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Summary of

Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 2004

2004/346

Gazetted on 30 September 2004
Expires on 30 September 2009

Effects of the exemption
The Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 2004 replaces, in an amended form, the exemptions granted by the Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 1999, subject to transitional provisions.

This notice continues to exempt managers of authorised unit trusts and open-ended investment companies established under British law, from the following provisions of the Securities Act 1978 and the Securities Regulations 1983:

• section 37, which prohibits the allotment of securities offered to the public unless there is a registered prospectus relating to the securities;
• section 37A(1)(a), which prohibits the allotment of securities offered to the public unless subscribers receive an investment statement relating to the securities prior to subscription;
• section 38A, and regulations 11 to 18, and 21 to 23, which contain requirements as to the content of advertisements and registered prospectuses;
• sections 51 to 54, which relate to the keeping of registers and accounting records, and the sending of certificates to securities holders.

Managers of authorised unit trusts are also exempted from section 33(3), which requires the appointment of a statutory supervisor, and a deed of participation.

The conditions of this exemption differ significantly from those in the 1999 notice, with regard to the provision of documents to the Registrar of Companies and the information that must be provided to New Zealand investors. The new conditions are similar to those included in the Securities Act (Australian Registered Managed Investment Schemes) Exemption Notice 2003 (ARMIS 2003 notice).

Background
The Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 1999 expired on 30 September 2004. In renewing the exemption, the Commission has taken the opportunity to align the conditions of the exemption more closely with the provisions of the ARMIS 2003 notice. The Commission also received and considered submissions in relation to the exemption.

The exemption
Managers of authorised unit trusts and open-ended investment companies established under the law of England and Wales, or the law of Scotland, are exempted from the following provisions of the Securities Act 1978 and the Securities Regulations 1983:

• in the case of authorised unit trusts, section 33(3) of the Act; and
• section 37 of the Act; section 37A(1)(a) of the Act; and
• section 38A of the Act and regulations 11 to 18 and 21 to 23 of the Regulations; and
• section 51 to 54 of the Act; and
• section 38(a) of the Act to the extent that it requires an overseas prospectus or key features document to refer to an investment statement.

Conditions
The exemption from section 37A(1)(a) of the Securities Act 1978 is on condition that before the securities are allotted, investors receive a key features document for the securities which complies with the requirements of the United Kingdom Financial Services Authority (FSA).

The exemptions from sections 33(3), 37 and 38A of the Securities Act 1978 and regulations 11 to 18 and 21 to 23 of the Securities Regulations 1983 are on condition that the investment statement complies with the investment statement provisions of the Act and the Regulations as if references in this legislation to "registered prospectus" were references to the overseas prospectus.

The exemptions from sections 33(3), 37, 37A(1)(a), and 38A of the Securities Act 1978 and regulations 11 to 18 and 21 to 23 of the Securities Regulations 1983 are on condition that:

• there is an overseas prospectus for the securities when they are offered in New Zealand; and
• prospective investors receive the following documents within five working days of asking for a copy of the overseas prospectus:
  • a copy of the overseas prospectus; and
  • a copy of the most recent annual report (and if this is more recent, the half-yearly report) for the scheme; and
  • copies of any other documents that would be required by law for investors in Great Britain; and
• before the securities are first offered in New Zealand, a copy of each of the following documents for the scheme is received by the Registrar of Companies:
  • the overseas prospectus;
  • any relevant exemption, order, or declaration (other than the exemptions granted by this notice);
  • a certificate that a copy of the overseas prospectus has been sent to the FSA;
  • any document issued by the FSA confirming the authorisation of the manager and trustee of the authorised unit trust, or the authorised corporate director and depositary of the investment company, under the Financial Services and Markets Act 2000 (UK);
  • in the case of shares in an investment company, the company's deed of incorporation and the company's authorisation by FSA;
  • in the case of units in an authorised unit trust, the trust deed and the trust's authorisation by FSA;
  • any current documents that amend or supplement those in the above list; and
• a copy of any document that amends, supplements or replaces the overseas prospectus after the offer opens is received by the Registrar of Companies before any further allotment of securities in New Zealand;
• the only material differences (if any) between the overseas prospectus that is used in New Zealand and the equivalent document used in Great Britain relate to the following:
  • the inclusion in the New Zealand prospectus of the information required by this notice;
  • the exclusion from the New Zealand prospectus of information relating to collective investment schemes or securities that are not being offered in New Zealand.

