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Summary of

Securities Act (Orakei Marina) Exemption Notice 2004

2004/403

Gazetted on 18 November 2004
Expires on 31 March 2007

Effects of the exemption
Orakei Marina Limited and the Orakei Marina Management Trust are able to:

offer marina berth licences without the appointment of a statutory supervisor;
extend the life of the prospectus for the licences;
extend the time within which subscriptions are required to be refunded; and
issue a prospectus which does not include prospective financial information or an auditor's report.

Background
Orakei Marina Limited is undertaking the development of a new marina, and the issuing of marina berth licences falls within the scope of securities legislation. However, the marina berth licence holders will not have any interest in or entitlement to the income of the company or the Orakei Marina Management Trust. The trust will provide the structure through which marina berth licence holders will be able to address issues relating to the management of the marina.

The exemption
The company and the trust are exempted from sections 33(3), 37(2), 37A(1)(c) of the Securities Act 1978 and clauses 7(2) to (6), 8, and 38 of the Third Schedule of the Securities Regulations 1983.

Conditions
The exemption from section 33(3) is subject to the conditions that the trust:

prepares financial statements for the scheme as soon as reasonably practicable after the end of each financial year;
ensures the financial statements are audited;
sends licence holders a written statement of the actual and budgeted contributions they are required to make that year to the operating and other costs of the scheme, as soon as reasonably practicable after the beginning of each financial year.

The exemptions relating to the registered prospectus are subject to the conditions that the prospectus:

contains prominent statements to the effect that the prospectus will immediately be withdrawn or amended if material in the prospectus or its attachments becomes false or misleading;
contains prominent statements that, for each financial year:
- audited financial statements that comply with the Financial Reporting Act 1993 will be prepared for the scheme not later than the reporting date; and
- copies of the most recent audited financial statements for the scheme may be obtained by licence holders from the addresses given;
- every registered prospectus will be accompanied by a copy of the most recent financial statements for the scheme;
states the fixed annual fees payable by licence holders for the first financial year of the scheme;
states the minimum gross value of sales of licences required for the scheme to commence;
explains the effects of the conditions of exemption from section 37(2) of the Securities Act 1978;
states that if the licences are not able to be allotted, investors will receive their subscriptions back, with interest, within 8 months of the date of the prospectus;
is accompanied by the most recent financial statements for the scheme;
is accompanied by the most recent statement of the actual and budgeted contributions to the operating and other expenses of the scheme; and
is accompanied by a copy of the licence for marina berths granted under the scheme.

The exemption from section 37(2) of the Securities Act 1978 is subject to the following condition if the minimum gross value of sales is not reached:

no allotment of the licences can take place unless, within 6 months of the date of the registered prospectus, -
- subscribers for the licences have become legally bound to pay the amount given in the prospectus as the minimum gross value of sales; and
- each subscriber has paid the company, in cash, at least 20% of the amount they are legally bound to pay for the licence.

The exemption from section 37(A)(1)(c) of the Securities Act 1978 is subject to the condition that, while the licences remain available for subscription, the company lodges certificates with the Registrar of Companies that:

relate to the registered prospectus for the licences;
refer to the company's most recent audited financial statements;
are signed by at least two directors of the company;
are dated not later than three months after the date of the most recent audited financial statements;
state that, in the opinion of the company's directors, the prospectus is not false or misleading in a material particular by reason of failing to refer or give proper emphasis to adverse circumstances;
state that, except to the extent permitted by these exemptions, the information contained in the registered prospectus complies with the Third Schedule of the Securities Regulations 1983.

Reasons
The participatory securities on offer are not in the nature of an ongoing scheme or business operation whereby investors will expect an income stream, and as such some of the provisions of the law applying to those investments do not provide material benefit for investors, but impose costs on the issuer.

The role of a statutory supervisor in monitoring ongoing cashflows and production of income for the scheme would not provide significant advantage for security holders in respect of this scheme, as the principal purpose of the investment will be to provide use of facilities. Given the nature of the scheme, the requirement to appoint a statutory supervisor may create a cost that is unlikely to be equalled by any benefit to marina berth licence holders.

The marketing requirements of schemes such as marina promotions are longer term than for most offers of securities. This is accommodated by allowing the use of an "evergreen" prospectus.

The condition of exemption requiring the directors to certify periodically that the prospectus is accurate and up to date, and to withdraw it immediately if it is misleading, provides protection for prospective investors by requiring that the prospectus can be relied upon as being accurate and current.

The scheme is not a traditional investment scheme whereby investors will receive a financial return by way of interest, dividends, or any other form of participation in the profits of the issuer. As such, prospective financial information about the scheme would be of limited use to investors. The condition requiring disclosure of fees payable will provide more useful information for prospective investors.

As the registered prospectus will not contain financial information, there is no need for an auditor's report.

Summary of

Securities Act (Orakei Marina) Exemption Notice 2004 2004/403

Securities Act (Orakei Marina) Exemption Notice 2004

2004/403