This notice comes into force on 28 October 2021 and is revoked on the close of 27 October 2026. The notice applies to existing shares in companies that manage communal facilities in real property developments where the shares were offered to the public in reliance on the Securities Act (Real Property Developments) Exemption Notice 2007 or a similar notice. The notice exempts a company from complying with certain continuing obligations under the Financial Markets Conduct Act 2013 (the Act) that apply after certain shares allotted under the Securities Act 1978 transition to the Act.

The notice replaces, on substantially the same terms, the Financial Markets Conduct (Communal Facilities in Real Property Developments) Exemption Notice 2016, which is revoked on 27 October 2021. However, a condition requiring issuers to give notice to shareholders about the exemptions and their impact has been removed, and an exemption from clause 30(1) of Schedule 4 has also been removed.

The notice is related to the Financial Markets Conduct (Communal Facilities in Real Property Developments) Designation Notice 2016, which provides relief through a class designation from requirements under the Act for new shares issued on or after 28 October 2016 in companies that manage communal facilities in real property developments.

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—

• the exemptions are necessary or desirable to promote and facilitate the development of fair, efficient, and transparent financial markets because they—

  • prevent the regulation by financial markets law of activities that are not financial product investments or financial markets activities and thereby remove unnecessary compliance burdens:

  • prevent confusion for investors and developers resulting from regulation applying when they sell or purchase real property in circumstances where they do not reasonably expect it to apply:

  • avoid the potential for unfairness if interests in companies that manage communal facilities are regulated but interests in incorporated societies that perform exactly the same function are not:

  • avoid resources being diverted from regulation of core financial markets activities to the detriment of the financial markets overall:

  • ensure existing shares are treated in an equivalent way to new shares that are subject to the Financial Markets Conduct (Communal Facilities in Real Property Developments) Designation Notice 2016:

• the exemptions are necessary or desirable to avoid unnecessary compliance costs because companies will not be required to comply with financial markets obligations (and incur the costs of doing so) when the relevant conduct is more appropriately and effectively governed by other regulatory regimes:

• the exemptions will only apply to existing equity securities in communal facilities companies offered in reliance on exemptions under the Securities Act 1978. They only provide relief from certain ongoing disclosure, governance, and financial reporting requirements that would otherwise have applied following transition. Alternative financial reporting and other requirements may still apply under the Companies Act 1993. For these reasons, the FMA considers that the extent of the exemptions is not broader than is reasonably necessary to address the matters that gave rise to them.