(1) These regulations may be cited as the Securities Act (Contributory Mortgage) Regulations 1988.

(2) These regulations shall come into force on 1 January 1989.

(3) Notwithstanding subclause (2), an application may be made under these regulations by any person for registration as a broker at any time on or after 1 November 1988 as if these regulations had come into force on that date and any person so applying may be registered as a broker under and for the purposes of these regulations with effect on and from the date of the commencement of these regulations.

(1) In these regulations, unless the context otherwise requires,—

(2) In these regulations a reference to the term Registrar shall be construed as a reference to the District Registrar of Companies at Wellington.

(3) In these regulations contributions of a contributor which are credited to the account of a mortgagor under an existing contributory mortgage for the purpose of repaying, whether directly or indirectly, the contributions of another contributor or money paid by a broker for an interest in a contributory mortgage, as the case may be, shall be deemed to be contributions which are paid to a vendor of an interest in a contributory mortgage.

(4) Where any term or expression used in these regulations is not defined in these regulations but is defined in the Act, that term or expression shall, unless the context otherwise requires, have, in these regulations, the meaning given to it by the Act.

For the purposes of these regulations development mortgage means a contributory mortgage secured by a charge over land that is being, or is intended to be, subdivided or improved, or on which buildings or other improvements are being, or are intended to be, erected, or altered, or developed, as the case may be, where—

• (a) the mortgagor is required to apply the whole or part of the principal sum secured, or to be secured, by the mortgage, towards the costs of subdividing or improving the land, or erecting, or altering, or developing any buildings or other improvements on the land, as the case may be; and

• (b) the amount of the principal sum secured, or to be secured, by the mortgage, or the aggregate amount of the principal sums secured or intended to be secured by the mortgage and any other mortgages ranking, or intended to rank, prior to or equally therewith, exceeds two-thirds of the modified land value of the land as set forth in a valuation report; and

• (c) the cost of subdividing or improving the land, or erecting or altering, or developing any buildings or other improvements on the land, as the case may be, exceeds 5% of the modified land value of the land as set forth in a valuation report.

(1) For the purposes of these regulations, nominee company in relation to a broker, means a company,—

• (a) in the case of a company within the meaning of the Companies Act 1955, that has a memorandum of association in the form set out in Schedule 1 and articles of association in the form set out in Schedule 2; or

• (b) in the case of a company within the meaning of the Companies Act 1993, that has a constitution that contains provisions that meet the requirements set out in Schedule 2A; and

• (c) that has a name that has a recognisable connection with the broker and that contains the word “Nominee” or “Nominees”; and

• (d) all the shares in which are held by or on behalf of the broker.

(2) The memorandum of association of a broker's nominee company may, notwithstanding subclause (1)(a), contain other provisions that are in addition to, but not inconsistent with, Schedule 1.

(3) The articles of association of a broker's nominee company may, notwithstanding subclause (1)(a), contain other provisions that are in addition to, but not inconsistent with, Schedule 2.

(4) The constitution of a brokers' nominee company may, notwithstanding subclause (1)(b), contain other provisions that are in addition to, but not inconsistent with, Schedule 2A.

(1) For the purposes of these regulations valuation report means a written report relating to land that is, or is to be, charged as security for a contributory mortgage and which—

• (a) is prepared and signed by an independent registered valuer; and

• (b) is dated as at a date not earlier than 4 months before the date of the contributory mortgage; and

• (c) contains the information and other matters specified in Schedule 3.

(2) For the purposes of subclause (1), a registered valuer is not an independent registered valuer if—

• (a) that registered valuer and any broker who offers interests in the contributory mortgage to the public for subscription, or any mortgagor under the mortgage, are relatives, one being the spouse, civil union partner, or de facto partner of the other or being the parent, brother, sister or child of the other or of the spouse, civil union partner, or de facto partner of the other; or

• (b) that registered valuer or any person employed by that registered valuer is, or has been within 1 year of the preparation of the valuation report,—

  • (i) a member or director of the broker or the broker's nominee company or the mortgagor; or

  • (ii) a member or a director of any company which is a holding company or a subsidiary of the broker or the broker's nominee company or the mortgagor or which is a partner or joint venturer with the broker or mortgagor; or

• (c) there is any other relationship or interest between the registered valuer and the broker or the broker's nominee company or the mortgagor that is likely to influence the judgment of the registered valuer.

