Financial Markets Conduct (Superannuation Schemes and Workplace Savings Schemes Being Wound up—Securities Allotted under Securities Act 1978) Exemption Notice 2017

2017/161

Coat of Arms of New Zealand

Financial Markets Conduct (Superannuation Schemes and Workplace Savings Schemes Being Wound up—Securities Allotted under Securities Act 1978) Exemption Notice 2017

Pursuant to section 556 of the Financial Markets Conduct Act 2013, the Financial Markets Authority, being satisfied of the matters set out in section 557 of that Act, gives the following notice.

Notice

1 Title

This notice is the Financial Markets Conduct (Superannuation Schemes and Workplace Savings Schemes Being Wound up—Securities Allotted under Securities Act 1978) Exemption Notice 2017.

2 Commencement

This notice comes into force on 14 July 2017.

3 Revocation

This notice is revoked on the close of 13 July 2022.

4 Interpretation

(1)

In this notice, unless the context otherwise requires,—

non-restricted scheme means a managed investment scheme that—

(a)

is treated, under clause 23 of Schedule 4 of the Act, as being registered on the register of managed investment schemes as a superannuation scheme or workplace savings scheme; and

(b)

is not a restricted scheme

restricted scheme means a managed investment scheme that is treated, under clause 23 of Schedule 4 of the Act, as being registered on the register of managed investment schemes as a superannuation scheme or workplace savings scheme that is a restricted scheme

specified scheme means the following managed investment schemes:

(a)

a restricted scheme:

(b)

a non-restricted scheme.

(2)

Any term or expression that is defined in the Act or the Regulations and used, but not defined, in this notice has the same meaning as in the Act or the Regulations.

Application of exemptions

5 Application of exemptions

(1)

The exemptions in clauses 7 to 16 apply in relation to a specified scheme in respect of which, before the close of 30 November 2016, a resolution was passed to wind up the scheme and to realise all of the scheme’s assets.

(2)

However,—

(a)

the exemptions in clauses 14 and 15 apply only to a specified scheme that is a non-restricted scheme; and

(b)

the exemption in clause 16 applies only to a specified scheme that is a restricted scheme.

(3)

Despite subclause (1), the exemptions in clauses 7 to 16 do not apply in relation to a specified scheme in respect of which any managed investment products were offered or issued on or after 1 December 2016.

6 Manager must provide information to Registrar and FMA

(1)

The exemptions in clauses 7 to 16 cease to apply on the date that is 3 months after the commencement date of this notice if the manager of the specified scheme has not, before that date,—

(a)

ensured that the governing document for the scheme is lodged with the Registrar; and

(b)

confirmed by written notice to the Registrar and the FMA that the manager intends to rely on this notice and, if applicable, any other relevant exemption notice; and

(c)

supplied the following information to the Registrar and the FMA:

(i)

the name of the scheme:

(ii)

an identification of the type or types of scheme:

(iii)

the name of the manager (as selected from a register kept by the Registrar) or, if the manager does not have an entry on such a register, the unique identifying information of the manager:

(iv)

the financial service provider number (if any) for the manager:

(v)

the address for communications from the Registrar to the manager:

(vi)

the balance date of the scheme.

(2)

Subclause (1) applies unless the distribution of assets of the scheme has been completed before the date that is 3 months after the commencement date of this notice.

Exemptions applying to managers of specified schemes

7 Exemption from ongoing disclosure and updating of registers

(1)

The manager of a specified scheme to which this clause applies is exempted in relation to the scheme from subpart 4 of Part 3 of the Act except as provided in subclause (2).

(2)

The manager is not exempted from section 96 of the Act or regulation 53A of the regulations to the extent that they relate to a request for the information described in regulation 53A(1)(a) or (d) of the regulations.

8 Exemptions from governing document requirements

The manager of a specified scheme to which this clause applies is exempted in relation to the scheme from—

(a)

section 135(1) and (3) of the Act; and

(b)

section 127(1)(b) of the Act to the extent that it requires the scheme’s governing document to comply with sections 135(1) and (3) and 136 of the Act; and

(c)

section 133(a) of the Act to the extent that it relates to sections 135(1) and (3) and 136 of the Act.

9 Exemptions from independent custody requirements

The manager of a specified scheme to which this clause applies is exempted in relation to the scheme from—

(a)

section 127(1)(f) of the Act; and

(b)

section 133(a) of the Act to the extent that it relates to section 127(1)(f) of the Act; and

(c)

section 156(2) of the Act to the extent that it requires scheme property not held by scheme participants to be held in one of the ways described in section 156(2).

10 Exemptions from requirements to have statement of investment policy and objectives

The manager of a specified scheme to which this clause applies is exempted in relation to the scheme from sections 164 and 166(1) of the Act.

