Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698943526794.pdf (New Zealand)
Deposit Takers Bill Government Bill Explanatory note General policy statement The Deposit Takers Bill (the Bill) is an omnibus Bill introduced under Standing Order 267(1)(c).

That Standing Order provides that an omnibus Bill to amend more than one Act may be introduced if the Business Committee has agreed to the Bill’s introduc‐ tion as an omnibus Bill.

The Bill will modernise the Reserve Bank of New Zealand’s legislation for prudential regulation and supervision of the deposit-taking sector.
The main purpose of the Bill is to promote the prosperity and well-being of New Zealanders and contribute to a productive and sustainable economy by protecting and promoting the stability of the financial system.

The provisions in the Bill are intended to help protect society from the damage to New Zealand’s financial system and wider economy that could be caused by unexpected external factors, excessive risk taking by the deposit-taking sector, and the unmanaged failures of individual deposit takers.
In 2017, the Government announced a review of the Reserve Bank of New Zealand Act 1989 (the Review).

Phase 1 of the Review dealt with monetary policy arrange‐ ments, resulting in the introduction of the Monetary Policy Committee and an eco‐ nomic objective of supporting maximum sustainable employment.
Phase 2 of the Review, which began in June 2018, focused on the institutional structure of the Reserve Bank of New Zealand (the Bank), the framework for the prudential regula‐ tion and supervision of deposit takers, and new arrangements for depositor protection.

In August 2021, the Reserve Bank of New Zealand Act 2021 (the RBNZ Act 2021) was enacted as the first result of phase 2.
The RBNZ Act 2021 is companion legis‐ lation to the Bill, focusing on the institutional foundations for the Bank’s prudential responsibilities and other functions.
The RBNZ Act 2021— • establishes a new governance model for prudential policy (a shift away from the single decision-maker in the form of the Governor to a board): 162—1 2 • • • • • Deposit Takers Bill Explanatory note strengthens accountability and transparency requirements (in line with the regime under the Crown Entities Act 2004): mandates a new financial policy objective focused on promoting financial sta‐ bility: requires the Minister of Finance (the Minister) to issue a financial policy remit: formalises an external departmental monitor (in this case, the Treasury) to assess the Bank’s performance of its statutory functions: provides statutory recognition for the Council of Financial Regulators as a key forum for co-operation and co-ordination within New Zealand’s financial regu‐ latory system.
The provisions of the Bill merge the currently separate frameworks for registered banks and licensed non-bank deposit takers under a single regulatory regime.

Reset‐ ting the prudential boundary for deposit taking will require the Bank to update the broader framework for the regulation and supervision of entities that fall within this boundary.
Updates to the Bank’s prudential framework include modernising the licensing process, enabling a range of prudential standards to be applied to particular deposit takers or classes of deposit takers, and expanding the suite of supervisory and enforcement tools.

The Bill introduces the Depositor Compensation Scheme (the DCS), a fund that will compensate eligible depositors up to $100,000.
The DCS may also be used to compensate creditors or shareholders that may be made worse off as a result of a resolution action, relative to outcomes under liquidation.

The Bill, once it comes into force, will replace the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013.
Preliminary provisions The main statutory purpose of the Bill is to promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy by protect‐ ing and promoting the stability of the financial system.

To that end, other purposes of the Bill include— • • • promoting the safety and soundness of deposit takers: promoting public confidence in the financial system: avoiding or mitigating adverse effects of risks involving the financial system.
The Bill includes a set of decision-making principles the Bank must take into account when performing or exercising its functions, powers, and duties.

The principles are designed to guide the exercise of powers under the Bill, and to ensure that the Bank takes a range of factors into account when pursuing the statutory purposes.

This includes ensuring that relevant considerations are taken into account (for example, proportionality considerations) and that longer-term risks are well managed.
Explanatory note Deposit Takers Bill 3 Licensing The Bill sets out requirements for the licensing of entities involved in the activity of borrowing and lending, conditions of a licence, and penalties that may result from non-compliance.

The Bank will primarily implement prudential policy through standards developed in consultation with the industry.

Beyond standards, the Bank may impose conditions on licences.
Licence conditions may apply particular prudential standards to firms (see the section below on regulation) and make other firm-specific restrictions on the busi‐ ness of a deposit taker.

The Bill contains fit and proper requirements for directors and senior managers of deposit takers.

It further outlines under what circumstances a deposit taker will need to obtain approval from the Bank for changes of control and other significant transac‐ tions, and when the Bank may cancel a licence.
Regulation Prudential requirements for all licensed deposit takers will primarily be set out in standards issued by the Bank.

Standards are secondary legislation under the Legis‐ lation Act 2019.

The Bill outlines the scope of prudential standards the Bank may impose on deposit takers.

The Bill further outlines the due diligence duty of directors, requiring them to ensure that their deposit taker complies with its prudential obligations.
Supervision The Bill details the Bank’s powers to gather information, undertake on-site inspec‐ tions, investigate non-compliance with prudential obligations, and seek remedial action by the deposit taker.

Enforcement The Bill provides a range of powers to sanction deposit takers for non-compliance.

The penalty regime for contraventions in the Bill includes criminal offences, civil pecuniary penalty liability, and infringement offences.

Enforcement provisions include the power to accept undertakings.
The Bill further criminalises the making of false or misleading declarations or provision of false or misleading information.

Depositor Compensation Scheme The Bill introduces the DCS, which provides each eligible depositor up to $100,000 for their covered deposits in New Zealand dollars at each deposit-taking institution.

Natural persons and businesses are generally eligible depositors.
However, govern‐ ment agencies, some financial institutions, and associated persons or directors of licensed deposit takers, as defined in the Bill, are excluded.

In general terms, compen‐ sation will be paid to eligible depositors by the DCS where a deposit taker is in finan‐ cial or other difficulties that cause serious or prolonged disruption to the ability of eli‐ gible depositors to access their covered deposits.
The Bill sets up a DCS fund by 4 Deposit Takers Bill Explanatory note charging levies to licensed deposit takers.

The fund is also backed up by public funds in case the balance of the DCS fund is insufficient to meet its obligations in a pay-out event.

Under the Bill, the Bank has the role of collecting levies, managing the DCS fund, determining entitlements, and making compensation payments.

The Bank can also use the DCS fund to support resolution measures when certain conditions are met.
Crisis management and resolution The Bill provides the Bank with powers to address a deposit taker in financial dis‐ tress, and to compensate creditors or shareholders that may be made worse off as a result of a resolution action relative to outcomes under liquidation.

Other provisions The Bill restricts the use of certain words (for example, “bank” and “banking”) and provides for co-operation with Australian authorities.
Transitional arrangements and commencement Most of the Bill will come into force on a date or dates specified by Orders in Coun‐ cil, but no later than 4 years after the date of Royal assent.

This is necessary to give effect to the intended arrangements for implementing the Bill.

The DCS is expected to come into force via an Order in Council at an earlier date than many other provi‐ sions in the Bill.
The following powers will come into force on the day after the date of the Royal assent: • • powers to issue standards (subpart 2 of Part 3): powers to make regulations (subpart 5 of Part 8).

A transitional period will then be used to license deposit takers and issue the relevant standards.

At the end of that period, the remaining provisions of the Bill will come into force and the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013 will be repealed.
It is intended that the Bill will be divided by the select committee or at the committee of the whole House stage into separate Bills as follows: • • Parts 1 to 8 and Schedules 1 and 2 will become the Deposit Takers Bill: Part 9 and Schedule 3 will become the Deposit Takers (Repeals and Amend‐ ments) Bill.

Departmental disclosure statement The Reserve Bank of New Zealand is required to prepare a disclosure statement to assist with the scrutiny of this Bill.
The disclosure statement provides access to infor‐ mation about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Explanatory note Deposit Takers Bill 5 A copy of the statement can be found at http://legislation.govt.nz/disclosure.aspx?
type=bill&subtype=government&year=2022&no=162 Regulatory impact assessment The Reserve Bank of New Zealand produced a regulatory impact assessment in April 2021 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

A copy of this regulatory impact assessment can be found at— • • https://www.treasury.govt.nz/system/files/2021-04/rbnz-dtb-RIA-4444132.pdf http://www.treasury.govt.nz/publications/informationreleases/ria Clause 1 is the Title clause.
Clause by clause analysis Clause 2 provides for most of the Bill to come into force by Order in Council.

All parts of the Bill must be in force within 4 years after Royal assent.

The reason for the deferred commencement is that secondary legislation needs to be made to give effect to some parts of the Bill (for example, regulations relating to the depositor compensa‐ tion scheme under Part 6 and the standards that licensed deposit takers must comply with under subpart 2 of Part 3).
The powers to make regulations and standards come into force on the day after Royal assent.

Part 1 Preliminary provisions Clause 3 sets out that the main purpose of the Bill is to promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive econ‐ omy by protecting and promoting the stability of the financial system.
The Bill’s addi‐ tional purposes are to promote the safety and soundness of deposit takers, to promote public confidence in the financial system, and to avoid or mitigate the adverse effects of risks involving that system.
Clause 4 sets out principles that the Reserve Bank of New Zealand (the Bank) must take into account under the Bill, for example, the desirability of taking a proportion‐ ate approach and consistency, the need to maintain competition and avoid unneces‐ sary compliance costs, and the desirability of sound governance of deposit takers.

Clause 5 sets out an overview of the Bill.

Clause 6 defines various terms used in the Bill.

The key definition of deposit taker is set out in Schedule 2.
In general terms, deposit takers are entities that currently carry on business as registered banks or licensed non-bank deposit takers.

Schedule 2 defines deposit taker as a person that carries on the business of borrowing and lending money.

A person carries on the business of borrowing if they make certain regulated 6 Deposit Takers Bill Explanatory note offers of debt securities under the Financial Markets Conduct Act 2013 or they make, in New Zealand, an offer of call debt securities.
A person is in the business of lending if they carry on a business of providing credit under credit contracts.

Clause 7 sets out when a person is associated with another.

Clause 8 relates to the transitional, savings, and related provisions set out in Schedule 1.

Clause 9 provides for the Bill to bind the Crown.
Part 2 Licensing of deposit takers Subpart 1—Key provisions This subpart sets out the following key matters: • • • • a deposit taker must hold a licence: a person must not falsely hold out that they are licensed: a failure to comply with these duties is an offence with a penalty of imprison‐ ment for a term not exceeding 2 years or a fine not exceeding $500,000, or both, for an individual or a fine not exceeding $5 million in any other case: the Bank may apply to the High Court for the liquidation of a deposit taker that carries on business without a licence.
This subpart provides for the Bank to issue licences.
In particular, it provides for— Subpart 2—Issue of licences • • • • • how a body corporate may apply for a licence; and the criteria for the issue of a licence, including that— • • • the applicant has the ability to comply with all prudential obligations under the Bill (for example, standards and licence conditions); and the applicant’s incorporation and ownership structure and its governance structure are appropriate, and its ownership is appropriate; and the applicant’s directors and senior managers are fit and proper persons; and additional criteria for overseas applicants.
The criteria relate to the law and regulatory requirements of, and the nature and extent of prudential supervision in, the applicant’s home jurisdiction; and the Bank to consult the Financial Markets Authority (the FMA).

The Bank must also consult the applicant about the conditions and standards the Bank proposes to impose; and the Bank to maintain a register of licensed deposit takers.
Explanatory note Deposit Takers Bill 7 Subpart 3—Conditions of licences This subpart allows the Bank to impose conditions on a licence.

Conditions may, for example,— • • impose requirements within a range set by standards (such as fixing a min‐ imum capital ratio within a range set out in a standard); or impose limits or restrictions on the size or nature of a deposit taker’s business or on its activities.
Subpart 4—Fit and proper requirements This subpart sets out fit and proper requirements for new directors and senior manag‐ ers of deposit takers.

The term senior manager includes chief executives and chief financial officers.

The subpart provides that— • • • • • the Bank must approve new directors and senior managers.
The requirement does not apply to overseas deposit takers (who are instead only required to notify the Bank if a new director or senior manager is appointed): a failure to obtain approval is an offence with a maximum fine of $500,000.
In addition, the Bank may suspend the director from acting as a director of the deposit taker or the manager from being concerned in, or taking part in the management of, the deposit taker: the Bank may at any time require a deposit taker to supply a fit and proper cer‐ tificate: if a deposit taker becomes aware of fit and proper concerns about a director or senior manager, it must disclose those concerns to the Bank: the Bank may remove a director or senior manager if it has reasonable grounds to believe that they are not a fit and proper person to hold the relevant position.
The Bank may also direct that the person not be reappointed.

Subpart 5—Bank’s approval required for certain changes This subpart requires the Bank’s approval for— • • • a transaction that would result in a person obtaining control over a licensed deposit taker.
The requirement does not apply to overseas deposit takers (who are instead only required to notify the Bank of a change in control): certain significant transactions (for example, where a deposit taker transfers all or a material part of its business to another person): an amalgamation of a deposit taker with 1 or more other persons.

The require‐ ment does not apply to overseas deposit takers (who are instead only required to notify the Bank of an amalgamation).
In considering a request for approval, the Bank must consider whether, if the pro‐ posed change occurs, the Bank would still be satisfied of the licensing matters set out in clause 17.

8 Deposit Takers Bill Explanatory note A failure to obtain approval does not invalidate a change.

But the failure is an offence with a penalty of imprisonment for a term not exceeding 1 year or a fine not exceed‐ ing $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case.
The Bank may give its approval unconditionally or subject to conditions.

A person that contravenes a condition of approval commits an offence with a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case.
Subpart 6—Cancellation This subpart allows the Bank to cancel a licence if the deposit taker— • • • • provides false or misleading information when applying for the licence and it has not yet commenced carrying on business in New Zealand; or has contravened a condition that requires it to commence carrying on business in New Zealand; or is not, or is no longer, a deposit taker and does not owe any obligations under any protected deposit; or has been liquidated, wound up, or dissolved or has otherwise ceased to exist.
This subpart allows a person to— Subpart 7—Appeals • • appeal to the High Court against a licensing or fit and proper decision of the Bank; or appeal to the High Court on a question of law against a decision of the Bank about licence conditions or a decision of the Bank about whether to approve a change of control, a significant transaction, or an amalgamation.
Part 3 Regulation of deposit takers Subpart 1—Credit rating This subpart requires a deposit taker— • • • • • • to have a credit rating from a rating agency that is approved by the Bank.
A credit rating is a rating of the deposit taker’s creditworthiness; and to notify the Bank of changes in ratings and of credit watch warnings; and to disclose the rating on its Internet site; and to comply with certain rules if it distributes an advertisement that refers to its rating; and not to disclose or advertise credit ratings from non-approved agencies; and to give public notice of a downgrade in the rating.
Explanatory note Deposit Takers Bill 9 This subpart allows the Bank to grant exemptions from the credit rating requirements in clause 59.

The Bank may grant an exemption where the costs of compliance would be unreasonable or not justified by the benefit of compliance.

Subpart 2—Standards This subpart allows the Bank to issue standards, which are secondary legislation.

A licensed deposit taker that fails to comply with a standard may be liable to a pecuni‐ ary penalty.
The maximum pecuniary penalty is $5 million or 0.1% of the total assets of the deposit taker’s group.

See subpart 2 of Part 5.

Procedural matters Clauses 75 and 76 provide for procedural matters relating to the issue of standards, including a requirement for the Bank to consult persons affected by a proposed stand‐ ard.

The requirement does not apply to minor or technical amendments.

Subject matter of standards Clauses 77 to 89 set out what standards may relate to.
In particular, standards may regulate, deal with, or otherwise relate to— • • • • • • • • • • • • • governance: the remuneration of, and incentives available to, directors, senior managers, and employees: incorporation structure (for example, requiring local incorporation): capital, liquidity, security interests, and credit ratings: bail-in arrangements.
A bail-in standard may, for example, require a deposit taker to issue debt securities that are convertible into shares if a certain trigger event occurs: ensuring only fit and proper persons are appointed to, and continue to hold, positions as directors or senior managers: loan concentration and risk exposures, exposures to related parties of a deposit taker, and a deposit taker’s business of lending money (a lending standard).

Generally speaking, standards apply only to deposit takers.
However, a lending standard may apply to other lenders: risk management, business continuity planning, and problem assets: the depositor compensation scheme under Part 6: covered bond or other securitisation arrangements (see subpart 10 of Part 7): the disclosure of information to the Bank or the public.
Disclosure under these standards replaces, for example, financial disclosure in disclosure statements under section 81 of the Banking (Prudential Supervision) Act 1989: contingency and recovery plans: facilitating resolution under Part 7 (including pre-positioning requirements): 10 • • • Deposit Takers Bill Explanatory note restrictions or prohibitions on the activities that a deposit taker may carry out other than as a deposit taker and on the activities that a New Zealand deposit taker may carry out outside New Zealand: internal controls and assurance: any other matters that may be prescribed in the regulations.
Bank’s approval may be required Clause 90 allows standards to impose a requirement to obtain the Bank’s approval for a matter.

Conditions Clause 91 allows standards to specify matters that may be set by a condition of a licence.

For example, a standard may specify a range of capital requirements and allow the Bank to set the particular capital requirement for a deposit taker within that range in a licence condition.
Subpart 3—Directors’ due diligence duty This subpart requires a director of a licensed deposit taker to exercise due diligence to ensure that the deposit taker complies with its prudential obligations.

A director that breaches this duty may be liable to a pecuniary penalty not exceeding $1 million.

See subpart 2 of Part 5.

The subpart sets out restrictions on indemnities and insurance in connection with liability for a breach of this duty.
Part 4 Supervision of deposit takers This Part requires the Bank to undertake prudential supervision of licensed deposit takers.

Subpart 1—Bank’s information-gathering power This subpart gives the Bank the power, by notice, to require a person to give informa‐ tion to the Bank, to produce documents for inspection, or to reproduce, or assist in reproducing, in usable form, information recorded or stored in those documents.
The Bank may exercise the power if the Bank considers it necessary or desirable to do so for the purposes of performing or exercising any of its functions, powers, or duties under this Bill.

A person commits an offence if they refuse or fail, without reasonable excuse, to comply with the notice.

The offence has a penalty of a fine not exceeding $50,000 for an individual or a fine not exceeding $500,000 in any other case.
The subpart also allows the Bank to require— Explanatory note Deposit Takers Bill 11 • • • a licensed deposit taker to give a report to the Bank about its business, oper‐ ation, or management (or the business, operation, or management of an associ‐ ate); or a licensed deposit taker to publish a report; or a licensed deposit taker or other person to obtain an audit or a review of infor‐ mation by an approved person.
Clauses 107 to 110 require an auditor of a licensed deposit taker or of an associate to disclose certain information to the Bank (for example, if the auditor is of the opinion that the deposit taker or associate is in serious financial difficulties or is, or has been, operating fraudulently or recklessly).
Subpart 2—On-site inspection This subpart facilitates the Bank’s ability to undertake prudential supervision by empowering the Bank to conduct on-site inspections for certain purposes (for example, assessing the adequacy of a deposit taker’s policies, processes, controls, or other arrangements for complying with its prudential obligations).

The Bank may exercise the power only at a reasonable time and in a reasonable manner.

The Bank is not required to give notice of the exercise of the power.
During an on-site inspection, employees, directors, or agents of the licensed deposit taker may be required to answer questions and give all other information that the Bank may reasonably require.

An employee, a director, or an agent of the licensed deposit taker commits an offence if they, without reasonable excuse, refuse or fail to comply with a requirement to answer questions or give information or they resist, obstruct, or delay the Bank in carrying out an on-site inspection.
The offence has a penalty of a fine not exceeding $50,000 for an individual or a fine not exceeding $500,000 in any other case.

Clause 144 provides that a person is not excused from answering questions or giving information on the ground that to do so would or might incriminate that person.
This subpart requires a licensed deposit taker to— Subpart 3—Reporting duty • • monitor its compliance with its prudential obligations; and report to the Bank if it believes it has contravened, may have contravened, or is likely to contravene a prudential obligation in a material respect.

A licensed deposit taker that, without reasonable excuse, contravenes this subpart commits an offence.

The offence has a penalty of a fine not exceeding $500,000.
Subpart 4—Remedial notices and plans This subpart allows the Bank to issue a remedial notice to a licensed deposit taker if it gives the Bank a report under subpart 3 or the Bank otherwise has reasonable grounds to believe that a licensed deposit taker has contravened, may have contravened, or is 12 Deposit Takers Bill Explanatory note likely to contravene a prudential obligation.

A remedial notice may require the deposit taker to take specified actions or to develop a remedial plan.
The actions or plans are directed to addressing the cause, or remedying or mitigating the consequen‐ ces, of the contravention or ensuring that the contravention does not occur or recur.

The deposit taker commits an offence if it contravenes a remedial notice or fails to comply with a remedial plan.

The offence has a penalty of a fine not exceeding $2,500,000.
This subpart— Subpart 5—Investigations • • • allows the Bank to appoint an investigator to investigate the affairs of a licensed deposit taker or other person if, for example, they have contravened, are contravening, or are likely to contravene a prudential obligation; and allows the investigator to obtain information relating to the business, operation, or management of the deposit taker or other person; and allows the investigator to enter and search a place (but only with consent or under a warrant issued under the Search and Surveillance Act 2012).
A person commits an offence if they, without reasonable excuse, hinder, obstruct, or delay an investigator or contravene a requirement to give information to the investiga‐ tor.

The offence has a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case.
Subpart 6—Confidentiality orders This subpart allows the Bank to prohibit the publication or communication of infor‐ mation that discloses, or may disclose, the exercise of a power under the Bill or that is obtained in connection with an inquiry, investigation, or other proceeding of the Bank.

A confidentiality order does not prohibit the disclosure of information with the Bank’s consent (and that consent must not be unreasonably withheld).
A person who knowingly or recklessly contravenes an order commits an offence.

The offence has a penalty of imprisonment for a term not exceeding 1 year or a fine not exceeding $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case.

Subpart 7—Power to require warning to be disclosed This subpart allows the Bank to require a person to disclose any of the Bank’s warn‐ ings.
For example, if the Bank has issued a warning to a licensed deposit taker about a contravention of a prudential obligation, the Bank may require the deposit taker to disclose the warning on its Internet site or in other communications.

Explanatory note Deposit Takers Bill 13 Subpart 8—Access to information by overseas supervisor This subpart facilitates co-operation with overseas supervisors.
The subpart allows the Bank to authorise an overseas supervisor to conduct an on-site inspection of a licensed deposit taker or to require the deposit taker to supply information.
Subpart 9—Miscellaneous Clause 144 provides that the privilege against self-incrimination does not excuse a person from giving information under Part 4 (for example, in response to a notice given by the Bank under subpart 1, during an on-site inspection under subpart 2, or in response to a notice given by an investigator under subpart 5).
However, clause 145 provides that a self-incriminating statement made orally may be used in evidence against the person only in a prosecution for an offence where the person gives evi‐ dence inconsistent with the statement.

These provisions carry over the substantive effect of sections 175A and 175B of the Banking (Prudential Supervision Act) 1989.

Clause 146 provides for the effect of a final court decision that the exercise of a power under clause 99 or 127 is unlawful.
For example, the clause requires unlaw‐ fully collected information to be destroyed.

Part 5 Enforcement Subpart 1—Power to accept undertakings This subpart allows the Bank to accept an undertaking from a deposit taker or other person.

An undertaking may include an undertaking to pay compensation, to take spe‐ cified action to address a contravention or to ensure that a contravention does not occur or recur, or to pay an amount in lieu of a pecuniary penalty.
No proceedings may be brought for a contravention against— • • a person who makes an undertaking in relation to the contravention, while there is no contravention of the undertaking: a person who made, and has completely discharged, an undertaking in relation to the contravention.

A person that contravenes an undertaking commits an offence.

The offence has a pen‐ alty of a fine not exceeding $50,000 for an individual or a fine not exceeding $500,000 in any other case.
In addition, the Bank may take a proceeding in the High Court to enforce the under‐ taking.

14 Deposit Takers Bill Explanatory note Subpart 2—Pecuniary penalty Court may make pecuniary penalty order This subpart allows the High Court to impose a pecuniary penalty against a person who has contravened a standard or a licence condition, has been involved in a contra‐ vention of a standard, or has breached the directors’ due diligence duty in clause 92.
Amount of pecuniary penalty The maximum amount of pecuniary penalty for a contravention, or involvement in a contravention, of a standard or a licence condition is the greater of $5 million and 0.1% of the total assets of the group.

The maximum amount of a pecuniary penalty for a breach of a director’s due diligence duty is $1 million.

Defences Clauses 159 and 160 set out defences for a person in contravention (A) or a person who is involved in a contravention.
For example, it is a defence for A to prove that the contravention was due to the conduct of another person or an accident or some other cause beyond A’s control and A took reasonable precautions and exercised due diligence to avoid the contravention.

Bank’s costs Clause 161 allows the High Court to order that a pecuniary penalty be applied to pay‐ ing the Bank’s actual costs.
Procedural rules Clause 162 provides for the rules of civil procedure and a balance of probabilities standard of proof to apply under this subpart.

Clause 163 provides for when proceedings may be commenced.

Relationship between proceedings and orders Clauses 164 and 165 provide that only 1 pecuniary penalty order may be made for same conduct and that there cannot be both a pecuniary penalty and a criminal pen‐ alty for the same conduct.
Clause 166 provides that a pecuniary penalty proceeding against a person in relation to particular conduct is stayed (unless the court orders otherwise) if a criminal pro‐ ceeding has been commenced for an offence in relation to the same conduct.

Subpart 3—Infringement offences This subpart sets out standard provisions for infringement offences.

The Bill provides for certain lower-level contraventions to be infringement offences.
For example, a failure of an overseas licensed deposit taker to notify the Bank if a new director or senior manager is appointed is an infringement offence under clause 30.

The infringe‐ Explanatory note Deposit Takers Bill 15 ment offence has a penalty of an infringement fee of $10,000 or a fine imposed by a court not exceeding $25,000.
Subpart 4—False or misleading declarations, representations, and other information This subpart prohibits a person from making a false or misleading declaration or rep‐ resentation for the purposes of the Bill.

A contravention of this prohibition is an offence with a penalty of imprisonment for a term not exceeding 1 year or a fine not exceeding $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case.
If a licensed deposit taker or an associated person is convicted of the offence, a director of the deposit taker or associated person is also guilty of the offence if it is proved that the offence took place with their authority, permission, or consent and that they knew, or could reasonably be expected to have known, that the offence was to be or was being committed and failed to take all reasonable steps to prevent or stop it.
Subpart 5—Ban ordered by District Court This subpart gives the District Court the power to ban a person from participating in a deposit-taking business.
An order may be made if, for example, the person— • • is a director who has persistently or seriously failed to comply with the due dil‐ igence duty under clause 92; or is a director of a deposit taker that has persistently or seriously contravened any prudential obligation, and the person has persistently failed to take reasonable steps to prevent or stop the contravention.
This subpart provides for— Subpart 6—Miscellaneous • • • • • the state of mind or conduct of a director, an employee, or an agent to be attrib‐ uted to a body corporate or other principal; and a general defence for certain offences under the Bill; and the time for filing charging documents for certain offences; and the jurisdiction of the High Court; and general provisions about court orders.
Part 6 Depositor compensation scheme Subpart 1—Preliminary provisions This subpart— 16 • • Deposit Takers Bill Explanatory note sets out an additional purpose of this Part, namely, to contribute towards pro‐ tecting and promoting the stability of New Zealand’s financial system through a depositor compensation scheme (the scheme); and defines key terms.
They include— • • • eligible investor, which in general terms is a holder of a protected deposit (other than a government agency or certain financial institu‐ tions); and protected deposit, which in general terms is a debt security issued by a licensed deposit taker where the payments of the principal and interest are in New Zealand currency only.

However, debentures, bonds, notes, commercial paper, and convertible notes are not protected deposits.
To be a protected deposit, a debt security must either meet requirements prescribed by the regulations or be of a kind specified in the regulations; and specified event notice (see clause 193).

A specified event notice triggers entitlements to compensation.
The Bank may issue a notice if— • • • a deposit taker has been put into liquidation or receivership or has entered resolution; and the deposit taker’s financial or other difficulties are likely to cause serious and prolonged disruption to the ability of eligible investors to deal with their protected deposits; and issuing the notice is the most appropriate means to deal with the disruption; and • sets out the Bank’s functions under the Part.
These include determining entitle‐ ments to compensation, collecting levies, and administering, operating, and investing the depositor compensation fund.

Subpart 2—Depositor Compensation Fund This subpart sets up the Depositor Compensation Fund (the fund).
The subpart pro‐ vides for— • • • • the fund to consist of levies collected under subpart 6, fund investments, and money recovered after the exercise of rights of subrogation under subpart 4; and the fund to be managed by the Bank on behalf of the Crown; and payments out of the fund.

In particular, the fund may be used to pay compensa‐ tion under the scheme.

The fund can also be used to support resolution meas‐ ures under subpart 5; and fund investments.
The Bank must comply with the requirements for the invest‐ ment of the fund that are contained in the statement of funding approach (see subpart 7).

Explanatory note Deposit Takers Bill 17 Subpart 3—Entitlement to compensation This subpart sets out the key rules for entitlement to compensation from the scheme.
In general terms, a person who has a protected deposit with a licensed deposit taker is entitled to compensation if— • • • the deposit taker is put into liquidation or receivership or enters resolution, and the Bank has issued a specified event notice under clause 193; and the person is an eligible investor; and the deposit is held by the person in their own right or is held for them or on their behalf.
The amount of compensation is generally based on the amount of the eligible invest‐ or’s protected deposits as at a quantification time set by the Bank.

However, the amount of compensation is generally limited to $100,000.
The subpart sets out provisions relating to the following: • • • • • • • • • • rules for calculating a person’s share of a deposit when it is held by or on behalf of 2 or more persons jointly; and rules for calculating a person’s share of a deposit when it is held by or on behalf of 2 or more persons other than jointly; and the entitlement of beneficiaries when a deposit is held under a bare trust or cer‐ tain other relevant arrangements (for example, under a regulated client money or property service); and regulations that provide for the calculation of the amount of a person’s protec‐ ted deposits or share of protected deposits when deposits are held on trust, by a partnership, or by a person under a relevant arrangement; and regulations that provide for a person’s entitlement to compensation to be sub‐ ject to conditions (for example, a condition that requires them to supply infor‐ mation); and regulations that provide for transactions connected to a protected deposit that have not yet been processed at the quantification time; and regulations that provide for the calculation of an eligible investor’s entitlement to compensation to take into account funds that the eligible investor has with‐ drawn, or that are otherwise available to the eligible investor, after the deposit taker enters resolution; and a power for the Bank to not pay compensation where, for example, a calcula‐ tion may not be made with reasonable certainty; and a rule that provides for liabilities owed by an eligible investor to the licensed deposit taker to be disregarded when calculating their entitlement to compensa‐ tion; and how the Bank may determine what interest has accrued on a deposit; and 18 • • • • • Deposit Takers Bill Explanatory note when the Bank may rely on a licensed deposit taker’s records and information from eligible investors and other persons; and the payment of compensation; and a power for licensed deposit takers and certain other persons to disclose to the Bank information (including personal information) to facilitate the payment of compensation; and a power for the Bank to disclose information (including personal information) to facilitate the payment of compensation; and the recovery of compensation that has been paid in excess or in error.
Subpart 4—Bank or subsidiary assumes eligible investor’s rights This subpart provides that, if the Bank pays compensation to an investor (A) in respect of a protected deposit, the Bank (or a subsidiary) is subrogated to A’s rights and remedies in relation to the deposit.

That is, the Bank may be able to recover the amount of compensation it has paid from the money that is owed by the deposit taker to A.
A must (at the Bank’s or a subsidiary’s expense) do anything reasonably required by the Bank (or subsidiary) to enable it to exercise or enforce any subrogated rights or remedies.

Subpart 5—Use of fund to support resolution This subpart allows the Bank to use the fund to support a resolution measure under‐ taken for a licensed deposit taker.
Resolution measures are actions taken by the Bank to further the purposes set out in clause 256 or paying compensation under subpart 9 of Part 7 (no creditor or share‐ holder worse off).

For example, money from the fund could be advanced to the deposit taker to support its customers having some continued access to liquidity and banking services.
The amount that the Bank may use is subject to a limit based on the net amount of compensation that would be payable to eligible investors in a hypothetical liquidation.

Subpart 6—Levies for depositor compensation scheme This subpart requires licensed deposit takers to pay to the Bank a levy prescribed by the regulations.

The levies are used to fund the depositor compensation scheme.
In particular,— • • the regulations may provide different levies for different classes of licensed deposit taker: the Minister must, before recommending regulations, have regard to the prin‐ ciple that it is desirable for the levies to be prescribed on the basis that certain costs should, over time, be met fully out of the fund.
Those costs include the costs of entitlements to compensation, including the cost of establishing and Explanatory note Deposit Takers Bill 19 maintaining the fund, the Bank’s costs of acting under the Part, the costs of repaying any money provided under subpart 8, and collection costs: • the Minister must also have regard to the following principles: • • • the scheme should be fully funded by licensed deposit takers; and the amount of levies for each class of deposit taker should take into account various matters.
These include the risks of the Bank issuing a specified event notice in relation to that class, estimates of costs in con‐ nection with such a notice, and the effect on financial stability of the obligation to pay the levy; and the desirability of predictability in levies: • the Minister must also have regard to the statement of funding approach (see subpart 7) and the Bank’s advice.

The Bank must consult licensed deposit tak‐ ers and other significantly affected persons before it gives the advice.
The requirement to pay a levy does not apply to a licensed deposit taker to which regulations referred to in clause 191(2)(c) apply.

Those regulations have the effect that debt securities issued by those deposit takers are not protected deposits.

