Dated at Wellington this 29th day of November 2011.
Head of Primary Regulatory Operations.
Statement of reasons
This notice, which comes into force on 1 December 2011, replaces the Securities Act (Group Investment Funds) Exemption Notice 2001, which expires on the close of 30 November 2011. It is considered desirable to replace the 2001 notice, rather than postpone its expiry, in order to update a range of existing references, and to add a new exemption from section 37A(1A)(d) of the Securities Act 1978 (the Act). This notice expires on the close of 30 November 2016.
The Financial Markets Authority, after satisfying itself of the matters set out in section 70B(2) of the Act, considers it appropriate to grant the exemptions set out in this notice for the following reasons:
the effect of the exemptions is to permit group investment funds offered by identified trustee companies and Public Trust to provide information in prospectuses under the same disclosure requirements as those used for unit trusts, rather than those designed for participatory schemes more generally. It also aligns certain other obligations of these group investment fund issuers with those of unit trust issuers. Group investment funds are similar in nature to unit trusts as investment vehicles. Allowing group investment funds to provide disclosure similar to that of unit trusts accordingly provides investors with better information concerning these investments. It also assists investors to make comparisons between the 2 types of investments. It is also appropriate to align some of the conduct obligations with those of unit trust issuers:
the exemption from the requirement to make securities registers publicly available for inspection and copying, on the condition that each security holder may inspect and copy the part of the register that relates to their own holdings, protects the privacy of security holders in circumstances where there is no particular reason for public access to a group investment fund register:
in circumstances such as those of group investment funds, where investors' holdings change regularly, the standard security certificate requirements to send a certificate each time security holdings change are impractical, unduly onerous, and potentially confusing for investors. The notice instead requires that investors receive this information at least once every 6 months, and at any time on request.
In light of the limited application of the exemptions to group investment funds offered by identified trustee companies and Public Trust, and because the alternative disclosure and conduct obligations prescribed by this notice are suited to the nature of the securities, the Financial Markets Authority considers that the exemptions will not cause significant detriment to subscribers, and that the exemptions are not broader than is reasonably necessary to address the matters that gave rise to the exemptions.
Date of notification in Gazette: 1 December 2011.
This notice is administered by the Financial Markets Authority.