Dated at Wellington this 20th day of July 2004.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
This notice, which comes into force on 23 July 2004 and expires on 23 July 2009, exempts 2 types of employer superannuation schemes from the registered prospectus requirements of the Securities Act 1978 (the Act).
The notice exempts superannuation schemes promoted by an employer (or associated persons) and offered to its employees or employees of associated persons (or to relatives, spouses, de facto partners, or dependants of those employees). This exemption applies to schemes that would have come within the exemption for employer superannuation schemes in section 5A of the Act except for any or all of the following reasons:
the offer is only made to employees, etc, but it is not a term of the trust deed itself that only these persons may be admitted to membership of the scheme so membership is not strictly conditional on being an employee, etc:
it is a term of the offer, but it is not a term of the trust deed itself (so is not a legal requirement for the scheme), that the employer will incur costs to cover any shortfall in the administrative costs of the scheme:
those employer costs are incurred by an associated person of the employer, rather than the employer itself:
those employer costs are incurred in respect of the year in which there is a shortfall, but not in that year itself:
the employer (or associated person) does not incur costs equal to the full administrative costs of the scheme, but the surplus of the scheme is applied to meet contribution liabilities, expense payments (including administrative costs), or both, and the employer incurs costs at least equal to the difference between that applied surplus and the administration costs.
The notice also exempts small employer superannuation schemes. The key differences from the other employer superannuation schemes are that these schemes may have more than 1 unassociated participating employer, but must have total assets of less than $5 million and have been in existence on 1 October 1997. This exemption is similar to that previously contained in regulation 2C of the Securities Regulations 1983 (the Regulations) before they were amended by the Securities Amendment Act 2004. These schemes would have come within the exemption in section 5A of the Act except for the reasons (set out above) applying to the other employer superannuation schemes or because they have more than 1 unassociated participating employer.
Both exemptions are subject to conditions similar to those applying to employer superannuation schemes exempted under section 5A of the Act. The main differences (other than those relating to the employer costs requirement, which are covered above) are that—
the annual report must state whether the employer was required to incur costs to fund any shortfall; and
the employer costs requirement (in clause 7), the requirement as to the annual report (in clause 8), and the requirement to respond to requests for the investment objectives and policy of the scheme (in clause 9) must be included, as terms of the offer, in the investment statement (except there is a transitional period of 3 months during which this condition does not apply to small employer superannuation schemes, to allow them to continue using their existing investment statements); and
for a transitional period of 3 months, small employer superannuation schemes may continue to use the statement warning of restricted disclosure in the form previously required by the Regulations.
These exemptions do not apply to employer superannuation schemes that are in fact exempt under section 5A of the Act (which means that it is clear which exemption and related conditions apply in each case).
However, there is an additional transitional exemption for small employer superannuation schemes (as previously defined in regulation 2C of the Regulations) that were previously exempt under section 5(2E) of the Act but are exempt now under section 5A of the Act. As with small employer superannuation schemes relying on this notice, for 3 months these schemes may continue to use the statement warning of restricted disclosure in the form previously required by the Regulations.
The Securities Commission (the Commission) considers that it is appropriate to grant the exemptions because—
the Commission considers that the purpose of section 5A of the Act is to grant an exemption from the requirement to have a registered prospectus to employer superannuation schemes where the costs of the scheme are met by the employer. Some schemes meet this policy purpose, but are unable to comply with the terms of the statutory exemption for various technical reasons. The Commission considers that it is consistent with the purpose of the Act to grant an exemption to extend the effect of the exemption in section 5A of the Act to these schemes, and to schemes that previously enjoyed the benefit of the section 5(2E) exemption for small employer superannuation schemes before the Securities Amendment Act 2004 came into force:
the Commission is of the view that it is appropriate to have a transitional period in which issuers of schemes that previously enjoyed the benefit of the exemption in the Regulations for small employer superannuation schemes can rely on the exemption from the requirement to have a registered prospectus while using their existing investment statements. The content of those existing investment statements is sufficiently similar to the content required under the new exemptions that the benefit of immediately preparing new investment statements is outweighed by the cost of doing so.