Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008

  • expired
  • Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008: expired, on 1 January 2013, by clause 3.

Reprint
as at 1 January 2013

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Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008

(SR 2008/5)

  • Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008: expired, on 1 January 2013, by clause 3.


Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

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).

Notice

1 Title
  • This notice is the Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008.

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

3 Expiry
  • This notice expires on the close of 31 December 2012.

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

    Act means the Securities Act 1978

    communal facilities means the following facilities that are, or at the completion of the development will be, owned, leased, licensed, maintained, administered, or operated in whole or in part by the Society:

    • (a) any land or any right over, or interest in, land within the development designated by a developer or the Society for use by owners or occupiers of developed properties, by invitees, or by certain classes of those persons:

    • (b) buildings, chattels, fixtures, fittings, plant, equipment, and other amenities within the development designated by a developer or the Society for use by owners or occupiers of developed properties, by invitees, or by certain classes of those persons:

    • (c) utilities

    computer register means—

    • (a) a computer register within the meaning of section 4 of the Land Transfer (Computer Registers and Electronic Lodgement) Amendment Act 2002; or

    controlling member means the controlling member of the Society in accordance with the rules

    developed property means a property within the development for which a computer register has been or will be issued or created as part of the process of development for an estate in fee simple under the Land Transfer Act 1952

    developer

    • (a) means SADE Developments No 2 Limited; and

    • (b) includes any assignee or successor in title of SADE Developments No 2 Limited (in whole or in part) that continues the promotion and carrying out of the development

    development means the development undertaken by the developer within the area of Savannah Bay of the property contained in the following certificates of title:

    • (a) Lot 1 Deposited Plan 378264, identifier 313610; and

    • (b) Lot 2 Deposited Plan 378264, identifier 313611; and

    • (c) Lot 3 Deposited Plan 378236, identifier 313612

    farm park means such portion of the communal facilities as is leased from the Society to another person for the purposes of operating a commercial farm consisting of approximately 212 hectares of the property referred to in the definition of development

    incorporation member means a person who—

    • (a) was a member of the Society on its incorporation; but

    • (b) is not an owner of a developed property

    lease, in relation to the lease by the Society of communal facilities that are land, means lease pursuant to a memorandum of lease registered under the Land Transfer Act 1952

    lease agreement means the contract or agreement for the lease of the farm park from the Society by another person

    offer means the offer of specified securities to the public

    owner of a developed property means a registered proprietor of a fee simple estate in a developed property

    Regulations means the Securities Regulations 1983

    rules means the rules of the Society

    sale agreement means an agreement for the sale of a fee simple estate in a developed property adopted or entered into by the developer as vendor

    Society means the Savannah Bay Association Incorporated, a society incorporated under the Incorporated Societies Act 1908

    specified security means a participatory security in the form of membership of the Society

    utilities means the following utilities and services:

    • (a) access over any roading within the development (including public or private access roads connecting to any highway, road, or access way):

    • (b) gas and drainage reticulation connecting 1 or more developed properties to any gas supply, sewage treatment plant, or disposal system:

    • (c) waste water and storm water disposal systems:

    • (d) service lines connecting 1 or more developed properties to appropriate supply networks:

    • (e) domestic and irrigation water supply reticulation connecting 1 or more developed properties to any water supply system (including storage tanks and treatment facilities):

    • (f) any other utilities or services ancillary to the use of developed properties or the development by owners or occupiers of developed properties, by invitees, or by certain classes of those persons.

    (2) In this notice, unless the context otherwise requires, a reference to the completion of the development is a reference to the time when—

    • (a) all of the physical works in connection with the development have been completed; and

    • (b) all relevant computer registers for developed properties have been issued or created; and

    • (c) all required code compliance certificates for the development have been issued under the Building Act 2004.

    (3) 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.

5 Exemptions
  • The developer, the Society, and every person acting on behalf of either or both of them are exempted from sections 33(3), 37, 37A, 38A, and 54 of the Act and the Regulations (except regulation 8) in respect of specified securities of which the developer or Society is an issuer.

6 Conditions of exemptions in clause 5
  • The exemptions in clause 5 are subject to the conditions that—

    • (a) subscribers for specified securities have, before subscription, received from the developer a copy of each of the following documents:

      • (i) the rules and any agreement for the management of the Society's affairs:

      • (ii) a specimen of all deeds or agreements providing for the transfer of communal facilities from the developer to the Society or for the lease or license of communal facilities by the Society:

      • (iii) a specimen of the sale agreement:

      • (iv) a specimen of all material instruments that will be executed by subscribers for specified securities, deeds, or agreements that contain provisions concerning the rights and obligations referred to in paragraph (b)(iii):

      • (v) a copy of the lease agreement; and

    • (b) subscribers for specified securities have, before subscription, received from the developer a document that sets out—

