Securities Act (Eligible Service Superannuation Schemes) Exemption Notice 2004
Effects of the exemption
The following superannuation schemes do not need a registered prospectus for offers of membership made to ministers, clergy and certain other specified persons:
- The Beneficiary Fund of the Presbyterian Church of Aotearoa New Zealand
- The New Zealand Anglican Church Pension Fund
- The Supernumerary Fund of the Methodist Church of New Zealand
At law, ministers and clergy are not employees of their churches. This means that superannuation schemes offered by churches for these people do not qualify for the exemptions for employer superannuation schemes in section 5A of the Securities Act 1978 or in the Securities Act (Employer Superannuation Schemes) Exemption Notice 2004.
The three named superannuation schemes are exempt, subject to conditions, from section 37(1) of the Securities Act 1978 in respect of offers of new membership to specified persons, who include ministers in their church, candidates accepted for the ministry in the church, and persons accepted for training as ministers. The conditions are set out below.
The exemption is subject to the condition that the offer includes the following terms:
- if there is a shortfall for a financial year, the promoter of the scheme, or an associated person, will incur, or procure payment of, costs in respect of that year that are at least equal to the amount of the shortfall.
- to determine whether there is a shortfall for a financial year, -
- determine the administrative costs for the scheme (excluding the costs that are directly attributable to the management of the investments of the scheme);
- then determine how much (if any) of the surplus (that is, the excess in the value of the scheme's assets over the value of the members' accrued benefits) has been applied to meet contribution liabilities, expense payments (which may include administrative costs), or both, for that year;
- then deduct the applied surplus amount from the administrative costs. The remaining amount of administrative costs, if any, is the shortfall.
- each annual report prepared under section 14 of the Superannuation Schemes Act 1989 for a financial year during which the scheme's trustees relied on the exemption must include the following statements and information:
- if any superannuation trustee, promoter, or manager of the scheme, or any director of that superannuation trustee, promoter, or manager, has, during the 5 years preceding the specified date, been adjudged bankrupt or insolvent, convicted of any crime involving dishonesty (within the meaning of section 2(1) of the Crimes Act 1961), prohibited from acting as a director of a company, or placed in statutory management or receivership, a statement to that effect including the name and any alternative or former name or names of the person concerned;
- if more than 10% of the value of the scheme's assets (calculated in accordance with generally accepted accounting practice) was, at any time during the year preceding the specified date, represented directly or indirectly by any securities that were issued by a superannuation trustee, manager, or custodian of the scheme (or any associated person of any of them), a description of those securities;
- a brief description of any legal proceedings or arbitrations that are pending at the specified date and that may have a material adverse effect on the scheme;
- a statement by the superannuation trustees of the scheme (or, if a superannuation trustee is a body corporate or unincorporate, by the directors of that body) as to whether, in their opinion, after due enquiry by them, either or both of the following have materially and adversely changed since the specified date:
- the value of the scheme's assets relative to its liabilities (including contingent liabilities);
- the ability of the scheme to pay its debts as they become due in the normal course of business;
- a statement as to whether the promoter or an associated person was required to incur, or procure payment of, costs for that financial year and, if so, a statement that those costs have been incurred or that those costs have been paid.
- the trustees of the superannuation scheme must send, or cause to be sent, to any member who so requests, a description of the investment objectives and policy for the scheme, or of the means for making changes to these, free of charge and within 5 working days of the trustees receiving the member's request for this information.
The exemption is also subject to the condition that the investment statement states the above terms of the offer, and includes a warning statement about restricted disclosure, in the form set out in the notice.
The Commission has considered an application from the Anglican Church in Aotearoa New Zealand and Polynesia, the Methodist Church of New Zealand, and the Presbyterian Church of Aotearoa New Zealand seeking an exemption from the requirement for a registered prospectus when offering membership of particular superannuation schemes (the "schemes") to individuals who include some or all of the following: ministers in their church, candidates accepted for the ministry in their church, and persons accepted for training as ministers. At law these individuals are not employees of the churches, and accordingly the schemes are not employer superannuation schemes within the meaning either of the Securities Act 1978 or the Securities Act (Employer Superannuation Schemes) Exemption Notice 2004.
The exemptions in sections 5A to 5C of the Act and in the 2004 notice apply to schemes offered within an employer/employee relationship. The Commission considers that the position of an individual who qualifies for membership of a scheme to which this notice applies is sufficiently similar to that of an employee for an exemption to be consistent with the policy of sections 5A to 5C of the Act.
Exemption may be extended to other registered superannuation schemes
The Commission may add further registered superannuation schemes to the Schedule of this notice and will assess schemes for possible inclusion on a case by case basis. The Commission intends that a scheme may be eligible if -
- it is promoted by 1 person only or by 1 person and 1 or more associated persons; and
- it is offered to persons who, in the Commission's assessment, are in a situation similar to that of the classes of persons identified in column B of the Schedule to this notice.
However, it is not the Commission's intention that this notice be made available to schemes offered to contractors generally.