South Canterbury Finance Limited

[minimoke]

I assume in the absence of an offer document Alan will be relying on his personal aquaintance with the investors. That is an exemption under the Act

Dubdee, are you referring to the close business association exemption. If so perhaps you're right. Except can AH get over this threshold? " sufficiently closely connected on a personal basis with the issuer that the assumption could be made that they would each have sufficient relevant knowledge of their relative's affairs or the means of readily obtaining that knowledge"

I don't think he'll make it. There are over 400 individual investors. The accountants here will know if 400 clients is a lot or not many to have a close association. But lets say 400 is quite manageable for an accountant - what about an accountant who is single handedly manging one of the countries largest investment companies which even someone with Sandy Maiers background is taking a while to get the hang of - let alone the new auditors who also took ages coming to grips with the accounts. Not something I'd expect some widowed grannie with no alternative means to cash would be able to do.

[Alan3285]

Dubdee, are you referring to the close business association exemption. If so perhaps you're right. Except can AH get over this threshold? " sufficiently closely connected on a personal basis with the issuer that the assumption could be made that they would each have sufficient relevant knowledge of their relative's affairs or the means of readily obtaining that knowledge"

I don't think he'll make it. There are over 400 individual investors. The accountants here will know if 400 clients is a lot or not many to have a close association. But lets say 400 is quite manageable for an accountant - what about an accountant who is single handedly manging one of the countries largest investment companies which even someone with Sandy Maiers background is taking a while to get the hang of - let alone the new auditors who also took ages coming to grips with the accounts. Not something I'd expect some widowed grannie with no alternative means to cash would be able to do.

This page contains (one) definition of "close business associate":

"Close business associate" means that there must be a degree of intimacy or "business friendship" between the issuer and the offeree although not necessarily a friendship away from business. The closeness must be sufficient to overcome any inequality which might otherwise be present in the relationship.

How many of the 400 or so Aorangi investors that applies to, I have no way of knowing at this point.

It should be noted, for balance, that not all of the 400 have to be covered under this provision, but for Aorangi to be in compliance with the Securities Act, it would seem that all of them would have to fall under one or more of the expemptions in section 3(2) of the act. If they don't then it would seem to be a technical breach of the provisions of the act, but I am not a lawyer!

Alan.

[CJ]

Dubdee, are you referring to the close business association exemption. If so perhaps you're right. Except can AH get over this threshold? " sufficiently closely connected on a personal basis with the issuer that the assumption could be made that they would each have sufficient relevant knowledge of their relative's affairs or the means of readily obtaining that knowledge"

Do facebook friends count - apparently the support AH page is over 4000 so applying 10% as the standard amount of friends on facebook you actually know, maybe he will succeed.

[minimoke]

This page contains (one) definition of "close business associate":

Just for the sake of completeness (and to give Enumerate the citation he often likes) my reference came from Securities Commission v Kiwi Co-operative Dairies Ltd [1995] 3 NZLR 26.
So it seems we are on common ground. The question now arises is: would we expect a qualified accountant in control of or an interest in over 500 entities with at least 400 preferred customers make a "technical" breach. If, say someone like Watson did this might that not be called a "negligent" breach; a "careless" breach" or a "fraudulent breach?.

[Alan3285]

Just for the sake of completeness (and to give Enumerate the citation he often likes) my reference came from Securities Commission v Kiwi Co-operative Dairies Ltd [1995] 3 NZLR 26.
So it seems we are on common ground. The question now arises is: would we expect a qualified accountant in control of or an interest in over 500 entities with at least 400 preferred customers make a "technical" breach. If, say someone like Watson did this might that not be called a "negligent" breach; a "careless" breach" or a "fraudulent breach?.

I don't know - what do you think?

Another question too: If someone tells you that they are exempt under the Securites Act s3(2), does that mean that you can believe them and are covered, or do you have to make your own inquiries?


Interesting stuff.

Alan.

[winner69]

.... so taxes have been paid on income generated over that period.

We are as Emunerates signature attests full of 'conjecture' shall we conjecture that the IRD will get involved next!

No way ... thats a conjecture too far and as Colin puts it a horrible thought

[Beagle]

Just for the sake of completeness (and to give Enumerate the citation he often likes) my reference came from Securities Commission v Kiwi Co-operative Dairies Ltd [1995] 3 NZLR 26.
So it seems we are on common ground. The question now arises is: would we expect a qualified accountant in control of or an interest in over 500 entities with at least 400 preferred customers make a "technical" breach. If, say someone like Watson did this might that not be called a "negligent" breach; a "careless" breach" or a "fraudulent breach?.

There is very little if any case law that I'm aware of defining the issue, that's one of the reasons why the case I had with a side company was settled, cost of a high court case is at least $250,000...people are inclined to settle matters if possible when faced with costs like that.

As an accountant in practice I can reliably tell you there's absolutly no way whatsoever you can have a close business association with 400 people, but hey, I'm not a workaholic superman like AH.

COLIN - Your comment that you believe investors will get all their money back is at odds with the initial SM's report.

4100 odd facebook supporters......let me see $136m / 4100 = average interest free loan of $33,170. I'd liike to buy a modest boat, where can I get my $33,000 interest free loan ?

The other point is clearly the complainant feels strongly enough that they should have the protection the Securities Act affords, and it only takes one, for the whole offer to be illegal, personally I think there's a lot more than one.

Balance - Yeah that tune will do nicely mate.

[minimoke]

I don't know - what do you think?

I don't think you become one of the country's wealthiest men by being "careless". Thats kinda counter-intuitive

I don't think you can be a professional accountant running many companies and be "negligent". A"professional" accountant would, I'd have thought, been answerable to his professional body and I've noted NZICA has been silent on this matter. Additionally no-one seems to be pursuing any actions of negligence - so a "negligent" breach seems unlikely.

Of the options I've provided that only leaves "fraudulent" so best someone gives me some more options.

Another question too: If someone tells you that they are exempt under the Securites Act s3(2), does that mean that you can believe them and are covered, or do you have to make your own inquiries?

If I am a poor Granny and the person is a professional accountant I rely on their expertise and do not make my own inquiries. I'm poor so I can't afford a newspaper to read those apparently informative articles in the Herald and the wireless goes a bit Phutt when those dull people in suits get to the microphone. But when Marge and I get our Blue rinse done at Chloes she reckons I'm onto a good thing.

If I am a sophisticated investor I'd be wondering why my money is going into same fund as the Granny so the question probably wouldn't arise. I didn't get to where I am today by following the Grannies!

[Dubdee]

Colin,
I think why there is so much passion here is that investors are not expecting any capital variability on debt. People expected the return on and return of their capital, without loss. That of course is naive but mum and dad who invested in those products and who have now lost some or all of their capital feel bretrayed.

They always considered the equity markets Russian roulette so there hasnt been the whinging about losses there, even though these have been severe.Eg Feltex

[Alan3285]

Colin,
I think why there is so much passion here is that investors are not expecting any capital variability on debt. People expected the return on and return of their capital, without loss. That of course is naive but mum and dad who invested in those products and who have now lost some or all of their capital feel bretrayed.

They always considered the equity markets Russian roulette so there hasnt been the whinging about losses there, even though these have been severe.Eg Feltex

I think that's probably correct.

For those of us who buy debt securities on market, there is no expectation of a fixed value for the nominal values we hold, but for someone 'putting cash into a fund' or even those who buy debt securities when they are issued, it does seem likely that they view things differently.

Alan.