      • (i) a description of the areas of land that make up the development:

      • (ii) a description of the communal facilities that are intended to be owned, leased, licensed, maintained, administered, or operated in whole or in part by the Society at the completion of the development:

      • (iii) a description of the rights and obligations of members of the Society in relation to the communal facilities and the specified securities:

      • (iv) a description of the voting rights of the subscriber, as a member of the Society, in respect of the specified securities (including a statement as to whether the rules provide for voting by classes of members, or by a representative, in relation to particular matters); and

    • (c) if the developer represents or agrees that the development will be completed in stages, subscribers for specified securities have, before subscription, received from the developer a document that sets out,—

      • (i) for each stage of the development, the intended communal facilities and when those facilities are intended to be transferred, leased, or licensed to, or completed or constructed by or for, or procured by, the Society; and

      • (ii) the material risks of those communal facilities not being transferred, leased, or licensed to, or completed or constructed by or for, or procured by, the Society at each stage; and

      • (iii) a statement as to what stage the development is at, or expected to be at, at the end of each calendar year within the period beginning on the date of commencement of the development and ending on the estimated date of the completion of the development; and

    • (d) subscribers for specified securities have, before subscription, received from the developer a statement of levies, fees, or charges that are estimated to be, or were, payable by members of the Society in relation to the development and the developed properties for each calendar year in the period beginning on the date of commencement of the development and ending on the estimated date of the completion of the development that—

      • (i) comprises estimates, historical data, or both; and

      • (ii) is itemised in relation to each of the different communal facilities; and

      • (iii) contains a statement as to whether the levies, fees, or charges payable are fixed, variable, or based on the capital value of the developed property; and

      • (iv) contains, if a levy, fee, or charge is variable, a statement of the factors that influence how the levy, fee, or charge can vary; and

      • (v) contains, if a levy, fee, or charge is based on the capital value of a developed property, a statement of a formula by which the levy, fee, or charge can be calculated, together with a worked example; and

      • (vi) contains a statement of the principal assumptions on which any estimates are based; and

      • (vii) contains a statement as to whether the estimates have been reviewed by an independent third party acting in his or her professional capacity or consist only of the expression of an opinion of the developer; and

    • (e) subscribers for specified securities have, before subscription, received from the developer a document that sets out,—

      • (i) in summary, the main terms of the agreement for the lease of the farm park, including the term of the lease and the expected annual earnings from that lease; and

      • (ii) the material risks associated with that lease, including the risk of the lease not being renewed at the end of its term; and

      • (iii) the effect of a reduction in rental income on the fees and levies payable by members, and on the communal facilities and services provided to members by the Society; and

    • (f) it is a term of the offer that the rules provide that the specified securities may be subscribed for by entering into an agreement to purchase a developed property; and

    • (g) it is a term of the offer that the rules provide that only an owner of a developed property or an incorporation member may be a member of the Society; and

    • (h) it is a term of the offer that the rules provide that incorporation members may continue as members of the Society only for so long as is reasonably necessary to satisfy the membership requirements of the Incorporated Societies Act 1908 but, in any event, must cease to be members of the Society on or before the sale of the last developed property by the developer; and

    • (i) it is a term of the offer that the rules provide that every owner of a developed property is entitled to be a member of the Society; and

    • (j) deposit moneys paid by a subscriber for specified securities are held in any of the following trust accounts until the sale agreement becomes unconditional:

      • (i) a nominated trust account operated by a lawyer, an incorporated law firm, a conveyancing practitioner, or an incorporated conveyancing firm under the Lawyers and Conveyancers Act 2006; or

    • (k) no settlement of a sale agreement is completed until,—

      • (i) if the developer represents or agrees that certain communal facilities will be owned, leased, or licensed by the Society at the time of settlement of the sale agreement, those communal facilities are owned, leased, or licensed in accordance with that representation or agreement; and

      • (ii) if any interest in land is included in the communal facilities to be owned or leased by the Society at the time of settlement of the sale agreement, that interest is registered on the computer register for that land at that time; and

      • (iii) if the developer represents or agrees that certain communal facilities will be completed or constructed by or for, or procured by, the Society at the time of settlement of the sale agreement, those communal facilities have been completed, constructed, or procured in accordance with that representation or agreement; and

    • (l) in respect of any communal facility that the developer represents or agrees will be owned, leased, or licensed by the Society at the completion of a certain stage of the development or at the completion of the development, it is a term of the offer that—

      • (i) a deed of transfer, lease, or licence for that communal facility has been executed in favour of the Society; and

      • (ii) in respect of a communal facility that is an interest or estate in land, the transfer or lease is registered immediately after the subdivision of the land and the issue or creation of a separate computer register for an estate in fee simple or leasehold in respect of the land on which the communal facilities are to be located; and

