Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698846540157.pdf (New Zealand)
2011/50 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 Anand Satyanand, Governor-General Order in Council At Wellington this 21st day of March 2011 Present: His Excellency the Governor-General in Council Pursuant to section 154(1)(a), (d), (e), (h), and (l) of the Financial Advisers Act 2008, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council, and on the recommendation of the Minister of Commerce made after consulting the Securities Commission in accordance with section 154(4) of that Act and being satisfied of the matters specified in section 154(5) of that Act, makes the following regulations.
Contents 1 2 3 Title Commencement Interpretation Page 2 2 2 1 r 1 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 2011/50 Definitions Meaning of cash or term portfolio investment entity Meaning of investment-linked contract of insurance Meaning of land investment product FSCU share is category 2 product Voluntary authorisation Authorisation in relation to category 2 product Prescribed entities Overseas banks prescribed entities for purposes of section 77P(1)(b) of Act Exemptions Exemption for National Provident Fund and Annuitas Management Limited Exemption for financial adviser services in relation to workplace financial product for related entity employees 3 5 5 7 7 7 8 8 Regulations Title These regulations are the Financial Advisers (Definitions, Vol- untary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011.
Commencement These regulations come into force on 1 April 2011.

3 (1) Interpretation In these regulations, unless the context otherwise requires,— Act means the Financial Advisers Act 2008 Commission means the Securities Commission.

