Wellington, April 14 NZPA - Auckland businessman David Jackson has resigned from the Securities Commission amid civil proceedings brought by the commission against Nuplex Industries, of which he is a non-executive director.
The commission is filing civil proceedings against Nuplex and six current and former directors, including Mr Jackson, for allegedly breaching continuous disclosure obligations.
Mr Jackson was a member of the Securities Commission from June 2005, and also a director of Fonterra, Pumpkin Patch, and The New Zealand Refining Company.
"I have tendered my resignation (from the commission) effective last night," he told NZPA.
He would not comment further, and would not discuss details of the proceedings against Nuplex.
Commerce Minister Simon Power said he received Mr Jackson's letter of resignation shortly after the commission announced its proceedings against Nuplex.
Mr Power said he had accepted the resignation but would not comment further while the matter was before the courts.
Nuplex yesterday said the company and its directors would defend themselves vigorously against the commission's allegations.
The other directors involved are Sydney-based managing director John Hirst, Sydney-based chairman and non-executive director Robert Aitken, Melbourne-based non-executive director Barbara Gibson, Sydney-based non-executive director Michael Wynter, and Auckland-based former non-executive director Bryan Kensington.
This is the first continuous disclosure case brought by the commission.
The commission is seeking declarations of contravention, pecuniary penalties -- which include a maximum penalty of up to $1 million per defendant --and compensatory orders.
The commission alleges that from December 22, 2008 until February 19, 2009 Nuplex, listed on both the NZX and the ASX, breached its continuous disclosure obligations under the NZX Listing Rules and the Securities Markets Act 1988 by failing to disclose to the market a breach of a banking covenant.
Both Nuplex and the directors are responsible for this failure, the commission alleges.
In its statement, Nuplex said it took seriously its continuous disclosure obligations and remained of the view that it had properly complied with them at all times.
"Regrettably, the commission's interpretation of the continuous disclosure required by the listing rules and the Securities Markets Act differs from the company's directors' considered judgement at the relevant time," Nuplex said.
Nuplex said the view of its board had been, and remained, that while the company's negotiations with banks remained incomplete, the company was complying with NZX listing rules in not making a disclosure.
"Furthermore, the board believes that disclosure while the negotiations were confidential and incomplete could have prejudiced the company, its shareholders and the banks," Nuplex said.
Discussions had taken place with the company's banks to loosen the senior debt cover ratio (SDCR) covenant, effective as at December 31, 2008.
That happened as soon as the company had a clear understanding of the impact of the global financial crisis on demand and of the rapid devaluation of the New Zealand dollar, Nuplex said.
The banks indicated they would consider loosening the covenant and, following completion of their internal processes, they did so.
"Given the banks' positive attitude, and after consideration by all board members, the board made the judgement in January 2009 that there was nothing material to disclose beyond the disappointing half year financial information," Nuplex said.
Business conditions during the 2009 financial year were unprecedented across the world, and in January 2009 the company was in uncharted waters.
The board exercised reasonable, commercial judgement on disclosing the successful SDCR negotiations with the banks in the interests of the company and its shareholders, Nuplex said.
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