      • (iii) the deed of transfer, lease, or licence has been provided to the Society; and

    • (m) if the development is advertised on the basis that the Society will own, lease, license, maintain, administer, or operate certain communal facilities in whole or in part at the completion of certain stages of the development or at the completion of the development, it is a term of the offer that the Society owns, leases, licenses, maintains, administers, or operates those communal facilities in whole or in part at the completion of those stages or at the completion of the development (as the case may be); and

    • (n) it is a term of the offer that if a representation or agreement is made by the developer to the effect that the developer or an associated person of the developer will make a contribution or payment to the Society for the purposes of the Society's activities,—

      • (i) a deed has been executed to this effect in favour of the Society; and

      • (ii) the deed has been provided to the Society; and

    • (o) if communal facilities that are estates or interests in land are leased, or to be leased, by the Society, the fee simple estate in those communal facilities are, or will be, owned by all of the members of the Society; and

    • (p) it is a term of the offer that the rules provide that the Society is only permitted to carry on 1 or more of the following activities:

      • (i) owning, leasing, licensing, maintaining, administering, or operating the communal facilities:

      • (ii) issuing licences to members of the Society that confer rights on those members to use the communal facilities, and administering and enforcing those licences in accordance with the rules:

      • (iii) owning, leasing, licensing, maintaining, administering, or operating land outside of the development if the Society is required to own, lease, license, maintain, administer, or operate that land in accordance with a resource consent for the development:

      • (iv) managing and administering the Society and administering and enforcing the rules:

      • (v) administering and enforcing a scheme for the regulation and control of matters relating to the use, repair, decoration, and landscaping of, and provision of services to, developed properties:

      • (vi) providing and maintaining services, utilities, facilities, and benefits to developed properties or for the development:

      • (vii) leasing the farm park on terms set out in the lease agreement:

      • (viii) any incidental activities that the Society considers are beneficial for members of the Society; and

    • (q) it is a term of the offer that the rules provide that—

      • (i) all moneys paid to the Society by its members are applied only for 1 or more of the activities referred to in paragraph (p); and

      • (ii) all moneys paid to the Society in respect of a lease of the farm park are applied only for 1 or more of the activities referred to in paragraph (p); and

      • (iii) members of the Society have the right to use the communal facilities in accordance with the rules; and

      • (iv) members of the Society have the right to vote at meetings of members of the Society; and

      • (v) on a liquidation of the Society, each member of the Society has the right to share pro rata with all other members of the Society in a distribution of any surplus assets of the Society; and

      • (vi) levies, fees, or charges payable to the Society by its members are determined only by a resolution of the members, or of a committee of the members, passed in accordance with the rules; and

      • (vii) the Society provides to a prospective purchaser of a developed property, within 5 working days after receiving a request, a copy of the most recent financial statements of the Society; and

      • (viii) financial statements of the Society complying with the Financial Reporting Act 1993 are audited annually and are distributed to members of the Society as soon as is reasonably practicable after each audit is completed and, in any event, no later than 5 months after the balance date of the Society; and

    • (r) the Society does not have as objects—

      • (i) the carrying on of trading activities; or

      • (ii) the carrying on of business for profit, except to the extent that the Society may lease the farm park on terms set out in the lease agreement.

7 Further conditions relating to controlling member
  • The exemptions in clause 5 are subject to the further conditions that—

    • (a) subscribers for specified securities have, before subscription, received from the developer a statement that—

      • (i) describes the rights, powers, and duties of the developer and the controlling member in relation to the Society and the communal facilities; and

      • (ii) specifies where and how potential investors and members of the Society may obtain further information concerning those rights, powers, and duties; and

      • (iii) states that potential investors should seek professional advice before purchasing a developed property; and

    • (b) it is a term of the offer that the rules provide that an independent mediator must be appointed to act in a dispute between any member of the Society and the developer or controlling member concerning the developer's or controlling member's compliance with the rules when exercising its rights and powers, or performing its duties, as the controlling member or in its capacity as the developer, if at least 25% of all members of the Society (excluding the developer and the controlling member) vote to appoint a mediator; and

    • (c) it is a term of the offer that the rules provide that, until the completion of the development, an updated statement of the matters set out in clause 6(c) and (d) is provided each year to the members of the Society with the financial statements that are distributed under clause 6(q)(vii); and

    • (d) it is a term of the offer that the rules provide that the provisions in the rules conferring rights and powers on the controlling member in its capacity as controlling member will expire or terminate no later than the completion of the development.

8 Certain conditions cease to apply if rules amended
  • (1) After the completion of the development and the communal facilities are owned, leased, licensed, maintained, administered, or operated as described under clause 6(b)(ii), a condition in clause 6(p) or 6(q) ceases to apply if—

    • (a) an amendment to the rules is approved by a special resolution passed by the members of the Society (excluding the developer); and

    • (b) the amendment results in the rules no longer complying with the condition; and

    • (c) subscribers for specified securities have, before subscription, received from the developer a statement that describes the procedure for amending the rules.

