Auditors nervous as Govt unveils regulation cuts to boost capital markets.
Tuesday, 14 July 2026
The Government has unveiled options for strengthening New Zealand capital markets’ “equity ladder”, but the lobbying body for auditors has sounded a note of caution.
The NZX sharemarket is the highest profile of New Zealand’s capital markets, but it has struggled in recent years to attract new companies listing their shares on it through initial public offerings.
There have been various suggestions for reviving its flagging fortunes centred around boosting KiwiSaver and privatising more state-owned assets, including Kiwibank, the remaining government-owned Air New Zealand shares, Pāmu (Landcorp) and TVNZ.
But the Government believes over-regulation is stifling capital raising further down what it calls the “equity ladder” on the nursery Catalist market for start-up companies, and the Unlisted Market.
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The reforms, unveiled today by Minister of Commerce and Consumer Affairs Cameron Brewer, focus on reducing the costs of raising money for companies to encourage more to list their shares on the NZX, or on the small company markets below it, hopefully later to progress up the rungs of the equity ladder onto the NZX main board.
The cost-cutting would be coupled with reducing the legal risk for directors who innocently fail to comply with listing rules, such as continuous disclosure rules designed to keep shareholders informed of market sensitive information.
Measures to reduce costs include reducing audit requirements for smaller companies on the lower-tier markets. However, notes of caution have been struck by Chartered Accountants Australia and New Zealand, which warned a “balance” needed to be struck between deregulation and ensuring investors get workable protections and high-quality information to make informed decisions.
And, fearing a reduction in work for its members, the accountancy lobbying body’s New Zealand head Peter Vial said: “New Zealand needs a strong and sustainable audit profession that can continue to provide the independent assurance that underpins confidence in our markets.”
However, one area in which the Government appears to be proposing tighter laws is on the “eligible” investor definition.
Instead of raising money from the wider public, some businesses raise money directly from wholesale investors like superannuation funds, and from what were supposed to be sophisticated private individuals who are experienced investors in their own right.
However, after several high-profile actions by the Financial Markets Authority against investment organisations which raised money from supposedly experienced investors, the Government is consulting on tightening the eligibility requirements so people have to prove they are experienced.
Or, as Brewer’s consultation puts it: “Some investor outcomes raise questions about the appropriateness of the eligible investor self-certification.”
The two actions by the FMA were against Auckland property investment group Du Val, and Rangiora-based investment group Chance Voight.
Unveiling a six-week consultation on the capital markets reform proposals, Brewer said: “Economic growth is this Government's central priority, and deep, competitive and trusted capital markets are central to that ambition.”
He said: “It comes down to one thing: the cost of capital. When it costs too much for a Kiwi business to raise money, good ideas go unfunded and businesses that should be expanding stay stuck. Our job is to bring that cost down, to make raising money here easier and cheaper, and to make investing here more rewarding.”
NZX acting chief executive Graham Law said: “As a small economy competing globally for investment, improving market depth, liquidity and policy settings are critical to ensuring capital is available, affordable and accessible.”
Thriving capital markets were needed as the pool of KiwiSaver funds expands over the next 20 years, he said.
“Stronger, more liquid capital markets lower the cost of capital, attract investment and give businesses more options to grow. If New Zealand wants higher productivity, stronger wages and a larger economy, we need settings that encourage capital to be invested here,” he said.
The reform proposals were informed by suggestions from the OECD economic survey on New Zealand, but one suggestion made by the OECD did not appear in the consultation document released by Brewer: tax relief for initial public offerings.