The Government has released its Phase Two consultation on capital markets reform, signaling further changes aimed at making it easier and cheaper for businesses to raise capital, while maintaining appropriate investor protections. It follows the Phase One reforms focused on IPO disclosure and climate-related disclosure obligations.

The consultation covers eight targeted reform areas, including product disclosure, director and issuer liability, Catalist and USX settings, crowdfunding and peer-to-peer lending limits, wholesale investor settings, auditor liability, and broker activity. Perhaps more significantly though, it also invites broader feedback on how New Zealand’s capital markets framework should evolve to better support growth, innovation and international competitiveness. This is an opportunity for market participants to promote changes they consider will move the dial.

Submissions close at 5pm on 25 August 2026.

Key reform areas under consideration

The discussion document seeks feedback on eight areas where existing settings may be adding unnecessary cost or friction:

• Product disclosure statements: Whether current PDS requirements remain proportionate and effective, including possible changes to reduce prescribed disclosure, shift more information to the Disclose Register, and move towards a more flexible, digital-first disclosure model.

• Director and issuer liability: Whether current civil liability settings are discouraging listing or capital raising, including continuous disclosure liability for NZX-listed issuers and deemed director liability for disclosure and financial reporting contraventions.

• Catalist market reforms: Whether current market capitalisation thresholds and audit requirements are limiting Catalist’s usefulness as a lower-cost public market, and whether it should play a wider role beyond being a stepping-stone market for smaller growth companies.

• USX audit requirements: Whether audit requirements for businesses on the Unlisted Securities Exchange (an exempt (private) market that operates under a lighter regulatory framework than a licensed market) are proportionate, particularly where smaller issuers are seeking shareholder liquidity rather than substantial new capital.

• Crowdfunding and peer-to-peer lending: Whether the current $2 million aggregate fundraising limit should be increased, and whether retail investor caps should be introduced if higher issuer limits are permitted.

• Wholesale investor settings: The eligible investor pathway, promotion of wholesale offers, the two-year validity period for eligible investor certificates, and whether existing wholesale investor thresholds remain appropriate.

• Auditor liability: Whether auditors conducting FMC audits should benefit from some form of liability limitation, such as a capped liability scheme or contractual limitation arrangement.

• Broker activity and issuer visibility: Concerns about declining research coverage, reduced broker engagement with smaller issuers, and difficulties connecting emerging companies with investors. No specific reforms are proposed at this stage; MBIE is mainly seeking evidence and ideas for further policy work.

Broader opportunity to shape reform

The consultation is not limited to the eight targeted reform areas. It also invites feedback on broader areas of tension in New Zealand’s capital markets framework, including where current settings may be creating unnecessary barriers, uncertainty or regulatory mismatch.

This creates an opportunity for market participants to raise practical issues that may not fit neatly within the specific reform proposals, as well as bigger ideas about how the Financial Markets Conduct Act 2013 and related settings should evolve to support deeper, more competitive and more innovative capital markets.

Possible areas for feedback include cross-border capital raising, pathways between private and public markets, market infrastructure, digital innovation, AI, asset tokenisation, the development of novel markets such as prediction markets, and the balance between investor protection and access to capital.

Next steps

We would be interested to hear from you, if your business is experiencing unnecessary cost or friction under the existing settings, or if you have any feedback on the proposed reforms.

Please contact us if you would like help preparing a submission, including identifying practical barriers or developing reform proposals that support investor protection, innovation and access to capital. Submissions close on 25 August 2026 and may address any or all aspects of the consultation.