FMA releases draft guidance for offer documents

The Financial Markets Authority (FMA) has published draft guidance for securities issuers, directors and their advisers on how to prepare and present effective prospectuses and investment statements. Compliance will be mandatory from 1 May 2012.

A consultation paper has been published and FMA is asking for submissions by 9 March 2012. It says the guidance will be finalised and published by 31 March 2012 and new offer documents will need to comply with the guidance from 1 May. Issuers with other documents already in the market will have until late 2012 to ensure they comply.

FMA CEO Sean Hughes says the aim is to ensure that financial markets participants clearly understand their responsibilities, and that investors have what they need to make informed decisions.

"Prospectuses and investment statements need to be concise, effective, and contain clear information," he says. "Disclosure documents should give equal prominence to both risk and return, and avoid undue promotion of what we would call 'headline returns'. To that end, the standards set out in the guidance note are designed to improve investors' ability to read and understand the offer."