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Managed funds law

Kensington Swan is recognised by international legal directories as a market leader in managed funds and securities law, having operated a specialist managed funds and workplace superannuation scheme division for over two decades.

Our team works with fund providers, scheme trustees, supervisors, investment managers, and administrators to develop and maintain cost-effective funds management arrangements and financial product offerings.

The Financial Markets Conduct Act 2013 fundamentally changed the overall regulation of financial product offerings in New Zealand. It continues to present some complex compliance challenges, requiring specialist legal support to ensure the rules are understood and that robust compliance assurance arrangements are in place. The Kensington Swan team has been at the forefront of the reforms shaping the new regulatory environment for financial product offerings and discretionary investment management services (DIMS). Our team has acted for a number of leading financial services companies, niche providers and new entrants to the market, from both New Zealand and overseas.

Our expertise encompasses all aspects of regulatory compliance, and includes:

  • Product design and strategy
  • Establishment and administration of managed funds offerings and DIMS
  • Market services licensing
  • Disclosure, offer and advertising collateral
  • Outsourcing arrangements such as investment management, administration, and custodial services
  • Other investment-related arrangements such as ISDAs, securitisations, and dealing in financial products
  • Fund administration challenges such as unit pricing, liquidity and related party issues
  • Offers of financial products to wholesale investors
  • Superannuation, KiwiSaver, and workplace savings schemes (including pension plans)
  • Wrap platforms
  • Proportionate ownership schemes
  • Anti-money laundering compliance
  • Advising international providers on their New Zealandregulatory footprint

The team

Our managed funds team prides itself on its innovative approach to helping our clients to develop and market new products and services. We provide solutions that are not only legally compliant, but commercially astute. We have the right mix of experience and expertise to deliver cost-effective solutions and advice in this increasingly complex area.

Our managed funds specialists are recognised industry leaders. We are experienced speakers on the law affecting managed funds, and regularly provide input to the regulatory reform process. The depth of our engagement with regulators, lawmakers, and market participants gives us unique insights into the regulatory and commercial issues affecting the operation of managed funds and financial product offerings in New Zealand.

Recent experience

Lifestages Deposit Portfolio

We advised SBS Bank subsidiary Funds Administration New Zealand on the development and roll-out of a highly successful cash PIE. The Portfolio offers on-call and term deposit units to retail investors in a tax-effective managed funds vehicle.When product categorisation regulations under the Financial Advisers Act were released for consultation, we successfully pushed for changes that enabled the Portfolio’s core investment strategy to be retained without unduly limiting its adviser distribution channels.

Master unit trust fund rationalisation project

We acted for a major New Zealand managed fund provider in the rationalisation of its extensive product offerings. We advised on options to move investors from various unit trusts to alternatives within the structure, to improve efficiency and simplify the offering.

The project involved a series of extraordinary resolutions of investors passed at unit holder meetings, enabling them to exchange units in one trust for units in another. One of the biggest risks a provider faces in projects of this nature is a loss of clients and funds under management. The strategy adopted on this project resulted in retention of funds in excess of 95%, making it one of the most successful of its kind.

Wholesale unit trust—illiquidity of fund's investments

We acted for a $1.4 billion wholesale unit trust to address issues arising from the illiquidity of the Fund’s investments. Working with in-house general counsel we devised a highly specialised governance structure to reflect the ‘club’ nature of the Fund, enabling it to continue. Wholesale funds with small numbers of institutional investors and liquidity issues present special governance challenges. Our expertise in securities law and governance principles was applied in devising a solution that was effective for both the Fund and its investors.Institutional investors have their own investor demands to deal with, adding a further dimension to the issues confronting the Fund. Balancing competing interests pragmatically was key to the solution’s success.

AXA Mortgage Backed Bonds Limited (MBBL)

We acted for MBBL in managing liquidity issues resulting from the global financial crisis. A moratorium proposal was approved by a significant proportion of bondholders, and has been successfully implemented. MBBL owned a good quality underlying loan book, but was negatively impacted by the global financial crisis. A number of other funds operated by AXA invested into MBBL, increasing the complexity and significance of the issues arising.



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