The New Zealand Securities Commission has now made the New Zealand securities market accessible to B...
The New Zealand Securities Commission has now made the New Zealand securities market accessible to British collective investment schemes.
A new exemption notice will enable British unit trusts and Oeics to offer their products in New Zealand without completing New Zealand disclosure documentation. This will provide a cost-effective method of adding the market to products distribution. While the New Zealand market is insignificant when compared to overseas markets, it can provide a relatively inexpensive bonus to fund issuers.
Earlier in the year, the Securities Commission indicated it would consider granting access to the New Zealand market to foreign collective investment schemes. It indicated it would do this by considering applications in respect of separate jurisdictions and product classes. The first of these has now been considered and the result is the Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 1999. This Notice came into force on 9 December 1999.
The notice allows both British unit trusts and Oeics to offer securities in New Zealand using their British disclosure documentation. The terms of the notice require that each investor receives a key features document that complies with the rules of the Investment Management Regulatory Organisation or the Personal Investment Authority (as the case may be) prior to subscribing for the securities. If a key features document cannot be supplied, the scheme must complete a New Zealand investment statement.
The content of this document is prescribed by the New Zealand securities regulations and provides key information in respect of the investment and a question and answer format designed around 11 key questions.
These include such questions such as 'What returns will I get?', 'What are the changes?', 'What are the risks?', 'What type of investment is this?' and 'Who is involved in providing it for me?'. The aim of this document is to provide simple and concise details to non-exempt investors.
The key features document or investment statement, as the case may be, contains or will be accompanied by a written statement appearing under the heading "Important Information for New Zealand Investors" setting out nine specific items of information. These cover additional risks, such as exchange and jurisdictional risks arising from investing in overseas securities and information as to availability of disclosure information.
It will also contain further written statements under the heading "Agreements to Jurisdiction" containing statements regarding submissions to the non-exclusive jurisdiction of New Zealand courts and provision for service of documents in New Zealand.
The securities are to be marketed for sale in Britain at the same time as they are offered in New Zealand. Thus the notice cannot be used as a back door to avoid New Zealand regulation of products offered only in New Zealand.
The offeror must complete a prospectus or scheme particulars (as the case may be) under which it is lawful to market securities in Britain.
The British prospectus, the most recent annual and (if more recent) half yearly reports of the scheme and any documents that accompanied the prospectus upon registration in Britain must be available within five working days of request.
Prior to making the offer, the following documentation must be lodged with the Registrar of Companies in Wellington, the British prospectus and a copy of any exemptions from any applicable regulatory regimes granted in respect of the securities.
Also a certificate from the issuer certifying that a copy of the British prospectus has been sent to the Financial Services Authority and a copy of any documents issued by the Financial Services Authority or a recognised self-regulatory organisation that evidences the manager and the trustee of the unit trust, or the authorised director and depository of the investment company, as the case may be, are authorised persons for the purposes of the Financial Services Act.
In the case of the unit trust, a copy of the trust deed and the authorisation order made under Section 78 of the Financial Services Act or in the case of an open-ended investment company, the instrument of incorporation and the authorisation order made under Regulation 9(1) of the ECA Regulations.
Additionally, an annual report to the Securities Commission in Wellington setting out details of the securities allotted in New Zealand in the previous year, the amount raised by the allotment of those securities and a statement as to the issuers intentions for continued offering must also be submitted.
Similar reports are required in respect of existing overseas jurisdiction notices and difficulties have arisen in the past with issuers inadvertently failing to provide the report.
The effect of failing to do this is to remove coverage of the notice, and thus render void any allotments of securities made. Thus it is important to ensure that these reports are not overlooked.
The British prospectus and the key features document are exempt from the majority of the content requirements of the securities regulations.
However the provisions of Regulation 8 (prohibition on misleading information), Regulation 9 (consistency between documents) and Regulation 20 (prohibition on statements as to safety) still apply. It will accordingly be necessary for overseas issuers to ensure that these regulations are complied with in preparation of those documents.
It is also important to note that any advertising or promotional material other than the British prospectus and the key features document will need to comply with all of the Regulations, including the requirement in Regulation 17 for the directors of the issuer to complete and retain compliance certificates.
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till