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. Accordingly, exemptions from these Website Profile requirements will be available, on application, to schemes that are closed to new investors and are being actively wound-up. If approved, an exemption may provide relief Sue Brown from the requirement to have a licensed manager, an Partner independent licensed supervisor, a statement of investment +64 4 918 3040 policy and objectives, or the need to have a governing [email protected] document that is FMCA compliant. The FMA will apply Website Profile conditions around reporting and disclosure requirements to any exemptions that it grants. Alasdair McBeth An exemption notice to give effect to the exemptions from Partner the custody and cash reconciliation obligations is expected +64 4 474 3257 to be finalised by the end of June 2016. The FMA has noted [email protected] that applications for licensing and governance exemptions Website Profile for schemes in active wind-up can be expected to take up to six weeks from the date that the FMA receives the Nicole MacFarlane information it needs. Special Counsel For advice on any of these exemptions, or the transition of +64 9 300 3891 your property scheme to the FMCA, please contact one of [email protected] our experts. Website Profile Geoff Ward-Marshall Senior Associate +64 4 474 3245 [email protected] Website Profile ABOUT DLA PIPER NEW ZEALAND DLA PIPER NEW ZEALAND DLA Piper New Zealand is an independent law firm. It is OFFICES www.linkedin.com/company/dla-piper-new-zealand associated with DLA Piper, a global law firm operating through various separate and distinct legal entities. For more information AUCKLAND www.twitter.com/dlapipernz visit www.dlapiper.co.nz DLA Piper Tower 205 Queen Street A list of DLA Piper offices can be found at www.dlapiper.com Auckland NZ 1010 www.bit.ly/dlapipernewzealand Tel +64 9 303 2019 COPYRIGHT [email protected] If you would like to reproduce any of this publication, please www.youtube.com/DLAPipervideos contact [email protected] WELLINGTON Chartered Accountants House www.facebook.com/dlapipernewzealand www.dlapiper.co.nz 50 - 64 Customhouse Quay, © DLA Piper New Zealand, May 2016 Wellington NZ 6011 Tel +64 4 472 6289 www.instagram.com/dlapipernewzealand [email protected] This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication. Financial Services Update | 2.