(1) Subject to subclause (2), every general authority shall be—

• (a) in the form set out in Schedule 4; and

• (b) dated; and

• (c) properly completed and signed by the contributor.

(2) A general authority may contain instructions or other provisions that are in addition to, but not inconsistent with, Schedule 4.

(3) A general authority shall not authorise an investment in a development mortgage.

(4) A general authority shall not authorise an investment on mortgage for a term of less than 30 days or more than 5 years.

(5) Subject to subclause (6), every special authority shall be—

• (a) in the form set out in Schedule 5; and

• (b) dated; and

• (c) properly completed and signed by the contributor.

(6) A special authority may contain instructions or other provisions that are in addition to, but not inconsistent with, Schedule 5.

Nothing in these regulations limits the Securities Regulations 1983.

(1) The Registrar shall maintain a register of all documents required to be registered under these regulations.

(2) The register kept under subclause (1) shall be open to inspection by any person on payment of such fees as may be prescribed.

(3) Any person may, on payment of the prescribed fee, obtain a copy of, or an extract from, any document or any part of a document registered under these regulations.

No person shall act as a broker unless—

• (a) that person is registered as a broker with the Registrar in accordance with these regulations; and

• (b) an auditor has consented to act as that person's auditor in the form contained in Schedule 6; and

• (c) the auditor referred to in paragraph (b) acts as the auditor for that person; and

• (d) a nominee company carries on business, or has been formed to carry on business, for that person as the nominee company of that person; and

• (e) a trust account is established and maintained in the name of that person's nominee company.

Every application for registration as a broker shall—

• (a) be dated; and

• (b) be signed by the applicant, or where the applicant is a body corporate or other body, by every director thereof; and

• (c) contain all of the information specified in Schedule 7; and

• (d) have attached thereto all of the documents and certificates specified in Schedule 8; and

• (e) be accompanied by payment of the prescribed fee.

Upon receipt of an application that complies with regulation 10 the Registrar shall register the applicant as a broker.

(1) Every broker shall deliver an annual report to the Registrar in accordance with these regulations.

(2) Every annual report shall—

• (a) be dated; and

• (b) be signed by the broker, or where the broker is a body corporate, by every director thereof, or by 2 directors signing on behalf of all directors, or by 1 director signing on behalf of all directors and by the secretary thereof; and

• (c) contain all of the information specified in Schedule 9; and

• (d) have attached thereto all the documents and certificates specified in Schedule 10.

(3) Every annual report shall be delivered to the Registrar—

• (a) in the case of a broker who is an individual, not later than 31 May in each year; and

• (b) in the case of a broker who is not an individual, within 3 months after the end of the broker's financial year.

The Registrar shall register every annual report that complies with regulation 12.

(1) Every broker shall notify the Registrar of any changes in the information specified in Schedule 7 and contained in the application for registration made by the broker pursuant to regulation 10.

(2) Every broker shall notify the Registrar of any changes in the information specified in Schedule 9 and contained in the most recent annual report delivered by the broker to the Registrar pursuant to regulation 12.

(3) Notification required under subclauses (1) and (2) shall be given—

• (a) in 1 or more documents dated and signed by the broker, or where the broker is a body corporate or other body, by every director thereof, or by 2 directors signing on behalf of all directors, or by 1 director signing on behalf of all directors and by the secretary thereof; and

• (b) within 30 days after the change occurs.

(1) If the FMA makes an order under section 44B(2)(a) or (b) of the Act, the Registrar must, upon receiving a copy of that order, place the order on the register of documents maintained under regulation 8.

(2) If the FMA makes an order under section 44B(2)(c) of the Act that the broker cease to act as a broker in respect of all contributory mortgages previously allotted, the Registrar must, upon receiving a copy of that order, place the order on the register of documents maintained under regulation 8, and the registration of the broker named in the order is cancelled for the period specified in the order.

(3) If a broker fails to comply with the requirements of regulation 12 or 14, the Registrar may notify the FMA of the failure.

