Securities Act (Kermadec Property Fund Limited) Exemption Notice 2006

Securities Act (Kermadec Property Fund Limited) Exemption Notice 2006

(SR 2006/337)

  • This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.


Note

This notice is administered by the Securities Commission.


Pursuant to the Securities Act 1978, the Securities Commission gives the following notice (to which is appended a statement of reasons of the Securities Commission).

1 Title
  • This notice is the Securities Act (Kermadec Property Fund Limited) Exemption Notice 2006.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

2 Commencement
  • This notice comes into force on the day after the date of its notification in the Gazette.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

3 Expiry
  • This notice expires on the close of 30 June 2007.

4 Interpretation
  • (1) In this notice, unless the context otherwise requires,—

    Act means the Securities Act 1978

    FRS-42 means the financial reporting standard known as Financial Reporting Standard No 42, approved under the Financial Reporting Act 1993

    Kermadec means Kermadec Property Fund Limited

    offer means the offer to the public of shares in accordance with the offer document

    offer document means the combined prospectus and investment statement in relation to the offer that is, or will be, registered on or about 7 November 2006

    promoter means the promoter of the offer

    Regulations means the Securities Regulations 1983

    shares means ordinary shares in Kermadec.

    (2) Any term or expression that is defined in the Act or the Regulations and used, but not defined, in this notice has the same meaning as in the Act or the Regulations.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

5 Exemptions from clauses 10(1)(c) and 11(3)(f) and (g) of Schedule 1 of Regulations
  • Kermadec and every person acting on its behalf are exempted, in respect of the offer, from clauses 10(1)(c) and 11(3)(f) and (g) of Schedule 1 of the Regulations.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

6 Condition of exemptions in clause 5
  • The exemptions in clause 5 are subject to the condition that the offer document states or contains—

    • (a) a prospective pro forma statement of financial position for Kermadec as at the close of the offer,—

      • (i) compiled as if at that date—

        • (A) all of the shares offered in accordance with the offer document had been allotted; and

        • (B) Kermadec had completed the purchase of the properties that the offer document states Kermadec intends to acquire; and

      • (ii) that contains the information required in a prospective statement of financial position under FRS-42; and

      • (iii) that includes any items material to an investor's understanding of the financial position of Kermadec as at the completion of the offer based on the assumptions disclosed with the prospective pro forma statement of financial position; and

      • (iv) subject to this notice, that complies with FRS-42; and

    • (b) a prospective statement of financial position for Kermadec as at 31 March 2007 and 31 March 2008; and

    • (c) a prospective statement of cash flows for Kermadec that complies with clause 10(2) of Schedule 1 of the Regulations, for each of the following periods:

      • (i) the period of 4 months ending on 31 March 2007; and

      • (ii) the period of 12 months ending on 31 March 2008; and

    • (d) a prospective statement of financial performance for Kermadec for each of the following periods:

      • (i) the period of 4 months ending on 31 March 2007; and

      • (ii) the period of 12 months ending on 31 March 2008; and

    • (e) a prominent statement to the effect that the offer document does not contain, in respect of each of the properties that the offer document states Kermadec intends to acquire,—

      • (i) an audited statement of financial position; or

      • (ii) an audited statement of financial performance; or

      • (iii) an audited statement of cash flows; and

    • (f) in the case of a property purchased from a party related to Kermadec or the promoter, a statement setting out the price or consideration paid or provided by the related party or promoter when it purchased the property; and

    • (g) a statement setting out the price or consideration paid or provided by Kermadec for each of the properties that the offer document states that Kermadec intends to acquire; and

    • (h) summary historical financial information for the period of 12 months ending on 31 March 2006 and for the period of 6 months ending on 30 September 2006 in respect of each of the properties that the offer document states that Kermadec intends to acquire, derived from their respective underlying accounting records, that complies with clause 8 of Schedule 1 of the Regulations (except clause 8(3)(b) and (5)); and

    • (i) in relation to each of the properties that the offer document states that Kermadec intends to acquire, the gross income and operating expenses for each of the 5 consecutive accounting periods preceding the specified date, to the extent that those figures are available to Kermadec or the promoter; and

