Securities Act 1978

37A Voidable irregular allotments

  • (1) No allotment of a security offered to the public for subscription shall be made if—

    • (a) the subscriber did not receive an investment statement relating to the security before subscribing for the security; or

    • (ab) in the case of a security that is offered in a simplified disclosure prospectus,—

      • (i) the subscriber did not receive, before subscribing for the security, a copy of—

        • (A) that simplified disclosure prospectus; and

        • (B) every instrument that amends that prospectus that is registered under section 43 before the time of allotment; or

      • (ii) the FMA made a delayed allotment order in relation to that simplified disclosure prospectus and the subscriber subscribed for the security before the delayed allotment order was made; or

    • (b) at the time of allotment, the investment statement or registered prospectus relating to the security is known by the issuer of the security, or any director of the issuer, to be false or misleading in a material particular by reason of failing to refer, or give proper emphasis, to adverse circumstances (whether or not the investment statement or registered prospectus became so false or misleading as a result of a change of circumstances occurring after the date of the investment statement or registered prospectus); or

    • (c) the date of allotment would be more than,—

      • (i) where the registered prospectus relating to the security contains or refers to a statement of financial position or interim statement of financial position in accordance with regulations and no certificate has been registered in relation to that prospectus under subsection (1A), 9 months after the date of that statement of financial position or interim statement of financial position (whichever is the later); or

      • (ii) where the registered prospectus relating to the security contains or refers to a statement of financial position (but not an interim statement of financial position) in accordance with regulations and a certificate has been registered in relation to that prospectus under subsection (1A), 9 months after the date of that certificate; or

      • (iii) in any other case, 6 months after the date of the registered prospectus; or

    • (d) in the case of an equity security, debt security, or participatory security, after the allotment, the total amount of securities allotted under the registered prospectus relating to the security would (after deducting, in the case of an allotment of debt securities, the total amount of debt securities of the issuer redeemed since the date of the registered prospectus) exceed the amount specified in the registered prospectus as the maximum amount that will be so allotted.

    (1AA) However, subsection (1)(a) does not apply to securities that are offered in a simplified disclosure prospectus.

    (1A) For the purposes of subsection (1)(c), if no interim statement of financial position is contained or referred to in a registered prospectus, an issuer may deliver to the Registrar for registration under this Act, and the Registrar shall register, a certificate that relates to the registered prospectus and that—

    • (a) is signed on behalf of all the directors by at least 2 directors of the issuer (or, where the issuer has only 1 director, by that director); and

    • (b) is dated no later than 9 months after the date of the statement of financial position contained or referred to in the registered prospectus; and

    • (c) states that, in the opinion of all directors of the issuer after due enquiry by them,—

      • (i) the financial position shown in the statement of financial position referred to in paragraph (b) has not materially and adversely changed during the period from the date of that statement of financial position to the date of the certificate; and

      • (ii) the registered prospectus is not, at the date of the certificate, false or misleading in a material particular by reason of failing to refer, or give proper emphasis, to adverse circumstances; and

    • (d) where the registered prospectus relates to equity securities, debt securities, or participatory securities, is accompanied by financial statements—

      • (i) for the 6-month period from the date of the statement of financial position referred to in paragraph (b); and

      • (ii) prepared in accordance with regulations as if they were required to be contained or referred to in a registered prospectus for those securities, except that they need not be audited.

    (2) [Repealed]

    (3) An allotment made in contravention of this section is (whether or not the issuer is in liquidation) voidable at the instance of the subscriber by notice in writing to the issuer at any time within the prescribed period.

    (4) For the purpose of subsection (3), prescribed period means—

    • (a) a period of 1 year after the security or a certificate of the security has been sent to the subscriber; or

    • (b) a period of 6 months after the subscriber knows, or ought reasonably to know, that the allotment was made in contravention of the provisions of this section—

    whichever is the lesser.

    (5) Without limiting any enactment or rule of law, an allotment made in contravention of this section shall be valid unless notice avoiding the allotment is given by the subscriber in accordance with subsection (3).

    (6) Where an allotment made in contravention of this section is avoided by the subscriber under subsection (3), the issuer shall forthwith upon receiving notice under that subsection, repay the subscriptions to the subscriber.

    (7) If such subscriptions are not so repaid within 1 month after the date of the receipt by the issuer of notice under subsection (3), the issuer and all the directors thereof shall be jointly and severally liable to repay the subscriptions with interest at a rate prescribed from time to time by regulations made under this Act from the date on which such notice was received:

    provided that a director shall not be so liable if he or she proves that the default in the repayment of the subscriptions was not due to any misconduct or negligence on his or her part.

    (8) [Repealed]

    Section 37A: inserted, on 1 September 1983, by section 16 of the Securities Amendment Act 1982 (1982 No 147).

    Section 37A(1): substituted, on 1 October 1997, by section 15(1) of the Securities Amendment Act 1996 (1996 No 100).

    Section 37A(1)(a): amended, on 1 October 1997, by section 4(1)(a) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1)(ab): inserted, on 28 July 2009, by section 11(1) of the Securities (Disclosure) Amendment Act 2009 (2009 No 23).

    Section 37A(1)(ab)(i)(B): substituted, on 1 May 2011, by section 17 of the Securities Amendment Act 2011 (2011 No 6).

    Section 37A(1)(ab)(ii): amended, on 1 May 2011, by section 84(3) of the Financial Markets Authority Act 2011 (2011 No 5).

    Section 37A(1)(b): amended, on 1 October 1997, by section 4(1)(b) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1)(c)(i): amended, on 1 October 1997, by section 4(1)(c) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1)(c)(ii): amended, on 1 October 1997, by section 4(1)(c) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1AA): inserted, on 28 July 2009, by section 11(2) of the Securities (Disclosure) Amendment Act 2009 (2009 No 23).

    Section 37A(1A): inserted, on 1 October 1997, by section 15(1) of the Securities Amendment Act 1996 (1996 No 100).

    Section 37A(1A): amended, on 1 October 1997, by section 4(2) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1A)(b): amended, on 1 October 1997, by section 4(2) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1A)(c)(i): amended, on 1 October 1997, by section 4(2) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(1A)(d)(i): amended, on 1 October 1997, by section 4(2) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(2): repealed, on 15 April 2004, by section 13(1) of the Securities Amendment Act 2004 (2004 No 31).

    Section 37A(3): amended, on 28 July 2009, by section 11(3) of the Securities (Disclosure) Amendment Act 2009 (2009 No 23).

    Section 37A(7): amended, on 1 October 1997, by section 4(3) of the Securities Amendment Act 1997 (1997 No 16).

    Section 37A(7) proviso: amended, on 3 May 2001, by section 5(c) of the Securities Amendment Act 2001 (2001 No 25).

    Section 37A(7) proviso: amended, on 3 May 2001, by section 5(d) of the Securities Amendment Act 2001 (2001 No 25).

    Section 37A(8): repealed, on 1 January 2011, by section 58 of the Limitation Act 2010 (2010 No 110).