11 Nov 2014

FMA wants clarity in prospectuses

9:47 am on 11 November 2014

The Financial Markets Authority (FMA) says companies will have to be more balanced with potential investors about any financial risks associated with investing in the business.

The FMA said it expects companies to note the recommendations it has made in its first-ever published review of a prospectus produced by a recently listed technology company.

While the FMA is taking no action against Gentrack, FMA director Simone Robbers said companies must be clear in their prospectuses and not give equal weight to every risk.

"There were no breaches that we found, but the offer documents could have been clearer in addressing things like likelihood, of the potential impact of risks to its financial forecasts," she said.

And she said issuers will have to sharpen their pitches, as there will be a cap on the number of pages they can use in a prospectus, from next month.

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