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The Securities Commission is about to relax rules for property developers to make it easier for them to comply with the law.
Liam Mason, the commission's general counsel, said the terms of class exemptions would be extended soon so fewer developers would have to apply for specific exemptions, especially for leased and staged developments.
He was commenting following action taken after high-profile developer Patrick Fontein of Kensington Properties applied to the commission earlier this year to ensure his Taupo and Orewa residential developments complied with the Securities Act.
But the commission found the developments did not comply. Securities were being offered without a registered prospectus or investment statement at the new housing estates and part of the offering in the schemes was technically illegal.
Fontein then gave enforceable undertakings to the commission to ensure he complied with the law.
Subsequently, he repaid about $5 million of property purchasers' money, all of which was then immediately offered back to him under the terms of a new scheme.
On Wednesday, Fontein issued a warning to bankers, accountants, lawyers and other developers, saying that many other staged real estate projects with common areas were also likely to need commission clearance.
A key part of these developments was the establishment of an incorporated society to own, manage and maintain common facilities in large property developments, he said.
But in selling membership of such societies, developers were effectively offering securities and must therefore comply with the law, Fontein said.
Mason said all this was about to change because the rules would soon be altered so that fewer developers would need to apply.
Instead, they would be considered to comply because the act gives the commission the power to exempt certain parties from compliance with the law, subject to appropriate terms and conditions.
"A lot of developments with common areas and societies can use exemption notices now," Mason said. However staged developments or those with leasehold land could be caught out, he said.
"It all depends at what point in the staging an incorporated society is formed."
"We will be extending the class exemptions to cover more developments and to include more types of developments," Mason said.
This would happen in the next few months.
