Ruby Bell

Qualifications

LLB University of Otago 2023
BSc (Economics) University of Otago 2023

Community Activity

Women’s Refuge Fundraising
Graham Dingle Foundation

Contact

DDI: +64 7 308 8026
M: +64 27 929 7987
E: ruby.bell@hobec.co.nz

Ruby is a solicitor in the corporate and finance team.

Ruby has recently moved from Dunedin to enjoy the sunny Bay of Plenty. She has joined the corporate and finance team to utilise her background in economics and has a particular interest in private equity, tax, and competition law.

Ruby Bell's Expertise

Corporate & Finance

Commercial Law

Ruby Bell's News & Resources

What your Directors and Officers Insurance doesn’t cover

Recent high profile prosecutions under the Health & Safety at Work Act (HSWA) have highlighted limitations of standard insurance cover for corporate directors and officers. Specifically, where criminal prosecutions may result in extensive defence costs for targeted directors or officers. Typical directors and officers (D&O) insurance will not cover defence costs where the prosecution is based on criminal liability, such as sections 48 and 49 of the HSWA, in the absence of acquittal. What D&O insurance is and what it typically covers New Zealand law places a high standard on a company’s decision makers, i.e., its board of directors and senior executives. A company will typically place D&O insurance to mitigate the risk for such persons. This covers a range of liabilities and includes compensation for legal claims and defence costs when acting in a governance or senior role. Companies can place D&O insurance for their directors and employees. However, a company may only effect the insurance if its constitution expressly authorises it (see s 162 of the Companies Act). D&O insurance can include where a person is charged with a breach of director’s duties or an infringement of the Resource Management Act (RMA). However, this insurance does not, and lawfully cannot, cover all liabilities. Gaps in cover and criminal liability A company cannot effect D&O insurance to cover defence costs where there is criminal liability if the insured is not acquitted. This is explicit at s 162 of the Companies Act. Absent other measures, this can leave a defendant funding their own defence in relation to liability under the HSWA or the RMA. However, a director or employee may place their own insurance personally for defence costs in relation to criminal liability (which includes liability for collusion under the Commerce Act, offences under the RMA and offences under the HSWA). Taking out personal defence cost cover is worth considering as many of these offences have strict liability, meaning, you can still be found liable for an accidental breach. If you are a director or executive employee of a company with exposure to liability under the RMA, HSWA, Commerce Act or any other statutes that have criminal liability, it might be a good time to consider personal cover. Or, if you already have D&O insurance, reviewing what you are covered for already. If you would like to discuss anything in relation to D&O insurance, including understanding what your policy says or what cover you might want to consider, contact our Corporate and Finance team.

The value of Limited Partnerships in commercial property investment

We were recently asked by PMG Funds (PMG) to share our expertise on limited partnerships (LPs) for commercial property investments. As a fund manager, PMG aim to structure each of their funds to maximise benefits for investors. Some of PMG\'s wholesale funds are structured as LPs. The LP structure enables them to simplify how they manage operational aspects of the investment, while allowing investors to play a more passive role while rental income flows through. What is an LP? An LP is a business structure with at least one general partner (GP) that assumes unlimited personal liability, so the investors don\'t have to. For PMG\'s LPs, investors pool their money together to purchase and/or develop property by contributing capital and becoming limited partners. Investors have limited liability and leave management to a fund manager and a property manager. The GP usually has no economic interest in the LP which is entirely held by the investor limited partners. In PMG’s fund structures, the LP will enter into a management agreement with a fund manager that will administer the LP. This agreement clearly sets out the powers and fees of the fund manager, which gives investors transparency to how their money is being used and the fees that are charged. So what\'s so great about LPs? Limited risk - investors only risk the money they have contributed to the LP. Every investment comes with inherent risk and the LP/GP structure is a shield to that risk. If something drastic happens and creditor and/or solvency claims start to appear, investors don\'t have to worry about being personally liable. Their purpose (in PMG\'s case) is real estate - the investment is simple - through the purchase of commercial property, investors receive net income. Tax simplicity - LP’s are look-through for tax. The only tax accounting required is on the investor\'s personal income. This means there is no double taxation or other complexities like those related to distributions from a company. Private - unlike registered companies where shareholder registers are public, an LP’s register is not public. The only public part is the GP company (registered with the Companies Office) which shows the GP company as the owner of the GP. This is the only thing the public will see in relation to the fund, so LPs are a great thing if you don\'t want the world to see your investments. The GP gets to do all the work - and the LP, as an investor, get to sit back, relax and receive the returns! The management agreement also creates incentive for the manager to do a good job - and make investors returns - some of the fees are awarded purely on success of the property fund, meaning that manager and investor interests are aligned. If you have any questions about how LPs work or would like further explanation on the legal side of things, please contact our corporate and finance team.

The Emissions Trading Scheme review was scrapped – what’s happening with forestry?

