Financial Markets Conduct (New Zealand Local Government Funding Agency Limited Water CCO Offer) Exemption Notice 2026

This notice also provides that Water CCO Offers or Substitution Transfer Offers (each, an Offer) made in reliance on the notice are not regulated offers under the Act. This means that other requirements of the Act that apply in connection with regulated offers (such as financial reporting requirements) will not apply to LGFA by reason of the Offers. Any other financial market conduct obligations LGFA may have, including obligations under Part 2 of the Act, are not affected.

The Financial Markets Authority (FMA), after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because—

• the exemptions recognise the unique characteristics of Water CCOs. While a Water CCO technically falls outside the wholesale investor exclusion in Schedule 1 (as it is not a local authority, which is a government agency), in practice a Water CCO will be now carrying out an activity of a local authority, and will have the same level of knowledge, information and sophistication when making investment decisions in respect of the Offers, as a local authority. In these circumstances, the exemptions recognise that Water CCOs are in substance wholesale investors and that the normal disclosure and governance requirements would not provide additional useful information or protection for those Water CCOs:
• there is a proposed amendment to the LG Act, via the Local Government (System Improvements) Amendment Bill, the effect of which will be that the Act will apply to a Water CCO as if it were a local authority (i.e. a wholesale investor) (Amendment). The exemptions in this notice are consistent with that proposed Amendment:
• the exemptions promote flexibility in the financial markets by recognising that Water CCOs are in substance wholesale investors, and by allowing Water CCOs to participate in the Offers in the same way as if the Offers were made in reliance on the Schedule 1 exclusion:
• without the benefit of the exemptions, there are significant compliance costs in respect of disclosure, governance and financial reporting that would apply to LGFA.

 As such, the FMA is satisfied that–

• granting the exemption is necessary or desirable in order to promote the purposes of the Act, specifically by avoiding unnecessary compliance costs and by promoting flexibility in financial markets; and
• as the exemptions only apply for two years, are limited to Water CCO Offers and Substitution Transfer Offers to a limited category of investors (Water CCOs who are wholly owned by one or more local authorities), and as the scope of the exemptions are analogous to the position LGFA would be in if the Amendment were in effect or if each Water CCO were classed as a wholesale investor under Schedule 1, the extent of the exemptions are not broader than reasonably necessary to address the matters that gave rise to them.

Dated at Wellington this 4^th June 2026.

John Horner, Director, Markets, Investors and Reporting