issued by the ACCC under section 155 of the Trade Practices Act 1974.
  Click here for more
  
  
• ACCC considers electricity works civil contractors accreditation scheme in public interest
  A proposal for Victoria's electricity distributors to implement a common accreditation scheme for civil-works contractors will produce public benefits, the ACCC has decided. As a result, the ACCC will grant authorisation, which provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.
  Click here for more