Subpart 7—Statement of funding approach This subpart requires the Minister to publish a statement of funding approach at least every 5 years.
The statement must set out— • • • • estimates of the costs of the scheme; and requirements for the investment of the fund (for example, requirements relating to liquidity); and the Minister’s proposed approach to managing the financial position of the Crown in connection with the scheme (for example, if there is a deficiency in the fund); and information about whether the levies will be set with a view to the fund balance reaching a target level and being maintained within a target band.
The Minister must consult the Bank and seek the views of public before publishing the statement.

Subpart 8—Deficiency in fund This subpart deals with a situation where the Bank has issued a specified event notice but the fund is insufficient to pay entitlements to compensation or meet the Bank’s costs.

In this situation, the Minister must provide to the fund money by way of grant or advance as may be necessary to meet the deficiency.
The money is provided on the terms and conditions that the Minister determines (for example, terms about repay‐ ment by the Bank of money lent to the fund and interest on that money).

20 Deposit Takers Bill Explanatory note Subpart 6 provides for levies to recover any money provided under this subpart (and any associated interest, fees, charges, or costs).
Subpart 9—Accountability This subpart provides for— • • • financial statements of the fund; and the Auditor-General to be the auditor of the fund; and accounting records.

Financial information about the fund is not consolidated into the Bank’s financial statements unless that is required by financial reporting standards.
Subpart 10—Miscellaneous provisions This subpart— • • requires a liquidator of a licensed deposit taker to give all reasonable assistance to enable the Bank to perform or exercise any function, duty, or power under this Part; and prohibits an issuer of a financial product or an associate from falsely holding out that the product is a protected deposit or that a holder is entitled to compen‐ sation.
A breach of the prohibition is an offence with a penalty of imprison‐ ment for a term not exceeding 1 year or a fine not exceeding $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case.

Part 7 Crisis management and resolution Subpart 1—Preliminary provisions This subpart sets out the purposes of Part 7 (in addition to the purposes in clause 3).
These include the following: • • • • to avoid significant damage to the financial system that could result from a licensed deposit taker being in financial distress or other difficulties; and to enable a licensed deposit taker that is in resolution to be dealt with in an orderly manner; and to support the purpose of Part 6; and to the extent not inconsistent with those purposes,— • • to minimise the costs of dealing with, or costs or losses otherwise incur‐ red in connection with, a licensed deposit taker that is in financial dis‐ tress or other difficulties; and to support the effective and efficient management of public financial resources by avoiding or minimising, and otherwise managing, the need Explanatory note Deposit Takers Bill 21 to rely on public money to deal with the financial distress or other diffi‐ culties.
Subpart 2—Planning and statement of approach This subpart requires the Bank to— • • prepare and maintain an orderly resolution plan for each licensed deposit taker; and publish its statement of approach to resolution (for example, a statement of the Bank’s expected resolution strategy or strategies for dealing with licensed deposit takers under the Part).

The Bank must review the statement every 5 years.
Subpart 3—Bank may give directions, approve sales, and replace directors Bank may give directions This subpart allows the Bank to give a direction to— • a licensed deposit taker (A) if— • • certain circumstances exist (for example, A is likely to become insol‐ vent, A is contravening or is likely to contravene its prudential obliga‐ tions, or A has been or is operating fraudulently or recklessly); and a direction is necessary or desirable to remedy or avoid the matter, to avoid or mitigate any adverse effects, or to avoid any further contraven‐ tion; and • an associate (B) of a licensed deposit taker (A) if— • • certain circumstances exist (for example, if A’s business and affairs are so closely connected with B that the Bank would be unable to effectively exercise its powers in relation to A unless a direction is issued to B or if B’s circumstances or affairs are prejudicial to A’s solvency); and a direction is necessary or desirable to remedy or avoid the matter, to avoid or mitigate any adverse effects, or to avoid any further contraven‐ tion.
A direction may require A or B to do certain things, including— • • • • to consult the Bank: to carry on, or cease to carry on, its business (in whole or in part) in accordance with the direction: to ensure that certain persons do not take part in the management or conduct of its business: to take specified actions to address a contravention or any circumstances of financial difficulties: 22 • Deposit Takers Bill Explanatory note to implement contingency and recovery plans.
In addition, a direction may trigger consequences under a bail-in instrument (see clause 79(4)).

For example, a direction may trigger the conversion of debt securities into shares.

Bank may approve sale or disposition The subpart allows the Bank to approve a sale or other disposition of the whole or part of the capital or business of a licensed deposit taker or an associate.
If the Bank gives its approval, the provisions of any legislation requiring any consent, licence, permission, or clearance or other authority do not apply.

Bank may remove, replace, or appoint director The subpart allows the Bank to remove, replace, or appoint a director of a licensed deposit taker (A) if, for example, the Bank has reasonable grounds to believe that A is, or is likely to be, insolvent or is contravening, or is likely to contravene, any pru‐ dential obligations.
Disclosure of direction or notice The subpart prohibits a person from disclosing or publishing the fact that the Bank has given a direction or exercised a power to remove, replace, or appoint a director.

Disclosure or publication may be made with the Bank’s consent (which must not be unreasonably withheld).

A breach of the prohibition is an offence with a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case.
Subpart 4—Resolution of licensed deposit takers and associated persons This subpart provides for an Order in Council to be made that puts a licensed deposit taker and any of its associates into resolution.

This state of affairs has similarities to statutory management under the Corporations (Investigation and Management) Act 1989, but the provisions in this Bill relating to resolution have been adjusted to ensure that they are fit for purpose in relation to deposit takers.
The Bank may appoint 1 or more persons as the resolution manager (see subpart 8).

The resolution manager exercises various powers under the Bank’s supervision (see subparts 6 and 8).

The Bank may appoint itself as resolution manager and must act as the resolution manager if no other person holds that office.

The Bank may recommend that a deposit taker be declared to be in resolution if the Bank— • is satisfied on reasonable grounds that certain matters apply.
These include that the deposit taker is insolvent or is likely to become insolvent, has contravened capital requirements, has contravened a direction, or has persistently or ser‐ iously contravened any other prudential obligation; and Explanatory note Deposit Takers Bill 23 • is satisfied that there is no reasonable prospect of the matters being adequately dealt with to the Bank’s satisfaction in a timely and orderly way other than through resolution.
All of the deposit taker’s subsidiaries also enter resolution unless the Order in Council provides otherwise.

The Bank may recommend that an associate be declared to be in resolution if the Bank— • • is satisfied on reasonable grounds that certain matters apply.
These include that the deposit taker’s business and affairs are so closely connected with the asso‐ ciate that the Bank will be unable to exercise effectively the powers conferred by the Part unless the associate is in resolution; and is satisfied that there is no reasonable prospect of the matters being adequately dealt with to the Bank’s satisfaction in a timely and orderly way other than through resolution.
Covered bond special purpose vehicles (and similar entities) are not associated per‐ sons or subsidiaries for these purposes.

The resolution of an overseas person only relates to its New Zealand business.

A resolution ends if a deposit taker— • • is declared, by Order in Council, to no longer be in resolution; or is put into liquidation on the application of the Bank.
Subpart 5—Moratorium and restriction on resolution trigger This subpart prevents a person from taking certain actions in relation to a deposit taker in resolution (A).

For example, a person may not— • • • • • commence or continue a proceeding against A; or enforce a judgment or an order against A; or take steps to put A into liquidation or exercise powers or rights under a security interest over A’s property; or determine a tenancy; or exercise a right of set-off.
The moratorium by default ends 12 months after A enters resolution (or at the earlier end of the resolution).

However, the Bank may extend the period of moratorium on 1 or more successive occasions.

In addition to a moratorium, the subpart places restrictions on resolution acting as a trigger for certain matters under an agreement to which the licensed deposit taker (A) is a party.
For example, the fact that A enters resolution does not allow the agreement or another party to the agreement to deny a liability, accelerate performance of an obligation, terminate a transaction, or enforce a security interest.

24 Deposit Takers Bill Explanatory note The subpart sets out qualifications to the moratorium rules and the restriction on a resolution trigger.
In particular,— • • • • • • a person may commence or continue a proceeding only with the leave of the Bank or the High Court: the Bank may waive the application of the moratorium or restriction in relation to the claims of, or security interests held by, a creditor or class of creditors: the moratorium and restriction do not affect the existence or priority of a secur‐ ity interest: the moratorium does not limit or prevent actions in relation to obligations incurred or rights granted after A enters resolution: the moratorium and restriction do not limit or affect certain rights under a net‐ ting agreement or rights under the rules of a designated financial market infra‐ structure (FMI): the restriction does not limit or prevent certain actions in relation to derivatives and certain agreements relating to netting agreements if those actions are taken after a stay.
The actions include denying a liability, accelerating performance of an obligation, or terminating or closing out a transaction.

The stay ends at the close of the day after the date on which A enters resolution (or at an earlier or a later time specified by the Bank).

The moratorium also does not limit or pre‐ vent similar actions (but the stay only relates to the restriction on a resolution trigger).
Subpart 6—Conduct of resolution This subpart sets out how a resolution of a deposit taker (A) is carried out.

The subpart provides for the Bank to act as the resolution authority.

As resolution authority, the Bank is responsible for ensuring that a resolution is carried out in a way that furthers the purposes of Part 7.
The subpart provides for certain functions, powers, and duties to be performed or exercised by the Bank and other functions, powers, and duties to be performed or exercised by a resolution manager.

As resolution authority, the Bank must supervise the resolution manager to ensure the manager is efficiently and effectively carrying out the resolution.
See subpart 8, which imposes certain duties on a resolution man‐ ager, including a duty to comply with the Bank’s directions and to regularly report to the Bank.
The subpart provides that— • • the management of A vests in the resolution manager as soon as A enters reso‐ lution: directors, managers, and other persons may be engaged in the management or conduct of A’s business only with the resolution manager’s permission: Explanatory note Deposit Takers Bill 25 • • • • • • the resolution manager has all of the powers, rights, and authorities that are necessary or desirable to enable the manager to further the purposes set out in clause 256.
In addition, the resolution manager— • • • • • • • • • has all of A’s powers, rights, and privileges; and has all of the powers of A’s shareholders and directors; and may carry on A’s business (in whole or in part); and may pay, in whole or in part, any creditor of A or class of A’s creditors or make a compromise or an arrangement with any creditor of A; and may deal with all questions relating to A’s property; and may offer and issue shares and other financial products in A (on the terms and conditions that the resolution manager thinks fit); and may disclaim onerous property.
See section 269 of the Companies Act 1993; and may change A’s balance date; and has any additional powers conferred by the regulations: the court has certain powers to trace A’s property that has been improperly dis‐ posed of.
For example, the court may order that the property be transferred or delivered to the resolution manager or that a sum be paid to the resolution man‐ ager: the Bank has the powers of an investigator under subpart 5 of Part 4: if A is an overseas person, the Bank may form a company to acquire all or part of its New Zealand business.

The New Zealand business may be vested in the company by Order in Council.
Any vesting of property or rights subject to a security interest continues to be subject to the security interest.

The company must be treated as also being in resolution: the Bank may dispose of the whole or any part of A’s business undertaking or any of its property, rights, or liabilities.

The disposal may be made to a com‐ pany formed by the Bank (for example, a bridge institution or an asset manage‐ ment vehicle).
The company formed by the Bank must be treated as also being in resolution (unless the Bank publishes a notice in the Gazette that provides otherwise).

The provisions of any legislation or agreement requiring any con‐ sent, licence, permission, clearance, or other authority do not apply to the dis‐ posal: the Bank may exercise its powers of disposal despite any security interest.
However, holders of certain security interests over property must be paid out of the proceeds of the disposal of the property in priority to all other claims (apart from the Bank’s costs).

In addition, property disposed of to a company formed by the Bank may continue to be subject to the security interest.
If shares or property of the company are disposed of, a holder of a relevant security interest 26 Deposit Takers Bill Explanatory note must be paid out of the proceeds of the sale in priority to all other claims (apart from the Bank’s costs): if a liability of A is included in a sale, transfer, or other disposition, A is relieved from its obligations in respect of the liability and the person entitled to performance in respect of the liability may enforce performance against the person to whom the business undertaking is sold, transferred, or otherwise dis‐ posed of: the Bank may suspend in whole or in part the repayment of A’s debts (other than debts incurred after A entered resolution).
In addition, the Bank may not suspend payment of an amount included in a netted balance (for example, under a designated FMI’s rules): the regulations may confer additional powers on the Bank: the court may give directions concerning A’s business and property and the exercise of powers under the subpart: certain provisions of the Companies Act 1993 are applied to A as if it were in liquidation (including provisions relating to a prohibition on a refusal to supply essential services, voidable transactions, voidable dispositions, and recovery in the case of transactions made at undervalue).
However,— • • certain provisions of that Act do not apply (for example, provisions relating to annual meetings, auditors, annual reports, and annual returns); and provisions of that Act relating to major transactions, voidable transac‐ tions, and voidable dispositions do not apply to transactions or dispos‐ itions entered into after the licensed deposit taker enters into resolution: neither the Bank nor a resolution manager may be treated as being a director of A by reason only of the fact that they are acting under the Part: any winding up, liquidation, receivership, or voluntary administration must cease for so long as A continues to be in resolution: the Bank must appoint auditors for A: no person may transfer or remove A’s property from New Zealand without the resolution manager’s consent: the expenses of the resolution must be paid out of A’s property in priority to other claims: a person commits an offence if they destroy, alter, or conceal A’s records.
The offence has a penalty of imprisonment for a term not exceeding 1 year or a fine not exceeding $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case: the rules in the Reserve Bank of New Zealand Act 2021 relating to the Bank’s subsidiaries do not apply.
• • • • • • • • • • • • Explanatory note Deposit Takers Bill 27 Subpart 7—Minister may give directions This subpart allows the Minister to give certain directions if— • • public money is involved in the resolution (for example, the Crown has given a guarantee or lent money in connection with dealing with the deposit taker’s financial distress or other difficulties); and the Minister is satisfied that exercising a resolution power in a particular man‐ ner would present a material risk to the prudent management of public money or that a resolution power should be exercised in a particular manner to reduce a material risk to the prudent management of public money.
The types of directions that the Minister may give include the following: • • • to exercise, or not exercise, a resolution power in a particular manner: to have regard to specified matters before exercising a resolution power: to take any other specified action to avoid or minimise, or otherwise manage, the risk to the prudent management of public money.
The Minister’s power is subject to procedural safeguards, including the Minister being satisfied that the direction is necessary or desirable for the purpose of avoiding or minimising, or otherwise managing, that risk, that the direction is not inconsistent with any of the purposes in clause 256(1)(a), (b), and (c), and that the extent of the direction is not broader than is reasonably necessary.
Subpart 8—Resolution manager Subpart 6 provides for a resolution manager to perform or exercise certain functions, powers, and duties in a resolution.

In general, they relate to carrying out the reso‐ lution on a day-to-day basis.

That subpart requires the Bank, as resolution authority, to supervise a resolution manager.
This subpart requires a resolution manager to— • • • • act efficiently and effectively in a way that furthers the purposes set out in clause 256; and comply with the Bank’s directions; and consult the Bank and have regard to the Bank’s advice; and regularly report to the Bank.

The subpart also provides for— • • the Bank to appoint or replace a resolution manager.
If 2 or more persons hold office as the resolution manager, an appointment notice must state whether the functions, powers, or duties of the resolution manager must be performed or exercised by those persons acting together or may be performed or exercised individually; and the Bank to act as the resolution manager if no other person is acting.
The Bank may also appoint itself as the resolution manager; and 28 • • Deposit Takers Bill Explanatory note the termination of a resolution manager’s appointment (for any reason); and a licensed deposit taker to remain in resolution despite a resolution manager ceasing to act.
Subpart 9—No creditor or shareholder worse off This subpart provides for certain creditors and shareholders of a New Zealand entity that has been put into resolution to receive compensation if they have received, are receiving, or are likely to receive, as a result of the resolution, less favourable treat‐ ment than would have been the case had the entity been put into liquidation.
The persons entitled to compensation are persons who were creditors or shareholders immediately before the entity entered resolution (pre-resolution creditors and pre- resolution shareholders).

The subpart provides that— • • • • • • the Minister must appoint a valuer.
The functions of a valuer are to make a valuation in relation to the affected entity and decide whether any pre-reso‐ lution creditor or pre-resolution shareholder is eligible for compensation (and, if so, the amount of the compensation): a valuer must meet certain independence requirements.
For example, a person is not eligible for appointment if, within the 2 years before the resolution, they have been a member of the board of the Bank or of the monetary policy com‐ mittee or they have been an employee of the Bank: the valuer must act in accordance with the regulations.

The regulations may provide for a wide range of technical matters in connection with the valuer’s functions, including valuation methods, principles, matters to be taken into account, and matters that must be disregarded.
The regulations may require or permit a valuer to make assumptions: the valuer determines compensation by reference to the difference between a liquidation value and a resolution value.

The liquidation value is what each pre-resolution creditor or pre-resolution shareholder would have been likely to receive had a liquidation of the affected entity occurred.
The resolution value is what each pre-resolution creditor or pre-resolution shareholder has received, is receiving, or is likely to receive as a result of the resolution: the valuer must prepare a draft report setting out the valuer’s decision.

The Minister and the Bank may then require the valuer to reconsider certain matters before the valuer finalises and publishes their report: the Bank must manage and administer payments of compensation in accord‐ ance with the regulations.
Money from the depositor compensation fund may be used to pay compensation in accordance with subpart 5 of Part 6.

However, if this is insufficient, the Crown must provide money that is sufficient to pay the compensation: Explanatory note Deposit Takers Bill 29 • • the valuer has information-gathering powers to assist them to perform or exer‐ cise their functions, powers, or duties: the valuer’s decisions may be appealed to the High Court on a question of law.
Subpart 10—Covered bonds This subpart carries over sections 139D to 139J of the Banking (Prudential Supervi‐ sion) Act 1989.

The subpart relates to covered bonds.

A covered bond is a debt security that repre‐ sents an unsecured obligation of a licensed deposit taker (or another issuer of a class specified in the regulations) where the amounts owing are guaranteed by a special purpose vehicle (SPV).
The obligations under the guarantee are secured by property (cover pool property) that is owned by the SPV under a security interest (the secur‐ ity interest).

Clause 403 requires an issuer to issue a covered bond only under a registered covered bond programme.

A breach of the requirement is an offence with a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case.
The subpart provides for— • • • • • the Bank to keep a public register of registered covered bond programmes; and the Bank to remove a programme from the register if, for example, all obliga‐ tions under the programme have been fulfilled or the security interest has been enforced; and requirements for registration.
These include requirements for— • • • • the cover pool property to be owned by an identified covered bond SPV; and a cover pool monitor to be appointed; and a register of cover pool property to be maintained; and tests to determine whether the value of the cover pool property is at least equal to amounts owing under the covered bonds (the tests); and the process for considering applications for registration, including giving the issuer an opportunity to provide further information in response to a proposed decision; and on-going requirements for the issuer.
These include requirements for— • • • • carrying out the tests at intervals of not more than 12 months; and maintaining the register of cover pool property; and notifying the Bank of every covered bond issued and of certain material changes; and ensuring that reports by the cover pool monitor are provided to the Bank and any bond or security trustee; and 30 • • Deposit Takers Bill Explanatory note a power for the Bank to require corrective action.
A breach of the requirement to take corrective action is an offence with a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case; and requirements for the cover pool monitor to be independent of both the issuer and any associated person and to be required to perform certain services under a contract of appointment.
The services include— • • assessing the arithmetical accuracy of the tests and the issuer’s compli‐ ance with on-going requirements; and providing reports on those matters to the issuer and reports on all other matters required by the regulations.

Clause 418 limits the application of certain resolution or statutory management provi‐ sions to covered bond SPVs.
The provisions relate, for example, to the moratorium and the restriction on a resolution trigger (see subpart 5 of Part 7) and to powers to suspend payment.
The clause provides, for example, that nothing in those provi‐ sions— • • prevents the transfer of the legal title to property in a cover pool from an issuer to a covered bond SPV (where the SPV is the owner of the property in the cover pool): affects the issuer’s obligation to pay to the SPV money collected on behalf of, and held on trust for, the SPV.

The clause also provides that an SPV is not an associated person or a subsidiary for certain purposes.
Subpart 11—Bank may apply to put deposit takers and associated persons into liquidation This subpart allows the Bank or a resolution manager to apply to the High Court under the Companies Act 1993 to put a licensed deposit taker or an associated person into liquidation under that Act.

In the case of— • • a licensed deposit taker, the power applies whether or not it is in resolution: an associated person, the power applies only if the associated person is in reso‐ lution.
The High Court may appoint a liquidator if the deposit taker or associated person is unable to pay its debts or has persistently or seriously contravened any prudential obligation or it is just and equitable that the deposit taker be put into liquidation.

Subpart 12—Miscellaneous This subpart provides that deposit takers (and any associates, directors, and employees) do not have a right to be consulted or informed about the exercise, or pos‐ sible exercise, of any powers conferred by this Part.
Explanatory note Deposit Takers Bill 31 Part 8 Miscellaneous Subpart 1—Use of words bank, banker, and banking This subpart prohibits financial service providers from using bank, banker, and bank‐ ing (restricted words) in their name or title.

However, the Bank may authorise par‐ ticular persons or classes of person to use a name or title that includes a restricted word.

The Bank may give an authorisation subject to conditions.
See clause 18 of Schedule 1, which provides for existing registered banks to be authorised to use restricted words in a name or title.

A breach of the prohibition is an offence with a penalty of a fine not exceeding $100,000 for an individual or a fine not exceeding $2,500,000 in any other case.

In addition, the subpart— • • • requires the Bank to outline in general terms its policies for giving an author‐ isation.
In particular, its policies in relation to the minimum requirements for a deposit taker to be authorised to use a restricted word (for example, a require‐ ment relating to financial strength); and limits the use of restricted words in advertisements by financial service provid‐ ers that are not licensed deposit takers; and gives the Bank a power to require a person to stop using a restricted word.
A person that contravenes the advertising requirement or a requirement to stop using a restricted word commits an offence.

The offence has a penalty of a fine not exceed‐ ing $50,000 for an individual or a fine not exceeding $500,000 in any other case.
Subpart 2—Trans-Tasman co-operation This subpart requires the Bank to— • • • support Australian financial authorities when performing or exercising its func‐ tions, powers, or duties; and to the extent reasonably practicable, avoid actions that are likely to have a det‐ rimental effect on financial system stability in Australia; and consult Australian financial authorities to the extent that is reasonably practic‐ able if a proposed action under this Bill (or any other prudential legislation) is likely to have that effect.
Subpart 3—Confidentiality This subpart imposes certain confidentiality obligations on the Bank.

The subpart applies to information given to the Bank under this Bill, information derived from or based on that information, and information about the exercise, or possible exercise, of the powers under the Bill.

In particular,— 32 • • • Deposit Takers Bill Explanatory note the Bank may publish or disclose the information only on particular grounds.
The grounds include where the publication or disclosure is— • • • • for the purposes of the Bank performing or exercising a function, power, or duty; or made under information sharing arrangements with other regulators under subpart 3 of Part 6 of the Reserve Bank of New Zealand Act 2021; or made to a person who the Bank is satisfied has a proper interest in receiving the information; or made with the consent of the person to whom the information relates: the Bank may impose conditions when information is published or disclosed under certain grounds (for example, conditions in relation to the publication, disclosure, or use of the information by a person to whom the information is disclosed): certain persons to whom the Bank publishes or discloses the information are subject to restrictions on the further publication, disclosure, or use of the infor‐ mation.
An intentional or a reckless breach of the restrictions is an offence with a penalty of imprisonment for a term not exceeding 1 year or a fine not exceed‐ ing $100,000, or both, for an individual or a fine not exceeding $2,500,000 in any other case.

Clause 440 clarifies that the Bank may make the information available under the Offi‐ cial Information Act 1982 only if 1 or more grounds under clause 439 apply.
Subpart 4—Bank’s power to specify how things are done This subpart relates to the provisions of the Bill that provide for something to be done in the manner specified by the Bank.

For example, clause 16 provides that a body corporate may apply for a licence in the manner that is specified by the Bank.

The subpart allows the Bank to— • • impose requirements on particular persons or classes of person.
For example, it may require a person to provide information or other evidence or documents; and require a person to provide information to assist the Bank in performing or exercising its functions, powers, or duties.

A notice issued by the Bank that imposes requirements on a class of persons is secon‐ dary legislation under the Legislation Act 2019.

The Bank may refuse to perform or exercise a function, power, or duty if the require‐ ment is not complied with.
Subpart 5—Regulations This subpart provides for regulations to be made for the purposes of the Bill, includ‐ ing— Explanatory note Deposit Takers Bill 33 • • • prescribing, for the purposes of any provision of the Bill that requires a thing to be done in a prescribed manner, the manner in which the thing must be done; and providing for anything the Bill contemplates will or may be provided for by regulations (for example, prescribing additional eligibility criteria for licences, additional matters that standards may relate to, and the manner in which a valuer must act under clause 368); and prescribing matters relating to the depositor compensation scheme, including— • • • • • • • prescribing classes of persons that are not eligible to compensation; and prescribing requirements that debt securities must meet in order to be a protected deposit or kinds of debt securities that are protected deposits; and specifying kinds of deposit takers whose debt securities are not protected deposits; and declaring classes of debt securities not to be protected deposits; and providing for the calculation of the amount of a person’s protected deposits or share of protected deposits in certain cases (see clause 211); and providing for the calculation of an eligible investor’s entitlement to com‐ pensation to take into account funds that the eligible investor has with‐ drawn, or that are otherwise available to the eligible investor, after the deposit taker enters resolution; and imposing conditions on a person’s entitlement to compensation (for example, imposing a requirement to give information to the Bank in con‐ nection with an entitlement).
The subpart sets out various procedural safeguards in connection with the regulations for the depositor compensation scheme.

For example, it requires the Minister to have regard to the purpose of Part 6 set out in clause 189.

See also section 292 of the Reserve Bank of New Zealand Act 2021, which will allow regulations to be made that impose fees, charges, and costs in connection with this Bill.
Subpart 6—Levy for Crown to recover cost of public support of deposit taker in financial distress or other difficulties This subpart requires licensed deposit takers (or licensed deposit takers of a pre‐ scribed class) to pay a levy prescribed by the regulations to recover a portion of the following costs that have been incurred by the Crown (and the costs of collecting the levy money): • costs incurred in connection with dealing with the financial distress or other difficulties of a licensed deposit taker or an associated person that is or was in resolution: 34 • Deposit Takers Bill Explanatory note costs incurred under new sections 25B and 25C of the Public Finance Act 1989 (see clause 486).
The Minister determines the portion to be recovered by levies after taking into account— • • any actual or likely recovery of those costs; and the extent to which incurring the costs was necessary or desirable to maintain the stability of the financial system or to maintain the continuity of systemi‐ cally important activities.
The subpart— • allows the levy regulations to— • • • • provide different levies for different classes of licensed deposit taker; and specify the amount of levies, or the method of calculating or ascertaining the amount of levies, for each class; and include in levies, or provide for the inclusion in levies of, any shortfall; and provide for the payment and collection of levies; and • requires the Minister, before recommending the levy regulations, to— • • • • • consult the Bank; and be satisfied that the costs were incurred as referred to above; and be satisfied that the costs were incurred within the previous 5 years; and have regard to the extent to which deposit takers of each class directly or indirectly benefited from the Crown’s expenditure, the effect that the obligation to pay a levy is likely to have on the soundness of those deposit takers, and the net cost to the Crown of incurring the expend‐ iture; and ensure that licensed deposit takers (or persons or organisations that are able to represent their views) are consulted.
Subpart 7—Other miscellaneous provisions This subpart provides for— • • • how notices, directions, and other documents must be given under the Bill; and when certain notices, directions, or documents are treated as having been given; and the definition of deposit taker in Schedule 2.

See the explanation relating to clause 6 for information about this definition.
Explanatory note Deposit Takers Bill 35 Part 9 Repeals and amendments to other Acts This Part— • • repeals the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013; and provides for amendments to— • • • • the Reserve Bank of New Zealand Act 2021 (the 2021 Act).

In particu‐ lar, the Bank’s functions are amended to include managing and adminis‐ tering the depositor compensation scheme under this Bill and to refer to acting as the resolution authority under Part 7.
Section 74 of the 2021 Act is amended to allow the board of the Bank to delegate some of the Bank’s functions and powers to a resolution manager (in particular, cer‐ tain functions and powers under Part 7).

The consequential amendments in Schedule 3 also include identifying this Bill as prudential legislation under the 2021 Act; and the Financial Markets Conduct Act 2013.

In particular, the exclusion from disclosure under that Act in clause 21 of Schedule 1 of that Act is replaced.
The exclusion currently relates to offers of debt securities and certain other financial products by registered banks.

The new clause 21 applies to offers by licensed deposit takers.

In addition to banks, this would include entities that are currently licensed non-bank deposit tak‐ ers; and the Public Finance Act 1989.
The amendments allow the Minister of Finance to approve expenses or capital expenditure to be incurred (whether or not there is an appropriation by Parliament) in relation to a situation where a licensed deposit taker, a licensed insurer, or an operator of a designated FMI is, or is likely to be, insolvent or otherwise in ser‐ ious financial difficulties.
When approving the expenditure, the Minister must be satisfied that it is necessary or desirable to maintain the stability of the financial system or maintain the continuity of systemically import‐ ant activities, and that there is no reasonable prospect of the situation being adequately dealt with other than through exercising the approval power.
A statement about any unappropriated expenditure must be inclu‐ ded in the Government’s financial statements and in an Appropriation Bill for confirmation; and the Insurance (Prudential Supervision) Act 2010 (the 2010 Act).

