Public Notice Relating to Transfer of Engagements
Pursuant to Section 135B of the Friendly Societies and Credit Unions Act 1982
New Zealand Firefighters Credit Union Incorporated (NZFCU) proposes to transfer its engagements (Transfer of Engagements) to Auckland Credit Union Incorporated (NZCU Auckland) in accordance with section 135(3) of the Friendly Societies and Credit Unions Act 1982 (“FSCU Act”).
Under the Transfer of Engagements, it is proposed that NZCU Auckland will undertake to fulfil all engagements of NZFCU, by succeeding to all of the assets, property, rights, powers, privileges of NZFCU, together with all liabilities and obligations of NZFCU. The Transfer of Engagements is similar to a merger between NZFCU and NZCU Auckland.
The NZFCU operates in accordance with the Trust Deed entered into between the NZFCU and Covenant Trustee Services Limited (“Supervisor”) on 12 March 2014 (“Trust Deed”) and its Rules (“Rules”), both as amended and replaced from time to time.
The NZFCU is in breach of its undertakings under the Trust Deed:
- to maintain a capital ratio in excess of 10%;
- to comply with the risk management program requirements; and
- to comply with the RBNZ credit rating exemption.
Each of these breaches is considered to be an Event of Default under the Trust Deed (“Event of Default”).
The Supervisor has written to the NZFCU regarding each Event of Default and has required the NZFCU to seek members’ approval for either a transfer of engagements to another credit union or to wind up the Credit Union.
The NZFCU Board has undertaken extensive reviews of the current position of NZFCU over the past 18 months. This review has uncovered the many challenges a credit union of our size faces in the current market. In order to remain a viable option for members moving forward the NZFCU Board believes the Transfer of Engagements represents a logical and significant step towards creating a sustainable credit union that is well positioned for the future. As a small financial entity, we are finding it difficult to compete due to relatively higher costs to meet and deliver services and, in recent years, the increased cost of compliance.
The Transfer of Engagements has been proposed to provide for a larger, stronger and more efficient unified credit union capable of taking advantage of economies of scale and reduced compliance costs. The scale of a larger, stronger credit union is intended to create efficiencies to deliver better pricing for savings and lending rates, and competitive fees, and enable us to invest in technology to improve services and provide wider access to capital for the benefit of our member-owners. It is anticipated that following the Transfer of Engagements, members of NZFCU and NZCU Auckland will have access to more competitive products and services.
If members do not agree to either a transfer of engagements or a wind up, the Supervisor will appoint a receiver to the NZFCU. The Supervisor has the power to appoint a receiver to the NZFCU at any time after an Event of Default has occurred.
It is proposed that members of NZFCU will vote on the Transfer of Engagements at a Special Meeting called for 6 May 2022. The Transfer of Engagements will be subject to the further approval of the Board of NZCU Auckland and will remain subject to other conditions.
If the Transfer of Engagements is approved by members of NZFCU by way of special resolution and the Transfer of Engagements becomes unconditional, the special resolution will be filed with the Registrar of Friendly Societies and Credit Unions (“Registrar”) pursuant to sections 135C(1) and 82(3) of the FSCU Act. Under section 82(4) of the Act, a period of six weeks is then allowed for objections to be made in respect of the Transfer of Engagements.
Where you consider that you may be adversely affected by the Transfer of Engagements to a substantial extent, you may object to the Transfer of Engagements pursuant to section 85 of the FSCU Act.
Objections may be made in writing to the Registrar at Private Bag 92061, Victoria Street West, Auckland 1142 within the six-week objection period or by email to email@example.com. Any objection should be clearly stated and describe the remedy sought.
It is anticipated that the Transfer of Engagements will take effect on or around 30 June 2022.
The most recent Product Disclosure Statements and audited financial statements for NZFCU and NZCU Auckland may be obtained online by accessing the Disclose register at www.disclose-register.companiesoffice.govt.nz (using the “Search for an Offer” function).
Further information may be obtained by visiting https://firefighters.co.nz/ or by contacting firstname.lastname@example.org.