Further to FMA's July update on the review of 44 class exemptions, FMA has announced its proposal to overhaul the Securities Act (Real Property Proportionate Ownership Schemes) Exemption Notice 2002.

The notice provides exemptions from the statutory supervisor, investment statement, prospectus, accounting, register and certificate requirements for offers to the public of interests in real property proportionate ownership schemes on the basis of provision of an alternative offer document and alternative requirements around the offer and allotment processes.

Although most submissions supported retention of this notice, FMA has concluded that this is not justified in terms of the purpose of the Securities Act. Instead, FMA is proposing a new limited exemption to address two discrete issues applying in the case of proportionate ownership schemes relating to developments on real property:

  • an exemption allowing extension of the prospectus for allotment of interests in schemes. This is because often development timeframes will be expected to exceed 18 months; and

  • an exemption that takes account of the fact that where there is a long period of time between subscription and allotment, market movements, and other events, may mean that the prospectus is no longer up to date at the time of allotment.

FMA is seeking comments on these discrete exemptions by 24 September 2012, and aims to have any new exemptions determined appropriate in place by 31 December 2012.

A copy of the project update and consultation paper on the proposed exemptions is available here.

Transitional arrangements

The Securities Act (Real Property Proportionate Ownership Schemes) Exemption Notice 2002 expires on 30 September and FMA does not propose to grant further similar exemptions. However, under a transitional provision (which is expected to be in force before the existing notice expires) offers that have commenced before 30 September 2012 will be able to be completed in reliance on the existing notice. This would enable the continued offer of any existing scheme (namely a scheme with an Offeror’s Statement dated on or prior to 30 September 2012) until 30 November 2012.

Any offer commencing after 30 September 2012 would be required to be offered in full compliance with the Securities Act and Regulations. For this reason FMA is inviting any market participant currently proposing to offer a real property proportionate ownership scheme to the public that will not have commenced before this date to contact FMA to discuss whether specific exemptions may be justified in the particular case.