The Supervisor Series | Part One

Trustees Corporate Supervision is an established supervision business with over five decades of experience in Aotearoa, New Zealand.

As Supervisors, we oversee the supervised entity to ensure our clients perform their duties and obligations within the requirements set by legislation and the documents governing their offer, such as the trust deed.

Over the Supervisor Series we will take a look at the what the role and responsibilities of a Supervisor is, the Acts of Parliament, The Financial Markets Supervisors Act, Financial Markets Conduct Act 2013 (FMC Act), the Non-bank Deposit Takers Act 2013 (NBDT ACT), and the Retirement Villages Act 2003 (RV Act).

Introduction

In its corporate supervisory capacity, Trustees Executors (via its Trustees Corporate Supervision division) performs various legislated roles as set out across a number of Acts of Parliament. A supervisor is necessitated by law to act as the legally independent guardian of investors’ best interests in relation to certain types of investments and their issuers, managers and operators. 

In this function, the supervisor is required to actively monitor the issuer/manager/operator of the supervised investment. This ensures that the issuer/manager/operator does its job properly in full compliance with its duties and obligations under applicable legislation, regulations, governing documents and supervisory agreements. This monitoring activity can change into an enforcement role for the supervisor if the issuer/manager/operator is non-compliant with its obligations.

The supervisor also often, but not always, takes custody of the assets of an investment it supervises on behalf of investors – for whom the assets are held in trust – and therefore becomes the investment’s custodian. The supervisor can appoint another party, a specialist custodian, to act as the custodian in its place, but cannot contract out of its own responsibilities concerning custodianship by doing so. Thus the activities central to the supervisor’s role can be summed up as serving the interests of investors through monitoring, enforcement and (if required) custodianship of their investment.  These core functions of a supervisor are intended to provide enhanced oversight of the issuer/manager/operator as their common objective, and in order to perform these functions, the supervisor must be officially licensed by the Financial Markets Authority (FMA). 

In these short articles, aspects of monitoring and enforcement by supervisors will be considered, with the topic of custodianship reserved for another piece.

Acts of Parliament Applying

Four Acts of Parliament primarily apply to the corporate supervisor’s role.  These are summed up in the table below.

Table 1. Applicable Legislation

In the sections that will follow over the next few weeks, the role of the supervisor in conducting monitoring and enforcement activities on behalf of investors will be described and analysed in respect of the four Acts of Parliament listed in Table 1.

Part two will look at the Financial Markets Supervisors Act and the Financial Markets Conduct Act.