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Crown Deposit Guarantee Scheme - Update for Collective Investment Schemes

07 November 2008

The Crown’s policy for applicants for the collective investment scheme (CIS) component of the Crown Deposit Guarantee Scheme and the final draft Deed of Nomination have been released.

The information required to make an application is set out at: http://www.treasury.govt.nz/economy/guarantee/pdfs/cis-nom-appform-v1.pdf
Where the Crown guarantees debt securities, the guarantee will be accessible by certain unit trusts, superannuation schemes and arrangements that are participatory securities, provided they invest exclusively in NZ government securities and/or debt securities issued by entities covered by the guarantee scheme.
To be eligible, the relevant CIS must:
  • have candidates that ensure that guarantee proceeds can only be paid to entitled creditors 
  • be in the business of borrowing and lending, or providing financial services, or both;  
  • carry out a substantial portion of their business in New Zealand; 
  • have at least 20 investors; 
  • not have any investors that, together with associated persons, hold more than 20% of the units of the scheme;  
  • be able to provide Trustee confirmation that there is no breach, or circumstances of which the Trustee is aware which are likely or could reasonably be expected to give rise to a breach, of the CIS’s trust deed; and 
  • not invest during the guarantee period in securities other than those issued by the New Zealand government or debt securities of registered banks.
Certain other factors, as detailed in the policy guidelines on the Treasury website, will be considered as part of the application process.
There are a number of practical matters a CIS should consider before entering into the Deed of Nomination (including the need to amend trust deeds of the relevant funds so they comply with warranties in the deed).
Please contact Tim Williams or Penny Sheerin for further information.