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Copy of Enforceable Undertaking

View Enforceable Undertaking in PDF format.

3 September 2003

This undertaking is offered to the Securities Commission for acceptance under section 69J of the Securities Act 1978 by:

Stage Three/Four Limited (the "company")
C/- Stuart George Searle
406 Union Road
Mauku
RD3
Pukekohe

And

Pinnacle Hill Farms Limited (the "promoter")
C/- Stuart George Searle
406 Union Road
Mauku
RD3
Pukekohe

And the sole director of both companies:

Mr Stuart George Searle (the "director")
406 Union Road
Mauku
RD3
Pukekohe

Background

1. The promoter is the developer of the lots comprising the subdivision known as Brunswick Park Stage 3 at State Highway 30, Tikitere, Rotorua. The promoter negotiated with the Rotorua District Council for a bulk supply of water to be made available to the lots in the subdivision. The promoter installed a water reticulation system for the subdivision. The company was incorporated on 19 September 2000 for the sole purpose of purchasing, administering control of, and maintaining the water system. The promoter was the only shareholder at the time of incorporation.
   
   
2. On l3 September 2001, the promoter sold the water system to the company. The promoter retained the shares in the company, but all agreements for the sale and purchase of the lots have been, and continue to be, conditional on the purchaser of each lot subscribing for ten shares in the company. Shares in the company have been offered to the public for subscription, and allotted without a registered prospectus or investment statement, contrary to the requirements of the Securities Act 1978.
   
   
3. The offer of shares was intended to result in the owners of the lots in the subdivision paying for, and effectively owning, the water system. Purchasers are required to enter into a deed of encumbrance with the company, the effect of which is to prevent the sale of the lot without the accompanying sale of the shares.
   
   
4. The company has recently applied for exemptions from sections 33, 37, 37A, 38A and 54B(3) of the Securities Act 1978 in respect of future offers of shares in the company.
   
   
5. The promoter, the company, and the director were at the time of the allotment unaware that offers had been made in contravention of the Securities Act 1978, and that allotments made are void. Their solicitors have advised the Commission of the breaches, and acknowledge the Commission's concerns about this. The company, the promoter and the director wish to remedy the situation, and to ensure that no further breaches occur. They have offered the undertakings set out below. The Commission has agreed to accept these undertakings under section 69J of the Securities Act 1978.
   
   

Undertakings

6. The company, the promoter, and the director will not offer further securities to the public for subscription, other than in an investment statement, registered prospectus, or authorised advertisement that complies with the Securities Act 1978 and the Securities Regulations 1983, or in accordance with any applicable exemption granted by the Commission.
   
   
7. The company will hold all subscription monies in trust, cancel any shares already allotted and refund, together with any interest earned, the subscription of any person who does not, within 15 working days of the date of this undertaking, re-apply for shares offered in accordance with the provisions of paragraph 6 of this undertaking.

Acknowledgements

8. The Company and the Director acknowledge that the Commission:
   
   
   1. may issue a media release referring to the undertaking and to the concerns of the Commission which led to the undertaking being executed;
      
      
   2. may from time to time publicly refer to the undertaking; and
      
      
   3. will make this undertaking available for public inspection
   
   
   
9. The Company and the Director acknowledge that this undertaking does not derogate from the rights and remedies available to the Commission or to any other person or entity arising from the conduct described in the undertaking.
   
   
10. The Company and the Director acknowledge that the Commission's acceptance of an enforceable undertaking under section 69J of the Securities Act 1978 does not affect the Commission's power to investigate future conduct of any person, to take any action or exercise any power under the Securities Act 1978 or any other legislation, or to refer any matter for criminal prosecution or seek any civil penalty.

Signed for and on behalf of Pinnacle Hill Farms Limited by its duly authorised officer:

[Stuart George Searle]

Signed for and on behalf of Stage Three/Four Limited by its duly authorised officer:

[Stuart George Searle]

Signed by Stuart George Searle

[Stuart George Searle]

Accepted by the Securities Commission pursuant to section 69J of the Securities Act 1978 by its authorised delegate:

[Liam Mason]

[Dated this 22nd day of August 2003.]

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