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New Securities Legistration recently passed by Parliament

Papua New Guinea's National Parliament, has passed the following legislation ("New Securities Legislation"):

  • Securities Commission Act;
  • Capital Markets Act; and
  • Central Depositories Act.

The New Securities Legislation is not in force yet and will not come into force until the legislation is certified by the Speaker of the National Parliament and following a notice in the National Gazette.

Importantly the Securities Commission Act will, when it comes into force, repeal the following:

  • The Securities Act 1997;
  • The Securities Regulation 1998; and
  • The Takeovers Code 1998

The legislative intention is that the Capital Markets Act will replace the Securities Act 1997 and that the Minister for Trade Industry and Commerce (currently Hon. Richard Maru MP) ("Minister") will prescribe a new takeovers code based on the recommendation of the PNG Securities Commission ("New Takeovers Code").

The PNG Securities Commission is still working on the New Takeovers Code and no recommendation has been made to the Minister yet. In these circumstances it seems unlikely that the Government will allow the New Securities Legislation (in particular the Securities Commission Act and the Capital Markets Act) to come into force until the New Takeovers Code has been approved by the Minister.

When it comes into force, the New Securities Legislation will bring securities regulation in PNG much more into line with current New Zealand and to a lesser extent, Australian practice. For example in relation to the prospectus requirements, the Capital Markets Ac does away with the concept of an "offer to the public". Instead, subject to specific exceptions (classified as "excluded offers", "excluded invitations" and excluded issues"), no person will be permitted in PNG to issue or offer for subscription or purchase or make application for the quotation of the securities on a stock exchange unless a prospectus in relation to the securities has been registered by the PNG Securities Commission and the prospectus and complies with the requirements of the Capital Markets Act. Importantly, an offer of or invitation to subscribe for securities pursuant to a takeover offer "which complies with the relevant law applicable to such offers" is specifically excluded.

Until the New Securities Legislation and the New Takeovers Code come into force, however, the PNG regulatory requirements in relation to takeovers, initial public offers and the offering of securities generally will continue to be determined by the Securities Act 1997 and the Takeovers Code 1998.

Written by Philip Wright

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