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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22815
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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We are a non profit registered charity - we have community

Customer Question

Hi- We are a non profit registered charity - we have community shareholders - we need to raise funds towards building a new health facility to operate from and we would like to offer more shares to the public. Is this able to be done without going through the full requirements for prospectus etc? Thanks
JA: Can you tell me where the nonprofit is registered?
Customer: NZ
JA: Has anything been filed or reported?
Customer: no
JA: Anything else you want the lawyer to know before I connect you?
Customer: no
Submitted: 9 months ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 9 months ago.

If you want to offer shares then there are very heavy requirements under the various statutes which govern the issue of financial services. I would not recommend raising money in this way because of the initial cost and the ongoing compliance costs.

Expert:  Chris The Lawyer replied 9 months ago.


Expert:  Chris The Lawyer replied 9 months ago.

Anyone offering financial products for sale needs to comply with financial markets legislation. The Financial Markets Conduct Act 2013 (FMC Act) defines these people as issuers and other offerors.

Expert:  Chris The Lawyer replied 9 months ago.

There isnt any real way to avoid the effect of this legislation. AS soon as you start to offer to the public you need to comply

Expert:  Chris The Lawyer replied 9 months ago.

Issuers are people who are involved in first making a financial product available. For the legal definition see section 11 of the FMC Act. They include:

  • the main debtor in relation to a debt security
  • the entity to which an equity security relates
  • the manager of a managed investment scheme
  • Any party that is in the business of entering into derivatives.
Customer: replied 9 months ago.
We understand that and we have reviewed the coming legislation - we have considered that the likely level of funds that could be raised would not be economic against the cost of compliance. The only likely avenue appears to be the "small" option for which we would meet with the requirement for max $2m in 12 months but the maximum participants of 20 would not meet our situation. When provided this info from govt source we were told that legal advice could assist us in achieving our objective this doesn't appear likely from what we have read. Therefore I guess the real question is: would it be worth our while seeking more detailed legal advice. Our objective would be to raise less than $2m but for up to 300 individual shareholders.
Expert:  Chris The Lawyer replied 9 months ago.

I think you should definitely seek expert advice on this issue. What you propose is not a small float because of the number of shareholders, as you realise. The cost of compliance would likely eat a fair percentage of the money raised

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