    (2) In this clause, special resolution means a resolution approved by a majority of 75% or, if a higher majority is required by the rules, that higher majority, of the votes of those members entitled to vote and voting on the question.

9 Transitional provision

Dated at Wellington this 28th day of January 2008.

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

[Seal]


J Diplock,
Chairperson.


Statement of reasons

This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 31 December 2012, applies to participatory securities in the form of membership of an incorporated society (the Society) owning, leasing, licensing, maintaining, administering, or operating communal facilities in a real property development to be undertaken by SADE Developments No 2 Limited (the developer). The notice exempts (subject to conditions) the developer, the Society, and every person acting on behalf of either or both of them, from sections 33(3), 37, 37A, 38A, and 54 of the Securities Act 1978 and the Securities Regulations 1983 (except regulation 8).

The Commission considers that it is appropriate to grant the exemptions because:

  • the securities exempted under the notice are memberships in a society set up to hold, administer, and maintain communal facilities in property developments. These memberships are offered as ancillary features to real estate transactions of a type that are not subject to the Securities Act 1978. While the memberships are securities in terms of the legislation, they are not offered as investments in the usual sense. Rather, the incorporated society is established as a convenient vehicle through which residents in the property development can use and enjoy communal facilities and can be required to contribute to the maintenance of those communal facilities:

  • the exemptions granted and the conditions imposed are similar to the Securities Act (Real Property Developments) Exemption Notice 2007 (the class notice). In this case the Society cannot rely on the class notice because the Society intends to grant a commercial lease in relation to certain communal land within the development. Given the limited nature of the business activity, purchasers can be informed about this by additional conditions requiring disclosure to purchasers of the terms and effects of the lease:

  • the conditions of exemption require the developer to give purchasers adequate information about the members' interest in the Society, the intended communal facilities, the lease granted by the Society, and other information such as the likely levies or fees associated with these.


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

Date of notification in Gazette: 31 January 2008.


Contents

  • 1General

  • 2Status of reprints

  • 3How reprints are prepared

  • 4Changes made under section 17C of the Acts and Regulations Publication Act 1989

  • 5List of amendments incorporated in this reprint (most recent first)


Notes
1 General
  • This is a reprint of the Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008. The reprint incorporates all the amendments to the notice as at 1 January 2013, as specified in the list of amendments at the end of these notes.

    Relevant provisions of any amending enactments that contain transitional, savings, or application provisions that cannot be compiled in the reprint are also included, after the principal enactment, in chronological order. For more information, see http://www.pco.parliament.govt.nz/reprints/ .

2 Status of reprints
  • Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment. This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.

    This presumption may be rebutted by producing the official volumes of statutes or statutory regulations in which the principal enactment and its amendments are contained.

3 How reprints are prepared
  • A number of editorial conventions are followed in the preparation of reprints. For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted. For a detailed list of the editorial conventions, see http://www.pco.parliament.govt.nz/editorial-conventions/ or Part 8 of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force.

4 Changes made under section 17C of the Acts and Regulations Publication Act 1989
  • Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice. Changes that would alter the effect of the legislation are not permitted.

    A new format of legislation was introduced on 1 January 2000. Changes to legislative drafting style have also been made since 1997, and are ongoing. To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all legislation reprinted after 1 January 2000 is in the new format for legislation and reflects current drafting practice at the time of the reprint.

    In outline, the editorial changes made in reprints under the authority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint:

    • omission of unnecessary referential words (such as of this section and of this Act)

    • typeface and type size (Times Roman, generally in 11.5 point)

    • layout of provisions, including:

      • indentation

      • position of section headings (eg, the number and heading now appear above the section)

    • format of definitions (eg, the defined term now appears in bold type, without quotation marks)

    • format of dates (eg, a date formerly expressed as the 1st day of January 1999 is now expressed as 1 January 1999)

    • position of the date of assent (it now appears on the front page of each Act)

    • punctuation (eg, colons are not used after definitions)

    • Parts numbered with roman numerals are replaced with arabic numerals, and all cross-references are changed accordingly

    • case and appearance of letters and words, including:

      • format of headings (eg, headings where each word formerly appeared with an initial capital letter followed by small capital letters are amended so that the heading appears in bold, with only the first word (and any proper nouns) appearing with an initial capital letter)

      • small capital letters in section and subsection references are now capital letters

    • schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross-references are changed accordingly

    • running heads (the information that appears at the top of each page)

    • format of two-column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chronological).

5 List of amendments incorporated in this reprint (most recent first)
  • Securities Act (SADE Developments No 2 Limited) Exemption Notice 2008 (SR 2008/5): clause 3