Fund managers and super scheme sponsors face the risk that their funds could be suspended when it comes to re-registering prospectuses and investment statement because of inconsistencies in interpreting the Securities Act and new disclosure legislation.
Brookfields Lawyers consultant Marguerite Brien told the Superfunds and Funds Management Conference in Wellington on Tuesday, that managers, sponsors and lawyers had enormous trouble complying with the new disclosure legislation when it became operative.
She says there are poor guidelines about how to comply with the legislation, plus the Companies Office, which is responsible for approving prospectuses, was not up to the job.
"The Companies Office, in general, was not up to the challenge of how to apply the act to superannuation products and investment products," she says.
"That continues to be a problem."
Her message to delegates was that managers, sponsors and lawyers can't relax knowing the first registration is behind them.
She says people starting to prepare to re-register documents with the office are finding the office is now querying items which it had approved in the previous registration.
The risk is that if documents are not re-registered in time, funds and schemes could be suspended, and lawyers could face stiff fines and prison terms if they get things wrong.
Brien says there is widespread concern in legal circles about the new disclosure regulations and how the Companies Office interprets it.
She says the profession has made "quite forceful representations" to the office, but they have been "in vain".
Brien acknowledged the Companies Office, along with lawyers, had been on a steep learning curve, however lawyers were looking to the office for consistent interpretation of the act and some clear guidelines on how to apply with it.
"We don't have the road map," she says.
These compliance problems are adding significant cost to a manager's business and straining relationships between, lawyers, their clients and the Companies Office.
Fund managers and super scheme sponsors face the risk that their funds could be suspended when it comes to re-registering prospectuses and investment statement because of inconsistencies in interpreting the Securities Act and new disclosure legislation.