The unit trust in New Zealand corresponds to the investment company in the United States. It provides a means whereby the smaller investor may share the benefits of skilled investment in a wide range of securities. In the typical unit trust a substantial sum (say £500,000) is subscribed by the public; each investor is allocated “units” corresponding to the amount he has subscribed and is known as a unit-holder. The subscriptions are pooled to purchase stock or shares in enterprises selected by the managers of the trust with an eye to profitability and safety. Investments can be varied in the light of market conditions. The shares are vested in a trustee for the unit-holders; the profits are pooled and distributed among unit holders. Partly because of the small share market, unit trusts were not established in New Zealand until 1960. The comparatively depressed state of the economy since then has limited expansion, there being only four in 1963.

Unit trusts are closely regulated by the Unit Trusts Act of 1960. Based to some extent on Victorian legislation, the Act is most comprehensive. Its aim is to give unit holders a measure of protection similar to that enjoyed by shareholders. In addition, because of the likely business inexperience of many unit trust investors, the Act places certain supervisory responsibilities on the trustee.

by Bruce James Cameron, B.A., LL.M., Legal Adviser, Department of Justice, Wellington.

• Commercial Law in New Zealand, Leys, W. C. S., and Northey, J. F. (1961)
• Personal Property in New Zealand, Garrow J. M. E., and Gray, H. R. (1959)
• Mercantile Law in New Zealand, Ward, D. A. S., and Wild, H. R. C. (1960).