NEW ZEALAND Law and Practice Contributed by: Deemple Budhia, Ling Yan Pang, Fred Ward and Matt Kersey, Russell McVeagh
1. Specific Financial Asset Types 1.1 Common Financial Assets The most common financial assets securitised in New Zealand include auto leases, auto receiva - bles, trade and equipment receivables and other receivables such as revolving credit (including credit cards). Residential mortgage-backed securitisations (RMBS) are also commonly seen in New Zealand, including a registered bank’s internal RMBS programme or covered bond pro - grammes. 1.2 Structures Relating to Financial Assets In New Zealand, securitisations are usually structured using a trust as the special-purpose entity (SPE), which is intended to be bankruptcy remote from the originator. An independent trus - tee company will generally act as the trustee, holding the trust assets for a beneficiary (which may be a charitable entity but is usually associ - ated with the originator). A trust manager (gener - ally the originator or an affiliate of the originator) will also be appointed to oversee the day-to-day operations of the trust. The trustee grants secu - rity over the trust assets to a security trustee for the benefit of secured creditors (the investors and other parties to the securitisation). The programme documents include detailed provisions around the operation of the trust and the securitisation, and leave little or no discretion for any of the parties – in particular, the trustee. Where New Zealand securitisations are struc - tured using a trust, a trustee may only exercise its powers in accordance with the trust docu - mentation. Company SPEs can also be used in the New Zealand market; however, these structures are less common.
1.3 Applicable Laws and Regulations The operation of a trust SPE, being an express trust, is regulated by the Trusts Act 2019. The trust documentation will usually explicitly or implicitly exclude or modify the application of the Trusts Act 2019. Company SPEs are regulated by the Companies Act 1993. Other relevant laws and regulations include the following. • The originator may structure the SPE in order to elect into the debt funding special purpose vehicle (DF SPV) regime in the Income Tax Act 2007, which would impact the tax treat - ment of the SPE – see 7.1 Transfer Taxes . • Where the SPE is an “overseas person” for the purposes of the Overseas Investment Act 2005, the requirements of that Act will need to be complied with, although there are exemptions for most types of financial assets. • Any regulatory regime applicable to securi - tised assets will need to be complied with, for example the Privacy Act 2020 and the Credit Contracts and Consumer Finance Act 2003 (CCCFA) – see 2.5 Servicers . • The originator, servicer and SPE will gener - ally need to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPA). 1.4 Special Purpose Entity (SPE) Jurisdiction Where a trust SPE is used, the trust company would be incorporated in New Zealand and the trust documentation governed by New Zealand law. A company SPE would be incorporated in New Zealand.
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