The exemptions from section 33(3) and 37A(1)(a) of the Securities Act 1978 are also subject to the following conditions:

• a copy of any document that amends or replaces any of the documents referred to above (apart from one which relates to the overseas prospectus) is received by the Registrar of Companies within 5 working days of:
  • the date on which the document is sent to the FSA; or
  • if the document is not sent to the FSA, the date on which it is received by the authorised corporate director, the manager, or the investment company; or
  • if the document is not sent to the FSA or the authorised corporate director, the manager, or the investment company, the date of the document.

The above conditions relating to the exemptions from sections 33(3), 37, 37A(1)(a) and 38A of the Securities Act 1978 and regulations 11 to 18, 21 and 22 of the Securities Regulations 1983 do not apply to a document when securities are offered after that document has been received by the Registrar of Companies.

The exemptions from sections 33(3), 37, 37A(1)(a) and 38A of the Securities Act 1978 and regulations 11 to 18, 21 and 22 of the Securities Regulations 1983 are also subject to the condition that the following information is contained in or accompanies every overseas prospectus or key features document and every investment statement for the securities:

• under the heading "Important Information for New Zealand Investors", the following statements:
  • the issue or sale of the securities will be carried out in the manner specified in the overseas prospectus, and which is prescribed by the law of England and Wales, or the law of Scotland;
  • the effects of New Zealand taxation rules on forecast or projected returns compared to those for British investors;
  • investors should satisfy themselves as to the tax implications of investing in the securities;
  • investing in the securities may involve a currency exchange risk;
  • New Zealand financial reporting requirements may differ from those applying to the collective investment scheme, and so the financial statements of the scheme may not be compatible in all respects with New Zealand requirements;
  • how to obtain copies of the overseas prospectus, and most recent annual or half-yearly report;
  • a list of the documents received by the Registrar of Companies and information on how they can be viewed;
  • the overseas prospectus may not contain all the information normally required in a New Zealand registered prospectus;
  • if a key features document is provided, the key features document may not contain all the information normally required in a New Zealand prospectus;
  • contact details for the manager and trustee, in the case of an authorised unit trust, or the authorised corporate director and depositary, in the case of an investment company, and a statement that these persons may not be subject in all respects to New Zealand law;
  • in relation to an overseas prospectus or key features document, a statement in the form set out in the Schedule to the notice; and
• under the heading "Agreement as to Jurisdiction", the following information:
  • in the event of a dispute concerning the contract for the shares, the manager of the authorised unit trust or the investment company and its authorised corporate director
    • accept the non-exclusive jurisdiction of the New Zealand courts,
    • have instructed their New Zealand agent to accept service of documents on their behalf;
    • agree that this statement is an agreement with each investor;
  • the contact details of the New Zealand agent for service
  • that the contract for the securities may not always be enforceable in New Zealand courts.
• the information included under the headings "Important Information for New Zealand Investors" and "Agreement as to Jurisdiction" may differ from the requirements set out above, as long as such differences are immaterial.

A further condition of the exemption from sections 33(3), 37, 37A(1)(a) and 38A of the Securities Act 1978 and regulations 11 to 18, 21 and 22 of the Regulations is that the securities are offered in Great Britain at the same time as they are offered in New Zealand.

A report must be sent to the Commission by 31 March each year about fundraising activities in the previous calendar year and stating whether these activities are intended to continue.

Transitional provisions
Transitional provisions apply to offers of securities made using an offer document that is dated before the expiry of the Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 1999. Offers of these securities may be made in accordance with that notice until 30 September 2005, or in accordance with the Securities Act (Great Britain Collective Investment Schemes) Exemption Notice 2004.

Reasons
The exemptions remain useful and relevant to Great Britain issuers and there is continued reliance on the exemptions.

The requirements for Great Britain issuers under this notice should be aligned, to the extent appropriate and relevant, to the requirements for Australian issuers under the Securities Act (Asutralian Registered Managed Investment Schemes) Exemption Notice 2003. The amendments to the 1999 notice achieve this, in particular, in relation to the requirements to file certain documents about the Great Britain issuer and the scheme with the New Zealand Registrar of Companies, and to provide New Zealand investors with additional information and warning statements about the differences between investing in New Zealand and investing in Great Britain.

A 1-year transitional period is required for securities offered after this notice comes into force using Great Britain disclosure documents that are dated prior to the expiry of the 1999 notice, as offers are being made on an ongoing basis.