Blog Image


Corporate Alert – 13 October 2017

Home Insights Corporate Alert – 13 October 2017

Contributed by:

Contributed by: Joe Windmeyer, Joanna Khoo and Nayoung Kwon

Published on:

Published on: October 13, 2017


FMA releases guidance note on substantial product holder disclosure

Following the consultation paper released in June seeking feedback on substantial product holder's disclosure obligations, the FMA has released a guidance note on substantial product holder (SPH) disclosures. The guidance note is available here.

What does the guidance note cover? The guidance note provides clarification on the following areas of compliance concern:

  • details of relevant transactions in initial disclosure;
  • aggregating on-market trades;
  • describing a 'relevant interest';
  • joint disclosures;
  • timeliness;
  • details of transaction for 1% movements;
  • registered holders; and
  • disclosures by individuals who manage funds.
Details of relevant transactions in initial disclosures

Initial disclosures must provide details of all relevant transactions or events in the four-month period prior to the commencement of a substantial holding, and not just for the individual trade that tipped the holding over the 5% threshold.

Aggregating on market trades

The disclosure of on-market trades may be aggregated (although separately for on-market acquisitions and on-market disposals), and at a minimum, the disclosure must state the following information:

  • the date range of aggregated on-market trades;
  • how the relevant interest was acquired, disposed of, or changed in nature;
  • the total consideration paid or received for the aggregated trades; and
  • the total number of financial products to which the aggregated trades relate.
Describing a "relevant interest"

An SPH disclosure must adequately describe the relevant interest in the financial product to provide sufficient information for the market to understand the nature of the relevant interest. The description of a "relevant interest" as "not applicable" or "normal market trading" is inadequate.

Where a relevant agreement exists, details of that agreement must be given, and the agreement must be attached to the SPH disclosure or alternatively an explanation of why it has not been provided.

Joint disclosure

When completing a joint SPH disclosure, prescribed information for each SPH is required separately under the following headings:

  • summary of substantial holding;
  • details of transactions and events giving rise to relevant event; and
  • details after relevant event.

The SPH disclosure should make clear which information relates to which joint holder, and under the heading "additional information", describe the nature of their connection.


SPH disclosure must be made promptly and without delay as soon as the person knows or ought reasonably to know that a relevant event has occurred. The FMA has clarified that the obligation to make an SPH disclosure arises when the transaction is agreed not when it is settled, for example, a purchaser acquires a relevant interest in a financial product when the trade takes place.

The FMA would expect SPH disclosure to be made usually within one business day of persons becoming aware of events that trigger a disclosure obligation.

Where an SPH disclosure contains price sensitive information that could materially affect the price of an issuer's quoted financial products (for example transactions by SPHs that relate to takeover offers), where possible, it should be released to NZX outside of market hours.

Details of transaction for 1% movements

SPH disclosures for 1% movements are expected to include details of all transactions (including aggregated on-market trades) and events, which led to the 1% movement. This is consistent with the approach toward initial SPH disclosures that require information on all transactions during the four months prior to the commencement of the substantial holding.

Registered holders

Under the SPH disclosure prescribed form, the "current" registered holder is the person to whom the financial products are registered before the relevant transaction. When the transfers are registered, the registered holder becomes the person to whom the financial products are registered after the relevant trade, transaction or event occurs.

In the case of on-market trades, it is common for the registered holder of the financial products when the transfers are registered to be "unknown".

Disclosures by individuals who manage funds

The FMA proposes to engage with MBIE to clarify the position on whether individual fund managers have a relevant interest in the financial products that they manage, held by fund management firms.

In the meantime, individuals who manage funds will not be required to make SPH disclosures for financial products they control through the funds they manage, solely because:

  • the funds they manage have a 5% holding in a listed company; or
  • the 5% threshold is met by a combination of their personal holding and the fund's holding.  

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.

Read more:
Corporate Advisory
Talk to one of our experts:
Related Expertise