New Zealand: Tighter trustee requirements – with more to come

Brief Counsel
Last Updated: 16 September 2011
Article by Cathryn Barber, Tim Williams, Mike Woodbury, Bradley Kidd, Ross Pennington and John Holland

Most Read Contributor in New Zealand, September 2016

Trustees of debt securities, KiwiSaver schemes and unit trusts will have greater powers, and greater obligations, from 1 October 2011 under regulations passed last month.

Issuers and providers will need to amend their trust deeds to reflect the new provisions.

Also in prospect, through the draft Financial Markets Conduct Bill (FMCB), are moves to impose an express standard of care on trustees and to limit trustee indemnities.

Deemed provisions

The Securities Amendment Regulations (No. 2) 2011 (the Regulations) will require each trust deed relating to debt securities to include the following provisions:

  • the issuer must provide to the trustee any reports the trustee requires
  • the issuer must report to the trustee any breach or possible breach of the terms of the trust deed or the offer of the debt securities
  • the trustee may engage an expert, at the cost of the issuer, to assist the trustee to determine the financial position of the issuer or to review the business, operation, management systems or governance of the issuer
  • the trustee may agree with the issuer any amendments to the trust deed that do not adversely affect the interests of the holders of debt securities, and
  • the trustee holds on trust for the benefit of the holders of the debt securities certain rights, including the right to enforce the issuer's duty to repay.

Matters to be specified in trust deeds for debt securities

Each trust deed relating to debt securities must include the following matters:

  • the form of the issuer (whether it is a body corporate, friendly society or credit union)
  • the governance requirements with which the issuer must comply
  • the frequency and contents of the reports the issuer must provide to the trustee
  • the frequency, procedure, business to be conducted and voting rights for meetings of holders of debt securities, and
  • the terms relating to the appointment and removal of the trustee and the trustee's powers and duties.

KiwiSaver schemes and unit trusts

Each trust deed relating to a KiwiSaver scheme or unit trust will be deemed to include clauses that:

  • the trustee must exercise reasonable diligence to ascertain whether or not there has been any breach of the terms of the trust deed or the offer of the interests/units, and
  • the trustee must do all the things it is empowered to do to cause any breach of the duty above to be remedied (unless such breach will not materially prejudice the holders of the interests/units).

These provisions already apply to trustees of debt securities under Schedule 15 to the Securities Regulations 2009.

Immediate impact of the Regulations

Issuers will need to amend their existing trust deeds by 1 October 2012 to reflect the new Regulations.

Trustees will have very wide powers to obtain information from issuers that may help if a trustee has concerns about an issuer or its business. Trustees in relation to debt securities already have considerable powers under the Securities Regulations 2009 to require issuers to provide information so this should not be a significant change for those trustees and issuers.

The Regulations should not have a material impact on the day to day operation of trustees or issuers. A number of trust deeds already include clauses similar to these new provisions so in practice there may be little change for those trustees and the issuers they supervise. In other cases, we do not expect there will be a significant increase in reporting requirements unless there are challenges within the issuer's business. Trustees will however have greater obligations if a breach of the trust deed occurs.

The Regulations are intended to improve the supervision of issuers but any improvement will naturally depend not just on the existence of these powers, but also on the extent to which a trustee exercises them and acts on the information received.

Impact of the Financial Markets Conduct Bill

Many of these new provisions will eventually be superseded by enhanced provisions governing trustee conduct in the FMCB (when it is enacted) and supporting regulations.

In that context, trustees should also be aware of proposed provisions in the FMCB to expressly impose a standard of care on trustees and to introduce new limits on their ability to be indemnified for their role as trustee.

Trustees must exercise the care, diligence and skill that a prudent person engaged in the business of acting as a licensed supervisor would exercise in the same circumstances. Any indemnity from the issuer's or scheme's assets or limitation of liability is only available in relation to the "proper performance" of the trustee's duties as set out in the FMCB and must be set out in the trust deed – in contrast to the current position which essentially allows trustees to be indemnified for all actions except negligence.

Next steps

The Regulations come into force on 1 October 2011. The draft FMCB is expected to be introduced to Parliament in early October and enacted in mid-late 2012 with commencement in early 2013.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Bradley Kidd
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.