Dated at Wellington this 25th day of March 2013.
Head of Primary Regulatory Operations.
Statement of reasons
This notice, which comes into force on 1 April 2013 and is revoked on 30 September 2017, replaces the Securities Act (Financial Institutions) Exemption Notice 2011 (the 2011 notice). The 2011 notice provided financial institutions with exemptions, subject to conditions, from—
section 37A(1)(c) and (1A)(d) of the Securities Act 1978 (the Act); and
various prospectus content requirements in Schedule 2 of the Securities Regulations 2009 (the Regulations) that relate to financial statements.
The provisions of the 2011 notice are carried forward with the following amendments:
the term deposit taker is used instead of financial institution, to align with a recent amendment to NZ IFRS 7:
deposit takers are granted additional exemptions, subject to conditions, from section 54B(1) of the Act and regulation 26 of the Regulations.
The Financial Markets Authority (FMA), after satisfying itself as to the matters set out in section 70B(2) of the Act, considers it appropriate to grant the exemptions because—
allowing these deposit takers to use the financial statements for the whole of the deposit taker group, rather than the borrowing group, reduces the regulatory compliance costs of preparing a prospectus. The 5% threshold ensures the financial statements presented provide a reasonable representation of the financial backing to the debt securities on offer:
in light of the change to financial reporting standards, it is appropriate to update the definition of the entities able to rely on the notice to recognise
“deposit takers” rather than
“financial institutions”. The transitional provisions reduce the impact of any compliance costs resulting from the regulatory changes for issuers that have previously relied on the 2011 notice and may no longer be able to do so. These issuers may continue to rely on the 2011 notice in respect of securities offered under an existing registered prospectus:
the exemptions in this notice have been in place for a number of years and the policy reasons remain valid and relevant. Consultation with market participants demonstrates a continued intention of reliance on these exemptions:
consequential exemptions are appropriate in relation to provisions of the Act that define the life of the prospectus (by reference to the date of the financial statements), and that specify the financial statements that must accompany a directors’ certificate extending the life of a prospectus. These consequential exemptions tie these requirements to the financial statements for the whole of the deposit taker group. Additionally, for the same reason, new exemptions included in this notice recognise that references in advertisements to financial statements, or requests for financial statements, should be interpreted in relation to these relevant whole group financial statements:
in the circumstances that the 5% threshold ensures the financial statements presented provide a reasonable representation of the financial backing to the debt securities on offer, FMA considers that the exemptions will not cause significant detriment to subscribers and that they are not broader than is reasonably necessary to address the matters that gave rise to the exemptions.
Date of notification in Gazette: 28 March 2013.
This notice is administered by the Financial Markets Authority.