(1) Notwithstanding section 15A of the Companies Act 1955 or section 16 of the Companies Act 1993, as the case may be, and notwithstanding anything in its memorandum or articles of association or constitution, as the case may be, no nominee company shall carry on any business or do any act, matter or thing except in accordance with or incidental to the following objects:

• (a) to act as a nominee company holding mortgages, charges, debentures, instruments by way of security, and securities of all kinds (whether contributory or otherwise) or any interest therein upon a bare trust for the legal or beneficial owner or owners thereof and as such nominee to lend moneys:

• (b) on behalf of the beneficial owner or owners to exercise and enforce all and any powers, remedies, or benefits conferred by, or attaching to, or resulting from, or incidental to, or consequent upon, the holding of any such security or interest therein:

• (c) on behalf of the beneficial owner or owners to buy in at the sale of land, or any interest in land, under any power of sale conferred by any mortgage charge or other security in which such beneficial owner or owners have an interest, and to resell such land or any part or parts thereof by public auction, private contract or otherwise and pending such resale to exercise all or any of the rights and powers of an owner and pay and discharge rates and other outgoings in respect thereof and generally manage the same:

• (d) on behalf of the beneficial owner or owners to execute and give all such variations, discharges, transfers, instruments, acknowledgements and other documents and perform all such acts and things as may be required in respect of any security or interest therein held by the company:

• (e) to maintain and operate the trust account of the nominee company:

• (f) to do the acts matters and things provided for in the Act and these regulations in respect of nominee companies.

(2) Every broker shall ensure that the nominee company of that broker does not carry on any business or do any act, matter or thing except in accordance with, or incidental to, the objects specified in subclause (1).

(1) Every broker shall ensure that the broker's nominee company establishes and maintains a trust account with a registered bank in the name of that nominee company.

(2) Every broker shall ensure that the trust account of that broker's nominee company—

• (a) is not overdrawn; and

• (b) is not used for any purposes other than those of receiving, or holding, or disbursing, money in accordance with these regulations.

(1) Every contribution received by a broker or a broker's nominee company shall be held in trust for the contributor and shall, immediately after it is received, be paid into the trust account of that broker's nominee company.

(2) Every contribution made by a broker shall be paid into the trust account of the broker's nominee company.

Subject to these regulations, every broker shall ensure that no contribution is paid out of the trust account of that broker's nominee company unless it is—

• (a) paid to a mortgagor under, or a vendor of an interest in, a contributory mortgage, in accordance with a general authority; or

• (b) paid to a mortgagor under, or a vendor of an interest in, a contributory mortgage, in accordance with a special authority and the contributor has been given or sent a document or documents signed by the broker containing and having annexed thereto, in the case of a development mortgage, the information and other matters specified in Schedule 11, and in the case of any other contributory mortgage, the information and other matters specified in Schedule 12; or

• (c) otherwise invested in accordance with a general authority; or

• (d) otherwise invested in accordance with a special authority; or

• (e) paid to the contributor.

(1) Every broker shall ensure that no contribution is paid out of the trust account of that broker's nominee company to a mortgagor under, or a vendor of an interest in, a contributory mortgage—

• (a) if at the time of the payment the broker knows or ought to know that any document relating to the mortgage sent or given to any contributor to the mortgage is false or misleading in a material particular (whether or not the document became so misleading as a result of a change of circumstances occurring after the document was sent or given to the contributor) or is inconsistent with the mortgage; or

• (b) if, after the payment, the amount, or the aggregate of the amounts, paid or applied, would exceed the amount specified in any special authority given by the contributor or in the mortgage, as the case may be, as the principal sum of the mortgage; or

• (c) if the date when the final balance of the principal sum is due and payable under the mortgage is later than any date specified in any special authority given by any contributor to that mortgage as the date for repayment of contributions to that contributor.

(2) Every broker shall ensure that no contribution is paid out of the trust account of that broker's nominee company—

• (a) unless the mortgage, executed by the mortgagor and in a form that is registrable under the Land Transfer Act 1952, has been received by the broker or the broker believes on reasonable grounds that it has been received by a solicitor acting on behalf of the broker; and

• (b) unless all buildings or improvements situated upon the property which is charged with the mortgage are insured to the full insurable value thereof against loss or damage by fire and other perils by an insurance office in New Zealand approved by the broker, and the policy of insurance or cover note names the broker's nominee company or all of the contributors to the mortgage, as the case may be, as loss payees under the policy.

