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A security means any interest or rightto participate in any capital, assets,earnings, royalties, or other property ofany person, and includes:(a) an equity security (an interest inor right to share in, or in the sharecapital of, a company);(b) a debt security (an interest in, orright to be paid, money which isdeposited with or lent to anotherperson);(c) a unit in a unit trust;(d) an interest in a superannuationscheme;(e) a life insurance policy;(f) a participatory security (a securityoffered by a partnership thatinvites investment from membersof the public).An “offer” includes an invitation, andany proposal or invitation to make anoffer. Therefore any communicationwhich relates to, or is connected with, aproposed investment in securities mustbe carefully considered as the provisionsof the Securities Act may be triggered.Determining who is, and who is not, a“member of the public” can, in somecases, be a difficult task. Legal adviceshould always be sought if therecould be an offer of securities to thepublic. The definition of “the public”includes “any section of the publichowever selected”. A person is notexcluded from being a member of thepublic simply because he or she is anemployee, client or shareholder of thecompany issuing the securities.If a company offers securities to thepublic without a registered prospectusand investment statement being inplace, the allotment of those securitiesmay be void. In that case, the issuermay have to repay the monies paid bysubscribers for securities, together withinterest. The Act also carries criminalpenalties in some cases. Directors canbe personally liable for the repayment.There are exemptions from therequirements under the Act to put aregistered prospectus and investmentstatement in place before offeringsecurities to the public. The mainexemptions are:(a) relatives and close businessassociates of the issuer or thedirectors of the issuing company;(b) individuals whose principal businessis the investment of money or whohabitually invest money in thecourse of their business;(c) where the required subscriptionprice is a minimum of NZ$500,000;(d) persons certified as “wealthy” (netassets of at least NZ$2 million or anannual gross income of NZ$200,000or more in the two precedingfinancial years); and(e) persons certified as experienced ininvesting money or in the industry orbusiness to which the security relates.There are also a number of specificexemptions, and some designedspecifically for the offer of securities inNew Zealand by overseas companiesto avoid dual compliance by an issuerwho is already required to comply withsimilar or tighter controls overseas.If a security can be formally listed, theonly recognised exchange is operatedby NZX Limited. There is also anunregulated trading platform called“Unlisted” which is an internet-basedsecurities trading service that providesa low cost, easy way for small tomedium sized companies to trade theirshares.11