This notice comes into force on 5 February 2022 and is revoked on the close of 4 February 2027. It applies to offers of certain debt securities known as Kauri bonds that are made in reliance on the $750,000 minimum investment wholesale investor exclusion in clause 3 of Schedule 1 of the Financial Markets Conduct Act 2013 (the Act). Generally, offerors relying on this exclusion must include a warning statement in every offer document and obtain an acknowledgement of the warning from investors (see clauses 3 to 5 of Schedule 8 of the Financial Markets Conduct Regulations 2014). The effect of this notice is to exempt offerors of Kauri bonds from the warning and investor acknowledgement requirements.

This notice replaces the Financial Markets Conduct (Wholesale Investor Exclusion—$750,000 Minimum Investment) Exemption Notice 2017, which is revoked on 4 February 2022. However, exemptions for unsubordinated debt securities (other than Kauri bonds) have not been continued.

The Financial Markets Authority, after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemption because—

• there is a real risk that the cost and complexities of the usual warning and investor acknowledgement requirements would discourage overseas issuers from making offers of Kauri bonds into New Zealand altogether considering the relative size of New Zealand’s debt capital market:

• this could have a significant effect on investment opportunities for New Zealand businesses given the importance of Kauri bond issuances:

• accordingly, the exemption is desirable to promote the purposes of the Act, specifically the confident and informed participation of businesses, investors, and consumers in the financial markets, the development of fair, efficient, and transparent financial markets, and the avoidance of unnecessary compliance costs:

• the exemption is not broader than is reasonably necessary to address the matters that gave rise to the exemption because it is limited to offers of Kauri bonds where the workability issues are particularly difficult.