Every broker shall ensure that no contribution is paid out of the trust account of that broker's nominee company to a mortgagor under, or a vendor of an interest in, a development mortgage under which the principal sum is to be paid or applied by instalments unless—

• (a) the contribution is paid in accordance with a special authority authorising investment in that mortgage; and

• (b) the special authority authorises payment by instalments and contains a description of the manner in which the instalments are to be paid and of any conditions to be fulfilled before payment; and

• (c) the mortgage provides for payment by instalments and contains a description, corresponding with the description mentioned in paragraph (b), of the manner in which the instalments are to be paid and of any conditions to be fulfilled before the payment; and

• (d) there are in the trust account or investments referred to in regulation 27, contributions made by contributors to that mortgage which equal in aggregate a sum equal to the amount of the principal sum less the amount of any instalments previously paid or applied; and

• (e) the aggregate of the amount paid under the mortgage and the amount of the payment or application does not exceed the amount recommended in a valuation report obtained by the broker as suitable for an advance; and

• (f) there are sufficient funds available in the form of contributions retained in the trust account, or investments referred to in regulation 27, to complete the development on the basis of that valuation report.

Every broker shall ensure that no contribution is paid out of the trust account of that broker's nominee company to a mortgagor under, or a vendor of an interest in, a development mortgage, not being a development mortgage under which the principal sum is to be paid or applied by instalments, unless—

• (a) the contribution is paid in accordance with a special authority authorising investment in that mortgage; and

• (b) there are in the trust account and investments referred to in regulation 27, contributions made by contributors to that mortgage which equal in aggregate a sum equal to the amount of the principal sum after deducting the amount of the payment or application and the amount of any advances on account of the principal sum previously paid or applied; and

• (c) the aggregate of the amount paid under the mortgage and the amount of the payment or application does not exceed the amount recommended in a valuation report obtained by the broker as suitable for an advance; and

• (d) there are sufficient funds available in the form of contributions retained in the trust account, or investments referred to in regulation 27, to complete the development on the basis of that valuation report.

The amount of any fee charged by a broker and payable by a mortgagor under a contributory mortgage and the amount of any charges incurred by a broker and payable by a mortgagor under a contributory mortgage may, notwithstanding regulations 19 to 22, be deducted from the money advanced to that mortgagor and paid to the broker.

(1) All money received by a broker or a broker's nominee company in repayment of the investment of contributions and all other money received by a broker or a broker's nominee company in respect of the investment of contributions shall be held in trust for the contributors entitled thereto, and shall, immediately after it is received, be paid by the broker into the trust account of the broker's nominee company.

(2) All money referred to in subclause (1) shall be held in trust for the contributors pending—

• (a) disbursement in accordance with regulation 19; or

• (b) payment to the broker in reimbursement for any payment made by the broker to or on behalf of a contributor for which the broker is entitled to be reimbursed; or

• (c) payment to any other person in accordance with a written instruction given by the contributor to the broker that specifies the amount of the payment and the person to whom the payment is to be made.

(1) All money received by a broker or a broker's nominee company in repayment of any principal sum or by way of interest in respect of a contributory mortgage shall be held in trust for the contributors under the mortgage and shall, immediately after it is received, be paid into the trust account of the broker's nominee company.

(2) All money referred to in subclause (1), shall be held in trust for the contributors to the mortgage pending—

• (a) disbursement in accordance with regulation 19; or

• (b) payment to the broker in reimbursement for any payment made by the broker to or on behalf of a contributor for which the broker is entitled to be reimbursed; or

• (c) payment to any person in accordance with a written instruction given by the contributor to the broker that specifies the amount of the payment and the person to whom the payment is to be made.

Every broker shall, within 7 days after a contribution is paid or applied pursuant to a general authority to or on behalf of a mortgagor under, or a vendor of an interest in, a contributory mortgage, send or give to the contributor a document or documents signed by the broker containing, in relation to the contributory mortgage,—

• (a) details of the amount of money paid or applied under the contributory mortgage; and

• (b) the information and other matters specified in Schedule 12.

(1) Contributions invested by a broker in accordance with a general authority or a special authority pending disbursement to a mortgagor under, or a vendor of an interest in, a contributory mortgage shall be invested in the name of the contributor or in the name of the broker's nominee company as trustee for the contributor.