Last year, the New Zealand Emissions Trading Scheme (ETS) was brought under the spotlight after a High Court hearing and Labour government led review. We have previously explained the ETS here. The ETS is governed by the Climate Change Response Act 2002 (the Act), putting a price on carbon emissions which certain industries must participate in. Every tonne of carbon emissions costs a credit, called a New Zealand unit (NZU). Participants who are emitters need to buy and surrender NZUs to the government to account for their emissions. NZUs can be invested or traded on the NZ ETS market. In 2021, auctioning was introduced where the Government sells NZUs to successful bidders. Auctioning allows the government to control the supply of NZUs, and therefore the emissions of participants, to meet its emissions reductions plan. The plan outlines the strategies and policies intended to achieve the emissions budget for 2022-2025. Five year emissions budgets are mandated by the Act to assist New Zealand’s overall goal of net-zero greenhouse gas emissions by 2025. The Climate Change Commission’s advice regarding Amendment Regulations to the Act in July 2022 recommended allowing NZU prices to increase, and to maintain consistency with the emissions reductions plan. The Labour government declined to follow this advice in the Climate Change (Auction, Limits, and Price Control for Units) Amendment Regulations 2022, instead depressing the market, by artificially reducing the price of NZUs in the emissions reduction plan, leading to plummeting NZU prices and a judicial review. On 13 July 2023, the High Court found that Minister for Climate Change James Shaw made an error with his recommendations concerning the unit level and price control settings for 2023-2027 adopted in the Amendment Regulations. The Minister admitted not complying with the relevant requirements. The settings favoured by Cabinet did not accord with the 2025 target, and did not accord with or justifiably deviate from the emissions budgets and New Zealand’s contribution under the Paris Agreement. The Minister was directed to reconsider the decision. Around this time, the Labour government launched a review of the ETS on 19 June 2023. A summary of that review can be found here. There was consideration given to forestry restrictions, to drive up the price of NZUs, creating uncertainty in the future of the forestry market. The Government failed to sell the 15 million NZUs it made available during the four ETS auctions in 2023, as the clearing price was not reached. The units were consequently removed from the market. The failure to clear was largely due to the significant excess of units currently in circulation. On 6 December 2023, the day of the final auction of 2023, the honourable Minister Simon Watts put out a press release. He said that the new coalition government is scrapping Labour’s ETS Review. They want a “strong and stable” ETS that gives “businesses certainty and confidence”. The Minister held these as the reasons of the NZU auction failure. There was no suggestion of another review. On 12 December 2023, the Minister put out a second press release. The Government is considering a report from the Climate Change Commission as they prepare a second emissions reduction plan and have started “work on doubling renewable energy production”. What does that mean for forestry? Our current Government’s focus on “certainty” and “business” implies no significant changes will be made to the ETS in relation to forestry for the foreseeable future (presumably, within the next three years at least). Renewable energy seems to be the new government’s vehicle on the path to solving issues with the ETS. Forestry investors, and relevant stakeholders, can put to rest any concerns related to Labour’s review. It appears as though forestry is not a key focus that the current Government has in relation to the ETS. For now, all obligations and legal implications around carbon credits and offsetting remain unchanged. If you have any questions around these obligations, please contact our expert team here.

Financial Markets Act 2013

Introduction The new Financial Markets Conduct Act (“Act”) has changed the way in which disclosure in the financial markets sector is made, and to whom. Disclosure requirements were previously scattered throughout legislation and case law and it was often difficult to work out which investors required disclosure. This article provides a brief overview of the changes around disclosure. These should make it easier to determine when disclosure is required and may be particularly helpful for small businesses seeking to raise capital, but minimise compliance costs. Key Changes Disclosure is required if an offer is a “regulated offer”. An offer is a regulated offer if one person to whom the offer is made requires disclosure. If everyone to whom an offer is made does not require disclosure, an offer is not a regulated offer. This means that for the same offer, disclosure may be required to some investors, but not others. If an offer is regulated, disclosure is made through a product disclosure statement (“PDS”) and an online registry. The form and content of the PDS is heavily prescribed by regulations but generally the PDS will contain a key summary, with further content sitting behind it. Continuous disclosure is required through an online registry. This should help keep compliance costs down. Previously, if disclosure was not made to an individual to whom disclosure should have been made, the offer was void. Now failure to make disclosure to one party does not void all of the offers made, just that individual one. Exclusions If you are a small business looking to raise capital you may not need to go to lengths of disclosure. There are a number of investors who are excluded from disclosure requirements. Generally, disclosure is not required where investors are: sophisticated enough to access relevant information; or have a sufficiently close relationship to the issuer to enable them to access the information. The broad exclusions are: Wholesale investors. Close business associates. Relatives. Small offers. Some of these exclusions are carried through from the existing legislation and are now defined more clearly. Some exclusions are new, designed to create more flexibility. The “wholesale investor” covers most of those people who were considered “habitual investors” with some additions. Wholesale investors now includes “eligible investors” which allows an investor to “self-certify” that they are exempt from requiring disclosure. The certification requirements differ slightly depending on the type of financial product, but generally a person needs to certify that they have sufficient experience to assess the merits of the offer, and that they understand the consequences. A lawyer, accountant or financial advisor needs to confirm the certification. Another new exclusion is “small offers” for equity or debt securities. Disclosure is not required where the following circumstances apply: The number of persons does not exceed 20 in any 12 month period; The amount raised does not exceed $2 million in any 12 month period; and The offer may only be accepted by a person who is “likely to be interested” in the offer OR who has an annual gross income of over $200,000 in the last two income years OR who are controlled by that person. Conclusion You should always obtain advice as to whether or not disclosure is required before making an offer. Please get in touch with us if you have any questions about disclosure and your obligations. We would be happy to provide assistance.