    • (j) a statement to the effect that the summary historical financial information referred to in paragraph (h) and contained in the offer document are derived from the underlying accounting records for the properties that the offer document states that Kermadec intends to acquire and are not the actual historical financial statements of Kermadec; and

    • (k) in relation to each of the properties that the offer documents states that Kermadec intends to acquire, a prominent statement identifying the properties for which audited financial information has been prepared and a statement that the most recent full financial statements in relation to those properties can be obtained from Kermadec on request and free of charge; and

    • (l) a copy of a valuation report in summary form for each of the properties that the offer document states Kermadec intends to acquire, prepared and signed by an independent registered valuer, that sets out the matters referred to in Schedule 1, dated not more than 2 weeks before the date of the offer document; and

    • (m) a statement to the effect that a copy of the valuation report, in respect of which the valuation report in summary form is based, is available on request free of charge from Kermadec; and

    • (n) prominent statements setting out—

      • (i) the reasons why the summary historical financial information required by the Regulations is not able to be provided; and

      • (ii) the reasons why the directors of Kermadec consider it appropriate to provide the information referred to in paragraphs (h) and (i) and the difference for investors between the information that would be required to be contained in the offer document under the Regulations and the information that will be provided; and

    • (o) a prominent statement to the effect that the prospective pro forma statement of financial position as at the close of the offer that is contained in the offer document for Kermadec is a prospective pro forma statement of financial position only and is not the actual statement of financial position for Kermadec.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

7 Exemption from clause 42(2) of Schedule 1 of Regulations
  • Kermadec and every person acting on its behalf are exempted, in respect of the offer, from clause 42(2) of Schedule 1 of the Regulations.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

8 Condition of exemption in clause 7
  • The exemption in clause 7 is subject to the condition that the offer document contains a copy of a report by a qualified auditor that—

    • (a) is signed by the auditor in the name of the auditor or the auditor's firm; and

    • (b) states whether the amounts stated in the prospective pro forma statement of financial position for Kermadec as at the close of the offer,—

      • (i) subject to this notice, comply with FRS-42; and

      • (ii) comply with the disclosure required by this notice; and

      • (iii) have been derived from the price stated in the sale and purchase agreements in respect of each of the properties that the offer document states Kermadec intends to acquire and states that the price to be paid is less than or equal to the relevant valuation; and

      • (iv) so far as the accounting policies and calculations are concerned, have been properly compiled in accordance with the assumptions made or adopted by Kermadec set out on the relevant pages of the offer document and are presented on a basis consistent with the accounting policies set out on the relevant pages of the offer document that were used in the preparation of the prospective pro forma statement of financial position; and

    • (c) contains a statement in the form set out in Schedule 2 in relation to the prospective statements of financial position, cash flows, and performance referred to in clause 6(b) to (d); and

    • (d) if the prospective pro forma statement of financial position as at the close of the offer does not comply with the requirements of paragraph (b), states how it does not comply; and

    • (e) in respect of each of the properties that the offer document states that Kermadec intends to acquire, states whether the amounts stated in the summary historical financial information contained in the offer document have been derived from audited financial statements or whether they have been derived from other underlying accounting records, and whether or not those amounts have been correctly derived.

    This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.


Schedule 1
Matters to be specified in independent registered valuer's report

cl 6(l)

  • This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

1 Name and address of valuer
  • The name and address of the registered valuer and a brief description of that registered valuer's qualifications.

2 Statement by registered valuer
  • A statement that the valuation report is made by the registered valuer as an independent registered valuer.

3 Purpose of report
  • A statement that the registered valuer is making the valuation report for the purposes of its inclusion in the offer document for the use by prospective investors for shares in Kermadec.

4 Description of real property
  • A description of the real property that is intended to be acquired by Kermadec and, if new buildings and improvements are proposed in respect of the real property, confirmation that the plans and specifications have been inspected by the registered valuer.

5 Covenants, etc, in respect of real property
  • A list of any covenants, conditions, restrictions, easements, and any other estates or interests that appear on the certificate of title in respect of the real property as at the date of the independent registered valuer's report.

6 Present use of real property
  • The present use of the real property.

7 Compliance with regional or district plan rules
  • (1) The nature of any regional or district plan rules, existing use rights, resource consents, or other statutory requirements relating to the real property.