(2) Every broker shall, at the request of a contributor, supply to that contributor, such information relating to any investment referred to in subclause (1), as may be specified by the contributor.

Every broker shall take reasonable steps to ensure that before any contribution or other money is paid or applied to or on behalf of a mortgagor under, or a vendor of an interest in, a contributory mortgage, there are assets available, or which will be available under the personal covenant of the mortgagor, or a guarantee or indemnity, which are sufficient, or will be sufficient, to discharge the amounts payable under the contributory mortgage as they become due.

Every broker shall comply with the provisions of Part 2 of the Credit Contracts Act 1981 on behalf of the contributors to every contributory mortgage in respect of which that broker acts.

(1) Every broker shall ensure that every contributory mortgage in respect of which that broker acts states—

• (a) if the mortgage is a nominee mortgage, the name of the broker's nominee company as mortgagee; or

• (b) if the mortgage is not a nominee mortgage, the names of all the contributors to that mortgage as mortgagees.

(2) Every broker shall take reasonable steps to ensure, in the case of every contributory mortgage in respect of which that broker acts, that—

• (a) the mortgage is registered at the earliest practicable date; and

• (b) the interests of contributors to the mortgage are protected if registration of the mortgage is delayed for any reason.

(3) Every broker shall ensure, in the case of every contributory mortgage in respect of which that broker acts, that—

• (a) the mortgage, any collateral securities, and, where the mortgage is a first mortgage, the certificate of title to the land charged and any policies of insurance, are at all times safely held on behalf of the contributors; and

• (b) all general authorities and special authorities relating to contributions to the mortgage and copies of all documents provided to contributors and mortgagors respectively are filed or maintained so as to be readily available for inspection by the broker's auditor.

Every broker who acts in respect of a contributory mortgage shall continue to act as a broker in respect of that contributory mortgage unless—

• (a) in the case of a nominee mortgage—

  • (i) another person who is registered under these regulations as a broker has agreed to act as a broker in respect of the management of that contributory mortgage; and

  • (ii) all the contributors having an interest in the contributory mortgage agree in writing to that person acting as broker in respect of that contributory mortgage; and

  • (iii) the broker delivers to that person all books and documents in that broker's possession or under that broker's control, or in the possession or under the control of that broker's nominee company, relating to the contributory mortgage, including without limitation—

    • (A) the securities and documents referred to in regulation 30(3):

    • (B) a copy of the accounts required to be kept under regulation 38; and

  • (iv) the broker causes to be paid to that person all money held in the trust account of the broker's nominee company on behalf of the contributors to that contributory mortgage; and

  • (v) the broker delivers to that person a memorandum of transfer (registrable under the Land Transfer Act 1952) transferring the interest of the broker's nominee company in the contributory mortgage to that person's nominee company; or

• (b) in the case of a contributory mortgage, not being a nominee mortgage,—

  • (i) all the contributors having an interest in the contributory mortgage agree in writing that the broker shall not be required to act as a broker in the management of the interests of those contributors; and

  • (ii) the broker delivers to a person designated in writing by all the contributors to the contributory mortgage all securities and documents referred to in regulation 30(3) in the possession of the broker or under the broker's control; and

  • (iii) the broker causes to be paid to the contributors to the contributory mortgage all money held in the trust account of the broker's nominee company.

(1) Every broker shall ensure that no nominee mortgage shall be mortgaged or transferred to any person unless—

• (a) all the contributors having an interest in the mortgage receive written notice of the proposed mortgage or transfer specifying the name of the proposed mortgagee or transferee and the consideration for the proposed mortgage or transfer; and

• (b) all contributors having an interest in the mortgage consent in writing to the proposed mortgage or transfer.

(2) Subject to subclause (3), every broker shall ensure that no interest of a contributor in a nominee mortgage shall be mortgaged or transferred to any person unless—

• (a) the contributor receives written notice of the proposed mortgage or transfer specifying the name of the proposed mortgagee or transferee and the consideration for the proposed mortgage or transfer; and

• (b) the contributor consents in writing to the proposed mortgage or transfer.

(3) Nothing in subclause (2) applies to the mortgage or transfer of an interest of a contributor in a nominee mortgage made at the written request of that contributor.

(1) Every broker shall ensure that no memorandum of priority or other document is executed enabling a prior or pari passu charge to be created in respect of land charged with a nominee mortgage without the written consent of all the contributors to that mortgage.

