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The Role of a Licensed Supervisor - Corporate Trustee Services

The Role of a Licensed Supervisor - Corporate Trustee Services

Jun 06 2019

Trustees Executors’ Corporate Trustee Services (CTS) team is one of the largest of its type in the business.  It is a New Zealand market leader for providing independent supervisory and trustee professional services to corporate clients in financial markets.  Its independence means it can make unbiased and impartial decisions for the benefit of investors. CTS was officially granted a standard term five-year supervisor licence in January 2018.

 

CTS is a Licensed Supervisor and Trustee of:

- Managed investment schemes such as KiwiSaver, superannuation schemes, unit trusts and group investment funds

- Debt securities

- Asset securitisations

- Non-bank deposit takers such as finance companies, credit unions and building societies

- Retirement villages, forestry, marina and other participatory security issues

 

What does a Supervisor do?

The job description for a licensed supervisor is embedded in New Zealand law.  Four key Acts of Parliament collectively establish and prescribe the powers, duties, and obligations of supervisors:

- Financial Markets Supervisors Act 2011

- Financial Markets Conduct Act 2013

- Non-bank Deposit Takers Act 2013

- Retirement Villages Act 2003

 

A Supervisor Protects Investors' Interests

Based on the legislative foundation of the Financial Markets Supervisors Act 2011, a supervisor performs diverse roles with shared features under the four listed Acts of Parliament.  In the first place, a supervisor must be officially licenced to practice by the Financial Markets Authority (FMA). Regardless of which governing Act applies thereafter, a supervisor’s core functions are designed throughout to provide enhanced investor protections. Services central to a supervisor’s role can be summed up as addressing the interests of investors through providing monitoring, enforcement and (if required) investment custodianship to supervised investment entities.  In carrying out these functions, a supervisor operates as the intermediating party between supervised entities and their appropriate overseeing regulator, whether that is the FMA, the Reserve Bank of New Zealand (RBNZ), or the Registrar of Retirement Villages.

Supervisors work within the requirements of investment-related legislation, regulations, governing documents (for example, trust deeds) and supervisory agreements, in relation to which activity their powers, duties and obligations are defined, prescribed and protected under relevant laws . A supervisor must actively monitor that the issuer/manager/operator of a supervised entity performs scrupulously in full compliance with legally enforceable duties and obligations.  This monitoring activity can change into an enforcement role for a supervisor if the issuer/manager/operator is non-compliant. In serious cases, a supervisor is legally obliged to notify the appropriate regulator of actual or potential breaches of law or regulations committed either by itself or by its supervised entities. A supervisor might even have to notify two regulators at the same time, as in the case of a supervised non-bank deposit taker, wherein both the FMA and the RBNZ would have to be informed.

Unless exempted, retirement villages registered under the Retirement Villages Act 2003 are required to have a statutory supervisor (which means the same as a licensed supervisor). The statutory supervisor must maintain a facility to hold certain funds on trust for actual and intending retirement village residents, monitor the village’s financial position, report annually to the Registrar and residents on its own performance, and otherwise carry out its legal obligations. A statutory supervisor works with residents and their retirement village operator to resolve any issues that may arise and ensure that the village is well managed.

Licensed supervisory services performed by CTS add value to Trustees Executors’ supervised corporate clients as we help them to comply with their legislated duties and obligations to act in the best interests of their investors.

 

As New Zealand’s investment markets continue to grow and become more complex, the role of a licensed supervisor will increase in economic importance.

 

To find out more about the role of a Licensed Supervisor you can read more here.