New Zealand Legislation: Regulations
Regulations are laws made under Acts
This notice, which comes into force on the day after the date of its notification in the Gazette and expires on 31 December 2012, applies to participatory securities in the form of membership of an incorporated society (the Society) owning, leasing, licensing, maintaining, administering, or operating communal facilities in a real property development to be undertaken by SADE Developments No 2 Limited (the developer). The notice exempts (subject to conditions) the developer, the Society, and every person acting on behalf of either or both of them, from sections 33(3), 37, 37A, 38A, and 54 of the Securities Act 1978 and the Securities Regulations 1983 (except regulation 8).
The Commission considers that it is appropriate to grant the exemptions because:
the securities exempted under the notice are memberships in a society set up to hold, administer, and maintain communal facilities in property developments. These memberships are offered as ancillary features to real estate transactions of a type that are not subject to the Securities Act 1978. While the memberships are securities in terms of the legislation, they are not offered as investments in the usual sense. Rather, the incorporated society is established as a convenient vehicle through which residents in the property development can use and enjoy communal facilities and can be required to contribute to the maintenance of those communal facilities:
the exemptions granted and the conditions imposed are similar to the Securities Act (Real Property Developments) Exemption Notice 2007 (the class notice). In this case the Society cannot rely on the class notice because the Society intends to grant a commercial lease in relation to certain communal land within the development. Given the limited nature of the business activity, purchasers can be informed about this by additional conditions requiring disclosure to purchasers of the terms and effects of the lease:
the conditions of exemption require the developer to give purchasers adequate information about the members' interest in the Society, the intended communal facilities, the lease granted by the Society, and other information such as the likely levies or fees associated with these.