(2) Every broker shall give written notice to all contributors to a nominee mortgage of any charge or encumbrance (being a charge or an encumbrance which can be registered without a memorandum of priority or other document signed by the mortgagee) which is registered in respect of the land which is charged with that nominee mortgage and which has, or may have, priority over, or rank equally with, that mortgage.

(3) Every notice under subclause (2) shall be given within 14 days after the broker becomes aware of the registration of the charge or encumbrance.

(4) Every broker shall ensure that, except with the written consent of all the contributors to the mortgage, no nominee mortgage or collateral security is discharged (whether wholly or partially) until all money secured by the mortgage has been paid to that broker's nominee company.

(5) Nothing in subclause (4) applies to the partial discharge of a nominee mortgage if—

• (a) the mortgage authorises partial releases to be given and specifies any conditions on which partial releases may be given corresponding with the conditions specified in any statement referred to in paragraph (b); and

• (b) the statement given to contributors pursuant to regulation 19(b) or regulation 26 states that partial releases of the mortgage may be given and also states any conditions on which partial releases may be given; and

• (c) in the case of a nominee mortgage which is a development mortgage, it is a condition of the mortgage that before a partial release of the mortgage is given the broker obtains a written valuation report prepared and signed by a registered valuer which states that, in the opinion of the valuer, the value of the balance of the land or interest in land after the partial release provides adequate security for the principal sum secured by the mortgage; and

• (d) the conditions contained in the mortgage relating to the partial release are complied with.

(1) Every broker shall give written notice to all the contributors to a contributory mortgage of—

• (a) any default for at least 30 days by the mortgagor in the payment of interest due under the mortgage or in the repayment of any part of the principal sum:

• (b) any other default by the mortgagor under the mortgage which is not remedied within 30 days after the default is, or should have become, known to the broker unless the default does not materially affect the contributors or their security.

(2) Every notice under subclause (1) shall specify the action the broker is taking or proposes to take in respect of the default.

(3) Subject to regulation 36, every broker shall do, and shall procure that broker's nominee company to do, all such things as that broker or that nominee company is empowered to do in respect of the default.

(4) No broker and no nominee company of a broker shall charge the contributors to a contributory mortgage any sum in connection with the exercise by that broker or that nominee company on behalf of the contributors of the powers of the mortgagee under the mortgage except for disbursements including reasonable legal fees incurred in connection with the exercise of those powers.

In any case where the contributors to a contributory mortgage have not been paid any sum payable under the mortgage within 14 days after that sum becomes due, the broker shall, forthwith after receiving a written request from a contributor to the mortgage, send to that contributor a list of the names and last known addresses of all the contributors to that mortgage.

(1) Any broker may, from time to time, summon a meeting of all the contributors to a contributory mortgage.

(2) Every broker shall, at the request in writing of that broker's auditor, summon a meeting of all the contributors to a contributory mortgage.

(3) In the case of any default of the kind referred to in regulation 34(1), every broker shall, if requested by not less than one-third of the contributors to the contributory mortgage, summon a meeting of all the contributors to that mortgage.

(4) Every meeting of the contributors to a contributory mortgage shall be summoned by sending by post a notice, specifying the time and place of the meeting, and the business for consideration, to every contributor at that contributors last known address not later than 14 days before the date of the proposed meeting.

(5) The business for consideration at any meeting summoned pursuant to this regulation shall be confined to—

• (a) receiving reports from the broker, or the broker's nominee company, or the broker's auditor, on matters relating to the contributory mortgage:

• (b) giving instructions to the broker or the broker's nominee company with respect to the exercise of any right, power or remedy under the mortgage:

• (c) such other matters as are unanimously agreed to by all the contributors present at the meeting.

(6) The contributors present at the meeting shall appoint a person to chair the meeting.

(7) All matters calling for a decision at any meeting shall be decided by a majority of the votes cast by the contributors present and voting at the meeting either in person or by an agent duly authorised in writing.

(8) At any meeting summoned pursuant to this regulation each contributor is entitled to one vote for each $100 of the principal sum secured by the contributory mortgage and owed to that contributor whether due for repayment or not.

(9) The decision of any meeting summoned pursuant to this regulation shall be binding on the broker and the broker's nominee company.

