Sepuloni Carmel: Securities Trustees and Statutory Supervisors Bill — In Committee 
Sepuloni Carmel: Securities Trustees and Statutory Supervisors Bill — In Committee 
[Volume:671;Page:17721] 
CARMEL SEPULONI (Labour) 
: 
 Before I get into the detail of Part 2 of the Securities Trustees and Statutory Supervisors Bill I need to remind the Government and anyone who is listening that Labour supports this bill. Reform of the ways that trustees and statutory supervisors operate is essential for the prevention of another financial collapse and there does need to be greater transparency in this area as has been evidenced by the Government’s handling of South Canterbury Finance— 
Jo Goodhew 
: Stick to the bill. 
CARMEL SEPULONI 
: I will bring it in—I need just to remind the Committee that it is relevant to what we are discussing today and that the collapse of South Canterbury Finance was the largest financial collapse in New Zealand’s history. 
I turn to the provisions of Part 2. The bill removes the automatic statutory approval for six trustee corporations. A trustee statutory supervisor or unit trustee must hold a licence that covers the debt security participatory security or unit trust to which the appointment relates. A licence holder must comply with every condition imposed on a licence. Part 2 outlines that it is an offence for a person to act as a trustee statutory supervisor or unit trustee without an appropriate licence and for a person to represent that a person holds a licence that covers a security without holding such a licence. We think that is very important on this side of the Chamber. 
The bill empowers the Securities Commission to licence persons to be trustees in respect of debt securities statutory supervisors in respect of participatory securities and trustees in respect of unit trusts. The commission may also licence persons to be statutory supervisors of retirement villages. The Financial Markets Authority will take over this role when it is up and running. I think that goes back to what we were concerned about before that maybe this is a little bit premature considering that there are other things coming up that are relevant to what we are discussing in this bill. 
Part 2 sets out the criteria under which licences may be granted provides that licences must be issued for a period no longer than 8 years and provides that licences may be varied. The bill as introduced provided that licences are issued for 5 years but the Commerce Committee recommended that this be extended to 8 years to avoid uncertainty for issuers operators of retirement villages and also licence holders. The commission may issue or vary a licence only if it is satisfied that: “(a) the applicant is—(i) a body corporate that is incorporated in New Zealand; or (ii) an overseas company (as defined in the Companies Act 1993) registered under that Act: (b) every director and senior manager of the applicant is of good character:” as defined in clause 15. The Commerce Committee recommended including a regulation-making power to provide for the matters the Securities Commission and the Financial Markets Authority must take into account in making a good-character assessment. Then finally the applicant either “(i) is registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008; or (ii) complies with section 13(a) and (b) of that Act:” as stated in clause 15(1) and (2). Clause 15(3) sets out in detail the factors the commission must take into account in deciding to issue or vary a licence including things like the skills and financial resources available to the applicant governance structure and other things. 
The monitoring and enforcement aspects of Part 2 are quite interesting. Licence holders must report to the Securities Commission at regular intervals between 6 and 12 months from the issue of the licence and then once every 6 months after that date particularly concerning the licence holders’ compliance with the terms of trusts deeds and deeds of participation and continued compliance with the requirements of eligibility to hold a licence. The bill provides that the commission may require a licence holder to submit an action plan if the commission is satisfied that the licence holder has breached or is likely to breach a trustee obligation or if a material change of circumstances has occurred.