3794

NEW ZEALAND GAZETTE

No. 182

shall at all times maintain its liquid capital at or above the prescribed level.

22 (2) A sharebroking firm may be temporarily excused from compliance with Rule 22(1) in respect of a particular transaction in accordance with Regulations made hereunder.

22 (3) For the purposes of this Rule 22 and Regulations made hereunder:

(a) The terms “liquid capital” and “prescribed level” shall have the meanings given to them in the regulations.

(b) The powers in Rule 8(21) (relating to the making of Regulations) shall without in any way limiting the powers in that Rule, be deemed to extend to Regulations relating to the implementation of this Rule, including Regulations relating to the manner in which various types of assets are to be valued for determining liquid capital, the inspection of the books of members and the supply by members of regular returns to the Inspector.

22 (4) Where a sharebroking firm is unable to comply with the requirements of Rule 22(1) and has not in terms of Rule 22(2) been temporarily excused from such compliance, the Board may if it sees fit, suspend both the firm and all or any of its principals until such time as it is satisfied that the firm is once again in a position to comply with these requirements.

23. Fidelity Guarantee Fund

23 (1) There shall be a Fidelity Guarantee Fund (“the fund”) for the purpose of meeting just claims from persons who have suffered pecuniary loss from a sharebroking transaction as a result of a member being unable to meet his financial obligations provided however that nothing in this Rule or the establishment and maintenance of the fund shall constitute a legal obligation to any such claimant.

23 (2) The management of the fund shall be vested in and controlled solely by the Board which may in its absolute discretion constitute a Fidelity Guarantee Fund Committee to assist with such management. The Fidelity Guarantee Fund Committee shall be accountable to the Board and shall have such powers as the Board from time to time determines.

23 (3) Every member who carries on whether alone or in partnership any business in addition to the business of sharebroking shall give security by bond (at such time for such amount and in such form as shall be determined by the Board) conditioned to secure the fidelity of such member.

23 (4) Every member who is in partnership with any person who is not a member (whether or not such person is in the opinion of the Board actively engaged in sharebroking) shall (in addition to compliance with Rule 23(3)) take out and maintain a bond to secure the fidelity of that person in respect of each type of business (other than sharebroking) engaged in by him each such bond to be in the sum of $20,000 or such larger figure as the Board may from time to time determine and such bond shall be in favour of or assigned to the Exchange provided that this Rule shall not apply in respect of any business where that person is already covered by a fidelity fund covering real estate agents or chartered accountants or by some other fidelity fund approved for the time being by the Board.

23 (5) Every member shall pay such annual contribution and such additional levy as may from time to time be fixed by the Board, provided that the total amount of all contributions and additional levies paid by members in any one year shall not, in aggregate, exceed the sum of $500,000 and the Board may differentiate between individual members and company members in setting the amount of any levy payable by either class of member. No person shall be entitled to a refund of any contributions or additional levies paid into the fund.

23 (6) The Board shall also have the power to enter into any contract of insurance which may either supplement, replace or otherwise contribute to any payment made from the fund as a result of any just claim being met.

23 (7) The premium for such insurance may at the complete discretion of the Board, be paid from the capital of the fund, the income of the fund, special levies upon members or upon market transactions or any combination thereof.

23 (8) Subject to Rule 23 (10), a person claiming to be entitled to reimbursement from the fund or any scheme of insurance related thereto shall not be entitled to receive more than $20,000 or such greater amount as the Board may in its absolute discretion determine in respect of any loss suffered as a result of the acts or defaults of any one member or his firm.

23 (9) Subject to Rule 23 (10), the total amount payable out of the fund or any scheme of insurance related thereto, to meet claims (as limited by Rule 23(8)) arising out of the inability of any member or his firm to meet the financial obligations of such member or his firm shall be limited to $500,000 or such greater or lesser amount as may be from time to time determined by the Board.

23 (10) Subject to Rules 23 (8) and 23 (9), the Board in its absolute discretion shall determine the extent (if any) to which any claim on the fund shall be met.

24. Short Sales

24 (1) No member shall enter into a short sale contract, either on his own behalf or knowingly for a client, unless such short sale is undertaken in compliance with procedures from time to time prescribed by the regulations.

24 (2) The term “short sale” shall have the meaning given to it in the regulations and variations of that term shall have corresponding meanings.

24 (3) The Board shall make regulations setting out the conditions on which members may make short sales. Such regulations shall include provision for approving securities which may be short sold, setting limits on the proportion of issued capital of any company which may be the subject of open contracts to short sell, and establishing margins of cover for short sales and position limits where appropriate.

25. Miscellaneous and Common Seal

25 (1) Odd lot dealers shall be appointed to deal with sales of parcels of shares not amounting to a marketable parcel as defined by or under these Rules. The operation of dealings in odd lots by or with official odd lot dealers shall be prescribed by the regulations.

25 (2) Where existing shareholders are given the right to apply for new shares, notes, debentures, or other securities offered to shareholders prior to delivery of shares sold for cash, members shall take such action as may be necessary or prescribed by the regulations to protect the rights of the buyers in respect of the securities so offered.

25 (3) Members shall take such action as may be necessary or shall be prescribed by the regulations to protect the rights of buyers in respect of entitlements to dividends