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30 Sep 11
Amendments proposed to Public Ancillary Funds

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The major changes appear to be:
  • the introduction of guidelines, and
  • the requirement for a trustee of a Public Ancillary Fund to be a corporate trustee.
On a preliminary basis it appears the Guidelines for Public Ancillary Funds would introduce:
  • a minimum annual distribution (at least four percent of the market value of the fund’s net assets (as at the end of the previous financial year)
  • the imposition of penalties for non compliance with various aspects (which is payable by the trustee and in some circumstances the directors of the trustee)
  • the requirement for valuation from time to time
    • the market value of the fund’s assets (other than land) must be estimated at least annually
    • the market value of land must be estimated at least once every three financial years
  • the requirement for the Trust to have an investment strategy and there are some investment limitations
  • a prohibition against borrowing except in very limited circumstances
  • the requirement for the trustee to prepare financial statements showing the financial positions of the fund at the end of each financial year and these must be audited, and
  • the final form these amendments will take or when they will be enacted are not yet clear. There will be transitional provisions to enable existing public ancillary funds to become compliant.
If you would like to review the proposed guidelines, you can read more on the Treasury website by clicking on the link below:

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Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.
 

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