15 August 2011
The Financial Markets Authority (FMA) has today ordered Share Buyers Limited (Share Buyers) and associated persons to include a warning from FMA in a prominent position at the beginning of any document making an unsolicited offer to buy shares or other securities.
The order requires that:
The order can be found here.
FMA Chief Executive Sean Hughes said that FMA wants any investor who receives an unsolicited offer to buy their shares to have all the information they need to make a sound decision.
"This order is intended to ensure that investors who receive an offer from Share Buyers to buy their shares or other securities will have the information they need to decide if that offer is in their best financial interests," Mr Hughes said.
"Investors are warned to treat any such offer with caution and to seek advice from an Authorised Financial Adviser, Community Law Centre or Citizens Advice Bureau."
Under section 49 of the Financial Markets Authority Act 2011, if FMA has issued a warning, it may make an order that requires any offer documents of the type specified in the order to contain a copy of the warning in a prominent position, or be accompanied by a copy of the FMA warning (a warning disclosure order).
Before making a warning disclosure order, FMA must first:
1. Issue a warning about any matter relating to a relevant person;
2. Give the relevant person at least three working days written notice that FMA may make a warning disclosure order and the reasons why FMA is considering exercising that power;
3. Give the relevant person an opportunity to make written submissions and to be heard on the matter within that notice period;
4. Have regard to whether exercising the power contributes to its function of promoting the confident and informed participation of businesses, investors and consumers in the financial markets.
FMA issued a warning on 8 July 2011 about unsolicited offers that may be made by Share Buyers and people associated with it. The warning is available here.
The warning disclosure order binds Share Buyers and any people associated with Share Buyers. FMA made the warning disclosure order today against Share Buyers, under section 49(1) of the Financial Markets Authority Act 2011 for the following reasons.
1. Share Buyers and its associated persons have engaged in conduct that involves dealing in securities, including making unsolicited offers to purchase securities, and requesting copies of share registers in a number of companies for the purposes of making off-market offers.
2. A fair, efficient, and transparent financial market requires the investors and consumers of that market to make fully informed decisions on the basis of the best information available.
3. The warning is intended to provide investors with information about how to find out what their investment is worth, so that the investors are able to compare the terms of selling securities under an unsolicited offer from Share Buyers and its associated persons against what they are otherwise likely to receive for their investment. FMA considers that this comparison is essential for investors to make an informed decision about whether to sell their securities.
4. The warning also cautions investors to read through the offer carefully and to seek advice.
5. Including the warning in a prominent place in the offer document will ensure that investors have an opportunity to read the warning before agreeing to sell their securities.
A person who does not comply with an order made by FMA under section 49 of the Financial Markets Authority Act 2011 commits an offence and is liable on summary conviction to a fine of up to $300,000.