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Financial Markets Conduct Act 2013

Governance of financial products - Governance of debt securities - Governing document requirements

104: Contents of trust deed for debt securities

You could also call this:

"What a trust deed for debt securities must include to protect you"

Illustration for Financial Markets Conduct Act 2013

When you have a debt security, there is a special document called a trust deed. This document says that the supervisor of the debt security must hold some important things in trust for you, the holder of the debt security. These things include the right to make the issuer repay the debt or pay interest, and any special security for repayment.

The supervisor must also hold the right to enforce any other duties that the issuer or other people have towards you, as outlined in the debt security or the trust deed. You can still enforce these duties yourself, even if the supervisor is holding them in trust for you.

The trust deed must include all the necessary details as required by the law and regulations, including those specified in section 105 and the regulations. It must also follow the frameworks and methodologies set out in notices issued by the FMA under subpart 4 of Part 9, if there are any.

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Part 4Governance of financial products
Governance of debt securities: Governing document requirements

104Contents of trust deed for debt securities

  1. A trust deed for a debt security must provide that the following are held in trust by the supervisor for the benefit of the holders of the debt security:

  2. the right to enforce the issuer's duty to repay, or to pay interest, under the terms of the debt security; and
    1. any charge or security for repayment; and
      1. the right to enforce any other duties that the issuer, any guarantor, and any other person have under—
        1. the terms of the debt security; or
          1. the provisions of the trust deed or this Act in relation to the debt security.

          2. Subsection (1) does not prevent a holder of a debt security from enforcing the issuer's duty to repay, or to pay interest, or any other duties that the issuer, any guarantor, or any other person owes to the holder.

          3. The trust deed is treated as containing any provision that is implied into it by or under this Act.

          4. The trust deed must also provide adequately for all of the matters required to be contained in it by section 105 and the regulations.

          5. The trust deed must provide for the contents required by this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 of Part 9 (if any).