New Zealand Legislation: Regulations

Explanatory note

This note is not part of the notice, but is intended to indicate its general effect.

This notice, which comes into force on 1 April 2003 and expires on 30 November 2007, replaces the Securities Act (Charitable and Other Purposes) Exemption Notice 1997 and the Securities Act (Religious Organisations) Exemption Notice 1997.

The provisions of those notices have been carried forward with a number of changes of substance.

This notice—

• exempts charitable organisations from the trustee and trust deed, prospectus, and investment statement requirements of the Securities Act 1978 and the advertisement certificate requirements of the Securities Regulations 1983, subject to conditions, in respect of any debt securities of which the organisation is the issuer; and

• exempts charitable organisations from the statutory supervisor, deed of participation, prospectus, and investment statement requirements of the Securities Act 1978 and the advertisement certificate requirements of the Securities Regulations 1983, subject to conditions, in respect of any participatory securities of which the organisation is the issuer if the terms of the constitution or rules of the organisation comply with certain requirements.

The main changes are—

• the definition of charitable organisation no longer requires the organisation to be carried on exclusively for charitable purposes; and

• the financial cap tests require consideration of the principal sums owing under debt securities allotted by associated persons of the organisation as well as by the organisation itself; and

• the statement that must, as a condition of the exemption, be given to every subscriber for a debt security has been amended to specify that the exemption has been granted by the Securities Commission on the basis that prospective investors are not necessarily seeking a commercial return, but instead wish to support the charitable or religious purposes of the issuer; and

• the notice clarifies that the exemptions do not apply to most offers relating to retirement villages.

The expiry dates of the existing charitable and religious organisations exemption notices have been amended to 30 June 2003. This extension of those expiry dates allows issuers a smoother transition to this new notice.