(2) Unless the context otherwise requires, any term or expression that is defined in the Act and used, but not defined, in these regulations has the meaning given by the Act.
2 2011/50 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 r 4 Definitions 4 (1) (2) (b) Meaning of cash or term portfolio investment entity For the purposes of the Act, cash or term portfolio invest- ment entity means— (a) a PIE call fund unit (a unit in a cash portfolio investment entity); or a PIE term fund unit (a unit in a term portfolio invest- ment entity).
In subclause (1),— PIE call fund unit means a specified unit in respect of which— (a) the unit holder has a right to withdraw the unit price or value of the units in full at any time, subject only to the following rights and requirements to the extent that they are described in the investment statement for the PIE call fund units: (i) the right of the specified issuer to suspend with- drawals if the withdrawal would prejudice the interests of unit holders in the PIE call fund as a whole or would threaten the relevant specified PIE’s eligibility as a multi-rate PIE as defined in section YA 1 of the Income Tax Act 2007: the right of the specified issuer to use some or all of the unit price or value to meet any amounts that are owing by the unit holder to the specified bank: the right of the specified issuer, on a demand for withdrawal of the unit price or value, to pay less than the unit price or value in full because of any default or impairment of debt securities of the specified bank in which the specified PIE invests: a requirement to maintain a minimum account balance: the right of the specified issuer to withhold pay- ment if the consideration for the units has not been received or cleared: a requirement to withdraw a minimum amount: the right of the specified issuer, or the trustee of the PIE call fund, to be indemnified for expenses, (ii) (iii) (iv) (v) (vi) (vii) 3 r 4 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 2011/50 costs, and
 liabilities incurred in acting as the spe- cified issuer or trustee of the PIE call fund, to the extent that they relate to, or are attributable to, the relevant units: (viii) the right of the specified issuer to deduct from the unit price amounts due, or to become due, on account of tax; and no fee or other amount is payable as a result of the spe- cified unit not having been held by the unit holder for a particular period of time (b) PIE term fund unit means a specified unit that has— (a) (b) (c) a fixed term;
 and a fixed principal amount; and a potential penalty if the unit price or value is withdrawn before the expiry of the fixed term registered bank parent means a registered bank within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989 that is the parent company of a specified issuer specified bank means— (a) (b) the specified issuer’s registered bank parent; or a related company of the specified issuer’s registered bank parent that is also a registered bank within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989 specified issuer means an issuer, in respect of 1 or more spe- cified PIEs, that— (a) (b) is a subsidiary of its registered bank parent; and is controlled by its registered bank parent within the meaning of section 7 of the Companies Act 1993 (which, for the purposes of this paragraph, is to be read with the necessary modifications); and in the ordinary course of its business continuously offers specified units to the public for subscription (c) specified PIE means a unit trust or group investment fund— that is a multi-rate PIE as defined in section YA 1 of the (a) Income Tax Act 2007; and in respect of which all of the money received from the public by way of subscriptions for specified units is (b) 4 2011/50 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 r 6 invested in bank term deposits, call building society shares, or call debt securities issued by a specified bank specified unit means a unit in a specified PIE or in a fund of a specified PIE.
(3) Unless the context otherwise requires, any term or expres- sion that is defined in the Securities Act 1978 or the Securities Regulations 2009 and used, but not defined, in this regulation has the same meaning as in the Securities Act 1978 or the Se- curities Regulations 2009.
5 (1) (2) 6 (1) Meaning of investment-linked contract of insurance For the purposes of the Act, investment-linked contract of insurance means any contract of insurance other than— (a) (b) a pure risk contract of insurance; or a life insurance policy (within the meaning of section 2(1) of the Securities Act 1978) issued before 1 January 2009.
In subclause (1), pure risk contract of insurance means a contract of insurance— (a) for the payment of money on the happening of a contin- gency, other than a contingency dependent on the con- tinuance of human life; and that does not, and never will, have a value on its can- cellation or surrender that is greater than the value of an unexpired premium relating to a period after the date of cancellation or surrender.
(b) Meaning of land investment product For the purposes of the Act, land investment product means any scheme that incorporates all of the following features: (a) the scheme involves a person (A) subscribing for an interest in, or a right in respect of, land; and (b) A subscribes to the scheme by providing money to the scheme promoter, or to any associated person of the scheme promoter; and as a result of that subscription, A obtains, or may obtain, an interest or right in land; and (c) 5 r 6 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 2011/50 (f) (ii) (iii) (d) (e) the scheme is designed or intended to provide a financial return or other benefit to A (whether or not a return or benefit is actually provided); and the amount of any return or benefit depends on— (i) the use to which the scheme promoter puts A’s money; or the use to which the scheme promoter puts the money of other persons subscribing to the scheme; or a guarantee, or other right, to be paid a return by the scheme promoter under the scheme; and A has no day-to-day control over the use or manage- ment of the interest in the land; and (g) the scheme is not otherwise a category 1 product.
In subclause (1), a person is an associated person of a scheme promoter if that person and the scheme promoter are— (a) associated persons within the description of that term in section 2(2) of the Securities Markets Act 1988 (whether or not that Act otherwise applies to those persons); or related bodies corporate within the description of that term in section 5B(2) of the Securities Markets Act 1988 (whether or not that Act otherwise applies to those bodies corporate); or persons who are partners to whom the Limited Partner- ships Act 2008 applies; or parties to an agreement, arrangement, or understanding (whether express or implied), whether or not legally en- forceable, under which the person acts for, with, or for the benefit of (whether directly or indirectly) the scheme promoter.
In this regulation,— money includes money’s worth scheme means any agreement, arrangement, or understanding (whether express or implied), whether or not legally enforce- able, and irrespective of substance or form scheme promoter means— (a) a person who is instrumental in the formulation of the land investment product; and (b) (d) (c) (2) (3) 6 2011/50 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 r 9 (b) where a body corporate is a scheme promoter, every person who is a director of that body corporate.
7 (1) (2) 8 9 FSCU share is category 2 product For the purposes of paragraph (k) of the definition of category 2 product in section 5 of the Act, an FSCU share is a category 2 product.
In subclause (1), FSCU share means a share referred to in section 107 of the Friendly Societies and Credit Unions Act 1982, and issued by a credit union, under which— (a) the member has a right to demand repayment of the value of the share in full at any time; and the credit union has an obligation to repay the value of the share in full in accordance with section 107(4) of the Friendly Societies and Credit Unions Act 1982; and the rate of dividend or interest payable or any other benefit provided does not alter as a result of the demand being made; and no fee or other amount is payable as a result of the prin- cipal sum not having been held by the credit union for a particular period of time.
(b) (c) (d) Voluntary authorisation Authorisation in relation to category 2 product Cases specified for the purposes of section 55(1)(d) of the Act are cases in which a financial adviser applies for authorisation under sections 52 and 53 of the Act in relation to financial adviser services provided in respect of any category 2 product.
Prescribed entities Overseas banks prescribed entities for purposes of section 77P(1)(b) of Act (1) Overseas banks are prescribed entities for the purposes of sec- (2) tion 77P(1)(b) of the Act.
In this regulation,— overseas bank means a bank that is— an overseas person; and (a) 7 r 10 (b) Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 2011/50 subject to regulatory controls that are substantially the same as those applying in New Zealand in relation to— the composition of the board of directors or other (i) controlling body of the bank; and the disclosure requirements relating to the bank’s financial position; and the requirements relating to the capital adequacy of the bank; and the requirements relating to the taking of deposits (iii) (iv) (ii) overseas person means— (a) (b) a body corporate incorporated outside New Zealand; or an unincorporated body that has its head office or prin- cipal place of business outside New Zealand.
Exemptions 10 (1) Exemption for National Provident Fund and Annuitas Management Limited The board of trustees of the National Provident Fund is exempt from the application of the Act.
(2) Annuitas Management Limited is exempt from the application of the Act in respect of any financial adviser services it pro- vides— (a) to the board of trustees of the National Provident Fund, to the Government Superannuation Fund Authority, or to any other Crown organisation; or on behalf of any person referred to in paragraph (a) (un- less that person is not itself exempt from the application of the Act in respect of those services).
(b) 11 Exemption for financial adviser services in relation to workplace financial product for related entity employees (1) A body corporate is exempt from the application of the Act in respect of a relevant service provided to an employee of— (a) (b) a related body corporate; or a limited partnership if the body corporate and the gen- eral partner are related bodies corporate.
For the purposes of subclause (1), relevant service (which is defined in section 5 of the Act) is limited to a service provided (2) 8 2011/50 Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 Explanatory note in connection with a financial product made available through an employee’s workplace.

