Dated at Wellington this 26th day of November 2013.
Head of Primary Regulatory Operations.
Statement of reasons
This notice comes into force on 1 December 2013. The notice is revoked on close of 30 November 2014.
The notice exempts not-for-profit organisations such as community-based recreational clubs, from the statutory supervisor, registered prospectus, and investment statement requirements in respect of offers of participatory securities that give holders a right to use or enjoy assets or other property on the basis of payment of membership subscriptions or other fees.
The notice replaces the exemption for participatory securities in the Securities Act (Charitable and Religious Purposes) Exemption Notice 2003 (the 2003 notice), which expires on 30 November 2013. A sister notice to this notice, the Securities Act (Charity Debt Securities) Exemption Notice 2013, replaces the exemption for debt securities in the 2003 notice.
The Financial Markets Authority, after satisfying itself as to the matters set out in section 70B(2) of the Act, considers that it is appropriate to grant the exemptions because—
interests offered by not-for-profit organisations that allow their members to use and enjoy their assets or other property in exchange for subscriptions or other fees can fall within the definition of participatory security in the Securities Act 1978. However, the interests offered by these organisations are not investment products in the conventional sense. The exemptions facilitate the operation of these not-for-profit organisations in these circumstances by relieving them from unnecessary compliance with the securities law regime:
the exemptions are consistent with the long-standing exemptions granted under the 2003 notice and preceding similar exemption notices.
In these circumstances, namely, that the notice applies only to holders of limited interests with limited liability, the Financial Markets Authority considers that the exemptions are not broader than is reasonably necessary to address the matters that gave rise to the exemptions and will not cause significant detriment to subscribers who are members of the public in New Zealand.