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Commission Policy for Approval of Trustees and Statutory Supervisors [2002] NZSecCom 1 (25 January 2002)

Last Updated: 7 November 2014

Trustees & Statutory Supervisors

COMMISSION POLICY FOR APPROVAL OF TRUSTEES AND STATUTORY SUPERVISORS

Section 48(3) of the Securities Act 1978 provides that:

The Commission may from time to time, by notice in the Gazette, approve any person or persons, or class or classes of persons, to act as a trustee or statutory supervisor for the purposes of this Act. Any such approval may be in respect of specified securities, or a specified class or classes of securities only, or in respect of all securities, and may be on such terms and conditions as the Commission thinks fit.

It has been the Commission's practice to consider applications for approvals of companies as trustees or statutory supervisors on either a specified securities or an all securities basis depending on the applicant's experience. By contrast, the Commission considers applications for approvals of individual persons to act as trustees or statutory supervisors on a specified securities basis. Where the Commission determines that an individual has previously demonstrated competence as a statutory supervisor the Commission is willing to consider an application from that individual for approval to act as a statutory supervisor on a wider basis. The Commission has never given approval for an individual to act as a trustee on an all securities basis.

The Commission's general criteria for the approval of a trustee or statutory supervisor have four main elements namely, competence and financial capacity, character, independence and accountability. The criteria are discussed in further detail below.

The First Criterion - Competence and Financial Capacity

The applicant must be able to demonstrate competence to fulfil the duties and functions required of a trustee or statutory supervisor under the law in respect of the particular securities being offered ("the duties").

The applicant, and where the applicant is a company, the applicant's directors, should have:

appropriate skills, qualifications, and experience to carry out the duties;
adequate financial resources to carry out the duties and to meet the potential liabilities of office; and

adequate personnel and other resources.

The applicant is required to prepare and present a report to the Commission. The presentation should focus on:

the curriculum vitae of the applicant, or, where the applicant is a company, the curriculum vitae of each director of the applicant and any key management staff, setting out the relevant skills, qualifications and experience of those people;
where the applicant is a company, core information about the applicant including details of incorporation, directors, shareholders and financial statements if available;

the proposed role of the trustee or statutory supervisor;

the procedures it will observe in carrying out its functions, for example, reporting and communication channels with the issuer and security holders;
the standards it will adhere to in conducting its business;
a brief description about its level of resources and its staff, including a profile of key management staff responsible for carrying out the duties of the trustee or statutory supervisor on a day to day basis; and
whether the applicant needs to delegate any of its duties to an external body, and if so, the reasons for that delegation and the procedures to ensure the proper performance of those duties.

Where an applicant has made a presentation to the Commission within the last 18 months and the applicant seeks a further approval from the Commission, the Commission may decide that it is not necessary to meet with the applicant again.

The Second Criterion - Character

Under the second criterion the person (and if the person is a company, any of its directors) and any senior staff must not:

have been convicted of a serious offence, in particular a crime involving dishonesty (as defined in section 2(1) of the Crimes Act 1961) including theft and fraud;
be prevented from acting as a director under section 199K of the Companies Act 1955 or sections 382, 383 or 385 of the Companies Act 1993;

have been a bankrupt at any time; or

have been disqualified, banned or suspended for more than six months from holding a licence or authorisation to practice under the law or membership rules of any professional association at any time.

Where the applicant is a company, the directors of the company are required to provide a statement that they have undertaken reasonable investigations and they are satisfied that officers of the company meet the second criterion.

Where a person does not meet the second criterion the Commission may still approve the person to act as a trustee or statutory supervisor but only if the person is a current and continuing member of a professional body designated by the Commission and a meeting is held between the Commission and the applicant to consider the circumstances as to why the person does not meet the second criterion.

The applicant must be (or if the applicant is a company the majority of its board members at all times must be) a chartered accountant, a lawyer, or otherwise a member of a professional body with power to regulate its members which the Commission decides from time to time.

The Third Criterion - Independence

Under the third criterion the applicant and the applicant's sponsoring firm, as well as any person or firm affiliated to either the applicant or the sponsor's firm, must provide a written undertaking that neither they nor any of their employees, shareholders, or officers will at any time hold any office or appointment or have any involvement, relationship or interest, including involvement as an auditor, in respect of any issuer of securities or any securities offered by the issuer for which the applicant acts as trustee or statutory supervisor. Where the applicant is a company the company will be required as a condition of approval to not engage in any business other than as a trustee or statutory supervisor or as approved by the Commission.

The Fourth Criterion - Accountability

Under the fourth criterion the applicant must demonstrate that it/he/she has adequate professional indemnity insurance.

In demonstrating satisfaction of the fourth criterion applicants must provide the following:

a statement from the applicant's insurer in relation to the amount and currency of the applicant's professional indemnity insurance and a confirmation that it is currently in force;
a statement from the applicant that, on the basis of independent expert advice, their professional indemnity insurance is adequate; and

an undertaking that adequate professional indemnity insurance cover will be maintained.

Further Conditions of Approval

Where the applicant is a company the Commission wishes to be satisfied that the approval applies only so long as the company is substantially directed and owned by people who were originally approved by the Commission. As a consequence, the company's approval as a trustee or statutory supervisor will be expressed as being void on 50% of the company's board or shareholders changing since the time of approval. This will be regarded as a change in a matter material for the purposes of condition (a) below.

The effect of this will be that if there is a 50% change in board composition or shareholding the company will need to make a further application for approval.

No person will be approved by the Commission to act as either a trustee or a statutory supervisor for an unlimited duration. The maximum duration of any approval will be five years.