Rebecca Kitteridge, Clerk of the Executive Council.
Explanatory note This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, which come into force on 1 April 2011, provide for ancillary matters under the Financial Advisers Act 2008 (the Act) that will assist in the full implementation of the financial advisers regime.

Regulations 4 to 6 define cash or term portfolio investment entity, in- vestment-linked contract of insurance, and land investment product.
An investment-linked contract of insurance and a land investment product are category 1 products (see paragraphs (b) and (d) of the definition of category 1 product in section 5 of the Act), and a unit in a cash or term portfolio investment entity is a category 2 product (see paragraph (g) of the definition of category 2 product in section 5 of the Act).

Regulation 7 specifies an FSCU share to be a category 2 product (see paragraph (k) of the definition of category 2 product in section 5 of the Act).
Regulation 7(2) defines an FSCU share as being a share referred to in section 107 of the Friendly Societies and Credit Unions Act 1982 (the FSCU Act), issued by a credit union, and meeting the requirements set out in regulation 7(2)(a) to (d).
FSCU shares do not fall within the definitions of call building society share or call credit union share in section 5 of the Act, because section 107(4) of the FSCU Act imposes a longer period for repayment of the value of the shares (60 days) than the definition in the Act (1 day).

Regulation 8 enables financial advisers providing services relating to category 2 products to seek, and be granted, authorisation under sections 52 and 53 of the Act in relation to those services.
9 Explanatory note Financial Advisers (Definitions, Voluntary Authorisation, Prescribed Entities, and Exemptions) Regulations 2011 2011/50 Regulation 9 enables brokers to pay client money into overseas banks, by prescribing overseas banks as prescribed entities for the purposes of section 77P(1)(b) of the Act.

Overseas bank and overseas person are defined in regulation 9(2).
Regulation 10 provides exemptions from the application of the Act for the board and trustees of the National Provident Fund (NPF) and Annuitas Management Limited (AML).

The exemption for NPF is unconditional, but the exemption for AML is limited to financial ad- viser services it provides to, or on behalf of, the board of trustees of NPF, the Government Superannuation Fund Authority, or any other Crown organisation.
Regulation 11 mirrors the exemption for an employer providing a relevant service to its employees (see section 14(1)(g) of the Act) by providing an exemption for a body corporate in respect of a rele- vant service provided to an employee of a related body corporate or a limited partnership (provided that the body corporate and the general partner are related bodies corporate).
Regulation 11(2) limits the def- inition of relevant service (which is defined in section 5 of the Act) for the purposes of this exemption.

Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 24 March 2011.

These regulations are administered by the Ministry of Economic Development.

12 10 Wellington, New Zealand: Published under the authority of the New Zealand Government—2011