11 Exemption from requirement to audit or review registers

The manager of a specified scheme to which this clause applies is exempted in relation to the scheme from section 218 of the Act.

Exemptions applying to custodians of specified schemes

12 Exemption from annual assurance engagement

A custodian of a specified scheme to which this clause applies is exempted in relation to the scheme from regulation 87(1) of the Regulations—

(a)

in respect of any relevant date occurring less than 4 months before the commencement of this notice; and

(b)

in respect of any relevant date occurring on or after the commencement of this notice.

13 Exemption from daily cash reconciliation requirement

A custodian of a specified scheme to which this clause applies is exempted in relation to the scheme from regulation 86(3) of the Regulations.

Exemptions applying to non-restricted schemes

14 Exemptions from licensing requirements

(1)

The manager of a non-restricted scheme to which this clause applies is exempted in relation to the scheme from—

(a)

section 127(1)(c) of the Act to the extent that it requires the manager of the scheme to be licensed and to have a licence that covers management if the scheme; and

(b)

section 133(a) of the Act to the extent that it relates to section 127(1)(c) of the Act; and

(c)

section 388(a) of the Act.

(2)

However, this clause does not apply to a manager of a specified scheme who is also the manager of a registered scheme that is not a specified scheme.

15 Exemptions from licensed supervisor requirements

The manager of a non-restricted scheme to which this clause applies is exempted in relation to the scheme from—

(a)

section 127(1)(d) of the Act; and

(b)

sections 127(1)(b) and 137 of the Act to the extent that those sections require the scheme to have a governing document that is legally enforceable by the supervisor of the scheme; and

(c)

section 133(a) of the Act to the extent that it relates to—

(i)

that aspect of section 127(1)(b) of the Act from which the manager is exempt under paragraph (b); and

(ii)

section 127(1)(d) of the Act; and

(d)

section 147 of the Act; and

(e)

section 149 of the Act; and

(f)

section 162 of the Act.

Exemption applying to restricted schemes

16 Exemption from requirement to have licensed independent trustee

The manager of a restricted scheme is exempted in relation to the scheme from—

(a)

section 131(1)(d) of the Act; and

(b)

section 133(b) of the Act to the extent that it relates to section 131(1)(d) of the Act.

Condition applying to all specified schemes

17 Condition relating to winding up of specified scheme

The exemptions in clauses 7 to 16 are subject to the condition that the manager of the specified scheme must carry out the winding up of the scheme in accordance with any relevant provisions of the governing document for the scheme.

Conditions applying to non-restricted schemes

18 Conditions relating to winding-up report

(1)

This clause applies to a non-restricted scheme.

(2)

The exemptions in clauses 7 to 15 are subject to the conditions that the person who was the manager of the scheme immediately before the scheme was wound up—

(a)

must, by 31 July 2017, ensure that final financial statements of the scheme, showing the financial position of the scheme as at the date on which the winding up takes effect, are prepared in accordance with generally accepted accounting practice and audited; and

(b)

must, within 20 working days after the final financial statements have been audited, ensure that—

(i)

a copy of those financial statements is provided to the FMA and to every person known by the manager to be a scheme participant immediately before the scheme was wound up; and

(ii)

the FMA and the known scheme participants are advised in writing as to the manner in which the remaining assets (if any) of the scheme are to be distributed; and

(c)

must inform the FMA of the date on which the distribution of the assets is completed.

(3)

Information provided to a scheme participant under subclause (2)(b) must be given to the participant or delivered or sent to the participant’s address.

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 superannuation schemes and workplace savings schemes in respect of which, before the close of 30 November 2016, a resolution was passed to wind up the scheme and realise its assets.

Since 1 December 2016, certain requirements under the Financial Markets Conduct Act 2013 (the Act) have applied to superannuation schemes and workplace savings 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 Market 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 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 obtain an annual assurance engagement and perform daily cash reconciliations:

  • in respect of schemes that are not restricted schemes,—

    • the requirement to have a licensed manager designated or appointed under the Act or the scheme’s governing document whose license covers the scheme:

    • the requirement to have a licensed supervisor:

  • in respect of restricted schemes, the requirement to have a licensed independent trustee.

This exemption is subject to the reporting and governance conditions set out in this notice.

The Financial Markets Authority (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 superannuation schemes and workplace savings schemes that are in the process of being wound 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 being wound up must be conducted in accordance with the governing document of the scheme and the conditions of this notice (and, in respect of restricted schemes, section 213 of the Act), appropriate governance arrangements are in place for these schemes to allow for effective monitoring and to reduce governance risks:

  • the managers of superannuation schemes and workplace savings schemes to which this notice applies remain 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.

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:

  • as the exemptions are only available to superannuation schemes and workplace savings 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.