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Summary of

Securities Act (Crown Wholesale Debt Securities) Exemption Notice 2004

2004/264

Gazetted on 26 August 2004
Expires on 31 August 2009

Effects of the exemption
Investment statements for debt securities originally allotted by the Crown and onsold to the public will contain information about the Crown as the issuer of the securities, but will not be required to contain information about the wholesale investors offering the securities.

Before subscription, investors will be given the name and contact details of the offeror, and information about where and to whom payments are to be made. The investment statement will state that this information will be provided to investors before subscription.

Background
The Crown offers debt securities such as New Zealand Government Bonds on a regular basis to wholesale investors, who then sell these to the public on the secondary market. The Crown is solely responsible for repayment of principal and interest in relation to these securities. The Crown provides investment statements for the wholesale investors to provide to retail investors. This exemption replaces the Securities Act (Crown Wholesale Debt Securities) Exemption Notice 1999 which expired on 31 August 2004.

The exemption
The Crown is exempt from regulation 7A(1) of the Securities Regulations 1983 to the extent that it requires the investment statement to contain information about any offeror of the Crown debt securities.

The Crown is also exempt from clause 5(1)(b) of Schedule 3D of the Securities Regulations 1983.

Conditions
The exemption from regulation 7A(1) of the Securities Regulations 1983 is subject to the following conditions:

• before subscription, investors are provided with the name and address of the offeror;
• the investment statement contains the following information:
  • a statement that the name and address of the offeror will be provided to each investor before subscription;
  • a description of the effect of this exemption;
  • a statement that the offeror is an issuer of the securities and as such, has obligations under the Securities Act 1988 and the Securities Regulations 1983.

The exemption from clause 5(1)(b) of Schedule 3D of the Securities Regulations 1983 is subject to the conditions that:

• before subscription, investors are provided with details about where and to whom payment is to be made; and
• the investment statement states that details about where and to whom payment is to be made will be provided to each investor before subscription.

Reasons
Where Part II of the Securities Act 1978 applies to an offer of previously allotted securities to the public, both the person offering the securities and the original allotter of the securities have a responsibility for the offer as issuers. In this case, the more relevant information for disclosure to investors is about the Crown. Information about the wholesale investors (being the persons offering the securities) as issuers may not be useful to the retail investors and may also be confusing. The conditions of the exemption from regulation 7A(1) of the Securities Regulations 1983 require potential investors to be advised that the offerors remain legally responsible as issuers.

The investment statements for the offers of debt securities to the public made by the wholesale investors are prepared by the Crown. The exemptions in this notice recognise that certain information relating to the wholesale investors is not available to the Crown at the time the investment statement is prepared. The exemptions enable information to be given to investors in a form other than the investment statement, so long as it is given prior to subscription.