Approved persons will be required, as a condition of approval, to report to the Commission on:

any occurrence or change in matters material to the Commission's approval of that person; and
in any event on an annual basis to the Commission by 1 March of each calendar year.

25 January 2002

HOW TO APPLY FOR APPROVAL TO BE A TRUSTEE OR STATUTORY SUPERVISOR

Section 48(3) of the Securities Act 1978 provides:

As a matter of general practice, representatives of any company seeking approval to act as a trustee will be invited to make a presentation to the Commission in support of its application. The presentation should focus on the proposed role of the trustee, the procedures it will observe, and the standards it will adhere to in conducting its business.

The person must meet the Commission's policy for the appointment of a trustee or statutory supervisor.

How do I apply to be a trustee or statutory supervisor?
Your application should be in writing and addressed to the Chief Executive, Securities Commission, PO Box 1179, Wellington 6011. It should include a cheque for the application fee.

If you prefer you can send your application on disk in Word format or by e mail to seccom@seccom.govt.nz. A hard copy should also be sent together with the application fee.

What is required in the application?
The application should provide evidence that you satisfy the general criteria set out in the Commission's policy on approval of trustees and statutory supervisors.

The application should also include the statements and undertakings, described in the Commission's policy, from directors of the applicant company and from its insurer, as well as the directors' dates of birth.

What are the charges?
A cheque for $1,265.00 should accompany the application. This represents the application fee of $100 prescribed under the Securities (Fees) Regulations 1999 and an advance of $1,000 in respect of fees and costs to be incurred, plus GST.

The Securities (Fees) Regulations 1998 prescribe charging rates of $200 plus GST per hour for time spent by Members of the Commission and $145 plus GST per hour for time spent by professional staff.

We are also empowered to obtain independent expert assistance relating to particular applications and to recover the cost of this although we will consult beforehand if we think this is necessary. We are willing to provide estimates for our work. While we endeavour to provide reliable estimates we do not consider ourselves bound to limit our charges to the amount of the estimate and will seek payments at the prescribed rates.

You will be sent an account for costs, where required, each month and at the conclusion of our work. If the cost of work done at the prescribed rates does not exceed the $1000 paid in advance you will receive a refund when our work is finished.

If the application is granted you also reimburse the Commission for the costs of printing and gazetting the approval at the rate of 55cents plus GST per word. The average length of an approval is about 400 words.

What steps are involved?

Application considered by staff
The application is reviewed by Commission staff, who prepare a memorandum for the Commission. You may be asked to provide further information at this stage.
Consideration by Commission Members
The memorandum is put to a Commission meeting. You will probably be invited to make a presentation to the Commission in support of your application. This should focus on the proposed role of the trustee, the procedures it will observe, and the standards it will adhere to in conducting its business.
Decision by Commission Members
The Commission will make its decision and communicate it promptly to the applicant.
Notification in the New Zealand Gazette
An approval takes effect by notice in the Gazette. The notice is signed under seal by the Chairperson or other Member of the Commission. The Gazette, is published each Thursday.

TRUSTEES AND/OR STATUTORY SUPERVISORS APPROVED UNDER SECTION 48 SECURITIES ACT 1978.
A.

COMPANIES

Anchorage Trustee Services Limited

approved as a statutory supervisor, subject to conditions, for a term expiring on 30 April 2007 in respect of securities offered to the public for subscription by Hilda Ross Retirement Village Limited, Grace Joel Retirement Village Limited, L D & B B Holdings Limited (trading as Geraldine Retirement Complex), Maryville Courts Trust Board (trading as Maryville Courts Retirement Villas), Ryman Napier Limited (trading as Princess Alexandra Retirement Village), Shona McFarlane Retirement Village Limited, Rowena Jackson Retirement Village Limited, Jane Winston Retirement Village Limited, Malvina Major Retirement Village Limited, Geraldine Retirement Estate Limited, Anthony Wilding Retirement Estate Limited, Edmund Hillary Retirement Village Limited and Julia Wallace Retirement Village Limited (notified in the Gazette on 18 January 2007).

BDO Spicers Auckland Trustee Company Limited

approved as a statutory supervisor and trustee, subject to conditions, for a term expiring on 6 August 2009 in respect of participatory and debt securities to be offered to the public for subscription (dated 29 July 2004, notified in the Gazette on 5 August 2004).

Covenant Trustee Company Limited

National Mutual Life Nominees Limited

although not currently approved to act as a trustee, National Mutual Life Nominees Limited retains its appointment as trustee in respect of debt securities that were issued in 1986 by New Zealand Equities Limited.

Prince & Partners Trustee Company Limited

Spicer & Oppenheim Trustee Company Limited

INDIVIDUALS

John Huntsbry Midgley

approved as a statutory supervisor, subject to conditions, for a term expiring on 6 August 2009 in respect of securities to be offered to the public for subscription by Anglican Methodist South Canterbury Trust, Social Service Council of the Diocese of Christchurch, and Windsor House Cottage Trust (dated 29 July 2004, notified in the Gazette on 5 August 2004); and for a term expiring on 31 August 2009 in respect of securities to be offered to the public for subscription by Karadean Court Retirement Village Limited (dated 25 August 2004, notified in the Gazette on 31 August 2004).

SECURITIES ACT 1978 TRUSTEE CORPORATIONS

The following are trustee corporations for the purposes of the Securities Act 1978, and so do not require authorisation from the Securities Commission in order to act as trustees or statutory supervisors:

Māori Trustee
New Zealand Permanent Trustees Limited
Perpetual Trust Limited
Public Trust
The New Zealand Guardian Trust Company Limited
Trustees Executors Limited

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