The amendments ensure that the Bank’s functions in connection with the depositor compensation scheme do not involve carrying on insurance business in New Zealand for the purposes of the 2010 Act; and • provides for other consequential amendments.
Hon Grant Robertson Deposit Takers Bill Government Bill Contents Title Commencement Part 1 Preliminary provisions Purposes Principles to be taken into account under this Act Overview Interpretation Meaning of associated person and holding entity Transitional, savings, and related provisions Act binds the Crown Part 2 Licensing of deposit takers Subpart 1—Key provisions Deposit taker must be licensed Offence for deposit taker to carry on business without licence Liquidation of deposit taker that carries on business without licence No holding out as licensed Offence for holding out Subpart 2—Issue of licences Bank may issue licence Application for licence When licence must be issued 162—1 Page 20 20 20 20 21 23 29 30 30 30 30 30 30 30 31 31 31 1 Deposit Takers Bill Additional criteria for overseas applicants Overseas requirements may be treated as appropriate Consultation requirements Notice of decision Bank must keep register of licensed deposit takers Form and content of register Subpart 3—Conditions of licences Bank may impose conditions on licence Bank may modify conditions of licence Subpart 4—Fit and proper requirements Licensed deposit taker must obtain Bank’s approval before new director or senior manager is appointed Offence to appoint new director or senior manager without approval Bank’s decision on approval Bank may suspend director or senior manager if approval not obtained Overseas licensed deposit taker must notify Bank if new director or senior manager is appointed Bank may require further fit and proper certificate Deposit taker’s duty on becoming aware of fit and proper concerns Offence to fail to disclose fit and proper concerns Power to remove directors and senior managers Bank may direct that person may not be reappointed Offence to contravene direction Further provisions about power to remove How power to remove is exercised Subpart 5—Bank’s approval required for certain changes Change of control Person who obtains control over licensed deposit taker
 must obtain Bank’s approval Overseas licensed deposit taker must notify Bank if person obtains control Significant transactions Licensed deposit taker must obtain Bank’s approval before entering into significant transaction Amalgamation Licensed deposit taker must obtain Bank’s approval before amalgamation Overseas licensed deposit taker must notify Bank if it amalgamates with another person Deposit Takers Bill Consequences of failing to get approval Offence to fail to get approval Failure to get approval does not invalidate proposed change Process for approval Meaning of proposed change Request for approval Report on proposal Bank must consider whether it would still be satisfied of licensing matters Bank’s decision on approval Offence to contravene condition of approval Requirement for approval is in addition to other requirements Subpart 6—Cancellation Cancellation of licence Process for cancelling licence Notice of cancellation Subpart 7—Appeals Appeals against licensing and fit and proper decisions Appeals against other decisions of Bank on questions of law only Appeal does not operate as stay Part 3 Regulation of deposit takers Subpart 1—Credit rating Licensed deposit taker must have current credit rating Offence to fail to have current credit rating Bank may approve rating agencies List of approved rating agencies Bank may review approval Licensed deposit taker must notify Bank of change in rating Licensed deposit taker must notify Bank of credit watch warning Disclosure of credit rating on licensed deposit taker’s Internet site Other advertising of credit ratings Licensed deposit taker must not disclose or advertise credit ratings from non-approved agencies Licensed deposit taker must give public notice of downgrade Bank may grant exemptions from credit rating requirements Restriction on Bank’s
 exemption power Subpart 2—Standards Bank may issue standards Licensed deposit taker must comply with applicable standards Application of standards Deposit Takers Bill Procedural matters Procedure for issuing standards When procedural requirements do not apply Subject matter of standards Governance, incorporation structure, and ownership Capital, liquidity, security interests, and credit ratings Bail-in standards Fit and proper persons Lending and other exposures Classes of lending must be prescribed by regulations Application of lending standards may extend to non-deposit-taking lenders Risk management, business continuity planning, and problem assets Depositor compensation Covered bonds and securitisation Disclosure of information Contingency and recovery plans and facilitating resolution under Part 7 Other matters Bank’s approval may be required Standards may require Bank’s approval Conditions Standards may provide for matters to be specified by conditions Subpart 3—Directors’ due diligence duty Duty of directors of licensed deposit takers Meaning of due diligence Prohibition on indemnities or insurance Permitted indemnities for certain liabilities or costs Permitted insurance for certain liability or costs Details of indemnity or insurance must be entered in interests register Part 4 Supervision of deposit takers Bank to undertake prudential supervision Prudential supervision Subpart 1—Bank’s information-gathering power Bank may require person to supply information for purposes of Act Offence to fail to supply information Deposit Takers Bill Bank may require report relating to licensed deposit taker or associated person
 Associated person must supply information Bank may require report to be published Offence to fail to give or publish report Requirement that information be audited or reviewed Offence to fail to obtain audit or review Disclosure of information to Bank by auditors Auditor to inform of intention to disclose Protection of auditor Admissibility of information Subpart 2—On-site inspection Purpose Bank may conduct on-site inspection Person may be required to answer questions or give information Offence relating to on-site inspection Subpart 3—Reporting duty Licensed deposit taker must monitor compliance Licensed deposit taker must report contraventions Offence to fail to monitor compliance and report contraventions Restriction on use of report Subpart 4—Remedial notices and plans Bank may require licensed deposit taker to take action in relation to contravention Bank’s consideration of remedial plan Bank may require amendment of remedial plan Remedial plan may also be amended with Bank’s approval Licensed deposit taker must comply with remedial plan Other provisions relating to remedial notices and plans Offence to contravene remedial notice, fail to give amended remedial plan, or fail to take steps to comply with remedial plan Subpart 5—Investigations Bank may appoint investigator Power to obtain information Power to enter and search place Offences in relation to investigations Subpart 6—Confidentiality orders Bank may make confidentiality order Disclosure with Bank’s consent Offence to contravene confidentiality order Deposit Takers Bill Subpart 7—Power to require warning to be disclosed Bank may require its warning to be disclosed Procedural matters
 relating to order Other provisions relating to order Bank must give notice of orders Offence to fail to comply with order Subpart 8—Access to information by overseas supervisor Access to information by overseas supervisor Bank must give notice of authorisation Authorisation may relate to particular customer or client Restriction on authorisation Duties of licensed deposit taker Offence to contravene duties Subpart 9—Miscellaneous Privilege against self-incrimination no excuse Admissibility of self-incriminating statements Effect of final decision that exercise of powers under section 99 or 127 unlawful Part 5 Enforcement Subpart 1—Power to accept undertakings Bank may accept voluntary undertaking When undertaking is enforceable What undertaking may include Undertakings that include payment of money Offence to contravene undertaking Court may enforce undertaking Court must take into account certain matters Proceedings for alleged contravention Licensed deposit taker or other person may withdraw or amend undertaking Subpart 2—Pecuniary penalty Court may make pecuniary penalty order 156 When court may make pecuniary penalty orders Amount of pecuniary penalty Maximum amount of pecuniary penalty Considerations for court Defences Defences for person that contravenes prudential obligation Defence for person that is involved in contravention Deposit Takers Bill Bank’s costs Court must order that recovery from pecuniary penalty be applied to Bank’s actual costs Procedural rules Rules of civil procedure and civil standard of proof apply Limitation Relationship between proceedings and orders Only 1 pecuniary penalty order may be made for same conduct No pecuniary penalty and criminal penalty for same conduct Relationship between concurrent pecuniary penalty proceeding and criminal proceeding Subpart 3—Infringement offences Infringement offences When infringement notice may be
 issued Revocation of infringement notice before payment made What infringement notice must contain How infringement notice may be served Payment of infringement fees Reminder notices Subpart 4—False or misleading declarations, representations, and other information False or misleading declarations, representations, or other information Liability of directors if licensed deposit taker or associated person commits offence Subpart 5—Ban ordered by District Court Power to ban certain persons from participating in deposit-taking business Type of order Other provisions relating to order Offence to contravene banning order Effect of appeal Appeal to High Court Subpart 6—Miscellaneous Attribution of liability State of mind of directors, employees, or agents attributed to body corporate or other principal Conduct of directors, employees, or agents attributed to body corporate or other principal Deposit Takers Bill Miscellaneous General defence for offences Time for filing charging document for certain offences Jurisdiction of courts in New Zealand Orders to secure compliance General provisions as to court’s orders Part 6 Depositor compensation scheme Subpart 1—Preliminary provisions Additional purpose of this Part Interpretation in this Part Meaning of protected deposit and related terms Licensed deposit taker must publish list of protected deposits When Bank may issue specified event notice Bank’s function under this Part Subpart 2—Depositor Compensation Fund Depositor Compensation Fund established Fund owned and managed on behalf of Crown What fund consists of Payments out of fund Bank may apportion expenditure Investments Subpart 3—Entitlement to compensation Entitlement rules General entitlement rule Calculation of entitlement Protected deposit held by or on behalf of 2 or more persons jointly Protected deposit held
 by or on behalf of 2 or more persons other than jointly District Court may make order about shares Partnerships Bare trustees and providers of relevant arrangement not entitled to compensation Entitlement rule for deposits held on trust Protected deposit held under different trusts Trustee that is ineligible in own personal capacity does not prevent compensation being payable in relation to trust Entitlements subject to regulations Regulations may provide for calculation of amount of person’s protected deposits or share of protected deposits Deposit Takers Bill Regulations may take into account transactions that have not been processed at quantification time Regulations may take into account funds that are withdrawn or available to eligible investors during resolution Regulations may impose conditions Other matters relating to calculation of entitlement Liabilities owed to licensed deposit taker must be disregarded Bank may rely on licensed deposit taker’s records and information from eligible investors and other persons Bank may determine interest accrued Payment of entitlements Payment of entitlements Bank not required to pay compensation if cannot act with reasonable certainty Bank may establish account on behalf of eligible investor Persons may disclose information to Bank to facilitate payment of compensation Bank may disclose information to facilitate payment of compensation Restrictions on entitlement to compensation under scheme Protected deposit subject to security interest Recovery of compensation paid in excess or in error under scheme Subpart 4—Bank or subsidiary assumes eligible investor’s rights Bank’s right of subrogation Bank may apportion compensation to determine
 respective rights and remedies Subpart does not limit or affect other rights or remedies Subpart 5—Use of fund to support resolution Bank may use fund to support resolution Bank must calculate maximum amount Maximum amount based on net amount of compensation payable in hypothetical liquidation Bank may apply fund money in manner it thinks fit Independent review 233 Review of assessment Subpart 6—Levies for depositor compensation scheme 234 235 236 237 238 Licensed deposit takers must pay levy for scheme Certain deposit takers not required to pay levy Interest on unpaid levy Levy regulations Minister must also have regard to other levy principles 101 102 103 103 103 103 104 104 104 104 105 105 105 106 106 107 107 107 108 109 109 109 110 110 111 111 112 9 Deposit Takers Bill 239 240 241 242 243 244 245 246 Minister must also have regard to statement of funding approach and Bank’s advice Bank must give advice about levy regulations Process for developing Bank’s advice Bank must publish levy advice Effect of failure to comply Subpart 7—Statement of funding approach Minister must publish statement of funding approach Minister must consult Bank and seek views of public Contents of statement Subpart 8—Deficiency in fund 247 Deficiency in fund 248 249 250 251 252 253 Subpart 9—Accountability Financial statements of fund Statement of responsibility Auditor-General is auditor of fund Audit of financial statements Board must ensure that proper accounting records are kept Financial information about fund consolidated into Bank’s financial statements only if required by financial reporting standards Subpart 10—Miscellaneous provisions 254 Liquidator must give reasonable assistance to Bank No holding out that product is protected deposit 255 Offence to hold out that product is protected deposit Part 7 Crisis management and resolution Subpart 1—Preliminary provisions 256 Additional purposes of this Part Subpart 2—Planning and statement of approach Resolution plan for each licensed
 deposit taker Bank must prepare and maintain orderly resolution plan for each licensed deposit taker Bank’s statement of approach to resolution Bank must publish statement of approach to resolution Content of statement of approach Review of statement of approach 257 258 259 260 10 112 112 112 113 113 113 113 113 114 114 115 115 115 115 116 116 117 117 118 118 118 119 Deposit Takers Bill Failure to comply does not affect validity of actions 261 Failure to comply with subpart does not affect validity of Bank’s actions Subpart 3—Bank may give directions, approve sales, and replace directors Bank may give directions 262 263 264 265 Bank may give directions to licensed deposit taker Bank may give directions to associated person Scope of directions Direction must be in writing and state grounds Bank may approve sale or disposition 266 Bank may approve sale or disposition Bank may remove, replace, or appoint director Power to remove, replace, or appoint director of licensed deposit taker How Bank exercises power to remove, replace, or appoint director Disclosure of direction or notice Prohibition on disclosing or publishing direction or notice Offence to contravene prohibition Subpart 4—Resolution of licensed deposit takers and associated persons Resolution of licensed deposit takers and associated persons Resolution of subsidiaries Resolution for overseas persons Date on which, and time at which, resolution starts Questions about whether transactions are before or after resolution Limitation on application of provisions to covered bond and certain other securitisation SPVs Grounds on which licensed deposit taker may be declared to be in resolution Grounds on which associated person may be declared to be in resolution End of resolution Application of resolution provisions to other persons in resolution Subpart 5—Moratorium and restriction on resolution trigger Moratorium Period of moratorium Bank must publish notice on Internet site Restriction on resolution trigger Person
 may commence or continue proceeding with leave Deposit Takers Bill Bank may waive application of moratorium and restriction on resolution trigger Moratorium and restriction on resolution trigger do not affect existence or priority of security interest Moratorium does not limit or prevent obligations incurred or rights granted after deposit taker enters resolution Moratorium and restriction on resolution trigger do not limit or affect certain rights under netting agreement or rights under rules of designated FMI Moratorium does not limit or prevent certain things in relation to derivatives, etc Restriction on resolution trigger does not limit or prevent certain things in relation to derivatives, etc, after stay Bank may reduce or extend stay Matters Bank must be satisfied of when reducing or extending stay Publication of notice Subpart 6—Conduct of resolution Bank must act as resolution authority Bank is resolution authority Function of resolution authority Bank must supervise resolution manager Bank must regularly report to Minister on conduct of resolution Resolution manager has management and control of deposit taker Management of licensed deposit taker vests in resolution manager Directors, managers, and other persons may act only with resolution manager’s permission Resolution manager’s general powers Resolution manager’s general powers Resolution manager has powers of deposit taker and of its shareholders, members, and board Resolution manager may carry on business of licensed deposit taker Resolution manager may pay creditors and compromise claims Resolution manager’s miscellaneous powers Resolution manager may offer and issue deposit taker’s financial products Resolution manager may disclaim onerous property Resolution manager may trace property improperly disposed of Order may not
 deprive good-faith purchaser for value Resolution manager may change balance date Deposit Takers Bill Bank may investigate affairs of licensed deposit taker 310 Bank’s investigation powers 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 Bank may form body corporate to acquire New Zealand business Bank may form body corporate to acquire New Zealand business Vesting does not affect deposit taker’s obligations or place it in breach Body corporate is also subject to resolution Vesting of property or rights subject to security interest Proof of vesting Bank may dispose of business undertaking or property, rights, or liabilities Bank’s disposal power Bank may dispose of business undertaking, etc, to bridge institution or asset management vehicle Body corporate is also subject to resolution Consents not required under other legislation or agreement, and transactions do not constitute breach Bank may sell, transfer, or dispose of property despite security interest When proceeds of sale of licensed deposit taker’s property must be paid to holder of security interest When property continues to be subject to security interest When proceeds of sale of shares or property of new body corporate must be paid to holder of security interest Kind of security interest referred to in various sections Proof of transactions Provisions applying where liabilities included in sale Bank may suspend payment of money owing Bank may suspend payment of money owing Bank may not suspend or cancel obligation incurred after deposit taker enters resolution Bank may not suspend payment of amount included in netted balance Regulations may confer additional powers 330 Bank’s or resolution manager’s powers under regulations Court may give directions 331 Court may give directions
 Relationship between resolution and other legislation and processes 332 333 Application of certain provisions of Companies Act 1993 Application of other Acts 138 138 138 139 139 139 140 140 141 141 142 142 142 142 143 144 144 145 145 145 146 146 146 147 13 Deposit Takers Bill Bank, resolution manager, and other persons are not directors under any legislation Prior insolvency process must cease Continuation of resolution if restored Auditors Appointment of auditors Existing auditor ceases to hold office Bank may remove auditor from office Auditor’s fees Auditor’s rights Offences Offence to remove property Offence to destroy, alter, or conceal records 334 335 336 337 338 339 340 341 342 343 344 Expenses of resolution Expenses Subsidiaries 345 Rules relating to subsidiaries do not apply Subpart 7—Minister may give directions When this subpart applies Minister may direct Bank relating to exercise of resolution power Procedural requirements Subpart 8—Resolution manager Key duties Resolution manager must act to further purposes of this Part Resolution manager must comply with directions of Bank Resolution manager must consult and have regard to Bank advice Resolution manager must regularly report as required by Bank Resolution manager must report annually on conduct of resolution Appointment of resolution manager Bank may appoint resolution manager Bank may appoint itself as resolution manager Bank holds office as resolution manager if no other person holds office How this Part applies if Bank holds office as resolution manager How 2 or more resolution managers may act Bank may terminate appointment of resolution manager Resolution manager may resign Bank may appoint replacement Resolution manager continues in office Licensed deposit taker continues to be in resolution Deposit
153 154 154 154 154 154 155 155 155 155 Deposit Takers Bill Subpart 9—No creditor or shareholder worse off Interpretation in this subpart Eligibility for compensation under this subpart Valuer’s role Minister must appoint valuer Functions of valuer Valuer must act in manner prescribed by regulations Valuer must prepare list of pre-resolution creditors and shareholders How valuer must determine compensation Valuer must determine compensation by reference to difference between liquidation value and resolution value Liquidation value Resolution value Discount rate Valuer’s report Valuer’s draft report Valuer must give draft report to Minister and Bank Minister or Bank may require valuer to reconsider Valuer must finalise and publish report Compensation notice and payments Valuer must send compensation notice Bank must make available public information if compensation notice cannot be sent Bank must manage and administer payments of compensation Bank must pay in accordance with regulations Crown must provide money necessary to pay compensation Transfer of entitlement by assignment or operation of law Valuer’s information-gathering power Valuer may require person to supply information for purposes of this subpart Offence to fail to supply information Person required to give information has same privileges as witnesses in court Use of information and confidentiality Appeals Appeal against valuer’s decision on question of law Time for bringing appeal Appeals to Court of Appeal No limit on judicial review Deposit Takers Bill Appointment of valuer 392 393 394 395 396 397 398 399 400 401 402 Who may be appointed as valuer Application of this subpart to joint valuers Appointment notice must be published Minister may terminate appointment of valuer Valuer may resign Valuer continues in office Valuer’s
 costs, charges, and expenses Valuer’s duties in relation to records Subpart 10—Covered bonds Interpretation relating to covered bonds Interpretation Meaning of covered bond SPV Meaning of issuer Main duties of issuer 403 Issuer may issue covered bond only under registered programme 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 Registration of covered bond programmes Register of registered covered bond programmes When programme must remain or be removed from register Other matters relating to registration Application for registration of covered bond programme Determination of application for registration of covered bond programme Bank must approve or decline application Bank must give notice of approval Bank must give notice of proposal to decline application Bank and issuer may agree to modify time limits Ongoing duties of issuer Requirements relating to registered covered bond programmes Bank may require corrective action Offence to fail to take corrective action Cover pool monitor Cover pool monitor Cover pool monitor must perform certain services under contract Resolution or statutory management, etc, of issuer Limitation on application of resolution, statutory management, etc, provisions to covered bond SPV Subpart 11—Bank may apply to put deposit takers and associated persons into liquidation 165 167 167 167 167 168 168 168 168 169 169 170 170 171 171 171 171 172 172 173 173 173 174 174 174 175 176 419 Liquidation of licensed deposit takers and associated persons 177 16 Deposit Takers Bill 420 When court may appoint liquidator Subpart 12—Miscellaneous 421 Licensed deposit taker not entitled to be informed about exercise of powers under this Part Part 8 Miscellaneous Subpart 1—Use of words bank, banker, and banking Limit on use of restricted words in name or title Limit on use of restricted words in name or title Offence to contravene limit on use of restricted words When restriction does not apply Bank may authorise particular persons to use
 restricted words in name or title Bank may authorise class of persons to use restricted words in name or title Authorisation extends to Registrar of Companies, etc Bank’s policies for giving authorisation Conditions Application of Companies Act 1993 Limit on use of restricted words in advertisement Limit on use of restricted words in advertisement Offence to contravene advertising limit Bank may require change of name, etc Power to require change of name, etc Offence to contravene requirement to change name, etc Subpart 2—Trans-Tasman co-operation Interpretation in this subpart Trans-Tasman co-operation Bank’s duty to consult Failure to comply with subpart does not affect validity of Bank’s actions Subpart 3—Confidentiality Disclosure of information by Bank Relationship with other Acts Offence to make unauthorised disclosure Conditions relating to disclosure of information Restrictions on further disclosure of information Offence for unauthorised disclosure or use 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 439 440 441 442 443 444 Subpart 4—Bank’s power to specify how things are done 445 When subpart applies 177 178 178 178 178 179 179 179 179 180 180 180 181 181 181 181 182 182 182 182 183 184 184 184 184 185 17 Deposit Takers Bill Bank may require particular persons to comply with specified requirements Bank may require class of persons to comply with requirements Requirements that may be specified Bank may also require further information Bank may refuse to act if requirements not complied with Subpart 5—Regulations General regulations Regulations relating to depositor compensation scheme Regulations prescribing classes of persons that are not eligible investors Regulations prescribing matters relating to protected deposits Regulations providing for licensed deposit takers that do not issue protected deposits Bank must give advice about regulations providing for licensed deposit takers that do not issue protected deposits Regulations
 providing for temporary high balance limits Bank must give advice about regulations for temporary high balance limits Regulations providing for calculation of amount of person’s protected deposits or share of protected deposits Regulations providing for transactions that have not been processed Regulations providing for taking into account funds that are withdrawn or available to eligible investors during resolution Subpart 6—Levy for Crown to recover cost of public support of deposit taker in financial distress or other difficulties Licensed deposit takers must pay levy to allow Crown to recover cost of public support Bank or prescribed person collects levy on behalf of Crown Interest on unpaid levy Levy regulations Process matters for recommendation Consultation about proposed levy regulations Effect of failure to comply Subpart 7—Other miscellaneous provisions How notices, directions, and other documents must be given When certain notices, directions, or documents treated as given Meaning of deposit taker Deposit Takers Bill Part 9 Repeals and amendments to other Acts Repeals 472 Repeals Amendments to Reserve Bank of New Zealand Act 2021 Principal Act Section 10 amended (Bank’s functions) Section 74 amended (Ability to delegate) Section 182 amended (Protection for certain persons) Section 189 amended (Crown indemnities in relation to statutory management) New section 190A and cross-heading inserted 473 474 475 476 477 478 Qualified privilege protection 190A Bank’s warnings, reports, guidelines, or comments protected by qualified privilege 479 Section 240 amended (Form and content of annual report) 480 481 482 483 484 485 486 Amendments to Financial Markets Conduct Act 2013 Principal Act Section 6 amended (Interpretation) Section 22 amended (False or
 misleading representations) Schedule 1 amended Amendments to Public Finance Act 1989 Principal Act Section 8 amended (Appropriation limited by amount) New sections 25B and 25C inserted 25B When Minister may exercise certain powers in connection with financial institution in serious financial difficulties Expenses or capital expenditure in connection with financial institution in serious financial difficulties 25C 487 Section 27 amended (Annual financial statements of Government) Amendments to Insurance (Prudential Supervision) Act 2010 488 489 Principal Act Section 8 amended (Meaning of carrying on insurance business in New Zealand) 490 Consequential amendments Consequential amendments Schedule 1 Transitional, savings, and related provisions 196 196 196 196 196 197 197 197 197 197 197 197 198 198 198 198 198 199 199 199 199 200 201 19 cl 1 Deposit Takers Bill Schedule 2 Deposit takers Schedule 3 Consequential amendments 209 214 The Parliament of New Zealand enacts as follows: 1 Title This Act is the Deposit Takers Act 2022.
Commencement Subpart 2 of Part 3 and subpart 5 of Part 8 come into force on the day after the date of Royal assent.

5 2 (1) (2) The rest of this Act comes into force on a date or dates set by Order in Council.

(3) Any part of the Act that has not come into force by the fourth anniversary of Royal assent comes into force then.

(4) An Order in Council made under this section is secondary legislation (see Part 10 3 of the Legislation Act 2019 for publication requirements).
Part 1 Preliminary provisions 3 (1) Purposes The main purpose of this Act is to promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy by protecting and promoting the stability of the financial system.
(2) To that end, this Act has the following additional purposes: (a) (b) (c) to promote the safety and soundness of each deposit taker: to promote public confidence in the financial system: to avoid or mitigate the adverse effects of the following risks: (i) (ii) risks to the stability of the financial system: risks from the financial system that may damage the broader econ‐ omy.
4 Principles to be taken into account under this Act In achieving the purposes of this Act, the Bank must take into account the fol‐ lowing principles that are relevant to the performance or exercise of the func‐ tions, powers, and duties conferred or imposed on the Bank: (a) the desirability of— 15 20 25 (i) taking a proportionate approach to regulation and supervision; and 30 20 Deposit Takers Bill Part 1 cl 5 (ii) consistency in the treatment of similar institutions (while recog‐ nising that the deposit-taking sector comprises a diversity of insti‐ tutions): the need to maintain competition within the deposit-taking sector: the need to avoid unnecessary compliance costs: the desirability of maintaining awareness of, and responding to,— (i) the practices of overseas supervisors that perform functions in relation to any licensed deposit taker or any holding company of any licensed deposit taker; and (ii) guidance or standards of international organisations: the desirability of ensuring that the risks referred to in section 3(2)(c) are managed (including long-term risks to the stability of the financial system): the desirability of sound governance of deposit takers: 5 10 the desirability of deposit takers effectively managing their capital, liq‐ uidity, and risk: 15 the desirability of depositors having access to timely, accurate, and understandable information to assist them to make decisions relating to debt securities issued by deposit takers.
(b) (c) (d) (e) (f) (g) (h) 5 (1) Overview This Act provides for the licensing, regulation, and prudential supervision of banks and other persons in the business of borrowing and lending money (deposit takers).
(2) In this Act,— Preliminary (a) this Part provides for— (i) (ii) the purposes of this Act; and the principles that the Reserve Bank of New Zealand (the Bank) must take into account when acting under this Act: Licensing of banks and other deposit takers (b) Part 2— (i) requires deposit takers to hold a licence: 20 25 30 (ii) (iii) (iv) provides for when the Bank must issue a licence: provides for licence conditions: requires directors and senior managers of deposit takers to be fit and proper persons: 35 21 Part 1 cl 5 Deposit Takers Bill (c) (d) (e) (v) requires the Bank’s approval for certain important changes (for example, a change in control of a bank or a significant transac‐ tion): (vi) provides for when the Bank may cancel a licence: (vii) provides for appeals against licensing decisions: Regulation of deposit takers Part 3— (i) requires a deposit taker to have a current rating of its creditworthi‐ ness: (ii) requires a deposit taker to comply with prudential standards.
Those standards may relate to, for example, governance, capital, liquidity, exposures to related parties, risk management, disclosure of information, contingency and recovery plans, and internal con‐ trols and assurance: (iii) requires directors of a deposit taker to exercise due diligence to ensure that the deposit taker complies with its prudential obliga‐ tions: Supervision of deposit takers Part 4— (i) requires the Bank to prudentially supervise deposit takers: 5 10 15 20 (ii) (iii) (iv) provides for information-gathering, on-site inspection, and inves‐ tigation powers: requires a deposit taker to monitor its compliance with the pruden‐ tial obligations and to report a failure to comply to the Bank: allows the Bank to require a deposit taker to take action to address a failure to comply: 25 (v) allows the Bank to require a deposit taker to disclose warnings: Enforcement Part 5— (i) allows the Bank to accept undertakings: 30 (ii) (iii) (iv) (v) provides for the High Court to impose a pecuniary penalty for a failure to comply with applicable standards, conditions of a licence, or the due diligence duty for directors: provides for infringement offences: creates an offence of giving false or misleading information under this Act: 35 provides for the District Court to ban persons from participating in a deposit-taking business: 22 (f) (g) (h) Deposit Takers Bill Part 1 cl 6 (vi) provides for when a state of mind or conduct is attributed to a body corporate or other principal: Depositor compensation scheme Part 6 establishes a depositor compensation scheme to— (i) provide certain compensation to eligible investors when a deposit taker is put into liquidation or is otherwise subject to a specified notice under that Part: (ii) support a resolution measure undertaken in relation to a licensed deposit taker under subpart 5 of that Part: Crisis management and resolution Part 7— (i) gives the Bank the power to issue directions to a licensed deposit taker or an associated person (for example, a direction to avoid or
 mitigate any adverse effects arising from a deposit taker being in financial distress or other difficulties): (ii) (iii) (iv) gives the Bank the power to remove, replace, or appoint a director of a licensed deposit taker (for example, when it is necessary or desirable to do so in circumstances where a deposit taker is insol‐ vent or is likely to become insolvent or has materially breached a prudential obligation): provides for the resolution of a licensed deposit taker or an associ‐ ated person that is in financial distress or other difficulties: provides for compensation to be paid to creditors or shareholders that are worse off as a result of a resolution: (v) regulates covered bonds: Miscellaneous provisions Part 8— (i) imposes restrictions on the use of the words “bank”, “banker”, and “banking”: (ii) (iii) (iv) provides for co-operation with Australian financial authorities: 30 provides for the confidentiality of information given to the Bank: gives the Bank the power to specify how certain things are done under this Act (for example, how to apply for a licence): (v) provides for regulations to support the Act.
(3) This section is only a guide to the general scheme and effect of this Act.
35 6 Interpretation In this Act, unless the context otherwise requires,— agreement includes any contract, arrangement, or understanding 23 Part 1 cl 6 Deposit Takers Bill applicable standard, in relation to a person, means a standard issued under subpart 2 of Part 3 that applies to the person approved rating agency means a rating agency approved by the Bank under subpart 1 of Part 3 associated person or associate has the meaning set out in section 7 Australian financial authority means an Australian public authority pre‐ scribed by the regulations bail-in instrument has the meaning set out in section 79 Bank means the Reserve Bank of New Zealand continued under the Reserve Bank of New Zealand Act 2021 Bank’s Internet site means an Internet site maintained by, or on behalf of, the Bank building society has the same meaning as in section 2(1) of the Building Soci‐ eties Act 1965 5 10 business, operation, or management has the meaning set out in section 99(5) 15 constitution means,— (a) (b) in the case of a company within the meaning of section 2(1) of the Com‐ panies Act 1993, the constitution of the company; and in the case of any other entity, the documents or instruments constituting or defining the constitution of the entity 20 co-operative company means a company registered as a co-operative com‐ pany under the Co-operative Companies Act 1996 Council of Financial Regulators means the Council of Financial Regulators continued under subpart 4 of Part 6 of the Reserve Bank of New Zealand Act 2021 court means, in relation to any matter, the court before which the matter is to be determined (see section 186, which confers exclusive jurisdiction on the High Court in proceedings other than proceedings for offences, banning orders, and certain other matters) credit has the same meaning as in section 6 of the Credit Contracts and Con‐ sumer Finance Act 2003 credit union has the same meaning as in section 2 of the Friendly Societies and Credit Unions Act 1982 current credit rating means a rating of creditworthiness
 that, in relation to a date on which a deposit taker is required to have a rating, was given not earlier than 15 months before that date debt security has the same meaning as in section 8 of the FMCA deposit taker has the meaning set out in clause 2 of Schedule 2 25 30 35 24 Deposit Takers Bill Part 1 cl 6 depositor compensation scheme means the depositor compensation scheme established by Part 6 designated FMI has the same meaning as in section 5 of the Financial Market Infrastructures Act 2021 director means,— (a) (b) (c) (d) in relation to a company, any person occupying the position of a director of the company by whatever name called: in relation to a partnership (other than a limited partnership), any part‐ ner: in relation to a limited partnership, any general partner: in relation to a body corporate or unincorporate, other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company document has the same meaning as in section 4(1) of the Evidence Act 2006 eligible investor has the meaning set out in section 190 enters resolution has the meaning set out in section 274 financial markets has the same meaning as in section 6(1) of the FMCA financial product has the same meaning as in section 7 of the FMCA 5 10 15 financial service has the same meaning as in section 5 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 20 financial service provider means a person who carries on a business of pro‐ viding a financial service, whether or not— (a) (b) the business is the provider’s only business or the provider’s principal business; or the person is required to be registered under the Financial Service Pro‐ viders (Registration and Dispute Resolution) Act 2008 25 financial system— (a) means the financial system in New Zealand; and (b) includes the financial markets fit and proper certificate means a certificate that complies with the require‐
 ments of an applicable standard referred to in section 80(1)(c) FMCA means the Financial Markets Conduct Act 2013 friendly society has the same meaning as in section 2 of the Friendly Societies and Credit Unions Act 1982 governing body means,— (a) in relation to a body corporate, the board of directors (or other persons or body exercising powers of management, however described) of the body corporate: 30 35 25 Part 1 cl 6 Deposit Takers Bill (b) in relation to a partnership or other unincorporated body of persons, either— (i) (ii) the board of directors (or other persons or body exercising powers of management, however described) of the partnership or other unincorporated body of persons; or 5 if there is no board or other persons or body as described in sub- paragraph (i), the partners of the partnership or members of the unincorporated body of persons Governor means a person who occupies the position of Governor of the Bank (whether the person is appointed under section 82 or 96 of the Reserve Bank of New Zealand Act 2021) 10 holding entity has the meaning set out in section 7 home jurisdiction means,— (a) (b) in the case of an overseas person that is a body corporate, the country in which that body is incorporated: 15 in the case of an overseas person that is an unincorporated body, the country in which that body has its head office or principal place of busi‐ ness in resolution has the meaning set out in section 274 information includes any data, forecast, or document 20 infringement fee, in relation to an infringement offence, means the infringe‐ ment fee for the offence specified in the provision that identifies the infringe‐ ment offence infringement offence means an offence identified in this Act as being an infringement offence 25 insolvent, in relation to a deposit taker or any other entity (A), means that— (a) (b) A is unable to pay A’s debts as they become due in the normal course of business; or the value of A’s assets is less than the value of A’s
 liabilities, including contingent liabilities (and for that purpose section 4(4) of the Companies Act 1993 applies in respect of A as if it were a company even if it is not) 30 investigator means a person appointed as an investigator under subpart 5 of Part 4 law enforcement or regulatory agency has the same meaning as in section 5 of the Reserve Bank of New Zealand Act 2021 35 licence means a licence issued under Part 2 licensed deposit taker means a person that holds a licence licensed deposit taker group, in relation to a licensed deposit taker, means the licensed deposit taker and all of its subsidiaries 26 Deposit Takers Bill Part 1 cl 6 liquidation under New Zealand law, in relation to an overseas body corpo‐ rate, includes a liquidation as referred to in section 342 of the Companies Act 1993 local authority has the meaning set out in section 5(1) of the Local Govern‐ ment Act 2002 5 Minister means the Minister of the Crown who, under the authority of a war‐ rant or with the authority of the Prime Minister, is responsible for the adminis‐ tration of this Act New Zealand chief executive officer, in relation to an overseas deposit taker, means— 10 (a) (b) the most senior officer of the deposit taker who is ordinarily resident in New Zealand; or another person who may be nominated by the deposit taker and agreed to in writing by the Bank New Zealand chief financial officer, in relation to an overseas deposit taker, means— 15 (a) the most senior officer of the deposit taker who is ordinarily resident in New Zealand (other than the New Zealand chief executive officer) and who is responsible for the accounting and financial reporting obligations of the deposit taker; or 20 (b) another person who may be nominated by the deposit taker and is agreed to in writing by the Bank non-deposit-taking lender means a person that carries on the business of lend‐ ing money but is not a deposit taker overseas deposit taker means a deposit taker that is an overseas person 25
 overseas licensed deposit taker means a licensed deposit taker that is an over‐ seas person overseas person means— (a) (b) a body corporate incorporated outside New Zealand; or an unincorporated body that has its head office or principal place of business outside New Zealand 30 overseas supervisor means any authority or body in any country other than New Zealand that performs functions in relation to deposit takers that corres‐ pond with, or are similar to, those conferred on the Bank under this Act personal information has the same meaning as in section 7(1) of the Privacy Act 2020 35 protected deposit has the meaning set out in section 191 prudential legislation has the same meaning as in section 5 of the Reserve Bank of New Zealand Act 2021 27 Part 1 cl 6 Deposit Takers Bill prudential obligation means an obligation imposed by or under any of the fol‐ lowing: (a) (b) (c) (d) (e) this Act or the regulations: the standards: a condition of a licence issued under Part 2: a direction given under this Act: the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and regulations made under that Act regulations means regulations made under this Act relative, in relation to any person, means— 5 10 (a) (b) (c) the person’s spouse, civil union partner, or de facto partner; or any parent, step-parent, brother, sister, child, or stepchild of the person; or any parent, step-parent, brother, sister, child, or stepchild of the person’s spouse, civil union partner, or de facto partner 15 resolution manager means— (a) (b) a person appointed under section 354; or the Bank if the Bank has appointed itself as a resolution manager or no other person holds office as a resolution manager restricted word— 20 (a) means any of the words “bank”, “banker”, and “banking”; and (b) includes— (i) (ii) any of those words as part of any other word: a translation of those words into another language (whether or not the translation of those words is part of any other word) 25 security
 interest means an interest in property created or provided for by a transaction that in substance secures payment or performance of an obligation, without regard to— (a) (b) the form of the transaction; and the identity of the person who has title to the collateral senior manager, in relation to a person (A), means a person who occupies any of the following positions in respect of A (by whatever name called): (a) if A is an overseas person,— (i) New Zealand chief executive officer: (ii) New Zealand chief financial officer: (b) in any other case,— (i) chief executive: 28 30 35 Deposit Takers Bill Part 1 cl 7 (ii) (iii) chief financial officer: a manager who reports directly to the chief executive significant transaction has the meaning set out in section 41 SPV means a special purpose vehicle standard means a standard issued under subpart 2 of Part 3 statement of funding approach means a statement published under subpart 7 of Part 6 5 subsidiary means a subsidiary within the meaning of sections 5 to 8 of the Companies Act 1993 temporary high balance limit has the meaning set out in section 202 voting product means a financial product that confers a voting right voting right means a currently exercisable right to cast a vote at meetings of members or shareholders of a body corporate, not being a right to vote that is exercisable only in 1 or more of the following circumstances: (a) (b) (c) (d) during a period in which a payment or distribution (or part of a payment or distribution) in respect of the financial product that confers the voting right is in arrears or some other default exists: on a proposal that affects rights attached to the financial product that confers the voting right: during the liquidation of the body corporate: in respect of a special, immaterial, or remote matter that is inconsequen‐ tial to control of the body corporate.
10 15 20 7 (1) Meaning of associated person and holding entity For the purposes of this Act, unless the context otherwise requires, a person (A) is associated with another person (B) if— 25 (a) B is A’s holding entity or subsidiary; or (b) more than half of the voting products of A, other than voting products that carry no right to participate beyond a specified amount in a distribu‐ tion of either profits or capital, are held by B and persons that are associ‐ ated with B (whether directly or indirectly, but other than in a fiduciary capacity); or (c) more than half of the voting products of each of A and B, other than voting products that carry no right to participate beyond a specified amount in a distribution of either profits or capital, are held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or (d) the businesses of A and B have been carried on in such a manner that the separate business of each person, or a substantial part of it, is not readily identifiable; or 30 35 29 Part 1 cl 8 Deposit Takers Bill (e) there is another person with which both persons are associated.
(2) Associated person and associate have a corresponding meaning.

