Dated at Auckland this 7th day of July 2017.
Nick Kynoch,
General Counsel.
Statement of reasons
This notice comes into force on 14 July 2017 and is revoked on the close of 13 July 2022.
This notice applies to unit trusts and group investment funds in respect of which, before the close of 30 November 2016, a resolution was passed to wind up the trust or fund and the process of giving effect to the resolution was underway.
Since 1 December 2016, certain requirements under the Financial Markets Conduct Act 2013 (the Act) have applied to these schemes, including ongoing disclosure, governance, and financial reporting requirements. This notice provides exemptions, subject to certain conditions, from the ongoing disclosure requirements and the following licensing and governance requirements of the Act and the Financial Markets Conduct Regulations 2014:
the requirement to update the scheme’s governing document to comply with the content requirements of the Act:
the requirement to have a licensed manager designated or appointed under the Act or the scheme’s governing document whose licence covers management of the scheme:
in respect of group investment funds that are not externally managed, the requirement to have an independent custodian:
the requirement to have a statement of investment policy and objectives:
the requirement to have the register of regulated products audited or reviewed by a qualified auditor:
the requirement that a custodian of scheme property performs daily cash reconciliations and obtains an annual assurance engagement.
The exemptions in this notice cease to apply if the requirements for a specified scheme to prepare a winding-up plan, produce progress reports, provide information to the Financial Markets Authority (the FMA) and the Registrar, and give notice to participants are not met (see clauses 6 to 9). The exemptions are also subject to the condition that the manager of a scheme to which the exemptions apply must carry out the winding up of the scheme in accordance with the scheme’s governing document.
The FMA, after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because,—
in general, the exemptions will reduce transitional and ongoing compliance costs for unit trusts and group investment funds that are in the process of winding up by relieving them of certain obligations that are unlikely to be of real benefit to affected investors in the circumstances:
as the process of winding up must be conducted in accordance with section 213 of the Act, the governing document of the trust or fund, and the requirements of this notice, appropriate governance arrangements are in place for these schemes to allow for effective monitoring and to reduce governance risks:
the manager of a trust or fund to which this notice applies remains subject to general duties in the Act that apply in the exercise of their functions, including the obligation to act honestly and in the best interests of scheme participants and to exercise the care, diligence, and skill of a prudent person:
each scheme must have a licensed supervisor designated or appointed under the governing document (or the Financial Markets Supervisors Act 2011) whose licence covers supervision of the scheme.
As such, the FMA is satisfied that—
the granting of the exemption is desirable in order to promote the purposes of the Act, specifically to avoid unnecessary compliance costs and to promote flexibility in financial markets; and
as the exemptions are available only to schemes that commenced the process of being wound up before 1 December 2016, the exemptions are not broader than is reasonably necessary to address the matters that gave rise to them.
Issued under the authority of the Legislation Act 2012.
Date of notification in Gazette: 13 July 2017.
This notice is administered by the Financial Markets Authority.