Our Forestry Investments
Our Investment Structure
Please note that Changes in the 2010 Budget (and subsequent changes to legislation) mean that the previous structures of Investments, as shown below cannot be created from 1 April 2011 and there being a transition period of up to two years to change those with existing Qualifying Company (QC) and Loss Attributing Qualifying Company (LAQC) structures. This page will be updated over the next 12 months to reflect the new investment structures but is retained for background information.
|
|
Our investments reflect the Forest Enterprises' philosophy to offer direct investment into New Zealand Radiata pine forestry as a professionally structured investment. Therefore our investments are structured to ensure that:
-
investors' money is protected
-
the forest activity is undertaken to the highest standards
-
investors are kept fully informed
-
investors retain ultimate control
-
there are many built in checks and balances.
For more details on aspects of our Investment Structure click on the topics listed below. You can also find out more in Our Investor Protections.
Investors
Forest
Enterprises
Qualifying
Company
Company
Investment
Partnership
of Companies
Investors
and Investment Units
Management,
Supervision and Control
Legal
Documentation
Investors
Investors invest by way of company shares. Company shares provide the protection of limited liability, a formal structure and a transferable asset.
The Investors own the land plus the treecrop being established and grown on the land.
The investment structure ensures that the Investors retain control of the investment at all times and that no material changes can be made without the Investors' prior approval.
Forest Enterprises
Forest Enterprises provides forest management, investment administration services and harvest consulting and management. See Management and Administration.
See Management and Administration Services for more details.
Qualifying Company
So that investors receive the forestry related tax deductions available, the company in which they invest is organised to comply with the New Zealand qualifying company taxation regime.
A company can be designated by the New Zealand Inland Revenue Department as a qualifying company (a loss attributing qualifying company) if it meets certain criteria.
A loss attributing qualifying company enjoys the same tax treatment as a partnership, with the tax losses available passing through to the shareholders (our forestry investors) rather than being locked in the company.
Why Company Investment?
The advantages of investing in company shares rather than direct into the partnership are -
Limited Liability - each investor is only liable for the amount they have already invested plus any share calls made to fund the budget for the current year. Partners in a partnership are jointly and severally (that is individually) liable for any financial consequences of the operation of the investment.
Ease of Transfer - company shares are easily transferred, whereas partnership shares are cumbersome to transfer and normally have pre-emptive rights in favour of the other partners.
Sale Proceeds may not be Taxable - income tax is always payable on the transfer of partnership shares, but in certain circumstances may not be payable on transfer of company shares.
Partnership of Companies
The criteria to become a qualifying company includes the restriction of a maximum of 5 shareholders in any one company.
In order to co-ordinate investments of an efficient size and scale, identical multiple companies are used. The multiple companies are bound together using a partnership.
Each forest investment is therefore a partnership of identical qualifying companies. The investment structure of our most recent investment, Baywood Forest is made up of a partnership of 32 qualifying companies. Each company comprises 5 investment units of 200 shares. Therefore the investment comprises a total of 160 investment units (32 x 5 = 160).
Which company an investor is in is immaterial, as the legal documentation ensures that every investor, regardless of company, has the same rights and obligations.
Investors and Investment Units
To enable investors to choose the financial level at which they wish to invest, each company comprises 5 parcels of 200 shares. We call these parcels of shares investment units.
An investor can subscribe for as many investment units they wish. If every investor subscribes for 1 investment unit, each company will comprise the maximum of 5 shareholders.
In practice many investors subscribe for more than one investment unit therefore the companies have anywhere between 1 and 5 shareholders.
How many shareholders a company has (within the maximum of 5) is immaterial, as the legal documentation ensures that every investor has the same rights and obligations.
Management, Supervision and Control
The day to day management of the forest and the administration of the investment is undertaken by Forest Enterprises as Manager.
The investors authorise Trustees Executors Ltd to act as the Directors of the Companies and under a limited Power of Attorney, to attend to all the procedural and statutory requirements of the operation of the Companies.
Investor control is assisted by the supervision input of Trustees Executors Ltd, together with reporting from the Manager, plus annual Financial and Forestry Audits.
As further protection for Investors, Trustees Executors Ltd hold all Investor' funds until required for authorised expenditure or distribution of harvest dividends.
See Our Investor Protections for more details.
Legal Documentation
The legal documentation implementing and controlling the investment comprises three documents -
Identical Constitutions for each investment Company which define most of the details in respect of the relationship between the Investors and the Investment
A Deed of Participation which includes the Partnership Agreement and Management Contract and which defines most of the details in respect of the operation, management and supervision of the forest.
A Deed of Custodianship which authorises Trustees Executors Ltd to hold the ownership of the land in trust for the Investors.
You can download examples of these documents for Baywood Forest, our most recent investment below. Otherwise we can mail you copies.
Constitution (215KB)
Deed
of Participation (415KB)
Deed
of Custodianship (334KB)
We recommend you download these files to your computer. To do
this right-click on the file, select 'Save as' and save to your P.C. When
the download is complete open the saved file. (You will need Adobe Acrobat
Reader to view PDF files. If you need details on how to get Adobe Acrobat
Reader click here)