Every broker shall establish and maintain, in a form approved by the broker's auditor, a register of contributory mortgages which shall contain, in relation to each contributory mortgage,—

• (a) the name and address of the mortgagor:

• (b) a description of the mortgage sufficient to identify it:

• (c) details of the principal sum secured by the mortgage:

• (d) the dates on which interest is payable under the mortgage:

• (e) the date or dates on which the principal sum or any part of the principal sum falls due for repayment:

• (f) the names and addresses of the contributors to the mortgage:

• (g) the amount of the contribution of each contributor to the mortgage:

• (h) such other information as may be specified by the broker's auditor.

(1) Every broker shall at all times keep, and shall ensure that the broker's nominee company at all times keeps, in such manner as will enable the audit thereof to be conveniently and properly carried out and in a form approved by the broker's auditor, books of account and other accounting records in respect of the business carried on by the broker as a broker that correctly record and explain the transactions of the broker and the broker's nominee company.

(2) Without limiting the generality of subclause (1), such books of account and accounting records shall contain—

• (a) in relation to every contribution received, the name of the contributor; and

• (b) in relation to any other money received—

  • (i) the name of the person from whom the money was received:

  • (ii) the name of the contributor entitled thereto; and

• (c) in relation to every contribution paid to a mortgagor under, or a vendor of an interest in, a contributory mortgage—

  • (i) the name of the contributor:

  • (ii) the name of the mortgagor:

  • (iii) details sufficient to identify the mortgage; and

• (d) in relation to any other payment made—

  • (i) the name of the person to whom the payment is made:

  • (ii) the name of the contributor on whose behalf the payment is made.

(1) Subject to subclauses (3) and (8), every person who has consented to act as the auditor of a broker shall, in respect of each financial year of the broker, audit the broker's register of contributory mortgages and the books of account and other accounting records of the broker and the broker's nominee company in order to ascertain whether—

• (a) the register of contributory mortgages and books of account and other accounting records have been properly maintained:

• (b) the broker has complied with the provisions of the Act and these regulations.

(2) For the purposes of carrying out such audit for each financial year the auditor shall examine the broker's register of contributory mortgages and the books of account and other accounting records of the broker and the broker's nominee company—

• (a) on at least 1 occasion during each of the first, second, and third quarters of that financial year; and

• (b) on at least 1 occasion within 3 months after the close of that financial year.

(3) No auditor shall be required to carry out an audit in relation to a contributory mortgage if—

• (a) the mortgage is registered under the Land Transfer Act 1952; and

• (b) the mortgagees named in the mortgage are the contributors to the mortgage; and

• (c) each of the contributors has instructed the broker in writing that all moneys payable to the contributors under the mortgage are to be paid directly to the contributors.

(4) Forthwith after the completion of each examination of the register of contributory mortgages and the books of account and other accounting records of the broker and the broker's nominee company the auditor shall—

• (a) prepare a report of the results of that examination; and

• (b) send a copy of that report to the broker; and

• (c) if the report discloses any breach of the Act or these regulations by the broker, send a copy thereof to the Registrar.

(5) Within 3 months of the close of the broker's financial year the auditor shall prepare a report of the results of the audit.

(6) Every report shall contain a statement by the auditor as to whether—

• (a) the register of contributory mortgages and books of account and other accounting records have been properly maintained:

• (b) the broker has complied with the provisions of the Act and these regulations.

(7) Within 14 days after completing the report the auditor shall—

• (a) send a copy of the report to the broker:

• (b) if the report discloses any breach of the Act or these regulations by the broker, send a copy of the report to the Registrar.

(8) No person who has consented to act as auditor of a broker shall be required to comply with the provisions of this regulation if—

• (a) that person sends to the Registrar written notice stating that that person has ceased to act as the auditor of that broker; and

• (b) another auditor has consented, in accordance with these regulations, to act as the auditor of the broker and a copy of such consent has been sent to the Registrar.

For the purposes of section 57A(2)(c) of the Securities Act 1978, every person who is a director of a contributory mortgage broker shall, upon becoming aware of any breach of these regulations, give notice of that breach to every contributor in respect of whom that breach relates.

A broker or a director of a broker who contravenes, or fails to comply with, any provision of these regulations commits an offence, and is liable on conviction to a fine not exceeding $5,000.