We are receiving a lot of enquiries from NZ startups, and more established tech companies, about the legalities of NZ companies raising investment via an ICO.
The likely legal treatment of an ICO offered to the general public in NZ (as opposed to wholesale or other excluded investors) is still a work in progress. The Financial Markets Authority’s guidance on this topic, which the Authority updated late last year, is helpful but far from definitive (see our December blog for more on this topic).
However, a NZ company wishing to raise funds via an ICO is unlikely to be targeting the NZ public. The big money invested into ICO’s is coming from international investors already participating in ICO, token and cryptocurrency markets.
The disclosure (prospectus) requirements of NZ’s securities laws do not apply to offers of securities outside NZ. So NZ companies seeking funding only from international investors will not need to wrangle with the NZ law or the FMA’s guidance. (Unfortunately this doesn’t mean NZ companies escape the need for legal advice altogether – specialist crypto-centric advice will still be needed on compliance with international securities laws.)
Although the bulk of NZ’s securities laws will not apply, there are still a couple of things to be aware of:
We expect to be talking with the FMA about ICO’s and NZ legal requirements as the year progresses. We will continue to blog on this topic as new information becomes available.
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