(3) For the purposes of this Act, a person is another person’s holding entity if, and only if, that other person is its subsidiary.

8 9 Transitional, savings, and related provisions The transitional, savings, and related provisions set out in Schedule 1 have effect according to their terms.

Act binds the Crown This Act binds the Crown.


Part 2 Licensing of deposit takers Subpart 1—Key provisions 5 10 10 Deposit taker must be licensed Every person who carries on business as a deposit taker must hold a licence.

11 Offence for deposit taker to carry on business without licence 15 (1) A person (A) commits an offence if A— (a) (b) carries on business as a deposit taker without holding a licence; and knows that, or is reckless as to whether, it must hold a licence.
(2) A person that commits an offence against this section is liable on conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 2 years or to a fine not exceeding $500,000 (or both): 20 (b) in any other case, to a fine not exceeding $5,000,000.
12 Liquidation of deposit taker that carries on business without licence The court may, on the application of the Bank, appoint a liquidator for a body corporate that may be put into liquidation under or in accordance with the Companies Act 1993 if it is satisfied that the body corporate is carrying on business as a deposit taker in contravention of section 10.
25 13 No holding out as licensed A person that is not licensed as a deposit taker must not, directly or indirectly, hold out that the person is a licensed deposit taker.

30 14 Offence for holding out (1) A person (A) commits an offence if A— (a) contravenes section 13; and 30 Deposit Takers Bill Part 2 cl 17 (b) knows that, or is reckless as to whether, what they are holding out is not the case.
(2) A person that commits an offence against this section is liable on conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 2 years or to a fine not exceeding $500,000 (or both): 5 (b) in any other case, to a fine not exceeding $5,000,000.

Subpart 2—Issue of licences 15 Bank may issue licence The Bank may issue a licence in accordance with this subpart.

16 Application for licence (1) A body corporate may apply for a licence in the manner that is specified by the Bank.
(2) See subpart 4 of Part 8 (which provides for the Bank’s power to specify the manner in which an application is made).
17 When licence must be issued (1) The Bank must, after receiving an application, issue a licence to which the application relates if the Bank is satisfied that— (a) (b) (c) (d) (e) (f) (g) the applicant has the ability to comply with the prudential obligations (including prudential obligations that the Bank proposes to impose if it issues the licence); and the applicant’s incorporation and ownership structure and its governance structure are appropriate, having regard to the size and nature of the applicant’s business or proposed business; and the applicant’s ownership (including the financial strength and source of funding of each person to which subsection (2) applies) is appropriate, having regard to the size and nature of the applicant’s business or pro‐ posed business; and the applicant’s directors, senior managers, and proposed directors and senior managers are fit and proper persons to hold their respective pos‐ itions; and the applicant is, or will be, registered under the Financial Service Pro‐ viders (Registration and Dispute Resolution) Act 2008 on and from com‐ mencing to provide the service of being a licensed deposit taker; and in the case of an applicant that is an overseas person, the criteria set out in section 18 are satisfied; and the eligibility criteria (if any) that are prescribed by the regulations are satisfied.
10 15 20 25 30 35 31 Part 2 cl 18 Deposit Takers Bill (2) For the purposes of subsection (1)(c), a person (A) is a person to which this subsection applies if— (a) A has the power (whether directly or indirectly) to exercise, or control the exercise of, 25% or more of the voting rights in the applicant; or (b) A has, together with 1 or more connected persons, the power (whether directly or indirectly) to exercise, or control the exercise of, 25% or more of the voting rights in the applicant.
5 (3) 18 (1) In subsection (2), connected person, in relation to A, means— (a) a person who is acting or will act jointly or in concert with A in respect of exercising, or controlling the exercise of, a power referred to in sub- section (2)(a) or (b); or a person who acts, or is accustomed to acting, in accordance with the wishes of A.
(b) 10 Additional criteria for overseas applicants For the purposes of section 17(1)(f), the Bank must be satisfied that the fol‐ lowing are appropriate: 15 (a) (b) the law and regulatory requirements of the applicant’s home jurisdiction that apply to the applicant and relate to the relevant matters: the nature and extent of prudential supervision that applies to the appli‐ cant and to deposit takers generally in the applicant’s home jurisdiction.
20 (2) The Bank must,— (a) (b) in the case of subsection (1)(a), have regard to whether the law and regulatory requirements of the applicant’s home jurisdiction are, in terms of achieving the purposes of this Act, at least as satisfactory as the law and regulatory requirements of New Zealand that relate to the relevant matters and apply to deposit takers incorporated in New Zealand; and in the case of subsection (1)(b), have regard to whether the prudential supervision is, in terms of achieving the purposes of this Act, at least as satisfactory as the nature and extent of prudential supervision that applies to deposit takers incorporated in New Zealand.
25 30 (3) The relevant matters are— (a) (b) (c) (d) (e) the licensing, registration, or authorisation of deposit takers; and the duties and powers of directors; and the capital standards that apply to deposit takers; and the disclosure of financial and other information to the public; and 35 assessments of the fitness and propriety of directors and senior manag‐ ers; and 32 Deposit Takers Bill Part 2 cl 23 (f) matters concerning deposit takers that are insolvent or otherwise in ser‐ ious financial difficulties (including the recognition and priorities of claims of creditors or classes of creditors in the event of an insolvency).
(4) In this section, deposit takers, in relation to an applicant’s home jurisdiction, includes banks or other entities that are licensed, registered, or otherwise authorised to accept deposits under the law of that jurisdiction.
5 19 Overseas requirements may be treated as appropriate The following must be treated as being appropriate if the applicant’s home jur‐ isdiction is a jurisdiction prescribed in the regulations: (a) (b) the law and regulatory requirements referred to in section 18(1)(a): the nature and extent of the prudential supervision referred to in section 18(1)(b).
20 Consultation requirements The Bank must, before making a decision under section 17, consult— (a) the FMA; and (b) the applicant about the conditions and standards that the Bank proposes to impose in relation to the applicant (if the Bank issues a licence).

Notice of decision The Bank must give notice of its decision under section 17 to the applicant.

If the Bank refuses to issue a licence, the notice must include a statement of the Bank’s reasons for doing so.
10 15 20 Bank must keep register of licensed deposit takers The Bank must keep a public register of licensed deposit takers.

The Bank must take all reasonable steps to ensure that the information con‐ tained in the public register is available through the Bank’s Internet site.

25 Form and content of register The Bank must determine the form of the register of licensed deposit takers and may amend the form as it considers necessary.
The register must include the following in relation to each licensed deposit taker: 30 (a) (b) (c) (d) the name of the deposit taker: the date on which its licence was issued: the deposit taker’s current credit rating under subpart 1 of Part 3 and the name of the rating agency that gave that rating: a summary of the matters that are specified by a condition of the deposit taker’s licence as referred to in section 91: 35 33 21 (1) (2) 22 (1) (2) 23 (1) (2) Part 2 cl 24 Deposit Takers Bill (e) all other information prescribed by the regulations.
(3) The register may also include a summary of— (a) (b) 1 or more conditions or standards that apply to the deposit taker; and any other matters that the Bank thinks fit.
Subpart 3—Conditions of licences 5 24 (1) Bank may impose conditions on licence The Bank may issue a licence to a person (A) subject to any of the following conditions: (a) (b) a condition that identifies the standards that A must comply with: a condition that identifies requirements in standards that apply to A: 10 Example A standard provides that a particular capital requirement applies to a deposit taker if the conditions of its licence state that the requirement applies.
(c) conditions that provide for anything that the standards say may or must be provided for by conditions: 15 Example A standard provides for a specific minimum capital ratio (within a range set out in the standard) that a deposit taker must maintain to be set in a licence condition.
(d) conditions that impose limits or restrictions on either or both of the fol‐ lowing: (i) the size or nature of the whole or any part of A’s business or pro‐ posed business: (ii) any activities that may be carried out by A: (e) in the case of a person that has not yet commenced carrying on the busi‐ ness of borrowing and lending money in New Zealand, either or both of the following: 20 25 (i) (ii) a condition that specifies the time period within which A must commence carrying on that business in New Zealand: 30 a condition that specifies the extent of that business in New Zea‐ land that A must have within a specified period: (f) a condition that requires A or A’s directors (or both) to certify that 1 or more of the following have been complied with (being certification that is given in the manner specified by the Bank): 35 (i) any prudential obligations: 34 Deposit Takers Bill Part 2 cl 27 (2) 25 (1) (ii) any requirements of any other legislation that are imposed on A as a licensed deposit taker (for example, financial reporting obliga‐ tions).
See subpart 2 of Part 5, which provides for a court to impose a pecuniary penalty for a contravention of a condition.

5 Bank may modify conditions of licence The Bank may, at any time after a licence is issued, by notice to the licensed deposit taker,— (a) impose conditions of the licence (whether or not the licence is already subject to conditions); or 10 (b) vary, remove, add to, or substitute any conditions of the licence.
(2) The Bank must, before exercising the power,— (a) (b) give the deposit taker not less than 7 days’ notice of the Bank’s intention to do so; and give the deposit taker a reasonable opportunity to make submissions to the Bank; and 15 (c) have regard to those submissions.

(3) The notice given to the deposit taker must contain, or be accompanied by, a statement of the Bank’s reasons for proposing to exercise the power.
Subpart 4—Fit and proper requirements 20 26 Licensed deposit taker must obtain Bank’s approval before new director or senior manager is appointed (1) A licensed deposit taker must obtain the approval of the Bank before a new director or senior manager is appointed.
(2) A request for the Bank to give its approval under this subpart must— 25 (a) contain or be accompanied by a fit and proper certificate for the new director or senior manager; and (b) otherwise be made in the manner that is specified by the Bank.
(3) This section does not apply in relation to— (a) a person who is appointed as a senior manager on an interim basis if the terms and conditions specified under section 80(1)(f) are complied with; or 30 (b) an overseas licensed deposit taker (see instead section 30).

27 Offence to appoint new director or senior manager without approval A licensed deposit taker that contravenes section 26(1) commits an offence and is liable on conviction to a fine not exceeding $500,000.
35 35 Part 2 cl 28 Deposit Takers Bill 28 (1) (2) (3) 29 (1) (2) (3) (4) 30 Bank’s decision on approval The Bank may, after considering a request for approval under section 26,— (a) give its approval unconditionally or subject to any conditions that the Bank thinks fit; or (b) refuse to give its approval.
5 The Bank must give notice of its decision to the licensed deposit taker within 20 working days after receiving all of the information that the Bank reasonably requires to assist it in determining whether to give its approval.

If the Bank refuses to give its approval or its approval is subject to conditions, the notice under subsection (2) must contain a statement of its reasons.
10 Bank may suspend director or senior manager if approval not obtained If a licensed deposit taker fails to comply with section 26 in relation to a director or senior manager (B), the Bank may make an order prohibiting or restricting B, without the leave of the Bank, from either or both of the follow‐ ing: (a) (b) acting as a director of the deposit taker: being concerned in, or taking part in the management of, the deposit taker.

The order ceases to be in force if the Bank approves the appointment.
If B knowingly fails to comply with the order, B commits an offence and is liable on conviction to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both).

See also subpart 5 of Part 5, which allows the District Court to make a ban‐ ning order if B fails to comply with the Bank’s order.
15 20 Overseas licensed deposit taker must notify Bank if new director or senior manager is appointed 25 (1) An overseas licensed deposit taker must, no later than 20 working days after the appointment of a new director or senior manager, provide to the Bank a fit and proper certificate for the new director or senior manager.
(2) An overseas licensed deposit taker that contravenes subsection (1) commits 30 an infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.
Bank may require further fit and proper certificate If the Bank has given a notice to a licensed deposit taker that requires it to give to the Bank a fit and proper certificate for a specified director or senior man‐ ager, the deposit taker must, in the manner specified by the Bank, comply with the requirement.

35 31 (1) 36 5 10 Deposit Takers Bill Part 2 cl 35 (2) This section applies whether or not a certificate in respect of the director or officer has previously been provided under this subpart.
(3) A licensed deposit taker that contravenes subsection (1) commits an infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.
32 (1) (2) (3) (4) Deposit taker’s duty on becoming aware of fit and proper concerns This section applies if a licensed deposit taker becomes aware of information on the basis of which it could reasonably form the opinion that a director or senior manager of the deposit taker is not, or is not likely to be, a fit and proper person to hold the relevant position.
The deposit taker must, as soon as practicable, disclose to the Bank all infor‐ mation relevant to that matter that is in the possession or under the control of the deposit taker.

In forming an opinion under subsection (1), the licensed deposit taker must have regard to the fit and proper matters specified in an applicable standard.
15 In this section, director or senior manager of the deposit taker includes a pro‐ posed new director or senior manager in respect of whom the deposit taker has requested approval under section 26.

33 Offence to fail to disclose fit and proper concerns A licensed deposit taker that, without reasonable excuse, contravenes section 32 commits an offence and is liable on conviction to a fine not exceeding $500,000.
34 (1) Power to remove directors and senior managers This section applies if the Bank, after having regard to the fit and proper mat‐ ters specified in an applicable standard, has reasonable grounds to believe that a director or senior manager of a licensed deposit taker is not a fit and proper person to hold the relevant position.

20 25 (2) The Bank may remove the director or senior manager from the relevant pos‐ ition from a date specified by the Bank.
30 35 Bank may direct that person may not be reappointed If the Bank acts under section 34, the Bank may give a direction that the director or senior manager may not be reappointed as a director or senior man‐ ager of the licensed deposit taker— (a) (b) (c) at any time; or for a period specified by the Bank; or 35 until 1 or more things specified by the Bank occur (for example, the director or senior manager receives a specified qualification).
37 Part 2 cl 36 Deposit Takers Bill 36 Offence to contravene direction (1) A licensed deposit taker that reappoints a person as a director or senior man‐ ager in contravention of a direction under section 35 commits an offence and is liable on conviction to a fine not exceeding $500,000.

(2) A person who has been removed as a director or manager under section 34 commits an offence if they accept reappointment to a position in contravention of a direction under section 35.
5 (3) A person who commits an offence against subsection (2) is liable on convic‐ 37 (1) (2) (3) 38 (1) (2) (3) tion to a fine not exceeding $50,000.

Further provisions about power to remove Sections 34 and 35 apply whether or not the director or senior manager is a fit and proper person to hold their position under the licensed deposit taker’s fit and proper policy.

Sections 34 and 35 do not apply to a director of an overseas deposit taker.
Sections 34 and 35 have effect despite any agreement, legislation, or rule of law, or the terms of the constitution of a licensed deposit taker.
How power to remove is exercised The Bank must, before exercising a power under section 34,— (a) give the licensed deposit taker and the director or senior manager not less than 7 days’ notice of the Bank’s intention to do so; and (b) give the licensed deposit taker and the director or senior manager a reasonable opportunity to make submissions to the Bank; and (c) have regard to those submissions.
The notice given to the deposit taker and the director or senior manager must contain, or be accompanied by, a statement of the Bank’s reasons for proposing to exercise the power.

The Bank must exercise the powers conferred by sections 34 and 35 by giv‐ ing notice to— (a) (b) (c) the licensed deposit taker; and the director or the senior manager; and in the case of a director, the Registrar of Companies.
10 15 20 25 30 (4) A notice given under subsection (3)(c) is sufficient compliance with section 159 of the Companies Act 1993.

38 Deposit Takers Bill Part 2 cl 40 Subpart 5—Bank’s approval required for certain changes Change of control 39 Person who obtains control over licensed deposit taker must obtain Bank’s approval (1) A person (A) must obtain the approval of the Bank before giving effect to a transaction if the transaction would result in A obtaining control over a licensed deposit taker.
5 (2) In this section and section 40, a person (A) obtains control over a licensed deposit taker if— (a) A obtains the power (whether directly or indirectly) to— (i) exercise, or control the exercise of, 50% or more of the voting rights in the deposit taker; or (ii) appoint 50% or more of the directors of the deposit taker; or (b) A obtains, together with 1 or more specified persons, the power (whether directly or indirectly) to— (i) exercise, or control the exercise of, 50% or more of the voting rights in the deposit taker; or (ii) appoint 50% or more of the directors of the deposit taker.
In this section and section 40, specified person, in relation to A, means— (a) a person who is acting or will act jointly or in concert with A in respect of exercising, or controlling the exercise of, a power referred to in sub- section (2)(b)(i) or (ii); or a person who acts, or is accustomed to acting, in accordance with the wishes of A.

(b) 10 15 20 Subsection (1) does not apply in relation to an overseas licensed deposit taker (see instead section 40).
25 Overseas licensed deposit taker must notify Bank if person obtains control If a person (A) gives effect to a transaction that results in A obtaining control over an overseas licensed deposit taker (B), B must give the Bank written notice of that matter within 20 working days after B becomes aware that A has obtained that control.
(2) The notice must specify the following information (to the extent that B is aware of the information): (a) (b) A’s name and the names of any specified persons; and the nature and extent of the power referred to in section 39 that A (or A together with 1 or more specified persons) may exercise or control; and 39 30 35 (3) (4) 40 (1) Part 2 cl 41 Deposit Takers Bill (c) the date on which A obtained the control.
(3) An overseas licensed deposit taker that contravenes subsection (1) commits an infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.

Significant transactions 41 Licensed deposit taker must obtain Bank’s approval before entering into significant transaction (1) A licensed deposit taker must obtain the approval of the Bank before entering into a significant transaction.
(2) In this Act, significant transaction means any of the following: (a) a transaction that involves,— (i) (ii) in the case of an overseas deposit taker, the transfer of all or a material part of the deposit taker’s New Zealand business to another person; or in the case of any other deposit taker, the transfer of all or a mater‐ ial part of the deposit taker’s business to another person: (b) any other transaction of a kind that is specified in an applicable standard as a significant transaction in respect of which approval is required under this subpart.
(3) Whether a part of a business is material must be determined in accordance with an applicable standard.

Amalgamation 42 Licensed deposit taker must obtain Bank’s approval before amalgamation (1) A licensed deposit taker must obtain the approval of the Bank before the deposit taker amalgamates with another person (whether it occurs under Part 13 of the Companies Act 1993 or any other law of similar effect that results in 2 or more entities amalgamating and continuing as 1 entity).
In this subpart, amalgamated entity means the single entity that is proposed to result from and continue after a proposed amalgamation.

30 Subsection (1) does not apply in relation to an overseas licensed deposit taker (see instead section 43).
Overseas licensed deposit taker must notify Bank if it amalgamates with another person If an overseas licensed deposit taker (A) amalgamates with another person (under a law that results in 2 or more entities amalgamating and continuing as 1 35 (2) (3) 43 (1) 40 Deposit Takers Bill Part 2 cl 47 entity), A must give the Bank written notice of the amalgamation within 20 working days after it takes effect.
(2) The notice must specify— (a) (b) the names of each amalgamating entity and the amalgamated entity; and the date of the amalgamation.

(3) An overseas licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.
Consequences of failing to get approval 44 Offence to fail to get approval (1) A person (A) commits an offence if A— (a) (b) contravenes section 39, 41, or 42; and knows that, or is reckless as to whether, it must obtain the Bank’s appro‐ val under that section.
(2) A person that commits an offence against this section is liable on conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): (b) in any other case, to a fine not exceeding $2,500,000.

45 Failure to get approval does not invalidate proposed change Nothing in this subpart invalidates any change of control, significant transac‐ tion, or amalgamation made without the approval of the Bank.
5 10 15 20 Process for approval 46 Meaning of proposed change In this subpart, proposed change means any of the following in respect of which approval is required under this subpart: 25 (a) (b) (c) the obtaining of control over a licensed deposit taker: the entering into of a significant transaction: the amalgamation of a licensed deposit taker with 1 or more other per‐ sons.
30 47 Request for approval (1) A request for the Bank to give its approval under this subpart must be made in the manner that the Bank specifies.

41 Part 2 cl 48 Deposit Takers Bill (2) A joint request may be made by 2 or more persons that are parties to the pro‐ 48 (1) posed change.

Report on proposal The Bank may arrange for a suitably qualified person (B) to prepare a report on a proposed change to assist the Bank with performing or exercising its func‐ tions, powers, or duties under this subpart.
5 (2) A person that makes a request and every other party to the proposed change must provide to B the information that B requires to assist them in preparing the report.
49 Bank must consider whether it would still be satisfied of licensing matters 10 The Bank must, in considering a request for approval under this subpart, con‐ sider whether, if the proposed change occurs, the Bank would still be satisfied of the matters set out in section 17 (which are the matters that the Bank must be satisfied of before an applicant is entitled to be issued with a licence).
50 (1) (2) (3) (4) Bank’s decision on approval The Bank may, after considering a request for approval under this subpart,— (a) (b) give its approval unconditionally or subject to any conditions that the Bank may impose under subsection (3); or refuse to give its approval.
The Bank must give notice of its decision to the licensed deposit taker and any other person who made the request within 20 working days after receiving both of the following: 15 20 (a) (b) all of the information that the Bank reasonably requires to assist it in determining whether to give its approval: all reports that the Bank has arranged to receive under this subpart in respect of the matter.
25 The approval may be subject to any conditions prescribed by the regulations or conditions that relate to matters prescribed in the regulations.

If the Bank refuses to give its approval, the notice under subsection (2) must contain a statement of its reasons for doing so.
30 51 Offence to contravene condition of approval A person that contravenes a condition of approval imposed under section 50 commits an offence and is liable on conviction,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: in any other case, to a fine not exceeding $2,500,000.
35 42 Deposit Takers Bill Part 2 cl 54 52 Requirement for approval is in addition to other requirements This subpart does not limit any other legislation that must be complied with in order to give effect to a proposed change that requires approval under this sub‐ part (for example, in the case of amalgamating companies, the requirements of Part 13 of the Companies Act 1993).
5 Subpart 6—Cancellation 53 (1) (2) 54 (1) Cancellation of licence The Bank may cancel a licence held by a person (A) if the Bank is satisfied that— (a) the information provided under section 16 is false or misleading in a material particular and A has not yet commenced carrying on the busi‐ ness of borrowing and lending money in New Zealand: (b) A has contravened a condition under section 24(1)(e)(i) (which requires A to commence carrying on the business of borrowing and lend‐ ing money in New Zealand within a particular period): 10 15 (c) A is not, or is no longer, a deposit taker and A does not owe any obliga‐ tions to pay money to any eligible investor under any protected deposit: (d) A has been liquidated, wound up, or dissolved or has otherwise ceased to exist.
For the purposes of subsection (1)(c), the Bank may disregard any obligation on A to pay money under a right of subrogation under subpart 4 of Part 6.

20 Process for cancelling licence The Bank must, before cancelling a licence held by a person (A),— (a) (b) (c) consult the FMA; and give A notice of the Bank’s intention to cancel the licence; and 25 have regard to any objections that are received before the close of the date specified under subsection (2)(b).
(2) The notice given to A must— (a) (b) contain, or be accompanied by, a statement of the Bank’s reasons for proposing to cancel the licence; and 30 specify the date by which A must deliver any objection to the Bank (which must be not less than 20 working days after the date of the notice).

(3) Subsection (1)(b) and (c) does not apply if— A asked the Bank to cancel its licence; or (a) 35 (b) A has been liquidated, wound up, or dissolved or has otherwise ceased to exist.
43 Part 2 cl 55 Deposit Takers Bill 55 Notice of cancellation The Bank must, as soon as practicable after cancelling a licence held by a per‐ son (A), give— (a) (b) notice of the cancellation on the Bank’s Internet site; and in the case of a cancellation under section 53(1)(a) to (c), notice of the cancellation to A.
5 Subpart 7—Appeals 56 Appeals against licensing and fit and proper decisions A person may appeal to the court against a decision of the Bank under this Part to— 10 (a) (b) (c) decline to issue a licence to the person; or decline to approve the person as a director or senior manager under sub- part 4; or remove the person as a director or senior manager under subpart 4.
57 Appeals against other decisions of Bank on questions of law only 15 A person that considers that any of the following decisions of the Bank is wrong in law may appeal to the court against the decision on a question of law only: (a) a decision to impose conditions on the person’s licence or proposed licence or to vary, revoke, add to, or substitute any conditions on the per‐ son’s licence; or 20 (b) a decision to decline to give an approval under subpart 5.
58 Appeal does not operate as stay An appeal under this subpart does not operate as a stay of any decision appealed against unless the court orders otherwise.

25 Part 3 Regulation of deposit takers Subpart 1—Credit rating 59 Licensed deposit taker must have current credit rating (1) A licensed deposit taker must have a current credit rating that is given by an 30 approved rating agency.
In this Act, a credit rating, in relation to a deposit taker, is a rating of its creditworthiness that complies with the requirements prescribed by the stand‐ ards.

(2) 44 Deposit Takers Bill Part 3 cl 64 (3) See section 70, which allows the Bank to grant an exemption from this sec‐ tion.

60 Offence to fail to have current credit rating 61 (1) (2) A licensed deposit taker that contravenes section 59 commits an offence and is liable on conviction to a fine not exceeding $2,500,000.
5 Bank may approve rating agencies The Bank may approve a person as a rating agency for the purposes of this Act.
In deciding whether to approve a person as a rating agency, the Bank must have regard to the following: (a) (b) (c) (d) (e) (f) the independence of the rating agency: 10 the adequacy of resources available to the rating agency: the credibility and objectivity of the rating agency’s methodology: the consistency and comparability of the rating agency’s ratings when assessed against ratings industry practice: the adequacy of the rating agency’s disclosure of information, including information about its processes, experience, and ownership: 15 relevant international standards, codes, and recommended practices relating to the ratings industry.
62 List of approved rating agencies The Bank must publish and keep up to date a list of approved rating agencies on the Bank’s Internet site at all reasonable times.

20 63 (1) (2) Bank may review approval The Bank may, at any time, review the approval of a person as a rating agency, and in conducting the review the Bank must have regard to the matters in sec- tion 61(2).
If, after conducting the review, the Bank considers that the person should no longer be an approved rating agency, it may revoke the approval.

(3) A credit rating given to a deposit taker by an agency at a time when the agency was an approved rating agency does not cease to be a rating from an approved rating agency for the purposes of this Act by reason of the fact that the appro‐ val of the agency has expired or has been revoked.
64 Licensed deposit taker must notify Bank of change in rating (1) A licensed deposit taker must, within 20 working days after receiving notice that its credit rating has changed, deliver to the Bank a certificate by the approved rating agency of the new rating.

(2) The certificate must state the date on which it was given.
25 30 35 45 Part 3 cl 65 Deposit Takers Bill (3) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.
65 Licensed deposit taker must notify Bank of credit watch warning 5 (1) A licensed deposit taker must, within 20 working days after receiving notice that a credit watch warning has been given in respect of the deposit taker’s credit rating, deliver to the Bank a certificate by the approved rating agency of the credit watch warning.

(2) (3) The certificate must state the date on which it was given and the reasons for it.
10 In this section, credit watch warning means any word, expression, or symbol used by an approved rating agency to indicate that the agency has a deposit taker under consideration with a view to a possible downgrading in a credit rat‐ ing given to the deposit taker by the agency.

(4) A licensed deposit taker that contravenes subsection (1) commits an 15 infringement offence and is liable to— (a) (b) an infringement fee of $10,000; or a fine imposed by a court not exceeding $25,000.
66 (1) Disclosure of credit rating on licensed deposit taker’s Internet site This section applies to a licensed deposit taker (A) if— (a) (b) A is required to comply with section 59 or A otherwise has a current credit rating given by an approved rating agency; and an Internet site that is maintained by, or on behalf of, A contains infor‐ mation or advertising about debt securities issued by A that are offered in New Zealand.
(2) A must ensure that the Internet site— (a) states clearly and prominently— (i) (ii) A’s current credit rating; and the name of the agency by which the rating was given; and (iii) the rating scale of which the rating forms part; or (b) contains a prominent link to another Internet site that clearly and promi‐ nently states the matters specified in paragraph (a).
(3) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $20,000; or a fine imposed by a court not exceeding $50,000.
20 25 30 35 46 Deposit Takers Bill Part 3 cl 68 67 Other advertising of credit ratings (1) A licensed deposit taker may distribute an advertisement that refers to its cur‐ rent credit rating, or to any part of the rating, only if the advertisement also states clearly and prominently— (2) (3) (a) (b) (c) the rating; and the name of the agency that gave the rating; and 5 that a description of any scale of which the rating forms part is available on a specified Internet site.
The Internet site that is specified may be an Internet site maintained by, or on behalf of, the licensed deposit taker or the agency that gave the rating.
10 For the purposes of this section and section 68,— (a) an advertisement is distributed if it is communicated to the public in New Zealand (with a view to obtaining business from relevant investors) by newspaper, magazine, brochure, pamphlet, notice, circular, radio or television broadcast, film, the Internet, or other means; and (b) relevant investor means a person to whom the licensed deposit taker makes an offer referred to in clause 2(2)(a) of Schedule 2.
(4) However, this section does not apply to advertising on an Internet site that is maintained by, or on behalf of, a licensed deposit taker (but section 66 will apply).

(5) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $20,000; or a fine imposed by a court not exceeding $50,000.
15 20 68 Licensed deposit taker must not disclose or advertise credit ratings from non-approved agencies 25 (1) A licensed deposit taker must not— (a) (b) disclose to a relevant investor a rating from a non-approved agency; or distribute an advertisement for any of the deposit taker’s deposit-taking business that refers to a rating from a non-approved agency.

30 (2) Subsection (1)(a) does not apply to a disclosure to an associated person or employee of the deposit taker.
(3) In this section, rating from a non-approved agency— (a) means, in relation to a licensed deposit taker, an assessment of its credit or creditworthiness that is in substance a credit rating or financial strength rating (whether called a rating, grading, scoring, ranking, or by any other name) that is issued or given by an agency that is not an approved rating agency; but 35 47 Part 3 cl 69 Deposit Takers Bill (b) does not include a credit rating referred to in section 63(3).
(4) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $20,000; or a fine imposed by a court not exceeding $50,000.

5 69 (1) Licensed deposit taker must give public notice of downgrade If a licensed deposit taker’s credit rating is downgraded, the deposit taker must give notice of the downgrade.
(2) The notice— (a) must be published on an Internet site maintained by, or on behalf of, the 10 deposit taker; and (b) must be published within 10 working days after the downgrade is given; and (c) may include any additional matter that the deposit taker considers is relevant to a proper understanding of the reasons for the downgrade.
15 (3) In this section, a deposit taker’s credit rating is downgraded if it is given a credit rating by an approved rating agency that is lower than its immediately preceding credit rating.

(4) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $20,000; or a fine imposed by a court not exceeding $50,000.
70 (1) (2) Bank may grant exemptions from credit rating requirements The Bank may, on the terms and conditions (if any) that it thinks fit, exempt any person or class of persons from compliance with section 59 (which relates to credit ratings).

The Bank’s reasons for granting an exemption (including why it is appropriate) must be published together with the exemption.

(3) An exemption granted under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
71 Restriction on Bank’s exemption power 20 25 30 The Bank must not grant an exemption from compliance with section 59 unless it is satisfied that— (a) (b) the exemption is not inconsistent with the purposes of this Act; and the costs of compliance with the provision would be unreasonable or not justified by the benefit of compliance; and 35 48 Deposit Takers Bill Part 3 cl 75 (c) the extent of the exemption is not broader than is reasonably necessary to address the matters that gave rise to the exemption.
Subpart 2—Standards 72 (1) (2) Bank may issue standards The Bank may, in accordance with this subpart, issue standards if the Bank is satisfied that the standards are necessary or desirable for 1 or more of the pur‐ poses of this Act.

