Law changes to be unveiled

Commerce Minister Lianne Dalziel is understood to be about to unveil law changes in a bid to solve the Australian Registered Managed Investment Schemes issue.

The government is likely to try to get cross party support for an add on to the Business Law Reform Bill which is currently before a select committee.

Business Law Reform Bills are traditionally non-controversial, and Dalziel will have to get support from all the other parties in order to get such a change through in that way.

The difficulty is understood to affect 13 New Zealand fund management firms – and in some cases the firms stand to lose hundreds of thousands of dollars unless the law is changed.

Under the existing law funds which are based offshore can be exempted from issuing a prospectus in New Zealand, so long as they lodge other documentation with the Companies Office.

The issue arose when Westpac bought BT Funds Management and discovered the late filing of some documents. Subsequent investigations unveiled other affected firms, although only one other - Edinburgh Fund Managers - has been named.

The penalty is draconian - the investment is deemed void, the money is refunded, along with a 10% penalty.

That 10% is higher than many funds have made in recent years, meaning that some investors may be keen to see the current law applied rather than changed.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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