The following regulations have been made in support of the new licensing regime for trustees and statutory supervisors:
- the Securities Trustees and Statutory Supervisors Regulations 2011 (which prescribe matters that the Financial Markets Authority (FMA) must consider when processing applications for licences under the Securities Trustees and Statutory Supervisors Act 2011, including assessing whether an applicant meets the mandatory 'good character' requirements and the content of regular reports that licence holders must provide to the FMA under the Act);
- the Financial Markets Authority (Fees) Regulations 2011 (which prescribe the licence application fee and the fee to vary a licence under the Securities Trustees and Statutory Supervisors Act); and
- the Securities Amendment Regulations (No 2) 2011.
New requirements for trust deeds for debt securities and trust deeds for unit trusts and KiwiSaver schemes
The Securities Amendment Regulations (No 2) 2011 prescribe matters and terms to be included in trust deeds to help ensure that trustees have the powers they need to properly fulfil their role under the new regime. They amend the Securities Regulations 2009 to:
Require trust deeds for debt securities to include provisions which specify the following matters (but note that there is a 1-year period within which trust deeds registered before 1 October 2011 must be amended to specify these matters):
- the corporate form of the issuer and any additional governance requirements that apply to it;
- the frequency with which the issuer must provide periodic reports to the trustee and the contents of those reports;
- the frequency of, the procedure for convening and holding, the business to be conducted at, and the voting rights at meetings of holders of debt securities;
- the terms relating to the appointment and removal from office of the trustee; and
- the trustee's powers and duties.
Prescribe further clauses that are deemed to be contained in trust deeds for debt securities, including:
- a duty on the issuer to notify the trustee of any actual or potential breach of the trust deed or the terms of the offer;
- the power of the trustee or statutory supervisor, with consent of the issuer, to make amendments to the trust deed that do not adversely affect investors;
- the power of the trustee or statutory supervisor to engage an expert to review the systems and governance of the issuer;
- the power of the trustee to obtain information relevant to the issuer's obligations under the trust deed; and
- the trustee's right to enforce duties of the issuer on behalf of investors.
- Prescribe clauses that are deemed to be contained in trust deeds for unit trusts and KiwiSaver schemes (other than restricted schemes). The clauses require the relevant trustee to exercise reasonable diligence to ascertain whether or not any breach of the terms of the deed or of the offer of securities has occurred, and to do all of the things that it is empowered to do to cause any breach of those terms to be remedied (except if the breach will not materially prejudice the interests of the securities holders). These duties already apply to trustees of debt securities under Schedule 15 of the Securities Regulations.
The Securities Trustees and Statutory Supervisors Act 2011 and the associated regulations came into effect on 1 October.
For further details on the new licensing regime for securities trustees and statutory supervisors visit the Ministry of Economic Development's website here.