5 Standards issued under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

73 Licensed deposit taker must comply with applicable standards 10 (1) A licensed deposit taker must comply with all applicable standards.
(2) See subpart 2 of Part 5, which provides for a court to impose a pecuniary penalty for a contravention of an applicable standard.

74 Application of standards (1) A standard may do either or both of the following: (a) (b) apply to all deposit takers, a particular deposit taker, or a class of deposit takers: apply in all circumstances, particular circumstances, or a class of cir‐ cumstances.

Example Different lending standards may apply to lending to customers in different geographical areas.
(2) A standard may provide for either or both of the following (see section 24(1)(a) and (b)): (a) the standard to apply to a deposit taker if a condition of its licence states that the standard applies: (b) a requirement of the standard to apply to a deposit taker if a condition of its licence states that the requirement applies.

Subsection (2) does not limit subsection (1).


If a matter referred to in any of sections 77 to 89 is specified as including certain specific matters, those specific matters do not limit the matter referred to.
15 20 25 30 Procedural matters Procedure for issuing standards Before issuing a standard (the proposed standard), the Bank must— 35 49 (3) (4) 75 (1) Part 3 cl 76 Deposit Takers Bill (a) (b) (c) notify the Minister of the prudential policy that the Bank intends to implement through the proposed standard; and consult the other members of the Council of Financial Regulators; and consult the persons, or representatives of the persons, that the Bank con‐ siders will be substantially affected by the issue of the proposed stand‐ ard.
5 (2) A failure to comply with this section does not affect the validity of any stand‐ ard.

76 When procedural requirements do not apply (1) Section 75(1)(a) does not apply if— (a) the proposed standard will apply only to a particular deposit taker; or 10 (b) the Bank is satisfied that the prudential policy is of a minor or technical nature only.
(2) Section 75(1)(b) and (c) does not apply to a standard that amends another standard if the Bank is satisfied that the amendment— 15 (a) (b) is only correcting a minor error; or is otherwise of a minor or technical nature only.
Subject matter of standards 77 Governance, incorporation structure, and ownership A standard may regulate, deal with, or otherwise relate to 1 or more of the fol‐ lowing matters: 20 (a) the governance of a deposit taker, including— (i) (ii) (iii) group and organisational structure; and the composition, size, and structure of the governing body; and the responsibilities of the governing body, of committees of that body, and of its management: 25 (b) the remuneration of, and incentives available to, directors, senior manag‐ ers, and employees and for any compensation or other benefits payable to directors, senior managers, and employees who cease to hold office, including matters relating to— 30 (i) (ii) governance of remuneration and incentive practices; and alignment of those practices with prudent risk taking; and (iii) supervisory oversight and engagement by stakeholders: (c) the incorporation structure of a deposit taker, including matters relating to— 35 50 Deposit Takers Bill Part 3 cl 79 (i) a deposit taker’s constitution (including prohibiting or restricting provisions that may be included in a constitution or requiring a constitution to include specified provisions); and (ii) whether a deposit taker must be incorporated under New Zealand legislation: (d) the ownership structure of a deposit taker and its ownership.
78 Capital, liquidity, security interests, and credit ratings A standard may regulate, deal with, or otherwise relate to 1 or more of the fol‐ lowing matters: (a) (b) (c) capital, including matters relating to capital ratios, minimum capital, assessing capital adequacy, capital recognition, capital repayment, defin‐ ing categories of qualifying capital, and methods of calculating capital: liquidity, including matters relating to managing liquidity risk, contin‐ gency funding, defining categories of qualifying liquidity, and methods of calculating liquidity: security interests given over the property of the deposit taker, including 1 or more of the following: 5 10 15 (i) (ii) (iii) (iv) limits on the proportion of the deposit taker’s property that may be subject to a security interest: restrictions or prohibitions on the property to which a security interest may relate: 20 restrictions or prohibitions on who may be given a security inter‐ est over the deposit taker’s property: any other requirements relating to the terms and conditions of agreements that create or provide for a security interest: 25 (d) ratings of creditworthiness required to be held by a licensed deposit taker, including— (i) the type of rating (for example, whether it is a short-term or long- term rating); and (ii) what the rating must relate to (for example, whether it indicates the creditworthiness of a deposit taker with respect to a specific financial obligation or applies to the deposit taker’s overall credit‐ worthiness).
30 79 Bail-in standards (1) A standard may regulate, deal with, or otherwise relate to bail-in instruments (a 35 bail-in standard).
(2) A bail-in standard may (without limitation) do 1 or more of the following: 51 5 10 15 20 Part 3 cl 79 Deposit Takers Bill (a) (b) (c) (d) (e) require a licensed deposit taker (A) to issue, enter into, or be a party to 1 or more kinds of bail-in instruments: specify the terms and conditions that must be included in those bail-in instruments: specify the events or other circumstances in which the matters in sub- section (4)(a), (b), (c), or (d) occur: specify the manner in which those bail-in instruments must be offered, entered into, or arranged: provide for how much must be raised in connection with those bail-in instruments and how much must be owed in connection with those bail- in instruments.
(3) The events or circumstances under subsection (2)(c) may include either or both of the following: (a) (b) the Bank giving a direction under subpart 3 of Part 7: the Bank giving a notice to A.
(4) A bail-in instrument is a financial product or any other agreement the terms and conditions of which provide for 1 or more of the following: (a) (b) (c) (d) the financial product or any rights or interests in connection with the agreement to be converted into, or exchanged for, 1 or more equity securities (or some other financial product) of A or of a subsidiary of A: the reduction or cancellation of an amount owing under the financial product or agreement (in whole or in part): the extension of the time for payment of an amount owing under the financial product or agreement (in whole or in part): any other variation of the terms and conditions of the financial product or agreement.
25 Examples Convertible debt securities A bail-in standard requires a licensed deposit taker (A) to have at least $1 billion worth of convertible debt securities.

30 The standard requires the debt securities to be offered under particular terms and conditions.

Under those terms and conditions, the Bank may give a direction to A that triggers the conversion of those debt securities into ordinary shares in A.
Loan under which amount may be written off A bail-in standard requires a licensed deposit taker (B) to raise at least $1 billion through bail-in instruments.

B could borrow at least $1 billion from another com- pany, with the bail-in standard requiring the borrowing to be on certain terms and conditions.

Under those terms and conditions, a certain portion of the debt is writ- ten off if B enters into resolution or liquidation.
35 52 Deposit Takers Bill Part 3 cl 81 80 Fit and proper persons (1) A standard may regulate, deal with, or otherwise relate to matters to ensure that only a fit and proper person may be appointed to, and continue to hold, a pos‐ ition as a director or senior manager, including— (a) (b) (c) (d) (e) (f) specifying the matters that are relevant to the consideration of whether a person is a fit and proper person to be appointed to, and continue to hold, a position as a director or senior manager; and 5 specifying the information that must be provided to the Bank when seek‐ ing the Bank’s approval of the appointment of a director or senior man‐ ager; and specifying the contents of fit and proper certificates; and imposing requirements for establishing, implementing, maintaining, and complying with a policy for the purpose of ensuring that only fit and proper persons are appointed to, and continue to hold, positions as direc‐ tors or senior managers (a fit and proper policy); and imposing requirements for re-assessing whether a director or senior manager is a fit and proper person to continue to hold their position; and specifying, for the purposes of section 26(3)(a), terms and conditions in connection with a senior manager who is appointed on an interim basis (for example, a term or condition relating to the permitted period of appointment and requirements that must be complied with before the person is appointed).
(2) A standard for a fit and proper policy may (without limitation) require the pol‐ icy to do 1 or more of the following: (a) (b) (c) specify the qualifications, requirements, and other criteria for a particu‐ lar position, including matters relating to a person’s character, compe‐ tence, and experience relative to the duties of the position: contain provisions to encourage any person to disclose information to the deposit taker or the Bank that may be relevant to a fit and proper assessment: contain provisions for giving or obtaining any consents required for the collection and use of any information by— (i) (ii) the deposit taker to comply with the policy or subpart 4 of Part 2; and the Bank for the performance or exercise of its functions, powers, or duties in connection with the policy.
81 Lending and other exposures (1) A standard may regulate, deal with, or otherwise relate to 1 or more of the fol‐ lowing matters: 53 10 15 20 25 30 35 Part 3 cl 82 Deposit Takers Bill (a) (b) (c) loan concentration and risk exposures: a deposit taker’s business of lending money (a lending standard): exposures to related parties of a deposit taker, including any of the fol‐ lowing matters: (i) requiring transactions between a deposit taker and any related party to be entered into only on a particular basis (for example, on arm’s-length terms): 5 (ii) monitoring transactions between a deposit taker and any related party: (iii) managing risks arising from exposures to any related party: 10 (iv) writing-off exposures to any related party: (v) any other limits or restrictions on exposures to related parties.
(2) A lending standard may specify income-based criteria, asset-based criteria, or any other criteria that must be applied by a deposit taker (or non-deposit-taking lender) when determining whether a person qualifies for a loan or the provision of any other credit.

15 Examples of criteria The types of criteria that may be specified include debt-to-income ratios and loan- to-value ratios.

(3) A lending standard may impose reporting requirements in connection with the 20 other requirements of the standard.
(4) A standard may define related party for the purposes of subsection (1)(c).

(5) In this subpart, lending means providing credit under credit contracts (within the meaning of clause 1 of Schedule 2).

82 Classes of lending must be prescribed by regulations (1) A lending standard may relate only to the class or classes of lending that are prescribed by the regulations.
(2) The regulations may prescribe classes of lending by reference to the purpose of the lending, the nature of the lending, or any other circumstances in which the lending occurs.

25 30 83 Application of lending standards may extend to non-deposit-taking lenders (1) A lending standard may apply to a particular non-deposit-taking lender or class of non-deposit-taking lenders if the regulations authorise the Bank to issue a lending standard with that application.
(2) A non-deposit-taking lender to which a lending standard applies must comply with the standard (see subpart 2 of Part 5, which provides for a court to impose a pecuniary penalty for a contravention of an applicable standard).
35 54 Deposit Takers Bill Part 3 cl 85 84 Risk management, business continuity planning, and problem assets A standard may regulate, deal with, or otherwise relate to 1 or more of the fol‐ lowing matters: (a) the management by a deposit taker of 1 or more of the following risks (including policies and processes to identify, measure, evaluate, monitor, report on, control, and mitigate those risks): 5 (i) (ii) (iii) (iv) (v) operational risk: credit risk: liquidity risk: interest rate risk: concentration risk: (vi) market risk: (vii) model risk (for example, the risk that a model for calculating cap‐ ital will not perform adequately): (viii) cybersecurity risk: (b) policies and processes for— 10 15 (i) (ii) business continuity planning: the early identification and management of problem assets (including the classification and valuation of those assets); and (iii) maintaining adequate provisions and reserves in connection with 20 problem assets.
85 Depositor compensation A standard may regulate, deal with, or otherwise relate to any 1 or more of the following matters in connection with the depositor compensation scheme: (a) making available to the Bank the information that the Bank considers is necessary or desirable for the performance or exercise of its functions, powers, or duties under Part 6 (including information about the size and composition of protected deposits and information about investors to determine actual or potential entitlements to compensation under that Part): (b) (c) gathering the information referred to in paragraph (a): facilitating the Bank’s ability to provide entitlements to compensation to, or on account of, eligible investors under Part 6 as soon as practicable after a specified event notice is issued (for example, to enable the Bank to quickly and accurately identify eligible investors and protected depos‐ its in connection with that notice).
25 30 35 55 Part 3 cl 86 Deposit Takers Bill 86 Covered bonds and securitisation A standard may regulate, deal with, or otherwise relate to any 1 or more of the following in connection with covered bonds or other securitisation arrange‐ ments: (a) (b) (c) (d) (e) (f) information that must be provided to the Bank for the purposes of sub- part 10 of Part 7: requirements in relation to covered bonds for the purposes of section 408(2)(g): limits on the proportion of property that may be beneficially owned by a person (for example, a special purpose vehicle) that grants, or may grant, a security interest in its property for the benefit of a holder of a covered bond: 5 10 restrictions or prohibitions on the property to which a covered bond or any other securitisation arrangement may relate: restrictions or prohibitions on who may be a party to a covered bond or other securitisation arrangement: 15 any other requirements relating to the terms and conditions of covered bonds or other securitisation arrangements.
87 Disclosure of information (1) A standard may regulate, deal with, or otherwise relate to the disclosure of information to the Bank or the public, or both (a disclosure standard).
20 (2) A disclosure standard may (without limitation)— (a) (b) (c) provide for when and how a disclosure document must be published, provided, or otherwise made available; and provide to whom the disclosure document must be published, provided, or otherwise made available (for example, the Bank, the public, or a par‐ ticular class of the public); and prescribe the information that must, or must not, be disclosed in the dis‐ closure document, including requiring the disclosure of information about any of the following in connection with a licensed deposit taker or licensed deposit taker group: (i) (ii) (iii) (iv) (v) governance and other corporate matters: financial matters (for example, the deposit taker’s financial condi‐ tion and performance): risk exposure and risk management: prudential matters: any other matters relating to the business, operation, and manage‐ ment of the deposit taker or licensed deposit taker group; and 25 30 35 56 (3) 88 Deposit Takers Bill Part 3 cl 88 (d) (e) (f) prohibit or restrict the use in a disclosure document of prescribed words, information, sounds, images, graphics, or other matters; and prescribe requirements for preparing and presenting financial informa‐ tion; and prescribe requirements as to the layout or method of presentation of dis‐ closure documents (including the length of a disclosure document and of the parts of a disclosure document, the size of type used, and when infor‐ mation may be incorporated by reference); and 5 (g) prescribe the documents that must, or must not, accompany a disclosure document.
10 In this section, disclosure document means the document or other information that must be published, provided, or otherwise made available under a disclos‐ ure standard.
Contingency and recovery plans and facilitating resolution under Part 7 Contingency and recovery plans (1) A standard may regulate, deal with, or otherwise relate to contingency and recovery plans, including 1 or more of the following matters: (a) (b) (c) (d) (e) (f) (g) the purposes for which a deposit taker must have those plans (for example, to ensure that a deposit taker is reasonably prepared in the event of a resolution under subparts 4 to 8 of Part 7): the contents of those plans, for example, the scenarios the plans must cover and the strategies and methods that must be included in the plans for dealing with those scenarios: the persons responsible for maintaining, activating, or implementing those plans: 25 the notifying of the Bank of the activation of those plans: the arrangements for activating and implementing those plans (for example, obtaining necessary human, technological, financial, and other resources): the reviewing, updating, or testing of those plans: the changing of those plans (including when the Bank requires a change to be made).
Facilitating resolution under Part 7 (including pre-positioning requirements) (2) A standard may regulate, deal with, or otherwise relate to any matters to ensure that, in the event of a resolution under subparts 4 to 8 of Part 7, the reso‐ lution can be carried out in an orderly manner and otherwise in accordance with the purposes set out in section 256, including requirements in connec‐ tion with the following: 57 15 20 30 35 Part 3 cl 89 Deposit Takers Bill (a) (b) (c) the deposit taker having appropriate capacity and capability to help ensure that any financial distress or other difficulties that may occur are dealt with in an orderly manner (for example, having appropriate policies, processes, controls, or other arrangements in place): an implementation plan in connection with the matters referred to in paragraph (a): a regular process to test the matters referred to in paragraph (a).
5 Examples Mechanisms to support customers’ access A standard may require a bank (A) to have mechanisms in place ahead of a bank failure for the purpose of ensuring that A’s customers have some continued access to liquidity and banking services (in particular, mechanisms to enable customers to quickly access their transactional account to a certain extent after A enters reso- lution).
Mechanisms to support separability A’s business has 3 main parts: residential property lending, rural lending, and other business lending.

A standard may require A to arrange its operations to enable those parts to be effi- ciently restructured or separated out if A enters resolution.

See the example in section 316, which shows how the Bank’s disposal power in a resolution may be exercised to separate out those parts.
89 Other matters (1) A standard may regulate, deal with, or otherwise relate to 1 or more of the fol‐ lowing matters: Outsourcing (a) arrangements for any business, or functions relating to any business, of a deposit taker to be carried on by any person other than the deposit taker: Significant transactions (b) when a transaction is a significant transaction in respect of which appro‐ val is required under subpart 5 of Part 2 and when a part of a business is material for the purposes of section 41: Restrictions or prohibitions on activities (c) restrictions or prohibitions on either or both of the following: 10 15 20 25 30 (i) (ii) the activities that a deposit taker may carry out other than in their capacity as a deposit taker: 35 the activities that a deposit taker (other than an overseas person) may carry out outside New Zealand: Internal controls and internal assurance function (d) internal controls and assurance, including— 58 Deposit Takers Bill Part 3 cl 90 (i) (ii) (iii) internal controls in connection with organisational structure, accounting systems, checks and balances, and safeguarding prop‐ erty; and the review and assessment of the adequacy and effectiveness of internal controls; and 5 the performance of an independent and effective internal assur‐ ance function: Matters prescribed in regulations (e) any other matters that may be prescribed in the regulations.
(2) In this section, internal assurance function includes— 10 (a) (b) assessing policies, processes, and internal controls; and providing assurance that policies and processes are being complied with.

Bank’s approval may be required 90 Standards may require Bank’s approval (1) A standard may impose a requirement for the Bank’s approval in connection 15 with a matter referred to in any of sections 77 to 89.
Examples Standard relating to capital A standard may require the Bank’s approval relating to capital recognition, capital repayment, and methodologies for calculating capital adequacy.

20 Standard relating to overseas activities A standard may require a deposit taker to obtain the Bank’s approval before estab- lishing an overseas branch or subsidiary.
(2) If a standard provides for the Bank’s approval,— (a) the standard must set out an appropriate manner in which the Bank must decide whether to give its approval and any conditions of the approval (for example, by specifying the matters that the Bank must have regard to, or be satisfied of, when deciding those matters); and 25 (b) a request for approval must be made in the manner specified by the Bank.
30 (3) A contravention of a condition of the Bank’s approval must be treated as being a contravention of the standard that imposed the requirement for the Bank’s approval.

Guidance note See subpart 2 of Part 5, which allows the court to impose a pecuniary penalty for a contravention of a standard (which includes a contravention of a condition of the Bank’s approval).
35 59 Part 3 cl 91 Deposit Takers Bill Conditions 91 (1) Standards may provide for matters to be specified by conditions The purpose of this section is to provide the flexibility to allow the require‐ ments or other matters in standards to be set in a manner that takes into account the circumstances of particular deposit takers.
5 (2) A standard may provide for a requirement or other matter to be specified by a condition of a licence if the Bank, after having regard to the considerations under subsection (3), is satisfied as referred to in subsection (4).

Example A standard specifies a range of quantitative capital requirements and provides for the requirements that apply to a particular deposit taker to be set within that range in the conditions of the deposit taker’s licence.
(3) The Bank must have regard to— (a) the purpose of this section; and (b) whether the requirement or other matter would be more appropriately dealt with in standards only (rather than being specified by a condition of a licence).
(4) The Bank must be satisfied that the standard— 10 15 (a) (b) sets an appropriate range or limit within which the requirement or matter may be specified by the condition; or 20 sets out an appropriate manner for the Bank to decide on the terms of the condition (for example, by specifying the matters that the Bank must have regard to, or be satisfied of, when deciding what condition is to apply).
Subpart 3—Directors’ due diligence duty 25 92 (1) (2) Duty of directors of licensed deposit takers Every director of a licensed deposit taker must exercise due diligence to ensure that the deposit taker complies with its prudential obligations.
For the purposes of this section, the director must exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances, taking into account (without limitation)— 30 (a) (b) the size and nature of the business of the deposit taker; and the position of the director and the nature of the responsibilities under‐ taken by the director.

(3) See subpart 2 of Part 5, which provides for a court to impose a pecuniary penalty for a contravention of the duty under this section.
35 Compare: Compare: 2015 No 70 s 44 60 Deposit Takers Bill Part 3 cl 95 93 Meaning of due diligence In this subpart, due diligence includes taking reasonable steps to ensure that the deposit taker— (a) (b) requires its employees and agents to follow procedures, or has imple‐ mented automated procedures, that are designed to ensure compliance with the prudential obligations; and 5 has in place methods for systematically identifying deficiencies in the effectiveness of the procedures for compliance; and (c) promptly remedies any deficiencies discovered.
94 Prohibition on indemnities or insurance (1) A licensed deposit taker, or an associated person, must not indemnify, or directly or indirectly effect insurance for, a director of the deposit taker in respect of— (a) (b) liability for any breach of section 92; or costs incurred by the director in defending or settling any claim or pro‐ ceeding relating to that liability.

(2) An indemnity given in breach of this section is void.

(3) (4) This section is subject to sections 95 and 96.
In this section and sections 95 and 96,— director includes a former director effect insurance includes to pay, whether directly or indirectly, the costs of the insurance indemnify includes to relieve or excuse from liability, whether before or after the liability arises.
95 Permitted indemnities for certain liabilities or costs (1) A licensed deposit taker, or an associated person, may, if expressly authorised by its constitution, indemnify a director of the deposit taker for any costs incur‐ red by that person in defending or settling a proceeding that relates to liability of a kind referred to in section 94(1)(a) if— (a) judgment is given in the director’s favour; or (b) the proceeding is discontinued.
(2) A licensed deposit taker or an associated person may, if expressly authorised by its constitution, indemnify a director of the deposit taker in respect of— (a) (b) liability of a kind referred to in section 94(1)(a) (but not a liability that arises out of a failure to act in good faith when acting in the capacity as a director); or costs incurred by that director in defending or settling any claim or pro‐ ceeding relating to any such liability.
61 10 15 20 25 30 35 Part 3 cl 96 Deposit Takers Bill 96 Permitted insurance for certain liability or costs (1) A licensed deposit taker, or an associated person, may, if expressly authorised by its constitution and with the prior approval of its board of directors, effect insurance for a director of the deposit taker in respect of— (a) (b) liability of a kind referred to in section 94(1)(a); or costs incurred by that director in defending or settling any claim or pro‐ ceeding relating to that liability.
5 (2) The directors of the licensed deposit taker, or of an associated person, who vote in favour of authorising the insurance must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the deposit taker or associated person (as the case may be).
10 (3) The director who is insured is personally liable to the deposit taker or associ‐ ated person for the cost of effecting insurance if— (a) (b) subsection (2) has not been complied with in effecting the insurance; or 15 reasonable grounds did not exist for the opinion set out in the certificate given under subsection (2).

(4) However, subsection (3) does not apply to the extent that the insurance was fair to the deposit taker or associated person at the time the insurance was effected.
20 97 Details of indemnity or insurance must be entered in interests register The board of a licensed deposit taker or an associated person must ensure that details of any indemnity given to, or insurance effected for, any director under section 95 or 96 are promptly entered in an interests register.
Part 4 Supervision of deposit takers Bank to undertake prudential supervision 25 98 Prudential supervision The Bank must in accordance with this Part undertake prudential supervision of licensed deposit takers.
30 Subpart 1—Bank’s information-gathering power Bank may require person to supply information for purposes of Act If the Bank considers it necessary or desirable for the purposes of performing or exercising its functions, powers, or duties under this Act, the Bank may, by notice to any person, require the person to do 1 or more of the following: 35 99 (1) 62 Deposit Takers Bill Part 4 cl 101 (a) (b) (c) give to the Bank any information, or class of information, that is speci‐ fied in the notice: produce for inspection any documents, or class of documents, that are specified in the notice: if necessary, reproduce, or assist in reproducing, in usable form, infor‐ mation recorded or stored in those documents.
5 (2) The information required under subsection (1)(a) must be given— (a) for the periods, and in the form (including consolidated form), that may be specified in the notice; and (b) in respect of the business, operation, or management of a person who is or may be any of the following: 10 (i) (ii) a deposit taker or any other financial service provider: an associated person of a deposit taker; and (c) in respect of business carried on in New Zealand or elsewhere and whether as principal, broker, agent, or intermediary; and 15 (d) within the period, and otherwise in the manner, that is specified in the notice.
(3) (4) (5) The person must comply with subsection (1)(b) and (c) within the period, and otherwise in the manner, that is specified in the notice.

The Bank may take copies of any documents produced for inspection under subsection (1).

For the purposes of this Act, a reference to matters relating to the business, operation, or management of a person includes the corporate, financial, or prudential matters of the person.
100 Offence to fail to supply information (1) A person commits an offence if they refuse or fail, without reasonable excuse, to comply with a notice under section 99.

(2) A person who commits an offence against subsection (1) is liable on convic‐ tion to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
20 25 30 101 Bank may require report relating to licensed deposit taker or associated person (1) The Bank may, by notice to a licensed deposit taker, require the deposit taker to give the Bank a report or series of reports on any matters relating to the busi‐ ness, operation, or management of either or both of the following: 35 (a) (b) the deposit taker: any associated person of the deposit taker.
63 Part 4 cl 102 Deposit Takers Bill (2) (3) (4) The report or series of reports must be prepared by a person approved by the Bank.

The notice must contain a statement of the reasons why the Bank wants the report or series of reports to be given.

The licensed deposit taker must comply with the notice within the period, and otherwise in the manner, that is specified in the notice.
5 102 Associated person must supply information An associated person of the licensed deposit taker must, if required to do so by the deposit taker, supply information relating to the person in order to enable the deposit taker to comply with a notice under section 101.

10 103 Bank may require report to be published (1) (2) (3) The Bank may, by notice to a licensed deposit taker, require the deposit taker to publish a report or series of reports under section 101 (whether in whole or in part).
The notice must contain a statement of the reasons why the Bank wants the report or series of reports to be published.

15 The licensed deposit taker must comply with the notice within the period, and otherwise in the manner, that is specified in the notice.
104 Offence to fail to give or publish report A licensed deposit taker or an associated person that, without reasonable excuse, contravenes a requirement under any of sections 101 to 103 com‐ mits an offence and is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
105 Requirement that information be audited or reviewed (1) The Bank may, by notice, require a licensed deposit taker or other person to obtain an audit or a review of any information that the deposit taker or other person is required to give to the Bank under— (a) (b) (c) this subpart; or an applicable standard or a condition; or any other prudential obligation.

20 25 30 The audit or review must be carried out by an auditor, or other person, approved by the Bank.
The licensed deposit taker or other person must comply with the notice within the period, and otherwise in the manner, that is specified in the notice.
35 (2) (3) 64 Deposit Takers Bill Part 4 cl 109 106 Offence to fail to obtain audit or review A licensed deposit taker or other person that, without reasonable excuse, contravenes a requirement under section 105 commits an offence and is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
107 Disclosure of information to Bank by auditors (1) This section and sections 108 to 110 apply to a person (an auditor) who holds, or at any time has held, office as required by any legislation, as an audi‐ tor of a licensed deposit taker or of an associated person of a licensed deposit taker.
(2) An auditor must disclose to the Bank information relating to the affairs of the licensed deposit taker or associated person obtained in the course of holding office as auditor if, in the opinion of the auditor,— (a) the licensed deposit taker or associated person— (i) (ii) (iii) (iv) (v) has contravened a prudential obligation; or has contravened section 455 of the FMCA or any other legislation that requires proper accounting records to be kept; or has contravened subpart 3 of Part 7 of the FMCA or any other legislation that relates to the preparation, audit, lodgement, or fil‐ ing of financial statements; or is in serious financial difficulties; or is, or has been, operating fraudulently or recklessly; and (b) the disclosure of the information is likely to assist, or be relevant to, the performance or exercise by the Bank of its functions, powers, or duties under this Act.
108 Auditor to inform of intention to disclose An auditor must, before disclosing any information to the Bank under section 107, take reasonable steps to inform the licensed deposit taker or associated person of the intention to disclose the information and the nature of the infor‐ mation.

109 Protection of auditor (1) No civil, criminal, or disciplinary proceedings lie against an auditor arising from the disclosure in good faith of information to the Bank under section 107.
(2) No tribunal, body, or authority having jurisdiction in respect of the professional conduct of an auditor may make any order against, or do any act in relation to, the auditor in respect of the disclosure referred to in subsection (1).

5 10 15 20 25 30 35 65 Part 4 cl 110 Deposit Takers Bill 110 Admissibility of information (1) No information received by the Bank under section 107 is admissible in evi‐ dence in any proceedings against the auditor concerned.
(2) This section does not limit the admissibility of any information obtained in any other way.
5 Subpart 2—On-site inspection 111 Purpose The purpose of this subpart is to facilitate the Bank’s ability to undertake pru‐ dential supervision of licensed deposit takers by doing 1 or more of the follow‐ ing: 10 (a) (b) (c) (d) assessing the adequacy of a licensed deposit taker’s policies, processes, controls, or other arrangements for complying with its prudential obliga‐ tions: verifying a licensed deposit taker’s compliance with its prudential obli‐ gations: 15 verifying the reliability of information supplied to the Bank by a licensed deposit taker under this Act: examining any matter relating to the business, operation, or management of a licensed deposit taker in order to understand and identify risks in connection with those matters: (e) monitoring a licensed deposit taker’s compliance with a remedial notice (f) (g) (h) or plan under subpart 4: examining the financial position or performance or cash flows of a licensed deposit taker: carrying out a review of all, or 1 or more classes of, licensed deposit tak‐ ers, in connection with 1 or more matters of prudential supervision (for example, a review of governance throughout the deposit-taking sector): doing any other thing that is incidental and related to, or consequential on, any thing that the Bank does under paragraphs (a) to (g).
112 Bank may conduct on-site inspection The Bank may enter and remain at any relevant place to carry out an on-site inspection of a licensed deposit taker if the Bank considers it necessary or desirable for the purposes of doing 1 or more of the things referred to in sec- tion 111.

The Bank— (a) may exercise the power only at a reasonable time and in a reasonable manner; but (b) is not required to give notice of the exercise of the power.
(1) (2) 66 20 25 30 35 Deposit Takers Bill Part 4 cl 116 (3) In this subpart, relevant place, in relation to a licensed deposit taker, means any place of business of the deposit taker.
113 Person may be required to answer questions or give information During an on-site inspection, the Bank may require any employee, director, or agent of the licensed deposit taker to— 5 (a) (b) answer questions relating to its records and documents; and give all other information that the Bank may reasonably require for the purpose of the inspection.
114 Offence relating to on-site inspection (1) An employee, a director, or an agent of the licensed deposit taker commits an 10 offence if they, without reasonable excuse,— (a) (b) refuse or fail to comply with a requirement under section 113 to answer any questions or give information; or resist, obstruct, or delay the Bank in carrying out an on-site inspection under this subpart.
15 (2) A person who commits an offence against subsection (1) is liable on convic‐ tion to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.

Subpart 3—Reporting duty 115 Licensed deposit taker must monitor compliance Every licensed deposit taker must ensure that there are in place effective methods for monitoring the licensed deposit taker’s compliance with the pru‐ dential obligations.
116 Licensed deposit taker must report contraventions 20 25 (1) (2) This section applies if a licensed deposit taker believes that it has contravened, may have contravened, or is likely to contravene a prudential obligation in a material respect.
The licensed deposit taker must, as soon as practicable after it forms the belief, give the Bank a report containing— 30 (a) (b) (c) details of the belief; and the licensed deposit taker’s grounds for the belief; and all other information prescribed by the regulations (if any).
67 Part 4 cl 117 Deposit Takers Bill 117 Offence to fail to monitor compliance and report contraventions A licensed deposit taker that, without reasonable excuse, contravenes section 115 or 116 commits an offence and is liable on conviction to a fine not exceeding $500,000.
118 Restriction on use of report 5 A report given by a licensed deposit taker under this subpart is not admissible as evidence in a civil or criminal proceeding against the deposit taker, except in a criminal proceeding that concerns the falsity of the report.
Subpart 4—Remedial notices and plans 119 Bank may require licensed deposit taker to take action in relation to 10 contravention (1) This section applies if— (a) (b) a licensed deposit taker has given the Bank a notice under subpart 3; or the Bank otherwise has reasonable grounds to believe that a licensed deposit taker has contravened, may have contravened, or is likely to contravene a prudential obligation.
15 (2) The Bank may, by notice (a remedial notice), require the deposit taker— (a) to take specified actions within a specified period— (i) to address the cause, or to remedy or mitigate the consequences, of the contravention; or 20 (ii) to ensure that the contravention does not occur or recur; or (b) to give to the Bank a plan (a remedial plan).
(3) The remedial plan must set out the following: (a) actions that the deposit taker will take— (i) to address the cause, or to remedy or mitigate the consequences, of the contravention; or 25 (ii) to ensure that the contravention does not occur or recur: an appropriate timetable for taking the proposed actions to ensure that they are taken as soon as practicable: steps that the deposit taker will take to keep the plan current: 30 any other matters required by the remedial notice.
(b) (c) (d) (4) The deposit taker must comply with a remedial notice in the manner specified in the notice.

120 Bank’s consideration of remedial plan (1) If a licensed deposit taker gives a remedial plan to the Bank, the Bank may— 35 68 Deposit Takers Bill Part 4 cl 126 (a) (b) approve the remedial plan; or require the deposit taker to amend the remedial plan and resubmit it to the Bank by a specified date for approval or rejection; or (c) reject the remedial plan.
(2) Nothing in this section limits the Bank’s power to issue a further remedial 5 notice under section 119(2)(a).

121 Bank may require amendment of remedial plan (1) (2) The Bank may at any time require the deposit taker to amend a remedial plan that has been approved by the Bank.
If the Bank acts under subsection (1) or section 120(1)(b), the licensed deposit taker must, within the period and otherwise in the manner specified by the Bank, give to the Bank an amended remedial plan that addresses the matter required to be amended.

