Unit trusts

A unit trust is an arrangement or scheme made for the purpose of making a profit or income for the members (beneficiaries) from an investment of some type.  Each unit trust has a manager and a trustee.

• A manager is the company that manages the investment and other property subject to the trusts governing the unit trust.  The manager will issue or offer interests in the unit trust to the public.
• A trustee is the person who is vested with the money, investments or property that are subject to the trusts governing the unit trust.  A trustee can be a trustee corporation within the meaning of the Trustee Act 1956, a company or a bank approved for the purpose by the Minister either generally or in respect of a particular trust.

The trustee and manager must be different entities.

FAQs

Incorporation information

1. Who may apply?

A company managing a unit trust can make an application to the Registrar of Companies to incorporate under the Unit Trusts Act 1960.

2. What needs to be filed?

No Form is required to form a unit trust. However, under the Unit Trusts Act 1960 the following documents are required:

• an Establishment Deed
• a Bond and
• a Master Trust Deed.

3. What fees are involved?

A fee of $NZ100.00 applies for registration of a new unit trust under the Unit Trusts Act 1960. If a prospectus is issued (under the Securities Act 1978) a fee of $NZ320 applies. If financial statements are required (under the Financial Reporting Act 1993) a fee of $NZ250 applies. A new unit trust is also required to lodge an establishment bond, see information below.

4. Further information about incorporation

For more detailed information about incorporating a unit trust, seek independant legal advice.

Filing obligations after incorporation

Unit trusts are required to file:

• Annual financial statements in accordance with the Financial Reporting Act 1993 (fee of $NZ250 plus $NZ100 late fee)
• Amendments to the Trust Deed registered under the Unit Trusts Act 1960
• Change of entity details such as name and address, change of trustee, change of manager, etc
• Any documents filed under the Securities Act 1978 e.g. prospectus, amendment to prospectus, trust deed, amendment to trust deed, etc.

Do unit trusts have to issue a prospectus?

In theory, it would be possible to have a unit trust that did not offer securities to the public but in practice, that is most unlikely to occur.

Under the Securities Act 1978, what is required in the financial statements?

The authority for filing financial statements is not under the Securities Act.  It is under the Financial Reporting Act 1993.

How much is the establishment bond?

The establishment bond is set at $NZ40,000.  This is only payable by the manager of the unit trust if he breaches the Unit Trusts Act 1960.  The bond document filed on registration sets out the fact that the manager agrees to pay this bond if any breach is made.

Removing a unit trust from the register

There is no formal removal process for unit trusts.

A manager of a trust may notify the Trustee of a trust in writing that the trust is to be terminated in accordance with the provisions set out in the Trust Deed.  Upon termination the Trustee is to sell and realise the investments and assets of the trust as soon as practicable in accordance with the provisions set out in the Trust Deed.  

The Registrar of Companies should be notified in writing once the provisions of the Trust Deed have been met.

Please address correspondence to:

The Companies Office
Northern Business Centre
Private Bag 92061
Victoria Street West
Auckland 1142