CFCL Investment regulation – New Zealand

Regulatory structure

Please refer to the CBL Market infrastructure - New Zealand for the complete information about the regulatory structure.

Holding restrictions

Disclaimer

The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 3 October 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and Clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.

Holding restrictions – Register Market – New Zealand

Restrictions on clients

Clients domiciled in New Zealand are allowed to hold funds through CFCL as New Zealand recognizes the concept of Beneficial Ownership and as such acknowledges that the Beneficial Ownership of funds held via CFCL is vested with the end client. There are no restrictions on New Zealand domiciled ultimate beneficial owners.

Certain funds may also impose specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.

Restrictions on holdings by foreign persons

There are no general restrictions on foreign client residency for holdings held through CFCL. However, foreign clients are subjected to the following legislation:

• the Overseas Investment Act 2005;
• the Overseas Investment Regulations 2005.

The consent of the Overseas Investment Office is required when an acquisition by an "overseas person" is of:

• 25% or more ownership or control interest in securities of a person where the consideration paid; OR

the value of the assets of the target, exceeds NZ$100 million.

Restrictions on settlement

There is no general restriction on settlement on New Zealand investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.

Holding restrictions – CSD Market – New Zealand

Holding Restrictions

The OIO's consent is generally required for investments by “overseas persons” in significant business assets; that is, if, as a result of the overseas person's acquisition of rights or interests in securities of a New Zealand body corporate, trust or other entity as defined in the Overseas Investment Act 2005:

• The overseas person or its associate(s) has/have a 25% or higher ownership or control interest, or an increase in an existing 25% or higher control interest in a New Zealand body corporate, trust or other entity as defined in the Overseas Investment Act 2005; and
• The value of the securities or consideration provided, or the value of the assets of the entity or the entity and its 25% or more subsidiaries, exceeds NZD 100 million. An NZD 477 million threshold applies to Australian investors.

Some New Zealand companies have specific foreign ownership restrictions that may require the investor to seek the companies' board approval of the investment.

Transfer and repatriation of capital

The transfer abroad of capital gains, dividends and interest as well as the repatriation of capital by residents or non-residents is not restricted.

Disclosure requirements

Introductory information and categories

This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.

Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.

Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.

For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.

In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.

In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.

The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.

Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.

It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.

In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.

N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.

Disclosure categories

Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:

Category 1

Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;

Category 2

Markets where disclosure by Clearstream Banking as a custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;

Category 3

Markets where there is no obligation for Clearstream Banking as custodian of Clearstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.

Disclosure requirements – Register Market – New Zealand

Disclosure Category: 2

Clearstream Fund Centre (“CFCL”) may be required, under the laws and regulations of New Zealand, to disclose the identity, information and holdings of clients and/or ultimate beneficial owners, upon request, in the case of holding New Zealand investment funds.

Consent

In order to comply with the local legislation, clients holding New Zealand investment funds or entering into transactions in the New Zealand market must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CFCL.

Disclosure Requirement

Clients are advised that the local laws and regulations oblige CFCL to disclose the requested information on CFCL clients and ultimate beneficial owners to the party that is entitled by law to receive such information.

Background and legal basis

The Legal basis for disclosure requirements may arise from the following:

• Section 290(2) of the Financial Markets Conduct Act 2013;
• Section 385(4) of the Financial Markets Conduct Act 2013; Subpart 3 of Part 8 of the Financial Markets Conduct Act 2013.

Disclosure requirements – CSD Market – New Zealand

Disclosure Category: 1

Under Financial Markets Conduct Act 2013 (“FMCA 2013”), Clearstream Fund Centre (“CFCL”) shall disclose the identity and holdings of customers of all financial products unless declared by regulations not to be a security for the purposes of the FMCA 2013.

Consent

In order to comply with the legislation as mentioned below, customers entering into transactions in the New Zealand domestic market consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, the listed company or its agent) as their attorney-in-fact, under power of attorney, to collect from CFCL such information as is required to be disclosed.

Background and legal basis

Local laws and regulations (including sections 274 to 281 and 290 and 291 of the FMCA 2013), may require CFCL or CFCL's depository to disclose securities holding information with respect to CFCL's securities account.

Obligation to report threshold crossings

The basis for disclosure falls under Sections 274 to 281 of the FMCA 2013.

When an investor acquires a relevant interest of 5% or more in any class of a listed company's voting securities, this constitutes a substantial security holding. The beneficial owner must disclose the substantial security holding to the company and to the registered exchange on which the securities are listed. Subsequent increases or decreases of 1% or more as well as ceasing to be a substantial security holder, also require disclosure. Disclosure must be given as soon as the substantial security holder knows, or ought to know, that the reportable event has arisen.

Based on Sections 290 and 291 of the FMCA 2013, a listed issuer may forward a notice to the nominee requiring the latter to disclose the name and address of every person who holds a relevant interest in the company, or similarly may issue a disclosure request to any person whom it believes to hold a relevant interest in voting securities. The relevant person will have to disclose its name and address as soon as practicable. A person has a relevant interest in a security if that person:

• Is the registered holder of the security; or
• Is the beneficial owner of the security; or
• Has the power to exercise, or to control the exercise of, a right to vote attached to the security; or
• Has the power to acquire or dispose of, or to control the acquisition or disposition of the security.

Disclosure applies to listed voting securities only, not to unlisted securities. However, the Securities Commission of New Zealand can require any person to disclose the nature and extent of any relevant interests in securities of a public issuer, including unlisted and non-voting securities.

Please refer to Disclosure Requirements - New Zealand for complete information on disclosure requirements for New Zealand.

Disclaimer

The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL acting as a sub-custodian for CFCL that was issued on 3 October 2019. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.

Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CBL arising out of or resulting from such non-compliance.