10 122 Remedial plan may also be amended with Bank’s approval (1) A licensed deposit taker may also, at any time, amend a remedial plan that has 15 been approved by the Bank, but only with the Bank’s approval.

(2) This section does not limit section 121.


123 Licensed deposit taker must comply with remedial plan If the Bank approves a remedial plan (whether as first provided or after amend‐ ment), the licensed deposit taker must take all reasonable steps to comply with the remedial plan.

20 124 Other provisions relating to remedial notices and plans (1) Neither a remedial notice nor a remedial plan may require the licensed deposit taker to pay compensation.
(2) A remedial notice must set out the reasons for which it is given.

125 Offence to contravene remedial notice, fail to give amended remedial plan, or fail to take steps to comply with remedial plan A licensed deposit taker that intentionally or recklessly contravenes section 119, 121, or 123 commits an offence and is liable on conviction to a fine not exceeding $2,500,000.
25 30 Subpart 5—Investigations 126 Bank may appoint investigator (1) This section applies if the Bank has reasonable cause to suspect that 1 or more of the following apply: 69 Part 4 cl 127 Deposit Takers Bill (a) (b) (c) a deposit taker or other person has failed to comply with subpart 1 of Part 2 (requirements to be licensed and not to hold out): a licensed deposit taker or other person has contravened, is contravening, or is likely to contravene a prudential obligation: a licensed deposit taker has been or is operating fraudulently or reck‐ lessly.
5 (2) (3) (4) If the Bank considers it necessary or desirable for the purposes of performing or exercising its functions, powers, or duties under this Act, the Bank may appoint, in writing, a person (an investigator) to carry out an investigation of the affairs of a person referred to in subsection (1).

The investigator must be an employee of the Bank or any other person who the Bank is satisfied is suitably qualified.
This subpart does not limit the Bank’s information-gathering powers under subpart 1 of this Part.
127 Power to obtain information 10 15 (1) An investigator may, for the purposes of carrying out an investigation of the affairs of a person (A) referred to in section 126(1), do 1 or more of the fol‐ lowing: (a) by notice, require A, or any director or employee of A, or any other per‐ son, to— 20 (i) (ii) give any information, or class of information, relating to the busi‐ ness, operation, or management of A; or produce for inspection any documents, or class of documents, of or relating to the business, operation, or management of A that are in the custody or under the control of A or the director, employee, or other person; or (iii) if necessary, reproduce, or assist in reproducing, in usable form, any information recorded or stored in those documents: (b) (c) take copies of any documents produced for inspection under paragraph (a): require any director or employee of A, or any other person, to answer any question relating to the business, operation, or management of A.
(2) Any questioning under subsection (1)(c) may be carried out by the investiga‐ tor, or a lawyer acting on behalf of the investigator, who may require the per‐ son who is subject to the questioning to take an oath or make an affirmation.

(3) An investigator who exercises any powers under this section must, if requested, produce the instrument of the investigator’s appointment.
25 30 35 70 Deposit Takers Bill Part 4 cl 130 128 Power to enter and search place (1) An investigator may, for the purposes of carrying out an investigation of the affairs of a person (A) referred to in section 126(1), enter and search any place if— (a) (b) the occupier of the place consents; or the investigator obtains a warrant under this section.
(2) An issuing officer (within the meaning of section 3 of the Search and Surveil‐ lance Act 2012) who, on an application made by an investigator in the manner provided in subpart 3 of Part 4 of that Act, is satisfied that there are reasonable grounds for believing that 1 or more of the following apply may issue a warrant to the investigator: (a) (b) A has contravened, is contravening, or is likely to contravene a pruden‐ tial obligation: it is necessary or desirable for the purpose of determining whether to exercise any powers conferred on the Bank under this Act that an inves‐ tigation of the affairs of A should be carried out.
(3) The provisions of Part 4 of the Search and Surveillance Act 2012 (except for sections 118 and 119) apply.
129 Offences in relation to investigations (1) A person commits an offence if they, without reasonable excuse,— (a) (b) (c) hinder, obstruct, or delay an investigator in carrying out an investigation under this subpart; or contravene a requirement of a notice given under section 127; or refuse to answer any question put to them under section 127 or to take an oath or make an affirmation when required to do so under that sec‐ tion.
(2) A person who commits an offence against this section is liable on convic‐ tion,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: in any other case, to a fine not exceeding $2,500,000.
Subpart 6—Confidentiality orders 130 Bank may make confidentiality order (1) The Bank may make an order prohibiting the publication or communication of any information— (a) that discloses, or is reasonably likely to disclose, the exercise of a power under this Act; or 35 71 Part 4 cl 131 Deposit Takers Bill (b) that is provided or obtained in connection with any inquiry, investiga‐ tion, or other proceeding of the Bank under this Act.
The Bank may make the order on its own initiative or on the application of any person.

The Bank may make the order on the terms and conditions (if any) that it thinks fit.

5 The prohibition in the order has effect for the period specified in the order (which must not exceed 3 years).

(2) (3) (4) (5) At the end of the period specified in the order, the Official Information Act 1982 and the Privacy Act 2020 apply to any information that was the subject of the order.
10 (6) An order made under this section is subject to any other legislation or an order of the court.

131 Disclosure with Bank’s consent (1) A confidentiality order does not prohibit the disclosure of any information by a 15 (2) (3) person if the disclosure is with the Bank’s consent.

The Bank’s consent must not be unreasonably withheld.
It is reasonable for the Bank to withhold its consent if it considers that the dis‐ closure of the information would be likely to— (a) (b) (c) prejudice the maintenance of the law, including the prevention, investi‐ gation, and detection of contraventions of any prudential obligations; or 20 unreasonably prejudice the commercial position of a deposit taker; or be inconsistent with the purposes of this Act.
(4) Subsection (3) does not limit the circumstances in which it may be reason‐ able for the Bank to withhold its consent.

25 132 Offence to contravene confidentiality order (1) A person commits an offence if they— (a) (b) publish or communicate information in contravention of a confidentiality order; and know that, or are reckless as to whether, publishing or communicating the information contravenes a confidentiality order.
30 (2) A person who commits an offence against this section is liable on convic‐ tion,— (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): 35 (b) in any other case, to a fine not exceeding $2,500,000.
72 (a) (b) (c) Deposit Takers Bill Part 4 cl 134 Subpart 7—Power to require warning to be disclosed 133 Bank may require its warning to be disclosed (1) This section applies if— (a) the Bank has reasonable cause to suspect that 1 or more of the following apply: 5 (i) (ii) a licensed deposit taker or other person has contravened, is contra‐ vening, or is likely to contravene a prudential obligation: a licensed deposit taker has been or is operating fraudulently or recklessly; and (b) the Bank has issued a warning to the licensed deposit taker or other per‐ son (A) about the matter referred to in paragraph (a).
10 (2) The Bank may, by notice given to A, order A, or all or any associated persons of A, or both to do 1 or more of the following: prominently disclose a copy of the warning on 1 or more Internet sites maintained by or on behalf of A or any of those associated persons: 15 ensure that every communication of the kind that is specified in the order and that is distributed by or on behalf of A or any of those associated persons contains a copy of the warning in a prominent position or is accompanied by a copy of the warning: ensure that any document of the kind that is specified in the order and that is required by any relevant legislation to be given by A, or any of those associated persons, to another person contains, or is amended to contain, a copy of the warning in a prominent position or is accompanied by a copy of the warning.
20 25 (3) In this section, relevant legislation means any of the following: (a) (b) (c) prudential legislation: financial markets legislation within the meaning of section 4 of the Financial Markets Authority Act 2011: the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and any regulations made under that Act.
30 134 Procedural matters relating to order The Bank may make an order under this subpart only if— (a) the Bank gives A at least 3 working days’ notice of the following mat‐ ters before the Bank exercises the power: (i) (ii) that the Bank may make an order; and 35 the reasons why it is considering exercising that power; and (b) the Bank gives A or A’s representative an opportunity to make written submissions and to be heard on the matter within that notice period.
73 Part 4 cl 135 Deposit Takers Bill 135 Other provisions relating to order (1) The Bank may make an order under this subpart on the terms and conditions (if any) that it thinks fit.
(2) If the order extends to associated persons of A, the order may require— (a) all, or any specified class or classes, of the associated persons to comply with the order (including associated persons that may be incorporated or formed after the date of the order); and 5 (b) A to provide a copy of the order to all or any of those associated persons.

(3) For the purpose of subsection (2), the order is not required to refer to the associated persons by name.
10 136 Bank must give notice of orders If the Bank makes an order under this subpart,— (a) it must, immediately after exercising the power, give notice on the Bank’s Internet site of— (i) (ii) (iii) the reasons for making the order; and the terms and conditions of the order (if any); and any other information the Bank thinks relevant in the circum‐ stances; and (b) (c) it may give public notice by any other means of the matters in para- graph (a); and it may notify any other person of the matters in paragraph (a).
137 Offence to fail to comply with order (1) A person to whom an order under this subpart applies commits an offence if the person refuses or fails, without reasonable excuse, to comply with the order.

(2) If an order under this subpart applies to an associated person of a licensed deposit taker, the associated person commits an offence if the associated person refuses or fails, without reasonable excuse, to comply with the order.
(3) A person who commits an offence against this section is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
15 20 25 30 74 Deposit Takers Bill Part 4 cl 142 Subpart 8—Access to information by overseas supervisor 138 Access to information by overseas supervisor (1) For the purpose of an overseas supervisor’s performance or exercise of its supervisory functions, powers, or duties, the Bank may authorise the overseas supervisor to do either or both of the following: 5 (a) (b) conduct an on-site inspection of a licensed deposit taker: require any licensed deposit taker to give to the overseas supervisor any information relating to that person.
(2) An authorisation may be— (a) (b) granted for the period or periods that the Bank thinks fit; and 10 varied, revoked, or amended by the Bank.

(3) This subpart has effect despite anything to the contrary in any other legislation or rule of law.

139 Bank must give notice of authorisation The Bank must give notice to a licensed deposit taker if the Bank— 15 (a) (b) grants an authorisation in relation to that person; or varies, revokes, or amends that authorisation.
140 Authorisation may relate to particular customer or client The information that an overseas supervisor may be authorised to obtain under this subpart may include, without limitation, information about the affairs of a particular customer or client of the licensed deposit taker.

141 Restriction on authorisation The Bank may grant an authorisation only if it is satisfied that sufficient provi‐ sion exists to protect the confidentiality of the information obtained or required by the overseas supervisor.
20 25 142 Duties of licensed deposit taker A licensed deposit taker that is given a notice under section 139 must comply with the notice by, as the case may be,— (a) (b) permitting the overseas supervisor to conduct an on-site inspection of the deposit taker; or 30 giving the overseas supervisor the required information within the period, and in the manner, specified in the notice.
75 Part 4 cl 143 Deposit Takers Bill 143 Offence to contravene duties A licensed deposit taker that, without reasonable excuse, contravenes section 142 commits an offence and is liable on conviction to a fine not exceeding $500,000.
Subpart 9—Miscellaneous 144 Privilege against self-incrimination no excuse A person is not excused from answering any question, giving any information, reproducing or assisting in reproducing any information, or producing any document under this Part on the ground that to do so would or might incrimin‐ ate or tend to incriminate that person.
Compare: 1989 No 157 s 175A 145 Admissibility of self-incriminating statements (1) A self-incriminating statement made orally by a person (whether or not the statement is recorded in writing) in the course of answering any question, giv‐ ing any information, reproducing or assisting in reproducing any information, or producing any document under this Part may be used in evidence against that person only in a prosecution for any offence where the person gives evi‐ dence inconsistent with the statement.
(2) Despite subsection (1), any statement made in relation to— (a) (b) a refusal or failure to answer any question, give any information, repro‐ duce or assist in reproducing any information, produce any document, or comply with any other requirement may be used in evidence against that person in a prosecution for any offence under this Act arising from the refusal or failure: the answering of any question in a way that is false or misleading in a material particular, or the giving of any information, the reproduction or assistance in reproduction of any information, or the production of any document that is false or misleading in a material particular, may be used in evidence against that person in a prosecution for any offence under this Act arising from that act.
Compare: 1989 No 157 s 175B 146 Effect of final decision that exercise of powers under section 99 or 127 unlawful In any case where it is declared in a final decision given in a proceeding in respect of the exercise or purported exercise of powers conferred by a relevant section that the exercise of any powers conferred by that section is unlawful, to the extent to which the exercise of those powers is declared unlawful,— (a) the Bank or investigator must ensure that, as soon as is reasonably prac‐ ticable after the decision of the court is given,— (1) 76 Deposit Takers Bill Part 5 cl 149 (i) (ii) any information supplied by a person under the relevant section is destroyed: any documents or extracts from documents obtained as a conse‐ quence of an inspection made under the relevant section are returned to the person who previously had possession of those documents or previously had them under their control, and any copies of those documents or extracts are destroyed: (iii) any information derived from or based upon any such information or documents or extracts is destroyed: (b) no information supplied by a person under, or purportedly under, a rele‐ vant section, and no documents or extracts from documents obtained under, or purportedly under, a relevant section,— (i) are admissible in evidence in any proceedings: (ii) may be used in connection with the exercise of any power con‐ ferred by the Bank or an investigator.
(2) In this section, relevant section means section 99 or 127.

Part 5 Enforcement Subpart 1—Power to accept undertakings 147 Bank may accept voluntary undertaking The Bank may accept a written undertaking from a licensed deposit taker or other person about a matter in relation to which the Bank is performing or exer‐ cising any of its functions, powers, or duties under this Act.
148 When undertaking is enforceable An undertaking takes effect and becomes enforceable when the Bank’s deci‐ sion to accept the undertaking is given to the person who made the under‐ taking, or at any later time specified by the Bank.
149 What undertaking may include An undertaking may include (without limitation) an undertaking from the deposit taker or person to— 30 (a) (b) pay compensation to any person; or take specified action to address the cause, or to remedy or mitigate the consequences, of a contravention (or likely contravention) of a pruden‐ tial obligation, or to ensure that the contravention does not occur or recur; or 35 (c) pay an amount to the Bank in lieu of a pecuniary penalty.
77 Part 5 cl 150 Deposit Takers Bill 150 Undertakings that include payment of money If the undertaking includes the payment of an amount in lieu of a pecuniary penalty,— (a) (b) the amount must be paid into a Crown Bank Account (after deducting the Bank’s costs incurred in connection with the matter); and 5 the Bank must give notice of the payment on the Bank’s Internet site, including— (i) (ii) a statement of the amount to be paid; and a brief description of the alleged contravention to which the undertaking relates.
10 151 Offence to contravene undertaking (1) A person must not contravene an undertaking given by that person that is in force.

(2) A person that contravenes subsection (1) commits an offence and is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
152 Court may enforce undertaking (1) (2) The Bank may apply to the court for an order under this section if the Bank is satisfied that a person has contravened an undertaking given by that person that is in force.
The court may make an order directing the person to do 1 or more of the fol‐ lowing: (a) (b) comply with the undertaking: pay to the Crown an amount representing (wholly or partly) any finan‐ cial benefit that the person has received because of the contravention of the undertaking: (c) pay compensation to any person.

(3) The order may include consequential directions.
153 Court must take into account certain matters 15 20 25 30 The court must, before making the order, take into account the following: (a) (b) (c) the nature and extent of the contravention of the undertaking: the nature and extent of any loss or damage incurred by any person as a result of the contravention: the circumstances in which the contravention occurred (including whether it was intentional, inadvertent, or caused by negligence): 35 (d) any other matters the court considers relevant.
78 Deposit Takers Bill Part 5 cl 156 154 Proceedings for alleged contravention (1) No proceedings may be brought for a contravention or an alleged contravention of this Act or the regulations against— (a) (b) a person who made an undertaking in relation to that contravention or alleged contravention, while the undertaking is enforceable and there is no contravention of the undertaking: 5 a person who made, and has completely discharged, an undertaking in relation to that contravention or alleged contravention.
(2) (3) The Bank may accept an undertaking in relation to a contravention or an alleged contravention before proceedings in relation to that contravention or alleged contravention have been completed.

If the Bank accepts an undertaking before the proceedings are completed, the Bank must take all reasonable steps to have the proceedings discontinued as soon as practicable (to the extent that the proceedings relate to that contraven‐ tion or alleged contravention).
155 Licensed deposit taker or other person may withdraw or amend undertaking A licensed deposit taker or other person may withdraw or amend an under‐ taking only with the Bank’s consent.
Subpart 2—Pecuniary penalty Court may make pecuniary penalty order 10 15 20 156 When court may make pecuniary penalty orders (1) The court may, on the application of the Bank, order a person (A) to pay to the Crown the pecuniary penalty that the court determines to be appropriate if the court is satisfied that A has— 25 (a) (b) (c) (d) contravened an applicable standard; or been involved in a contravention of an applicable standard; or contravened a condition of its licence; or contravened section 92 (directors’ due diligence duty).
(2) In this subpart,— 30 (a) (b) A’s conduct means the conduct of A for which A is liable to the pecuni‐ ary penalty: a person is involved in a contravention of an applicable standard if the person— (i) (ii) has aided, abetted, counselled, or procured the contravention; or 35 has induced, whether by threats or promises or otherwise, the contravention; or 79 Part 5 cl 157 Deposit Takers Bill (iii) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (iv) has conspired with others to effect the contravention.
Amount of pecuniary penalty 157 Maximum amount of pecuniary penalty (1) The maximum amount of a pecuniary penalty that a body corporate may be ordered to pay for a contravention, or involvement in a contravention, of an applicable standard or a condition of a licence is the greater of— (a) (b) $5,000,000; and 0.1% of the total assets of the body corporate and its subsidiaries (if any) as at the balance date of the accounting period that precedes the time at which the contravention first occurs (as specified in the body corporate’s financial statements or the group financial statements of the body corpo‐ rate and those subsidiaries).
(2) (3) If the body corporate is an overseas person, the total assets must be calculated by reference to the total assets of the New Zealand business of the body corpo‐ rate and its subsidiaries (if any) as specified in the financial statements or the group financial statements for that New Zealand business.

The maximum amount of a pecuniary penalty that an individual may be ordered to pay for a contravention of section 92, or involvement in a contra‐ vention of an applicable standard, is $1,000,000.
5 10 15 20 158 Considerations for court In determining whether to make an order, and the amount of any pecuniary penalty to be paid, the court must have regard to the following matters: (a) (b) (c) the extent to which A’s conduct undermines the purposes of this Act: 25 any loss or damage caused by A’s conduct: whether A has taken steps to avoid or mitigate any adverse effects aris‐ ing from A’s conduct: (d) whether A’s conduct was intentional or reckless: (e) (f) (g) the circumstances of A’s conduct: 30 whether A has previously engaged in similar conduct: any other matters the court considers relevant.
Defences 159 Defences for person that contravenes prudential obligation This section applies to a proceeding under this subpart against A for a contra‐ vention of an applicable standard, a condition of a licence, or section 92.

35 (1) 80 Deposit Takers Bill Part 5 cl 162 (2) It is a defence for A to prove that the contravention was due to reasonable reli‐ ance on information provided by another person, other than a director, an employee, or an agent of A.
(3) It is also a defence for A to prove that— (a) the contravention was due to— 5 (i) (ii) the conduct of another person, other than a director, an employee, or an agent of A; or an accident or some other cause beyond the control of A and A’s directors, employees, and agents; and (b) A took reasonable precautions and exercised due diligence to avoid the 10 contravention.
(4) A’s conduct must still be treated as contravening an applicable standard, a con‐ dition of a licence, or section 92 even if the conduct does not lead to any liability under this subpart because of the availability of a defence.

160 Defence for person that is involved in contravention 15 (1) This section applies if— (a) (b) a person (B) has contravened an applicable standard; and another person (C) is involved in the contravention.
(2) In a proceeding under this subpart against C for involvement in the contraven‐ tion, it is a defence if C proves that— 20 (a) (b) C’s involvement in the contravention was due to reasonable reliance on information supplied by another person, other than a director, an employee, or an agent of C; or C took all reasonable steps to ensure that B complied with the applicable standard.
25 Bank’s costs 161 Court must order that recovery from pecuniary penalty be applied to Bank’s actual costs If the court orders a person to pay a pecuniary penalty, the court must also order that the penalty must be applied first to pay the Bank’s actual costs in bringing the proceedings.
30 Procedural rules 162 Rules of civil procedure and civil standard of proof apply The proceedings under this subpart are civil proceedings and the rules of court and rules of evidence and procedure for civil proceedings apply (including the standard of proof).

35 81 Part 5 cl 163 Deposit Takers Bill 163 Limitation (1) A proceeding under this subpart may be commenced within 3 years after the matter giving rise to the contravention was discovered or ought reasonably to have been discovered.
(2) However, no proceeding under this subpart may be commenced 10 years or 5 more after the matter giving rise to the contravention.

(3) Section 48(1) and (3) of the Limitation Act 2010 (which relates to fraud) applies with all necessary modifications to the 10-year period referred to in subsection (2) as if it were a longstop period.
Relationship between proceedings and orders 164 Only 1 pecuniary penalty order may be made for same conduct If conduct by a person constitutes a contravention, or involvement in the contravention, of 2 or more obligations, proceedings may be brought against that person for the contravention, or involvement in the contravention, of any 1 or more of the obligations, but no person is liable to more than 1 pecuniary penalty order for the same conduct.
165 No pecuniary penalty and criminal penalty for same conduct A person cannot be ordered to pay a pecuniary penalty and be liable for a fine or to imprisonment under this Act or any other Act for the same conduct.
10 15 166 Relationship between concurrent pecuniary penalty proceeding and 20 criminal proceeding (1) A criminal proceeding for an offence may be commenced against a person in relation to particular conduct whether or not a proceeding under this subpart has been commenced against the person in relation to the same conduct.
(2) A proceeding under this subpart against a person in relation to particular con‐ duct is stayed (unless the court orders otherwise) if a criminal proceeding against the person has been commenced for an offence in relation to the same conduct.

(3) After the criminal proceeding referred to in subsection (2) has been comple‐ ted or withdrawn, a person may apply to have the stay lifted on the pecuniary penalty proceeding.
25 30 Subpart 3—Infringement offences 167 Infringement offences (1) A person who is alleged to have committed an infringement offence may— (a) be proceeded against by the filing of a charging document under section 14 of the Criminal Procedure Act 2011; or 35 (b) be issued with an infringement notice under section 168.
82 Deposit Takers Bill Part 5 cl 170 (2) (3) Proceedings commenced in the way described in subsection (1)(a) do not require the leave of a District Court Judge or Registrar under section 21(1)(a) of the Summary Proceedings Act 1957.

See section 21 of the Summary Proceedings Act 1957 for the procedure that applies if an infringement notice is issued.
5 168 When infringement notice may be issued The Bank may issue an infringement notice to a person if the Bank believes on reasonable grounds that the person is committing, or has committed, an infringement offence.

169 Revocation of infringement notice before payment made 10 (1) The Bank may revoke an infringement notice before— (a) (b) the infringement fee is paid; or an order for payment of a fine is made or deemed to be made by a court under section 21 of the Summary Proceedings Act 1957.
(2) (3) The Bank must take reasonable steps to ensure that the person to whom the notice was issued is made aware of the revocation of the notice.

15 The revocation of an infringement notice before the infringement fee is paid is not a bar to any further action as described in section 167(1)(a) or (b) against the person to whom the notice was issued in respect of the same matter.
170 What infringement notice must contain An infringement notice must be in the form prescribed in the regulations and must contain the following particulars: (a) (b) (c) (d) (e) (f) (g) (h) details of the alleged infringement offence that fairly inform a person of the time, place, and nature of the alleged offence: the amount of the infringement fee: the address of the Bank: how the infringement fee may be paid: the time within which the infringement fee must be paid: a summary of the provisions of section 21(10) of the Summary Proceed‐ ings Act 1957: 30 a statement that the person served with the notice has a right to request a hearing: a statement of what will happen if the person served with the notice nei‐ ther pays the infringement fee nor requests a hearing: (i) any other matters prescribed in the regulations.
35 83 20 25 Part 5 cl 171 Deposit Takers Bill 171 How infringement notice may be served (1) An infringement notice may be served on the person who the Bank believes is committing or has committed the infringement offence by— (a) (b) (c) (d) (e) (f) delivering it to the person or, if the person refuses to accept it, bringing it to the person’s notice; or 5 leaving it for the person at the person’s last known place of residence with another person who appears to be of or over the age of 14 years; or leaving it for the person at the person’s place of business or work with another person; or if the person is a body corporate, delivering it to a director or an employee of the body corporate at its head office, principal place of business or work, or registered office, or by bringing it to the director’s notice or the employee’s notice if that person refuses to accept it; or 10 sending it to the person by prepaid post addressed to the person’s last known place of residence or place of business or work; or 15 sending it to an electronic address of the person in any case where the person does not have a known place of residence or business in New Zealand.
(2) If the person is a body corporate,— (a) (b) subsection (1)(a) to (c) does not apply (but see subsection (1)(d) instead); and 20 the infringement notice (or a copy of it) sent in accordance with sub- section (1)(e) or (f) must be sent for the attention of a director or employee of the body corporate.
(3) Unless the contrary is shown,— (a) (b) an infringement notice (or a copy of it) sent by prepaid post to a person under subsection (1) is to be treated as having been served on that per‐ son on the fifth working day after the date on which it was posted; and an infringement notice sent to a valid electronic address is to be treated as having been served at the time the electronic communication first entered an information system that is outside the control of the Bank.
172 Payment of infringement fees All infringement fees paid for infringement offences must be paid into a Crown Bank Account.

173 Reminder notices A reminder notice must be in the form prescribed in the regulations and must include the same particulars, or substantially the same particulars, as the infringement notice.
25 30 35 84 Deposit Takers Bill Part 5 cl 175 Subpart 4—False or misleading declarations, representations, and other information 174 False or misleading declarations, representations, or other information (1) A person (A) commits an offence if, for any purpose relating to this Act,— (a) A makes a declaration or representation to the Bank or an investigator and A knows that, or is reckless as to whether, the declaration or repre‐ sentation is false or misleading in any material particular; or 5 (b) A gives to the Bank or an investigator any information and A knows that, or is reckless as to whether, the information is false or misleading in any material particular; or (c) A gives to the Bank or an investigator a document and A knows that, or is reckless as to whether, the document is not genuine; or (d) A otherwise publishes or makes available any information and A knows that, or is reckless as to whether, the information is false or misleading in any material particular.
Subsection (1) applies whether A acts on A’s own behalf or on behalf of any other person.

Subsection (1)(a) applies whether A makes the declaration or representation orally or in writing.

10 15 (2) (3) (4) A person that commits an offence against this section is liable on conviction,— 20 (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): (b) in any other case, to a fine not exceeding $2,500,000.
175 Liability of directors if licensed deposit taker or associated person commits offence 25 If a licensed deposit taker or an associated person is convicted of an offence against section 174, every director of the deposit taker or associated person is guilty of the offence if it is proved— (a) that the act that constituted the offence took place with the director’s authority, permission, or consent; and 30 (b) that the director— (i) knew, or could reasonably be expected to have known, that the offence was to be or was being committed; and (ii) failed to take all reasonable steps to prevent or stop it.
85 Part 5 cl 176 Deposit Takers Bill Subpart 5—Ban ordered by District Court 176 Power to ban certain persons from participating in deposit-taking business (1) The District Court may, on the application of the Bank, make an order in respect of a person under this subpart if the court considers that the person— (a) (b) (c) (d) (e) has engaged in an act, an omission, or a course of conduct that consti‐ tutes serious wrongdoing and that the person is not a fit and proper per‐ son to participate in a deposit-taking business in 1 or more of the ways described in section 177; or has failed to comply with an order under section 29; or as a director of a licensed deposit taker, has persistently or seriously failed to comply with section 92 (directors’ due diligence duty); or is a director of a licensed deposit taker that has persistently or seriously contravened any prudential obligation, and the person has persistently failed to take reasonable steps to prevent or stop the deposit taker’s contravention; or is prohibited from participating in a deposit-taking business in 1 or more of the ways specified in section 177 under an order made, or a notice given, under a law of a country, State, or territory outside New Zealand.
5 10 15 (2) Every application to the court under this section must be made by an originat‐ ing application.
20 177 Type of order The order is an order banning a person from being or doing 1 or more of the following: (a) (b) (c) (d) (e) (f) being a director of a licensed deposit taker: being concerned or taking part in the management of a licensed deposit taker: 25 being a shareholder of a licensed deposit taker: being an employee or other agent of a licensed deposit taker: acting under a contract for services with a licensed deposit taker: otherwise participating in a business of a licensed deposit taker in any other way (whether paid or unpaid).
30 178 Other provisions relating to order (1) An order may be— (a) made even though the person concerned may be criminally or civilly liable for the matters on the grounds of which the order is to be made; and 35 (b) permanent or for a specified time; and 86 Deposit Takers Bill Part 5 cl 182 (c) (d) subject to the terms and conditions that the court thinks fit; and cancelled or varied at any time by the court (on the application of the Bank or of the person who is the subject of the order).
(2) The court may make any order in the matter as to costs and otherwise as it thinks fit.

5 (3) As soon as practicable after an order is made, the Registrar of the court must send a copy of the order to the Bank.

179 Offence to contravene banning order A person who intentionally or recklessly contravenes an order made under this subpart commits an offence and is liable on conviction to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both).
10 180 Effect of appeal A ban under this subpart has effect from the date specified in the order even though an appeal may have been lodged under section 181.

181 Appeal to High Court 15 The Bank or a person to whom an order relates may appeal to the High Court against a decision of the District Court under this subpart.
Subpart 6—Miscellaneous Attribution of liability 182 State of mind of directors, employees, or agents attributed to body 20 corporate or other principal (1) (2) If, in a proceeding under this Act in respect of any relevant conduct engaged in by a body corporate, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, an employee, or an agent of the body corporate, acting within the scope of their actual or apparent authority, had that state of mind.
If, in a proceeding (other than a proceeding for an offence) under this Act in respect of any relevant conduct engaged in by a person other than a body cor‐ porate, it is necessary to establish the state of mind of the person, it is sufficient to show that an employee or agent of the person, acting within the scope of their actual or apparent authority, had that state of mind.
25 30 (3) In this section,— relevant conduct means conduct in relation to which any provision of this Act applies 87 Part 5 cl 183 Deposit Takers Bill state of mind, in relation to a person, includes the knowledge, intention, opin‐ ion, belief, or purpose of the person and the person’s reasons for that intention, opinion, belief, or purpose.
Compare: 1986 No 5 s 90(1), (3), (5) 183 Conduct of directors, employees, or agents attributed to body corporate or 5 other principal (1) Conduct engaged in on behalf of a body corporate by any of the following must be treated, for the purposes of this Act, as having been engaged in also by the body corporate: (a) (b) a director, an employee, or an agent of the body corporate, acting within the scope of their actual or apparent authority: 10 any other person at the direction or with the consent or agreement (whether express or implied) of a director, an employee, or an agent of the body corporate, given within the scope of the actual or apparent authority of the director, employee, or agent.
15 (2) Conduct engaged in on behalf of a person other than a body corporate (A) by any of the following must be treated, for the purposes of this Act, as having been engaged in also by A: (a) (b) an employee or agent of A acting within the scope of their actual or apparent authority: 20 any other person at the direction or with the consent or agreement (whether express or implied) either of A or of an employee or agent of A, given within the scope of the actual or apparent authority of the employee or agent.
Compare: 1986 No 5 s 90(2), (4) Miscellaneous 184 General defence for offences (1) (2) This section applies to offences against any of sections 27, 33, 36, 51, 60, 100, 104, 106, 114, 117, 129, 137, 143, 255, 270, 342, 385, 399, 403, 415, 423, 432, and 434.
It is a defence to a prosecution for an offence referred to in subsection (1) if the defendant (A) proves that— (a) the contravention to which the offence relates was due to— 25 30 (i) (ii) the conduct of another person, other than a director, an employee, or an agent of A; or 35 an accident or some other cause beyond the control of A and A’s directors, employees, and agents; and (b) A took reasonable precautions and exercised due diligence to avoid the contravention.
88 Deposit Takers Bill Part 6 cl 189 185 Time for filing charging document for certain offences (1) Despite anything to the contrary in section 25 of the Criminal Procedure Act 2011, the limitation period in respect of a category 1 offence or a category 2 offence under this Act ends on the date that is 3 years after the date on which the offence was committed.
5 (2) Nothing in subsection (1) affects the application of section 25 of the Crim‐ inal Procedure Act 2011 in relation to any offence not mentioned in that sub‐ section.

(3) In this section, category 1 offence and category 2 offence have the same meanings as in section 6(1) of the Criminal Procedure Act 2011.
10 186 Jurisdiction of courts in New Zealand The High Court has exclusive jurisdiction to hear and determine court proceed‐ ings in New Zealand under this Act, other than proceedings— (a) (b) (c) (d) (e) (f) for offences; or under subpart 5; or under section 196(4); or under section 205; or under section 390; or under section 469.
187 Orders to secure compliance 15 20 The court may, for the purpose of securing compliance with any other order it makes under this Act, direct a person to do or refrain from doing a specified act.

188 General provisions as to court’s orders (1) A court order under this Act may be made on the terms and conditions the 25 court thinks fit.