    (2) Whether the intended use of the real property by Kermadec complies with the rules, rights, consents, or other statutory requirements referred to in subclause (1).

8 Rateable value of real property
  • The rateable value of the real property.

9 Leasehold interests or tenancy arrangements in respect of real property
  • (1) Current rental payable, and a statement as to whether that rental is being paid, in respect of any existing leasehold interest in the real property or any existing tenancy arrangement relating to the real property.

    (2) Other material matters concerning any leasehold interests or tenancy arrangements.

10 Registered valuer's opinion as to capital value of real property
  • The opinion of the registered valuer as to the capital value of the real property and the date of, and basis for, that capital value free of charges.

11 Basis of valuation
  • The basis upon which the registered valuer's valuation of the real property is made and any assumptions used in making the valuation, including any matters referred to in a land information memorandum under section 44A of the Local Government Official Information and Meetings Act 1987 that have been referred to the independent registered valuer for the purposes of the valuation report referred to in this notice, and a description of those matters.

12 Income from real property
  • The amount of income that the real property can reasonably be expected to produce on an annual basis under the conditions prevailing at the date of the registered valuer's report.

13 Other material matters relating to real property
  • Any other matters concerning the real property that the registered valuer considers to be material according to the standards usually applied by registered valuers in conducting valuations of real property.

14 Consent to distribution of report
  • A statement that the registered valuer has consented to the distribution of the registered valuer's report to prospective investors for shares in the offer document in the form and context in which it is included and that, as at the date of the report, the registered valuer has not withdrawn that consent.

Schedule 2
Contents of statement in relation to prospective financial information

cl 8(c)

  • This Notice expired, as from the close of 30 June 2007, pursuant to clause 3 of this Notice.

In our opinion, the prospective financial information set out on [specify page numbers of the offer document], so far as the accounting policies and calculations are concerned,—

  • (a) has been properly compiled on the footing of the assumptions made or adopted by the directors of Kermadec Property Fund Limited set out on [specify page numbers of the offer document]; and

  • (b) is presented on a basis consistent with the accounting policies to be adopted by Kermadec Property Fund Limited, those accounting policies being materially the same as the accounting policies set out on [specify page numbers of the offer document] which were used in the preparation of the prospective pro forma statement of financial position as at the close of the offer.

Dated at Wellington this 3rd day of November 2006.

The Common Seal of the Securities Commission was affixed in the presence of:

J Diplock,

Chairperson.

[Seal]

Statement of reasons

This notice comes into force on the day after the date of its notification in the Gazette and expires on 30 June 2007.

This notice exempts Kermadec Property Fund Limited (Kermadec), subject to conditions, from clauses 10(1)(c) and 11(3)(f) and (g), and 42(2) of Schedule 1 of the Securities Regulations 1983 (the Regulations) in respect of shares offered to the public by Kermadec under an investment statement and prospectus in relation to the offer that is, or will be, registered on or about 7 November 2006.

The Securities Commission considers it appropriate to grant the exemptions for the following reasons:

  • the businesses being acquired are commercial properties. Kermadec is unable to comply fully with the requirements of clause 11(3)(f) as it does not hold sufficient historical information about all of the properties. The Commission considers that investors should receive information that shows the value of the properties to be acquired and the anticipated structure and financial position of the company once it has completed the offer and acquired the properties, as well as prospective financial information regarding the company. Investors will also be assisted by summary financial information that shows the performance of the properties, although not all aspects of the historical information will be directly comparable with the prospective financial information:

  • the exemption will allow the prospective financial information to be aligned with Kermadec's normal accounting period. This means that the prospective information will be more easily comparable to financial statements that are used by Kermadec. This will make the information of more use to investors:

  • an offer document is normally required to provide a separate figure for the net tangible asset backing per unit of the securities being offered if there is no statement of financial position in that offer document. As the conditions of the exemption require a pro forma balance sheet for Kermadec, this will provide (pro forma) the information required to calculate the net tangible asset backing per unit of the securities being offered:

  • the exemption from clause 42(2) of Schedule 1 of the Regulations allows an auditor's report that is tailored to the prospective financial information to be provided in the offer document.


Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 6 November 2006.