MAY 2016 FINANCIAL SERVICES UPDATE Some welcome relief for managers of real property schemes. The Financial Markets Authority (FMA) CUSTODY OF REAL PROPERTY The first exemption removes the need for real property has announced a new class exemption assets of existing closed property investment schemes to for managers of property schemes. The be held by the scheme’s supervisor or an independent custodian. This will be conditional on the supervisor exemption announced yesterday relieves holding a first ranking security that is registered against the managers and their custodians from the property. If a manager holds real property under this exemption then it will also be exempt from the need to some of the licensing and governance obtain an annual assurance engagement - this would requirements that would usually apply otherwise require the manager to engage an auditor to provide an annual assurance report on the custodial under the Financial Markets Conduct Act processes, procedures and controls. (FMCA), and that may cause unnecessary All other assets will need to be held by the supervisor or custodian and will be subject to an annual assurance costs for property schemes because of the engagement. special nature of their assets and operations. CASH RECONCILIATIONS Custodians of all schemes (new and existing) will be exempt from the requirement to undertake daily cash reconciliation. This will be conditional on reconciliations taking place at a frequency that is appropriate for the volume and frequency of transactions. Financial Services Update | 1 QUALIFYING PROPERTY INVESTMENT KEY CONTACTS SCHEMES IN ACTIVE WIND-UP Daniel Arapere The FMA has recognised that, for a scheme that is in Partner active wind-up, the cost of compliance with the new +64 4 474 3210 licensing and governance requirements will outweigh the
[email protected] benefit for investors.