(2) The court may revoke, vary, or suspend an order made under this Act on the terms and conditions the court thinks fit.
Part 6 Depositor compensation scheme Subpart 1—Preliminary provisions 30 189 Additional purpose of this Part (1) The purpose of this Part is to contribute towards protecting and promoting the stability of New Zealand’s financial system by— 89 5 10 15 Part 6 cl 190 Deposit Takers Bill (a) (b) protecting eligible investors to the extent that they are covered by the depositor compensation scheme; and allowing the Depositor Compensation Fund to be used to support a reso‐ lution measure undertaken in relation to a licensed deposit taker.
(2) This section does not limit section 3.
190 Interpretation in this Part (1) In this Part, unless the context otherwise requires,— eligible investor— (a) means a holder of a protected deposit or a person on whose behalf a pro‐ tected deposit is held (whether or not the debt security was issued to, or subsequently acquired by, the holder of the security); but (b) does not include any of the following: (i) (ii) (iii) (iv) a licensed deposit taker, a licensed insurer, or an operator of a des‐ ignated FMI: a bank or other entity that is licensed, registered, or otherwise authorised to accept deposits under the law of an overseas juris‐ diction: a government agency: in relation to a specified event notice issued in relation to a licensed deposit taker (B),— 20 (A) (B) an associated person of B; or a director of B: (v) a person of a class that is prescribed by the regulations fund means the Depositor Compensation Fund established under section 195 government agency means any of the following: 25 (a) (b) (c) (d) (e) (f) (g) the Crown (as defined in section 2(1) of the Public Finance Act 1989): an Office of Parliament (as defined in section 2(1) of the Public Finance Act 1989): a Crown entity under section 7(1)(a) to (c) of the Crown Entities Act 2004: 30 a local authority (as defined in section 5(1) of the Local Government Act 2002): a State enterprise (as defined in section 2 of the State-Owned Enterprises Act 1986): the Bank or a subsidiary of the Bank: 35 a company or other organisation named or described in Schedule 4 or 4A of the Public Finance Act 1989: 90 Deposit Takers Bill Part 6 cl 190 (h) the Board of Trustees of the National Provident Fund continued under the National Provident Fund Restructuring Act 1990 (and any company appointed under clause 3(1)(b) of Schedule 4 of that Act) person— (a) (b) has the same meaning as in section 13 of the Legislation Act 2019; and 5 includes— (i) (ii) (iii) a partnership under the Partnership Law Act 2019 (see section 206); and in the case of a trust to which section 208 applies that has only 1 trustee, the trustee
 acting in their capacity as trustee; and in the case of a trust to which section 208 applies that has more than 1 trustee, the trustees acting jointly in their capacity as trustees quantification time, in relation to a specified event notice, means the time spe‐ cified in the notice under section 193(3) relevant arrangement has the meaning set out in subsection (2) scheme means the depositor compensation scheme established by this Part specified event notice means a notice issued under section 193 statement of funding approach means the statement of funding approach published under subpart 7.
(2) A protected deposit is held for, or on behalf of, 1 or more persons under a rele‐ vant arrangement if the deposit— (a) (b) (c) is held under a regulated client money or property service (within the meaning of section 431W of the FMCA); or is held in trust under section 87 of the FMCA; or is held under a trust, a scheme, or other arrangement of a kind that is prescribed by the regulations.
(3) In this Part, a protected deposit must be treated as being held for, or on behalf of, 1 or more persons if— (a) (b) a trust, a scheme, or other arrangement of a particular kind is prescribed by the regulations for the purposes of subsection (2)(c); and the regulations declare that a deposit held under a trust, scheme, or arrangement of that kind must be treated as being held for, or on behalf of, those persons.
Example A managed investment scheme that is managed by a bank (A) is a multi-rate PIE (as defined in section YA 1 of the Income Tax Act 2007).

The scheme only invests in protected deposits issued by A.

An investor who holds interests in the scheme may use their investment in a similar way to a normal term deposit or call deposit.
10 15 20 25 30 35 91 Part 6 cl 191 Deposit Takers Bill If the regulations prescribe schemes of that kind for the purposes of subsection (2)(c), the regulations may also declare that the protected deposits are to be treated as being held for, or on behalf of, the investors who hold interests in the scheme.
191 Meaning of protected deposit and related terms 5 (1) In this Act, protected deposit means a debt security issued by a licensed deposit taker (B) if— (a) (b) (c) payments of the principal and interest are in New Zealand currency only; and the terms of the debt security are governed by New Zealand law; and 10 either or both of the following apply: (i) (ii) the requirements prescribed by the regulations for the purposes of this paragraph are satisfied: the debt security is of a kind that is specified by the regulations for the purposes of this paragraph.
15 (2) However, protected deposit does not include any of the following: (a) (b) (c) (d) a security commonly referred to in the financial markets as a debenture, a bond, a note, commercial paper, or a convertible note (unless the secur‐ ity is prescribed by the regulations as being of a kind to which this para‐ graph does not apply): 20 a redeemable share (other than a redeemable share issued by a credit union, a friendly society, a co-operative company, or a building society): a debt security issued by a licensed deposit taker of a kind that is speci‐ fied in the regulations for the purposes of this paragraph: a debt security that is declared by the regulations not to be a protected deposit.
25 (3) The amount of the protected deposit at a particular time is— (a) (b) the principal to be repaid under the debt security as at that time; and accrued interest for the debt security as at that time, if any (see section 217).
30 192 Licensed deposit taker must publish list of protected deposits (1) A licensed deposit taker must ensure that an Internet site that is maintained by, or on behalf of, the deposit taker— (a) (b) identifies clearly and prominently all debt securities issued by the deposit taker that are protected deposits; or 35 contains a prominent link to another Internet site that clearly and promi‐ nently contains that information.
92 Deposit Takers Bill Part 6 cl 194 (2) A licensed deposit taker that contravenes this section commits an infringement offence and is liable to— (a) (b) an infringement fee of $20,000; or a fine imposed by a court not exceeding $50,000.
193 When Bank may issue specified event notice (1) The Bank may issue a specified event notice in relation to a licensed deposit taker (B) if— (a) 1 or more of the following apply: (i) (ii) B is put into liquidation under New Zealand law: a receiver is appointed in relation to the whole, or substantially the whole, of the assets and undertaking of B and the Receiverships Act 1993 applies to the receivership: (iii) B has entered resolution; and (b) the Bank is satisfied that— (i) B’s financial or other difficulties are likely to cause serious and prolonged disruption to the ability of eligible investors to deal with their protected deposits in accordance with their applicable terms and conditions; and 5 10 15 (ii) issuing the notice is the most appropriate means to deal with that disruption.
20 (2) (3) The Bank must publish the notice in the Gazette.

The notice must specify a quantification time that the Bank thinks fit.

(4) However, the quantification time must be no earlier than the time of the event referred to in subsection (1)(a)(i), (ii), or (iii).
194 Bank’s function under this Part 25 The Bank’s function under this Part is to manage and administer the scheme, including— (a) (b) (c) (d) (e) (f) (g) deciding whether a notice should be issued under section 193; and determining entitlements to compensation under this Part; and ensuring that compensation under this Part is provided as soon as prac‐ ticable after the Bank issues a specified event notice; and 30 exercising rights of subrogation under subpart 4; and paying money out of the fund under subpart 5 for the purposes of sup‐ porting a resolution measure undertaken in relation to a licensed deposit taker; and 35 collecting the levies and interest payable under subpart 6; and administering, operating, and investing the fund; and 93 Part 6 cl 195 Deposit Takers Bill (h) monitoring risks in connection with the scheme; and (i) (j) providing, or facilitating the provision of, information to the public in connection with the scheme; and performing and exercising the functions, powers, and duties conferred or imposed on it by or under this Part.
5 Subpart 2—Depositor Compensation Fund 195 Depositor Compensation Fund established This section establishes the Depositor Compensation Fund (the fund).

196 Fund owned and managed on behalf of Crown (1) All assets in the fund are owned by the Bank on behalf of the Crown.

10 (2) For the purposes of this Part, the Bank is not a trustee, or a constructive trustee, in relation to the performance of its functions or any other matter.

(3) The fund is managed by the Bank on behalf of the Crown.
(4) All money owing in respect of the fund is recoverable in a court of competent jurisdiction as a debt due to the Bank or to a subsidiary of the Bank that the Bank has nominated for the purpose.
15 197 What fund consists of The fund consists of— (a) (b) all levies and interest collected under subpart 6: fund investments: (c) money accruing from the investment of the fund: (d) money accruing from the exercise of the rights of subrogation under subpart 4: (e) money provided under subpart 8: (f) any other money that may be lawfully payable into the fund.
198 Payments out of fund Money may be paid out of the fund— (a) to pay for the Bank (or a prescribed person) performing or exercising functions, powers, or duties under this Part, including— (i) (ii) paying compensation under subpart 3; and paying the Bank’s expenditure incurred in connection with provid‐ ing, or facilitating the provision of, information to the public in connection with the scheme; and 20 25 30 94 Deposit Takers Bill Part 6 cl 201 (iii) paying all expenditure incurred by the Bank in connection with the Bank performing or exercising its functions, powers, or duties under this Part; and to support a resolution measure undertaken in relation to a licensed deposit taker under subpart 5; and to pay the taxation liabilities arising in respect of the fund; and 5 to repay any money borrowed by the Bank under subpart 8 (deficiency in fund), and to pay any interest or fees, charges, or costs in connection with borrowing the money.
(b) (c) (d) 199 Bank may apportion expenditure 10 (1) This section applies if the Bank reasonably considers that expenditure is related to both— (a) (b) the Bank performing or exercising its functions, powers, or duties under this Part; and the Bank performing or exercising any other functions, powers, or duties.

15 (2) (3) The Bank may apportion the expenditure in the manner that the Bank thinks fit so as to determine the part of the expenditure that is to be met out of the fund under section 198(a).
The part of the expenditure determined in relation to the fund must be treated as expenditure under section 198(a).

20 200 Investments (1) (2) (3) (4) The Bank may invest all or any money received by it in respect of the fund that is not immediately required for expenditure.

The Bank must comply with the requirements for the investment of the fund that are contained in the statement of funding approach.

25 This section does not limit subpart 5.


Section 113 of the Reserve Bank of New Zealand Act 2021 does not apply to an investment made under this section.
Subpart 3—Entitlement to compensation 30 Entitlement rules 201 General entitlement rule (1) A person (A) is entitled, in respect of 1 or more protected deposits placed with a licensed deposit taker (B), to compensation from the fund if— (a) the Bank has issued a specified event notice in relation to B; and 35 (b) A is an eligible investor; and 95 Part 6 cl 202 Deposit Takers Bill (c) (d) the deposits are placed with B at the quantification time; and 1 or more of the following apply in respect of each of the deposits: (i) A holds the deposit in A’s own right (and no other person holds the deposit): (ii) A holds the deposit in A’s own right jointly with 1 or more other 5 persons: (iii) (iv) the deposit is held for, or on behalf of, A (and no other person) in a bare trust or under a relevant arrangement: the deposit is held for, or on behalf of, A and 1 or more other per‐ sons in 1 or more bare trusts or under 1 or more relevant arrange‐ ments.
(2) (3) (4) The compensation to which A is entitled is the amount that is calculated by the Bank under this Part and in the manner prescribed by the regulations.

See section 208, which provides that references in this section to a person holding a deposit in their own right may be treated as including a trustee or trustees holding a deposit on trust.

This section and sections 202 to 209 are subject to the regulations referred to in sections 211 to 214.
10 15 202 Calculation of entitlement (1) The compensation that an eligible investor (A) referred to in section 201 is entitled to under this Part is the lesser of the following: 20 (a) the total amount of the following as at the quantification time: (i) A’s protected deposits falling within section 201(1)(d)(i) and (iii); and (ii) A’s share of the protected deposits falling within section 201(1)(d)(ii) and (iv) (see sections 203 to 205 for rules about how to determine A’s share): (b) $100,000 or a temporary high balance limit (if any).
Example Bank B goes into liquidation.

A holds a deposit of $60,000 with B.

A and A’s spouse jointly hold 2 other deposits with B worth $40,000 and $50,000.

A’s share of those deposits under section 203 is $45,000 (an equal share of $90,000).

The total amount under subsection (1)(a) is $105,000 ($60,000 plus $45,000).

This exceeds the $100,000 coverage limit.

Therefore, A is only entitled to compen- sation of $100,000 on B’s liquidation.
25 30 35 96 Deposit Takers Bill Part 6 cl 204 (2) A limit in subsection (1)(b) applies regardless of the number or amount of deposits.

(3) In this section, temporary high balance limit means a limit (which is greater than $100,000) that— (a) (b) is prescribed by, or determined in accordance with, the regulations; and 5 applies to A in accordance with the regulations.
203 Protected deposit held by or on behalf of 2 or more persons jointly (1) This section applies if a protected deposit is held— (a) (b) by 2 or more persons in their own right jointly; or for, or on behalf of, 2 or more persons jointly in 1 or more bare trusts or under 1 or more relevant arrangements.
10 (2) For the purposes of this Part,— (a) each of the persons must be treated as having— (i) (ii) an equal share in the protected deposit (unless subparagraph (ii) applies); or 15 the share in the protected deposit that is specified in records that are maintained by the licensed deposit taker, or provided by the holder of the protected deposit, in the manner prescribed by the regulations; and (b) a person’s share in the protected deposit must be taken into account in calculating their entitlement (if any) to compensation under section 202 (except to the extent that the regulations provide otherwise).
Subsection (2) applies whether or not each person is an eligible investor (but a person who is not an eligible investor is not eligible to compensation in respect of their share).

(3) (4) This section does not affect the rights of those persons as between themselves.
204 Protected deposit held by or on behalf of 2 or more persons other than jointly (1) This section— (a) applies if a protected deposit is held— (i) (ii) by 2 or more persons in their own right; or for, or on behalf of, 2 or more persons in 1 or more bare trusts or under 1 or more relevant arrangements; but (b) does not apply if section 203 applies.

Example A protected deposit is held in a law firm’s trust account for, or on behalf of, 200 cli- ents.
20 25 30 35 97 Part 6 cl 205 Deposit Takers Bill The deposit is not held on behalf of those clients jointly.

Accordingly, section 203 does not apply.
(2) For the purposes of this Part,— (a) each of the persons must be treated as having— (i) (ii) the share in the protected deposit that is specified in records that are maintained by the relevant person in the manner prescribed by the regulations; or 5 if such records are not maintained, the share in the protected deposit that is notified by the relevant person in the manner pre‐ scribed by the regulations; and (b) a person’s share in the protected deposit must be taken into account in calculating their entitlement (if any) to compensation under section 202 (except to the extent that the regulations provide otherwise).
Subsection (2) applies whether or not each person is an eligible investor (but a person who is not an eligible investor is not eligible to compensation in respect of their share).

This section does not affect the rights of those persons as between themselves.
In this section, relevant person means, in the case of a deposit held— (3) (4) (5) (a) (b) (c) by 2 or more persons in their own right, those persons acting together: in 1 or more bare trusts, the trustee or trustees: under 1 or more relevant arrangements, a person of the kind that is pre‐ scribed in the regulations.
205 District Court may make order about shares (1) This section applies if— (a) (b) (c) section 204 applies; and a person referred to in section 204(1)(a) applies for an order under this section; and the Bank has not yet paid any compensation under this subpart in respect of the protected deposit.
(2) Despite section 204, the District Court may, if it thinks it is just and equitable to do so, make an order that, for the purposes of this Part, a protected deposit must be treated as being held by, for, or on behalf of— (a) (b) a particular person; or 1 or more persons in the shares that the court thinks fit.
(3) A person’s protected deposit, or share in a protected deposit, as specified in an order must be taken into account in calculating their entitlement (if any) to compensation under section 202 (except to the extent that the regulations provide otherwise).
98 10 15 20 25 30 35 Deposit Takers Bill Part 6 cl 208 206 Partnerships (1) For the purpose of entitlement to compensation from the fund, a partnership under the Partnership Law Act 2019 must be treated as being a person that is distinct from its partners.

(2) Accordingly, if a protected deposit is held by, for, or on behalf of 2 or more partners for a partnership, the partners must not be treated as being 2 or more persons under section 203.
5 207 Bare trustees and providers of relevant arrangement not entitled to compensation (1) If a bare trustee holds a protected deposit— (a) (b) under a bare trust, the beneficiary or beneficiaries (but not the bare trustee) may be entitled to compensation under sections 201 and 202 in respect of the deposit: under different bare trusts, the beneficiary or beneficiaries of each of those trusts (but not the bare trustee) may be entitled, in respect of the portion of the deposit held under the trust, to compensation under sec- tions 201 and 202 in respect of the deposit.
(2) If a person (A) holds a protected deposit under a relevant arrangement for, or on behalf of, 1 or more other persons, the other person or persons (but not A) may be entitled to compensation under sections 201 and 202 in respect of the deposit.

(3) In this section, beneficiary means a person for which, or on whose behalf, the protected deposit is held.
208 Entitlement rule for deposits held on trust (1) This section applies if— (a) 1 or more protected deposits are held— (i) (ii) by 1 or more trustees under 1 trust; or for, or on behalf, of 1 or more trustees under 1 trust; and (b) the trust is not any of the following: (i) (ii) a bare trust: a trust under a relevant arrangement: (iii) a trust of a kind that is prescribed by the regulations.
(2) For the purpose of entitlement to compensation from the fund,— 10 15 20 25 30 (a) the following must be treated as being the person (A) that holds the deposit (or for which, or on whose behalf, the deposit is held): 35 (i) if the trust has only 1 trustee, the trustee acting in their capacity as trustee: 99 Part 6 cl 209 Deposit Takers Bill (ii) if the trust has more than 1 trustee, the trustees acting jointly in their capacity as trustees; and (b) references to a person holding a deposit in their own right must be treated as including the trustee or trustees holding a deposit on trust.
(3) Compensation that is paid under this Part in respect of the protected deposits held under the trust must be treated as being trust property.

5 Example A bank (B) goes into liquidation.

The Smith Family Trust has 3 trustees: X, Y, and Z.

The trust has 3 deposits with B: $60,000, $30,000, and $20,000 ($110,000 in total).

10 X, Y, and Z acting jointly in their capacity as trustees are treated under this Act as 1 person (A) that holds the deposits.

The total amount of the deposits is $110,000.


This exceeds the $100,000 coverage limit under section 202.

Therefore, the trustees (on behalf of the trust) are only entitled to compensation of $100,000 on B’s liquidation.

The compensation is trust property.

The entitlement of the Smith Family Trust is separate from any entitlement that X, Y, or Z may have in their personal capacity (or in a capacity as a trustee for some other trust).
209 Protected deposit held under different trusts (1) If a protected deposit is held under different trusts, each portion of the deposit held under each of those trusts as at the quantification time must be treated as being a separate protected deposit for the purposes of calculating the entitle‐ ment to compensation in respect of each trust.

Example A deposit of $150,000 is held for 2 trusts: the Smith Family Trust and the Jones Family Trust.
Of that amount, $90,000 is identified as being property of the Smith Family Trust while $60,000 is identified as being property of the Jones Family Trust.

Those amounts must be treated as separate deposits for the purposes of calculating entitlements to compensation for the respective trusts.

(2) This section does not apply to a trust referred to in section 208(1)(b)(i) to (iii).
210 Trustee that is ineligible in own personal capacity does not prevent compensation being payable in relation to trust (1) A trustee or trustees acting in their capacity as trustees must be treated as being a person distinct from the trustee or trustees in their own personal capacity.

(2) Accordingly, the fact that 1 or more trustees may not be eligible investors in their own personal capacity does not prevent the trustee or trustees acting in their capacity as trustees from being an eligible investor.
15 20 25 30 35 40 100 Deposit Takers Bill Part 6 cl 212 Entitlements subject to regulations 211 Regulations may provide for calculation of amount of person’s protected deposits or share of protected deposits (1) For the purposes of this subpart, the regulations may provide for the calculation of the amount of a person’s protected deposits or share of protected deposits, including by taking into account any benefit to which the person is entitled or that the person might (directly or indirectly) receive in connection with a pro‐ tected deposit that is held in any 1 or more of the following ways: (a) (b) (c) (d) by a trustee or trustees on trust: by a partnership or any other unincorporated body: by 2 or more persons jointly: by a person under a relevant arrangement (for example, under a custodial service referred to in section 431W of the FMCA).
5 10 (2) Those regulations may authorise or require the Bank to treat any protected deposit held by— 15 (a) a person as being held (in whole or in part) by— (i) (ii) (iii) that person and 1 or more other persons jointly in the shares deter‐ mined under the regulations; or another person; or 2 or more other persons jointly in the shares determined under the regulations: 20 (b) 2 or more persons jointly as being held (in whole or in part) by— (i) (ii) (iii) (iv) 1 of those persons; or 1 or more of those persons in the shares determined under the regulations; or 25 1 or more of those persons and 1 or more other persons in the shares determined under the regulations; or 1 or more other persons in the shares determined under the regula‐ tions.
(3) Subsection (2) does not limit subsection (1).
30 212 Regulations may take into account transactions that have not been processed at quantification time (1) This section applies if,— (a) before the quantification time,— (i) a transaction connected with a protected deposit is entered into and an instruction relating to the transaction has been received by the licensed deposit taker; but 35 101 Part 6 cl 213 Deposit Takers Bill (ii) the protected deposit has not yet been credited or debited to take into account the transaction; and (b) the circumstances specified in the regulations (if any) apply.
(2) (3) For the purposes of this subpart, the regulations may provide for the calculation of the amount of a person’s protected deposits or share of protected deposits to be increased or decreased to take into account the transaction.

5 The regulations may provide for the transaction to be taken into account in the prescribed manner.
213 Regulations may take into account funds that are withdrawn or available to eligible investors during resolution (1) This section applies if— (a) (b) the Bank issues a specified event notice in relation to a licensed deposit taker that has entered resolution; and during the whole or any part of the relevant period, all or any part of the principal to be repaid under a protected deposit that is placed with the deposit taker is withdrawn, or is available to be withdrawn, by or on behalf of an eligible investor; and (c) the circumstances specified in the regulations (if any) apply.
(2) (3) For the purposes of this subpart, the regulations may provide for the calculation of the amount of compensation that a person is entitled to under this Part to take into account the matter referred to in subsection (1)(b).

The regulations may provide for the matter to be taken into account in the pre‐ scribed manner.

(4) The relevant period is the period that— (a) (b) is on and after the quantification time; but ends immediately before the time at which compensation is paid under this Part.
Example A bank (B) goes into resolution.

A customer of the bank (A) has a $100,000 transactional account with B at the quantification time.

Under the resolution, A is given limited access to their account: A is permitted to withdraw up to $90,000.

A withdraws $40,000 (whether in 1 transaction or multiple transactions).

A continues to have available a further $50,000 continuing up until the time at which the compensation is to be paid under this Part.
Under the ordinary entitlement rules, A is entitled to $100,000 compensation.

However, the regulations may take into account the ongoing access to $90,000 by providing for A to be entitled to $10,000 compensation.

This means that A will have received (or have available) a total of $100,000 (the $10,000 compensation, the $40,000 that has been withdrawn, and the remaining $50,000 that continues to 10 15 20 25 30 35 40 102 Deposit Takers Bill Part 6 cl 217 be available).
This puts A in the same position as if access to A’s account had not been made available.

214 Regulations may impose conditions (1) (2) For the purposes of this subpart, the regulations may provide that a person’s entitlement to compensation is subject to the conditions (if any) that are pre‐ scribed by the regulations.

5 The Bank may, if it thinks fit, refuse to pay compensation under this subpart if 1 or more of those conditions are not complied with.
Example As a condition of entitlement, the regulations require the trustees of a trust to pro- vide information about the beneficiaries of the trust.

10 If the information is not provided, the Bank may refuse to pay compensation in connection with the protected deposits held by the trust.
Other matters relating to calculation of entitlement 215 Liabilities owed to licensed deposit taker must be disregarded For the purposes of calculating the amount of compensation that an eligible investor is entitled to under this Part, the liabilities (if any) that are owing by the eligible investor to the licensed deposit taker must be disregarded.
216 Bank may rely on licensed deposit taker’s records and information from eligible investors and other persons The Bank, when calculating and paying compensation under this Part, may rely on any of the following: (a) (b) (c) records or other information given by, or on behalf of, the licensed deposit taker (for example, information given under standards referred to in section 85): information given by, or on behalf of, an eligible investor (for example, information provided under a condition imposed under section 214): any other information given under this subpart (for example, information given by a relevant person under section 204).
217 Bank may determine interest accrued 15 20 25 30 The Bank may determine the amount of interest accrued on a protected deposit by making an estimate that is reasonable in the circumstances, if the Bank con‐ siders that— (a) there is uncertainty as to the entire amount of interest that has accrued; or 35 103 Part 6 cl 218 Deposit Takers Bill (b) (c) the time required to ascertain the entire amount of interest that has accrued would be so long as to unduly delay the payment of compensa‐ tion under this Part; or the costs and expenses that would be incurred in the calculation made to ascertain the entire amount of interest that has accrued would, having regard to the likely difference between the ascertained amount and the estimated amount of the interest, outweigh the benefits of making the calculation.
Payment of entitlements 218 Payment of entitlements (1) After the Bank calculates the entitlement of an eligible investor to compensa‐ tion under this Part, the Bank (or a prescribed person on behalf of the Bank) must pay the compensation to, or on account of, the eligible investor— (a) (b) in the manner prescribed by the regulations; and otherwise in the manner that the Bank thinks fit.

(2) This section is subject to section 219.
5 10 15 219 Bank not required to pay compensation if cannot act with reasonable certainty The Bank is not required to pay compensation under this subpart in relation to a protected deposit if it is not reasonably practicable for the Bank to do any 1 or more of the following with reasonable certainty: 20 (a) make any calculation under this Part: (b) (c) determine who the eligible investor or investors are in respect of the deposit (and what their respective shares are): determine how to pay the compensation to, or on account of, the eligible investor.
25 220 Bank may establish account on behalf of eligible investor (1) The Bank may establish, on behalf of an eligible investor, an account with a licensed deposit taker (other than a deposit taker in resolution) for the purposes of wholly or partly meeting the investor’s entitlement to compensation.

30 (2) This section applies— (a) (b) whether or not the eligible investor consents to the Bank acting under subsection (1); and despite anything to the contrary in any other legislation or rule of law.
221 Persons may disclose information to Bank to facilitate payment of 35 compensation (1) This section applies to the following persons (a discloser): 104 Deposit Takers Bill Part 6 cl 224 (a) (b) (c) a licensed deposit taker: a bare trustee that holds a protected deposit under a bare trust: a person that holds a protected deposit under a relevant arrangement for, or on behalf of, 1 or more other persons.
(2) A discloser may disclose any information (including personal information) about a person (A) to the Bank if the discloser believes, on reasonable grounds, that the disclosure of the information is necessary to facilitate 1 or more of the following: 5 (a) (b) (c) ascertaining whether A is an eligible investor who is entitled to compen‐ sation under this Part: 10 calculating A’s entitlement to compensation under this Part: paying the compensation to, or on account of, A.
(3) The discloser may also disclose personal information in accordance with infor‐ mation privacy principle 11 set out in section 22 of the Privacy Act 2020.
222 Bank may disclose information to facilitate payment of compensation 15 (1) The Bank may disclose any information (including personal information) about a person (A) to any other person if the Bank believes, on reasonable grounds, that the disclosure of the information is necessary to facilitate 1 or more of the following: (a) (b) (c) ascertaining whether A is an eligible investor who is entitled to compen‐ sation under this Part: 20 calculating A’s entitlement to compensation under this Part: paying the compensation to, or on account of, A.
(2) The Bank may also disclose personal information in accordance with informa‐ tion privacy principle 11 set out in section 22 of the Privacy Act 2020.

25 223 Restrictions on entitlement to compensation under scheme (1) This section applies if the Bank (or a prescribed person) has paid to, or on account of, an eligible investor (A) the full amount of compensation payable in respect of A’s protected deposits in accordance with this Act.
(2) No other person is entitled to compensation under this Part in respect of those 30 same protected deposits.

224 Protected deposit subject to security interest (1) (2) This Part applies regardless of whether the protected deposit is subject to a security interest.

If a protected deposit is subject to a security interest in favour of the licensed deposit taker that issued the deposit, any compensation paid in respect of the deposit is not subject to the security interest.
35 105 Part 6 cl 225 Deposit Takers Bill (3) This section applies despite anything to the contrary in the Personal Property Securities Act 1999 or any other legislation, instrument, or other rule of law.

225 Recovery of compensation paid in excess or in error under scheme (1) This section applies if— (a) any compensation paid to, or on account of, an eligible investor out of the fund exceeds what ought to have been paid under this Act; or 5 (b) any compensation is paid in error to any person.
(2) The Bank may recover the amount paid in error or excess from the person who received the compensation.

(3) The person must repay the money in the manner that is specified by the Bank.

10 (4) An amount paid in error or excess to any person is money owing in respect of the fund (see section 196(4)).

(5) On recovering an amount paid in error or excess under this section, the Bank must pay the amount into the fund.
(6) After the amount is paid into the fund, the Bank may pay the amount out of the fund (in whole or in part) to meet any obligation payable by the Bank in con‐ nection with the Bank performing or exercising functions, powers, or duties under this Part.
Subpart 4—Bank or subsidiary assumes eligible investor’s rights 226 Bank’s right of subrogation (1) If the Bank (or a prescribed person) pays compensation under this Part to, or on account of, an eligible investor (A) in respect of a protected deposit issued by a licensed deposit taker (B), the Bank (or a subsidiary) is subrogated, to the extent of the payment, to all the rights and remedies that, but for the subroga‐ tion, A would have had in relation to the protected deposit.
(2) A must (at the Bank’s or a subsidiary’s expense) do anything reasonably required by the Bank (or subsidiary) to enable it to exercise or enforce any sub‐ rogated rights or remedies.
(3) This section applies— 15 20 25 (a) (b) (c) whether the compensation is equivalent to the full amount owing under a protected deposit or only part of that amount; and 30 to give the Bank (or a subsidiary) the same rights and remedies that A would have had in relation to B, any third party, and any security for an amount owing under a protected deposit; and to give the Bank (or a subsidiary) the same priority that A would have had in the event of B’s insolvency.
35 In this subpart, subsidiary means a subsidiary of the Bank that the Bank has nominated for the purpose of this section.
(4) 106 Deposit Takers Bill Part 6 cl 229 227 Bank may apportion compensation to determine respective rights and remedies (1) This section applies if— (a) (b) the Bank pays compensation to, or on account of, an eligible investor (A) in respect of 2 or more protected deposits issued by a licensed deposit taker (B); and 5 the amount that is paid is less than the total amount referred to in sec- tion 202(1)(a).
The Bank may apportion the compensation to 1 or more of the protected depos‐ its in the manner that the Bank thinks fit.

10 The Bank’s power includes the power to apportion the compensation between principal and interest.

The Bank’s apportionment is binding on A, B, the Bank, and any third parties for the purposes of determining rights, obligations, and remedies in respect of the protected deposits.
15 (2) (3) (4) Example A holds a deposit of $60,000 with bank B when a specified event notice under sec- tion 193 is issued in relation to B.

A and another person (C) jointly hold a deposit with B worth $90,000.

A’s share of that deposit is $45,000.

20 The total amount for A under section 202(1)(a) is $105,000 ($60,000 plus $45,000).

However, A is only entitled to compensation of $100,000 (see section 202(1)(b)).
The Bank apportions the compensation as follows: • • the $60,000 deposit is entirely compensated.

The Bank is, therefore, entirely subrogated to all of A’s rights and remedies in that deposit: the $45,000 deposit is compensated to the extent of $40,000.

The Bank is, therefore, subrogated to A’s rights and remedies in that deposit to the extent of that payment.

A retains rights and remedies in relation to the remaining $5,000.
228 Subpart does not limit or affect other rights or remedies This subpart does not limit or affect any other rights or remedies that the Bank may have.
Subpart 5—Use of fund to support resolution 229 Bank may use fund to support resolution (1) For the purposes of supporting a resolution measure undertaken or to be under‐ taken for a licensed deposit taker (A) and other matters in connection with the measure, the Bank may authorise an amount to be paid out of the fund if— 25 30 35 107 Part 6 cl 230 Deposit Takers Bill (a) (b) the Bank is satisfied that eligible investors are likely to receive, as a result of the resolution measure, no less favourable treatment than would have been the case had the eligible investors been paid compensation under subpart 3; and the total amount paid out of the fund under this subpart in connection with the resolution of the licensed deposit taker does not exceed the maximum amount calculated under section 230.
(2) (3) Subsection (1)(a) does not apply in relation to paying compensation under subpart 9 of Part 7 (no creditor or shareholder worse off).
In this Part, resolution measure means either of the following: (a) any action taken by the Bank to further the purposes set out in section 256 in connection with a licensed deposit taker in resolution, whether the Bank performs or exercises its functions, powers, or duties under this Act or any other legislation: Example The Bank advances $500 million from the fund to a licensed deposit taker that is in resolution (A) on certain terms and conditions.
The purpose of the advance is ensuring that A’s customers have some continued access to liq- uidity and banking services (in particular, limited access to their transac- tional accounts).

This action has the effect that it is unnecessary for the Bank to trigger a compensation entitlement by issuing a specified event notice.
This action furthers the purposes set out in section 256, including by avoid- ing significant damage to the financial system, enabling the resolution to be carried out in an orderly manner, and supporting the purpose of Part 6 to protect eligible investors to a certain extent.

(b) paying compensation under subpart 9 of Part 7 (no creditor or share‐ holder worse off).
230 Bank must calculate maximum amount (1) The Bank must calculate the maximum amount in the manner— (a) (b) prescribed by the regulations (if any); or that the Bank thinks fit (if no regulations apply for the purpose).
(2) The regulations may, in particular, require the Bank to do 1 or more of the fol‐ lowing: to apply, or not to apply, specified methods of calculation: to apply specified principles: to assess values or average values at specified dates or over specified periods: to take specified matters into account in a specified manner: not to take specified matters into account.
(a) (b) (c) (d) (e) 108 Deposit Takers Bill Part 6 cl 233 (3) (4) The regulations may also require or permit the Bank to make assumptions.

