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Securities Act NZ

 

The raising of capital within New Zealand through the offer of equity securities to the public is governed by the Securities Act 1978 and the Securities Regulations 1983. The governing body that reviews and monitors these activities is the Securities Commission. www.sec-com.govt.nz 

 

There are defined procedures and processes that must be adhered to when a company offers shares to the public. These are in place to protect both the investor and business seeking investment.  A simple summary is that in most instances businesses offering shares to the public outside of family and close friends need to develop a full prospectus and register this with the Companies Office.

 

The development of a prospectus, investment statement, associated accounts documentation and disclosures are prohibitive in time and resource to most small businesses to develop.

 

To combat this barrier, and make access to private investment capital (known also as Angel Investment) for small businesses more affordable and accessible, the Securities Commission has power under the Securities Act 1978 to issue exemptions from the full requirements of that Act to certain groups. The Securities Commission has issued the Securities Act (Venture Capital Schemes) Exemption Notice 2008 to provide an easier pathway for small businesses.  bizAngels uses one of these pathways. bizAngels operates under a Securities Act Exemption Notice.

 

"Securities Act 1978  (Venture Capital Schemes) Notice 2008"

 

The Exemption Notice provides for the issue of a separate Code of Practice (please download, read and print for reference). The Code of Practice incorporates three required forms. Two of the required forms are for businesses seeking investment and one is for potential investors. See investor and businesses seeking investment sections.

 

This Exemption Notice as its title sounds does not negate the Securities Act of 1978. Its purpose is to create a less onerous process for emergent and small private businesses without large resources to trade some of their shareholding for capital investment.

 

 

Securities Act Exemption Notice

 

"Securities Act (Venture Capital Schemes) Notice 2008"

 

Enterprising Manukau is an approved Scheme Administrator under the above Exemption Notice.  bizAngels is a branded division of Enterprising Manukau. www.em.org.nz  Enterprising Manukau is an economic development agency.

 

 

Limitations of the Publications of Businesses Seeking Capital Investment

 

 

The bizAngels scheme under the Exemption Notice is not a broker or trader of shares. The role is limited to that of an administration and introduction service.

 

• bizAngels assesses the compliance of the processes documented in the code of practice.
• Businesses seeking capital investment who have satisfactorily completed registration under the requirements of the code of practice may be introduced to those potential investors who have also registered with the scheme.
• A public offer of shares may not take place. The introductions of a registered business seeking equity capital can only be made to those potential investors who have registered with the scheme. 

 

There are several Scheme Administrators throughout New Zealand.  There is now a mechanism that allows cross registration with all existing schemes.

 

Commercial Neutrality

 

bizAngels does not endorse or give an opinion of the potentials or risks of any business it introduces to registered investors. It recommends the investors use professional advice to assess the potentials of the offered investment. The bizAngels administrator is accountable to ensure the process of documentation and introductions are completed in the manner proscribed in the Exemption Notice and Code of Practice

 

Investment Size Limitation 

 

All deal introductions and transactions must be under at total of NZ$5 million capital raised. We envisage that most deals will be under NZ$1 million, and that businesses who grow with Angel Capital may require second and third rounds of investment as businesses expand. Dependant upon the circumstances of the business at the time of second and third rounds of investment business may still use this service, or be introduced to venture capital dealers and processes as defined under the full Securities Act 1978.  

Copyright Enterprising Manukau 2009