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Summary of

Securities Act (Minimum Subscription) Exemption Notice 2000

SR 2000/190

Gazetted on 21 September 2000

Expires on 30 June 2004

This notice replaces the Securities Act (Minimum Subscription) Exemption Notice (No 2) 1999 (SR 1999/217).

This class notice applies to specified shares and to specified units in a unit trust. These are:

• shares which are to be paid for by instalments over a period specified in the registered prospectus with the first instalment payable on subscribing for the shares; and

• units in a unit trust which are to be paid for by instalments over a period specified in the registered prospectus with the first instalment payable on subscribing for the units.

There are two exemptions.

Exemption from section 37(2) of the Act for shares and units

Every issuer is exempted, in respect of specified shares and specified units, from compliance with section 37(2) of the Act in so far as the minimum amount referred to in that subsection must be paid to, and received by, the issuer within 4 months after the date of the registered prospectus.

Condition

The exemption from section 37(2) is subject to the condition that subscribers have, within four months after the date of the prospectus, become legally bound to pay that amount to the issuer under the participation deed or the trust deed for the shares or units.

Exemption from section 37A(2) of the Act for shares

Every issuer of specified shares is exempted from section 37A(2) which prohibits allotments of shares unless the amount payable on applying for the shares is at least 10% of the minimal amount of the shares.

Conditions

The exemption is subject to the conditions that:

• subscribers for the shares become legally bound, at the time they subscribe, to meet the full subscription price of the shares in the manner and at the time specified in the investment statement;
• the only condition of subscribers becoming legally bound to meet the subscription prices is that the shares are allotted; and
• no shares are allotted unless the manager holds subscriptions for all the shares offered and all shares are allotted at the same time.

Effects of the exemption

Section 37 (2) requires that shares and units may not be allotted unless an amount (described in the prospectus as the minimum amount which, in the opinion of directors, must be raised by the issue in order to provide for the matters specified in the Regulations) is subscribed, and is paid to, and is received by, the issuer within 4 months of the date of the registered prospectus.

Under the notice issuers are exempt from the requirement in section 37 (2) that the amount must be paid to and received by them within the 4 month period.

The exemption from Section 37A(2) of the Act allows issuers, subject to conditions, to accept payment in instalments without specifying a nominal amount of the security.

Reasons

Some participatory schemes provide for the price of the securities to be paid in instalments over a period of time. This is common particularly where the scheme is committed to payments over a period of time. The purpose is to allow for the cost of the investment to be spread.

This exemption reflects the general policy of the Act in containing as a condition that subscribers have, within 4 months after the date of the prospectus, become legally bound to pay to the issuer the minimum amount referred to in section 37 (2) of the Act.