Dated at Wellington this 22nd day of March 2011.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
Note: The following statement of reasons should be read in conjunction with the statement(s) of reasons appended to the:
This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 30 September 2012, replaces the Securities Act (Industrial and Provident Societies) Exemption Notice 2002 (the 2002 notice).
This notice is on substantially the same terms as the 2002 notice. However, the notice relates to the Securities Regulations 2009 (rather than the Securities Regulations 1983).
The exemptions granted by the notice apply only in respect of securities allotted to members of the industrial and provident societies specified in the Schedule. The notice includes exemptions from the following provisions of the Securities Act 1978 (the Act) and the Securities Regulations 2009 (the 2009 regulations):
section 33(3) of the Act (which requires a statutory supervisor to be appointed for participatory securities):
section 37A(1)(c) of the Act (which restricts the time of allotment):
section 54 of the Act (which relates to the issue of certificates evidencing securities):
various requirements of the 2009 regulations relating to the content of a registered prospectus.
The notice, in effect, entitles the industrial and provident societies to use an evergreen short form prospectus.
The Securities Commission considers that it is appropriate to grant the exemptions because—
industrial and provident societies are registered under the Industrial and Provident Societies Act 1908. They are required to be either bona fide co-operative societies or to conduct business for charitable-type purposes:
like co-operative companies, industrial and provident societies are structured to allow the co-operation of subscribers with similar interests under a single corporate entity. The main advantage is that the societies use their collective purchasing power to negotiate discounts for members from suppliers. Similarly to co-operative companies, prospective shareholders subscribe for shares primarily to gain access to preferential prices rather than to obtain a return on funds invested:
although the shares in an industrial and provident society are technically participatory securities, in practice they are virtually indistinguishable from equity securities issued by a co-operative company. It is therefore appropriate that the information provided to subscribers is the information that is usually required for equity securities. It is also appropriate to provide for other exemptions similar to those granted to co-operative companies, including allowing for the use of a short form prospectus. By doing this, the exemptions recognise the special nature of these societies and create a balance by reducing compliance costs while ensuring members receive appropriate and sufficient information:
this notice continues exemptions from provisions of the Act previously provided in the 2002 notice, and provides for existing exemptions from provisions of the Securities Regulations 1983 to be provided in respect of equivalent provisions of the 2009 regulations (with the effect that the named industrial and provident societies will be able to continue to rely on those exemptions in respect of offers of securities under the 2009 regulations). While the changes in the 2009 regulations will reduce costs for issuers and improve information for investors, they do not attempt to tailor disclosure requirements specifically for all of the circumstances to which securities law requirements apply. Accordingly, exemptions from the equivalent provisions continue to be required, and remain appropriate in light of the policy for exemptions for co-operative organisations such as industrial and provident societies:
the transitional provisions reduce the compliance costs resulting from the regulatory changes for issuers that have previously relied on the 2002 notice. These issuers may continue to rely on the 2002 notice in respect of securities offered under an existing registered prospectus unless the prospectus needs to be amended to prevent it from being false or misleading in a material particular (see section 37A(1)(b) of the Act). In addition, the transitional provisions can be relied on after 31 October 2011 only if the prospectus contains (if applicable) the information specified in clause 4 of Schedule 2 of the 2009 regulations (which relates to guarantors and requires more information than the equivalent provision in the Securities Regulations 1983).
Note: The preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to the: