Dated at Wellington this 18th day of December 2008.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
This notice, which comes into force on its notification in the Gazette, exempts, subject to conditions, the issuers of certain collective investment schemes from section 37A(1A)(c)(i) of the Securities Act 1978. The notice relates to the certificate that may be registered that allows the date of allotment of securities to be more than 9 months after the date of the statement of financial position referred to in the prospectus. Section 37A(1A)(c)(i) requires the directors of the issuer to state in the certificate that the financial position shown in the statement of financial position has not materially and adversely changed during the period from the date of the statement of financial position to the date of the certificate.
The notice provides 2 exemptions from section 37A(1A)(c)(i) of the Securities Act 1978. The first exemption, which expires on 1 April 2009, does not require interim financial statements to be registered. The second exemption, which expires on 30 September 2009, applies where interim financial statements are registered.
The Securities Commission considers that it is appropriate to grant the exemptions because—
significant market declines and investor redemptions have adversely affected the financial position of many collective investment schemes in recent months. In these circumstances, issuers of some schemes are not able to register a directors’ certificate to renew prospectuses expiring on 31 December 2008 for a further 9-month period. This is because directors must attest in these certificates that the financial position of the scheme shown in the financial statements filed with the prospectus has not materially and adversely changed in the intervening period:
if prospectus extension certificates are not registered then schemes must withdraw from the market until new prospectuses containing or referring to interim financial statements are registered. Collective investment schemes have in the past relied on the prospectus renewal certificate to extend their prospectuses. As a result, many schemes are not in a position to have interim financial statements ready before 31 December 2008. Without an exemption, these schemes would need to withdraw from the market until interim financial statements were ready and new prospectuses could be registered:
the Commission considers that it is appropriate to provide temporary relief to enable these schemes to remain open if adequate alternative financial information is provided to investors to assist them to make an informed investment decision. The conditions of exemption require issuers to warn investors about adverse market and fund performance. This exemption will only be available for 3 months, in order to give schemes time to complete and register interim financial statements. The conditions of exemption require the certificate and alternative financial information to be updated monthly:
the second exemption allows these schemes to continue to rely on the existing prospectus once interim financial statements are available and filed. Once financial statements that comply with the Securities Regulations 1983 or NZ IAS 34 are available, the prospectus will be accompanied by the financial information required for investors, and a requirement at that point to immediately register a new prospectus would impose costs that would not be justified by the benefits of a new prospectus. This second exemption can be relied upon until 30 September 2009.