Subsections (2) and (3) do not limit subsection (1).

231 Maximum amount based on net amount of compensation payable in hypothetical liquidation (1) (2) (3) (4) The Minister must make a recommendation for regulations for the purposes of section 230 only on the advice of the Bank.
The Bank may give the advice only if the Bank is satisfied of the matter speci‐ fied in subsection (4).

The Bank must also be satisfied of the matter specified in subsection (4) if the Bank is acting under section 230(1)(b).
The matter to be satisfied of is that the calculation of the maximum amount will be based on— (a) the Bank’s estimate of the amount of compensation (if any) that would be paid to eligible investors under subpart 3 in the event that a liquid‐ ation of the licensed deposit taker under New Zealand law had com‐ menced immediately before it entered into resolution; less (b) the Bank’s estimate of the amount that would be recovered under sub- part 4 in that event.
5 10 15 232 Bank may apply fund money in manner it thinks fit (1) (2) If an amount is paid out of the fund under this subpart, the Bank may apply that amount on the terms and conditions, and otherwise in the manner, that the Bank thinks fit.
20 The power in this section includes (without limitation) the power to do either or both of the following: (a) (b) to pay compensation to persons under subpart 9 of Part 7, whether or not those persons are eligible investors: 25 to advance the money to a licensed deposit taker in resolution (or to any other person) on the terms and conditions that the Bank determines (for example, terms about repayment, interest on the money that has been advanced, and the grant of a security interest over the property of the deposit taker or other person).
30 Independent review 233 Review of assessment (1) The Bank must appoint 1 or more persons as reviewer as soon as is reasonably practicable after— 35 (a) a resolution ends, if the Bank has paid money out of the fund under this subpart during the course of the resolution; or 109 Part 6 cl 234 Deposit Takers Bill (b) the Bank pays money out of the fund under this subpart to pay compen‐ sation under subpart 9 of Part 7.
(2) Before appointing a reviewer, the Bank must be satisfied that the person— (a) has the appropriate knowledge, skills, and experience to act as the reviewer under this section; and 5 (b) is independent of the Bank.
(3) The reviewer must— (a) (b) (c) (d) assess whether the Bank’s calculation of the maximum amount complies with section 230; and prepare a draft report on their findings; and consult the Bank on the draft report; and provide a final report to the Bank after taking into account the Bank’s comments on the draft.

(4) (5) The reviewer may, when acting under subsection (3)(a), only take into account information known to the Bank at the time that it makes the calculation under section 230.
The Bank must publish the final report on its Internet site.

Subpart 6—Levies for depositor compensation scheme 234 Licensed deposit takers must pay levy for scheme (1) Every licensed deposit taker must pay to the Bank, or a prescribed person on behalf of the Bank (the prescribed person), a levy prescribed by the regula‐ tions made under this subpart.
(2) A licensed deposit taker must pay the levy by the date specified for payment, whether in an invoice or other appropriate document given to the deposit taker by the Bank or the prescribed person.

(3) (4) (5) The specified date for payment must be not less than 30 days after the date of the invoice or other appropriate document.

The amount of any unpaid levy and any interest under section 236 are recov‐ erable under section 196(4).

This section is subject to section 235.


235 Certain deposit takers not required to pay levy This subpart does not apply to a licensed deposit taker to which regulations referred to in section 191(2)(c) apply.
10 15 20 25 30 110 Deposit Takers Bill Part 6 cl 237 236 Interest on unpaid levy (1) A person who owes a levy under this subpart is liable to pay to the Bank or the prescribed person interest assessed at the rate and applied by the method (if any) prescribed by the regulations made under this subpart.

(2) The interest is payable on— 5 (a) (b) (c) any unpaid levy; and any unpaid instalment payment in respect of any levy; and any unpaid interest that has been charged already.
237 Levy regulations (1) (2) The Governor-General may, by Order in Council, on the recommendation of the Minister, make regulations providing for the levies.
10 The Minister must, before making a recommendation, have regard to the prin‐ ciple that it is desirable for the levies to be prescribed on the basis that the fol‐ lowing costs should, over time, be met fully out of the fund: (a) (b) (c) the costs of entitlements to compensation under this Part, including the cost of establishing and maintaining the fund (taking into account any money recovered under subpart 4); and the costs of the Bank in performing or exercising its functions, powers, or duties under this Part; and the costs of repaying any money provided to the fund under subpart 8 and any interest or fees, charges, or costs in connection with the money provided to the fund; and 15 20 (d) the costs of collecting the levy money.
(3) The regulations may— (a) (b) (c) (d) (e) (f) provide different levies for different classes of licensed deposit taker: 25 specify the amount of levies, or the method of calculating or ascertaining the amount of levies for each class: include in levies, or provide for the inclusion in levies of, any shortfall in recovering the costs (including the costs referred to in subsection (2)(c)): provide for the payment and collection of levies (which may include providing for instalment payments): provide for interest under section 236: specify the financial year or part financial year to which a levy applies, and apply that levy to that financial year or part financial year and each subsequent financial year until the levy is revoked or replaced: 30 35 111 Part 6 cl 238 Deposit Takers Bill (g) (h) require payment of a levy for a financial year or part financial year, irre‐ spective of the fact that the regulations may be made after that financial year has commenced: provide for waivers, discounts, or refunds of the whole or any part of a levy for any case or class of cases.
5 (4) Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
238 Minister must also have regard to other levy principles The Minister must, before making a recommendation under section 237, have regard to the following principles: 10 (a) (b) that the scheme should be fully funded by licensed deposit takers (including to meet any shortfalls to the fund): that the amount of levies for each class of deposit taker to be specified under section 237(3)(a) should take into account— (i) the likelihood of the Bank issuing a specified event notice in rela‐ tion to a deposit taker of that class; and 15 (ii) estimates of the costs referred to in section 237(2), including estimates of the costs in connection with the Bank issuing a speci‐ fied event notice in relation to a deposit taker of that class; and (iii) the effect that the obligation to pay a levy under this subpart is likely to have on the soundness of a deposit taker of that class: 20 (c) the desirability of predictability in levies.
239 Minister must also have regard to statement of funding approach and Bank’s advice The Minister must, before making a recommendation under section 237, have regard to— 25 (a) (b) the statement of funding approach; and the advice given by the Bank under section 240.

240 Bank must give advice about levy regulations The Bank must, before regulations are made under this subpart, give the Minis‐ ter advice about the proposed regulations (levy advice).
30 241 Process for developing Bank’s advice (1) The Bank must, before giving the levy advice, consult— (a) (b) licensed deposit takers or the persons or organisations that the Bank con‐ siders are able to represent the views of licensed deposit takers; and 35 any other representatives of persons that the Bank believes are signifi‐ cantly affected by a levy.
112 Deposit Takers Bill Part 6 cl 246 (2) The consultation must include consultation relating to the amount of levies or method of calculating or ascertaining the amount of levies.

242 Bank must publish levy advice The Bank must, as soon as practicable after regulations are made under this subpart, publish a copy of the levy advice on the Bank’s Internet site.
5 243 Effect of failure to comply A failure to comply with section 241 or 242 does not affect the validity of any regulations made under this subpart.

Subpart 7—Statement of funding approach 244 Minister must publish statement of funding approach 10 (1) (2) (3) The Minister of Finance must, at least every 5 years, publish a statement of the funding approach for the scheme.

See section 239, which requires the Minister to have regard to the statement before making a recommendation for levy regulations.
In this subpart, the period of a statement is the 5-year period after the date of the statement.
15 245 Minister must consult Bank and seek views of public The Minister must, before publishing a statement,— (a) (b) (c) consult the Bank; and seek the views of members of the public on the matters that the Minister considers would assist the Minister to prepare the statement; and 20 have regard to the comments that are provided by those members of the public within the period and in the manner specified by the Minister.
246 Contents of statement The statement must— (a) contain information about the estimated costs of the scheme under this Part, including— (i) (ii) information on the likelihood of the Bank issuing 1 or more speci‐ fied event notices during the period of the statement; and estimates of the costs referred to in section 237(2) during the period of the statement, including estimates of the cost of entitle‐ ments in connection with the Bank issuing 1 or more specified event notices during the period of the statement; and 25 30 (b) contain information about the assumptions and evidence used to prepare the estimates and other information under paragraph (a); and 35 113 Part 6 cl 247 Deposit Takers Bill (c) (d) (e) set out requirements for the investment of the fund (for example, requirements relating to liquidity); and set out the Minister’s proposed approach to managing the financial pos‐ ition of the Crown in connection with the scheme, including how the Minister’s duty under subpart 8 would likely be complied with if that subpart applies; and state whether the levies will be set with a view to the fund balance reach‐ ing, and being maintained at, a target level or within a target band and, if so,— (i) (ii) that level or band; and the estimated time frame for the fund balance to reach that level or band; and (f) state the reasons for the level or band, and time frame, under paragraph (e).
Subpart 8—Deficiency in fund 247 Deficiency in fund (1) This section applies if the Bank has issued a specified event notice but the property of the fund is not sufficient to do 1 or both of the following in connec‐ tion with the notice: (a) pay entitlements to compensation under this Part: (b) meet all other costs of the Bank in performing or exercising its func‐ tions, powers, or duties under this Part.
(2) (3) (4) The Minister must provide to the fund out of public money, without further appropriation than this section, money by way of grant or advance as may be necessary to meet the deficiency.

The money is provided under this section on the terms and conditions that the Minister determines (for example, terms about repayment by the Bank of money lent to the fund and interest on that money).
See subpart 6, which provides for levies to recover any money provided to the fund under this section and any interest or fees, charges, or costs in connec‐ tion with the money provided to the fund.

Subpart 9—Accountability 248 Financial statements of fund (1) As soon as practicable after the end of each financial year, the Bank must pre‐ pare financial statements in relation to the fund for that financial year.
35 (2) The financial statements must— 114 Deposit Takers Bill Part 6 cl 252 (a) (b) (c) comply with generally accepted accounting practice (as defined in sec‐ tion 8 of the Financial Reporting Act 2013); and include any other information or explanations needed to fairly reflect the financial operations and financial position of the fund; and include a forecast statement of comprehensive revenue and expense for the fund prepared at the start of the financial year, for comparison with the actual financial statements.
5 249 Statement of responsibility (1) The financial statements in relation to the fund must contain, or be accompan‐ ied by, a statement of responsibility.
10 (2) The statement must— (a) (b) (c) contain a statement of the signatories’ responsibility for the preparation of the financial statements and for the judgments in them; and contain a statement of the signatories’ responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting in rela‐ tion to the fund; and contain a statement that, in the opinion of the signatories, the financial statements for the financial year fairly reflect the financial position and operations of the fund; and 15 20 (d) be dated and signed on behalf of the board of the Bank by 2 members.
250 Auditor-General is auditor of fund The fund is to be treated as if it were a public entity as defined in section 4 of the Public Audit Act 2001 and, in accordance with that Act, the Auditor- General is its auditor.

25 251 Audit of financial statements (1) The Bank must forward to the Auditor-General the financial statements of the fund before the end of the second month following the end of the financial year to which the statements relate.
(2) The Auditor-General must— 30 (a) (b) audit the statements; and provide an audit report on those statements to the Bank within 30 days after receiving them.
252 Board must ensure that proper accounting records are kept (1) The board of the Bank must cause accounting records to be kept that— 35 (a) correctly record and explain the transactions of the fund; and 115 Part 6 cl 253 Deposit Takers Bill (b) will at any time enable the financial position of the fund to be deter‐ mined with reasonable accuracy; and (c) will enable the members of the board of the Bank to ensure that the financial statements of the fund comply with this subpart; and (d) will enable the financial statements of the fund to be readily and prop‐ 5 erly audited.
(2) The accounting records must be in written form or in a manner in which they are easily accessible and convertible into written form.

253 Financial information about fund consolidated into Bank’s financial statements only if required by financial reporting standards 10 (1) (2) Information about the financial position or performance of the fund may be consolidated into the financial statements of the Bank or the Bank group only if consolidation is required by applicable financial reporting standards.
This section applies despite anything to the contrary in Part 5 of the Reserve Bank of New Zealand Act 2021.

15 (3) In this section,— applicable financial reporting standard has the same meaning as in section 5 of the Financial Reporting Act 2013 Bank group has the same meaning as in section 215 of the Reserve Bank of New Zealand Act 2021.
20 Subpart 10—Miscellaneous provisions 254 Liquidator must give reasonable assistance to Bank (1) A liquidator of a licensed deposit taker must give all reasonable assistance to enable the Bank to perform or exercise any function, duty, or power under this Part, including 1 or more of the following: 25 (a) (b) (c) ascertaining the eligible investors who are entitled to compensation under this Part: calculating the entitlement to compensation under this Part of 1 or more eligible investors: paying the compensation to, or on account of, 1 or more eligible invest‐ ors.
30 See section 286 of the Companies Act 1993, which allows the Bank to apply for a court order to enforce this duty.

This section does not limit any duty that the liquidator has under subpart 1 of Part 4 (which allows the Bank to require a liquidator to supply information).
For the purposes of subpart 1 of Part 4, the information that the Bank may require a liquidator to give under section 99(1)(a), and the documents that the Bank may require a liquidator to produce or to act in respect of under sec- 35 (2) (3) (4) 116 Deposit Takers Bill Part 7 cl 256 tion 99(1)(b) or (c), include all information and documents of the licensed deposit taker that are in the possession or under the control of the liquidator.
No holding out that product is protected deposit 255 Offence to hold out that product is protected deposit (1) An issuer of a financial product or an associated person of the issuer must not, 5 directly or indirectly, hold out that— (a) (b) the financial product is a protected deposit if that is not the case; or a holder of the financial product is entitled to compensation under this Part if that is not the case.
(2) A person commits an offence if they— 10 (a) (b) contravene subsection (1); and know that, or are reckless as to whether, what they are holding out is not the case.

(3) A person that commits an offence against this section is liable on conviction,— (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): 15 (b) in any other case, to a fine not exceeding $2,500,000.
Part 7 Crisis management and resolution Subpart 1—Preliminary provisions 256 Additional purposes of this Part (1) This Part has the following purposes (in addition to those set out in section 3): (a) to avoid significant damage to the financial system that could result from a licensed deposit taker being in financial distress or other difficulties, including— (i) (ii) by maintaining the continuity of systemically important activities undertaken by licensed deposit takers in New Zealand; and by mitigating, or otherwise managing, any loss of confidence in the financial system resulting from a licensed deposit taker being in financial distress or other difficulties; and (b) to enable a licensed deposit taker that is in resolution to be dealt with in an orderly manner; and (c) to support the purpose of Part 6; and 20 25 30 117 Part 7 cl 257 Deposit Takers Bill (d) to the extent not inconsistent with any of paragraphs (a), (b), and (c), to minimise the costs of dealing with, or costs or losses otherwise incur‐ red in connection with, a licensed depositor taker that is in financial dis‐ tress or other difficulties by— (i) (ii) preserving the interests of creditors and maintaining the ranking of claims of creditors; and 5 dealing with the financial distress or other difficulties as quickly as is reasonably practicable; and (e) to the extent not inconsistent with any of paragraphs (a), (b), and (c), to support the effective and efficient management of public financial resources by avoiding or minimising, and otherwise managing, the need to rely on public money to deal with a licensed deposit taker that is in financial distress or other difficulties.
10 (2) In this Part, public money has the same meaning as in section 2(1) of the Pub‐ lic Finance Act 1989.

15 (3) This section does not limit section 3.


Subpart 2—Planning and statement of approach Resolution plan for each licensed deposit taker 257 Bank must prepare and maintain orderly resolution plan for each licensed deposit taker The Bank must prepare and maintain a plan, in relation to each licensed deposit taker, that is designed to facilitate dealing with the deposit taker in an orderly manner if it were to enter into resolution.
Bank’s statement of approach to resolution 258 Bank must publish statement of approach to resolution The Bank must, after consulting the Minister, publish a statement of approach to resolution on the Bank’s Internet site.
20 25 259 Content of statement of approach The statement of approach must state— (a) (b) the Bank’s expected resolution strategy or strategies for dealing with licensed deposit takers under this Part; and 30 the Bank’s intended approach to the following in connection with deal‐ ing with licensed deposit takers under this Part: (i) co-operating with relevant law enforcement or regulatory agen‐ cies, Australian financial authorities, and overseas supervisors; and 35 118 Deposit Takers Bill Part 7 cl 262 (ii) (iii) engaging with the Minister and relevant law enforcement or regu‐ latory agencies about the use of powers under this Part; and otherwise performing or exercising functions, powers, or duties under subparts 3 to 8.
260 Review of statement of approach (1) The Bank— (a) must review the statement of approach within 5 years after the first state‐ ment is published and then at subsequent intervals of not more than 5 years; and (b) may review the statement of approach at any other time.

5 10 (2) In carrying out the review, the Bank must— (a) consider whether any amendments to the statement of approach are necessary or desirable; and (b) report on the findings to the Minister.
(3) The Bank must publish the report on the Bank’s Internet site as soon as practic‐ able after giving it to the Minister.

15 Failure to comply does not affect validity of actions 261 Failure to comply with subpart does not affect validity of Bank’s actions The performance or exercise of a function, power, or duty is not invalid by rea‐ son only of a failure to comply with this subpart.
20 Subpart 3—Bank may give directions, approve sales, and replace directors Bank may give directions 262 Bank may give directions to licensed deposit taker (1) The Bank may give a licensed deposit taker (A) a direction if the Bank— 25 (a) (b) has reasonable grounds to believe that 1 or more of the circumstances set out in subsection (2) apply; and considers that directing A is necessary or desirable for 1 or more of the following purposes: (i) (ii) (iii) to remedy or avoid the matter set out in subsection (2): to avoid or mitigate any adverse effects arising, or likely to arise, in connection with the matter set out in subsection (2): to avoid any contravention or further contravention of a prudential obligation in connection with the matter set out in subsection (2).
30 35 119 Part 7 cl 263 Deposit Takers Bill (2) The circumstances are as follows: (a) (b) A is insolvent or is likely to become insolvent: the circumstances of A are such as to be prejudicial to the soundness of the financial system: (c) A’s affairs are being conducted in a manner prejudicial to— (i) (ii) A’s solvency; or the soundness of the financial system: (d) A has contravened, may have contravened, or is likely to contravene a requirement under an applicable standard or a condition of its licence to maintain a minimum amount (or ratio) of capital: (e) (f) (g) A has contravened, may have contravened, or is likely to contravene any other prudential obligation in a material respect: A has been or is operating fraudulently or recklessly: an overseas supervisor has taken, or is taking, regulatory action against A or against a person that controls A (whether or not that action has been completed).
5 10 15 (3) Subsection (2)(d) does not limit subsection (2)(e).
263 Bank may give directions to associated person (1) The Bank may give an associated person (B) of a licensed deposit taker (A) a direction if the Bank— 20 (a) (b) has reasonable grounds to believe that 1 or more of the circumstances set out in subsection (2) apply; and considers that directing B is necessary or desirable for 1 or more of the following purposes: (i) (ii) (iii) to remedy or avoid the matter set out in subsection (2): to avoid or mitigate any adverse effects arising, or likely to arise, in connection with the matter set out in subsection (2): to avoid any contravention or further contravention of a prudential obligation in connection with the matter set out in subsection (2).
(2) The circumstances are as follows: (a) A’s business and affairs are so closely connected with B that the Bank would be unable to effectively exercise the powers conferred by this Part in relation to A unless a direction is issued to B: (b) the circumstances of B are such as to be prejudicial to— (i) A’s solvency; or (ii) A’s ability to comply with a prudential obligation in a material respect: 25 30 35 120 Deposit Takers Bill Part 7 cl 264 (c) B’s affairs are being conducted in a manner prejudicial to— (i) A’s solvency; or (ii) A’s ability to comply with a prudential obligation in a material respect.
264 Scope of directions (1) A direction given under this subpart may require a licensed deposit taker or an associated person to do 1 or more of the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) consult the Bank, at the times and in the manner specified by the Bank, about the circumstances of the deposit taker or associated person and the actions or proposed actions to resolve any difficulties facing the deposit taker or associated person: carry on its business, or any part of its business, in accordance with the direction: cease to carry on its business, or any part of its business, in accordance with the direction: 15 ensure that any director, or any senior manager or other employee, of the deposit taker or associated person ceases to take part in the management or conduct of its business except with the permission of the Bank and so far as that permission extends: remove or replace any of the directors of an associated person of the deposit taker: 20 remove or replace its auditor or appoint an auditor approved by the Bank: take the action that is specified in the direction to address a contraven‐ tion of any prudential obligation: 25 take the action that is specified in the direction to address any circum‐ stances of financial difficulties: implement all, or part, of the deposit taker’s contingency and recovery plans in accordance with the direction (see section 88): issue shares in accordance with the direction: take the action that is specified in the direction that is necessary or desir‐ able for any matter in section 79(4)(a), (b), (c), or (d) to occur under a bail-in instrument.
(2) If the events or circumstances referred to in section 79(2)(c) for a bail-in instrument include a direction under this subpart, a direction given under this subpart may provide for a matter in section 79(4)(a), (b), (c), or (d) to occur.

121 5 10 30 35 Part 7 cl 265 Deposit Takers Bill 265 Direction must be in writing and state grounds A direction given under this subpart must— (a) (b) be in writing; and state the grounds on which it is given.
Bank may approve sale or disposition 266 Bank may approve sale or disposition (1) The Bank may approve a sale or other disposition of the whole or part of the capital or business undertaking of either or both of the following: (a) (b) a licensed deposit taker, if the Bank has reasonable grounds to believe that 1 or more of the circumstances listed in section 262(2) exist: an associated person of the licensed deposit taker, if the Bank has reasonable grounds to believe that 1 or more of the circumstances listed in section 263(2) exist.
(2) If the Bank grants an approval,— (a) (b) it must be given by written notice to the parties; and the provisions of any legislation, or of any instrument, requiring any consent, licence, permission, or clearance or other authority do not apply as a condition of the legality or validity of the sale or other disposition.
Compare: 1989 No 157 s 116(2), (3) Bank may remove, replace, or appoint director 267 Power to remove, replace, or appoint director of licensed deposit taker (1) The Bank may remove or replace a director of a licensed deposit taker (A), or appoint a person as a director of a licensed deposit taker (A), if the Bank— (a) has reasonable grounds to believe that 1 or more of the following apply: (i) (ii) A is insolvent or is likely to become insolvent: the circumstances of A are such as to be prejudicial to the sound‐ ness of the financial system: (iii) A has contravened, may have contravened, or is likely to contra‐ vene any prudential obligation in a material respect; and (b) considers that exercising a power under this section is necessary or desirable.
30 This section does not apply to a director of an overseas person.

This section and section 268 have effect despite any agreement, legislation, or rule of law, or the terms of the constitution of a licensed deposit taker.
(2) (3) 122 Deposit Takers Bill Part 7 cl 269 268 How Bank exercises power to remove, replace, or appoint director (1) The Bank must— (a) exercise a power under section 267 by giving written notice to— (i) the director concerned, or the person being appointed; and (ii) in the case of the removal, replacement, or appointment of a director, the Registrar of Companies; and 5 (b) give written notice of the exercise of the power to the licensed deposit taker.
(2) A notice given under subsection (1)(a)(ii) is sufficient compliance with sec‐ tion 159 of the Companies Act 1993 as long as, in the case of an appointment, the notice is accompanied by the form of consent and certificate required under section 152 of that Act.
10 Disclosure of direction or notice 269 Prohibition on disclosing or publishing direction or notice (1) A person must not disclose or publish the fact that a direction has been given 15 (2) under this subpart or that a notice has been given under section 268.
Subsection (1) does not apply to the disclosure or publication of the fact that a direction or notice has been given if the disclosure or publication is made— (a) to any director, senior manager, or professional or financial adviser of the licensed deposit taker, or associated person of a licensed deposit taker, to which the direction or notice relates; or (b) with the written consent of the Bank, for the purposes of the sale or other disposition, or the possible sale or other disposition, of the whole or any part of the capital, or business undertaking, of the licensed deposit taker or associated person of a licensed deposit taker; or (c) by, or on behalf of, the Bank, or with the written consent of the Bank,— (i) (ii) to the public or any class of the public; or to any person who has a proper interest in knowing that the direc‐ tion or notice has been given.
(3) For the purposes of subsection (2)(b) and (c),— (a) the Bank’s consent must not be unreasonably withheld; and (b) in considering whether to give its consent, the Bank must take into account the time that has elapsed since the direction or notice was given.

(4) Subsection (1) does not apply to the disclosure or publication of the fact that a direction has been given under section 264(1)(d) if the disclosure or publi‐ cation is for the purpose of giving effect to the direction.
20 25 30 35 123 Part 7 cl 270 Deposit Takers Bill (5) Subsection (1) does not apply to the disclosure or publication of the fact that the Bank has directed a matter in section 79(4)(a), (b), (c), or (d) to occur (which relates to bail-in).
Compare: 2010 No 111 s 150(1)–(4) 270 Offence to contravene prohibition A person that contravenes section 269 commits an offence and is liable on conviction,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: in any other case, to a fine not exceeding $2,500,000.
Compare: 2010 No 111 s 150(5) 5 10 Subpart 4—Resolution of licensed deposit takers and associated persons 271 Resolution of licensed deposit takers and associated persons The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank,— (a) (b) declare that a licensed deposit taker (A) is in resolution; and 15 declare that 1 or more associated persons of a licensed deposit taker are in resolution.
Compare: 1989 No 157 s 117(1) 272 Resolution of subsidiaries (1) (2) If a licensed deposit taker (A) enters resolution, every subsidiary of A also enters resolution unless the subsidiary is declared to be a subsidiary to which the order under section 271 does not apply.

If A acquires a subsidiary after it enters resolution, the subsidiary is also in resolution unless an Order in Council is made before the acquisition that declares that the subsidiary to be acquired is not in resolution.
(3) A person that holds office as the resolution manager in respect of A also holds office as the resolution manager in respect of the subsidiaries that are in reso‐ lution (unless a notice under section 354 provides otherwise).
Compare: 1989 No 157 s 117(2), (2A) 273 Resolution for overseas persons If a licensed deposit taker in resolution is an overseas person, this subpart and subparts 5 to 8 apply only to— (a) the property, rights, and liabilities relating to its New Zealand business; and (b) the management or conduct of its New Zealand business.
Compare: 1989 No 157 s 117(3) 20 25 30 35 124 Deposit Takers Bill Part 7 cl 277 274 Date on which, and time at which, resolution starts (1) An Order in Council made under section 271 must specify the date on which, and the time at which, it comes into force.

(2) The date and time must not be earlier than the date on which, and the time at which, the Order in Council is made.
5 (3) A licensed deposit taker or an associated person— (a) (b) enters resolution when the Order in Council comes into force; and remains in resolution until the end of the resolution under section 279.
Compare: 1989 No 157 s 117(4), (5) 275 Questions about whether transactions are before or after resolution 10 (1) (2) This section applies if a question arises as to whether, on the date on which a licensed deposit taker or an associated person entered resolution, an act was done or a transaction was entered into or effected before or after the deposit taker or person entered resolution.
The act or transaction must, in the absence of proof to the contrary, be treated as having been done or entered into or effected after the deposit taker or person enters resolution.
Compare: 1989 No 157 s 117(1A) 276 Limitation on application of provisions to covered bond and certain other securitisation SPVs 15 20 (1) This section applies to a person if the person is— (a) (b) a covered bond SPV (as defined in section 401); or an SPV that— (i) is involved in a securitisation arrangement of a type prescribed by the regulations; and 25 (ii) is otherwise of a class that is prescribed by the regulations.
(2) The SPV is not— (a) (b) an associated person for the purposes of section 271; or a subsidiary for the purposes of section 272.
Compare: 1989 No 157 s 139J(4) 30 277 Grounds on which licensed deposit taker may be declared to be in resolution (1) The Bank may make a recommendation under section 271 in respect of a licensed deposit taker (A) only if the Bank— (a) is satisfied on reasonable grounds that 1 or more of the following matters apply: 35 (i) A is insolvent or is likely to become insolvent: 125 Part 7 cl 278 Deposit Takers Bill (ii) A has contravened a requirement under an applicable standard or a condition of its licence to maintain a minimum amount (or ratio) of capital: (iii) A has contravened a direction given under subpart 3: (iv) A has persistently or seriously contravened any other prudential 5 obligation: (v) an overseas supervisor has taken, or is taking, regulatory action against A or against a person that controls A (whether or not that action has been completed); and (b) is satisfied that there is no reasonable prospect of the matters that apply under paragraph (a) being adequately dealt with to the Bank’s satisfac‐ tion in a timely and orderly way other than through resolution.
(2) (3) Subsection (1)(a)(ii) and (iii) does not limit subsection (1)(a)(iv).
In this section, regulatory action, in relation to A or a person that controls A, means— 10 15 (a) action to cancel or suspend the licence, registration, or other authorisa‐ tion of A or the person to act as a bank or other deposit taker (or action equivalent to cancelling or suspending such a licence, registration, or authorisation); or (b) a direction to A or the person to the effect of 1 or more of the following: 20 (i) (ii) (iii) to take specified action to improve its solvency: to carry on its business, or any part of its business, in accordance with the direction: to cease to carry on its business, or any part of its business, in accordance with the direction.
25 Compare: 1989 No 157 s 118 278 Grounds on which associated person may be declared to be in resolution (1) The Bank may make a recommendation under section 271 in respect of an associated person (B) of a licensed deposit taker (A) if the Bank— (a) (b) is satisfied on reasonable grounds that 1 or more of the matters set out in subsection (2) apply; and is satisfied that there is no reasonable prospect of the matters that apply under paragraph (a) being adequately dealt with to the Bank’s satisfac‐ tion in a timely and orderly way other than through resolution.
(2) The matters are as follows: 30 35 (a) B has contravened, or is contravening, any direction or other require‐ ment imposed by or under this Act or the regulations: 126 Deposit Takers Bill Part 7 cl 280 (b) A’s business and affairs are so closely connected with B that the Bank will be unable to exercise effectively the powers conferred by this Part in relation to A unless B is in resolution: (c) the circumstances of B are such as to be prejudicial to— (i) A’s solvency; or 5 (ii) A’s ability to comply with a prudential obligation in a material respect: (d) B’s affairs are being conducted in a manner prejudicial to— (i) A’s solvency; or (ii) A’s ability to comply with a prudential obligation in a material 10 respect.
279 End of resolution (1) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, declare that a licensed deposit taker or an associated person that is in resolution is no longer in resolution.

15 (2) Despite subsection (1), the recommendation of the Bank is not required if public money is involved in the resolution (within the meaning of section 346(2)).
(3) A licensed deposit taker or an associated person is also no longer in resolution 20 if it is put into liquidation on the application of the Bank.

(4) The resolution ends,— (a) in the case of subsection (1), at the date and time specified in the Order in Council; or (5) (b) in the case of subsection (3), at the commencement of the liquidation.
If an Order in Council declares that a licensed deposit taker is no longer in resolution, every subsidiary of the deposit taker, except a subsidiary specified in the order, is also no longer in resolution (with effect at the same date and time specified under subsection (4)(a)).
Compare: 1989 No 157 s 144 25 30 280 Application of resolution provisions to other persons in resolution (1) (2) References in subparts 5, 6, and 8 to a licensed deposit taker (or similar ref‐ erences) must be read as including references to another person in resolution (unless the context otherwise requires).
In this section, another person in resolution means any of the following per‐ sons if the person is in resolution: 35 (a) a subsidiary or any other associated person of a licensed deposit taker: 127 Part 7 cl 281 Deposit Takers Bill (b) a body corporate formed and registered under section 311 or 317.
Compare: 1989 No 157 s 140(2)(b) Subpart 5—Moratorium and restriction on resolution trigger 281 Moratorium (1) If a licensed deposit taker (A) is in resolution, no person may do any of the fol‐ lowing: 5 (a) (b) (c) (d) (e) (f) (g) commence or continue a proceeding, including a proceeding by way of counterclaim, against A: issue an execution, attach a debt, or otherwise enforce or seek to enforce a judgment or an order obtained in respect of A: 10 take any steps to put A into liquidation or voluntary administration: enter into possession of, sell, or appoint a receiver of A’s property or property in respect of which A has an equity of redemption: exercise or continue a power or rights under, or in accordance with, a mortgage, charge, debenture, instrument, or other security interest over A’s property: claim or recover, under a retention of title clause, hire purchase agree‐ ment, mortgage, lease, or security interest, any property in A’s posses‐ sion: determine or forfeit a tenancy, retake or re-enter premises, or exercise or continue a power or rights under or in connection with a lease, against A: (h) exercise a right of set-off against A.
(2) Nothing in subsection (1) limits or prevents the Bank from performing or exercising any functions, powers, or duties under this Act.

(3) This section is subject to section 418(1) to (3).

Compare: 1989 No 157 s 122(1), (10) 282 Period of moratorium (1) The moratorium under section 281(1) ends on the earlier of the following: (a) the end of the resolution: (b) the close of the date that is 12 months after the date on which the licensed deposit taker enters resolution.
(2) However, the Bank may, by notice in the Gazette, extend the period of the moratorium under section 281(1) beyond the period referred to in subsec- tion (1)(b) for a further period not exceeding 12 months, and may in the same manner extend that period on successive occasions.
128 15 20 25 30 35 Deposit Takers Bill Part 7 cl 285 (3) (4) The Bank may extend the period of the moratorium only if it is satisfied that it is necessary or desirable to do so for either or both of the purposes in section 256(1)(a) and (b).

The Bank may only issue a notice to extend the period of the moratorium before the end of the period to be extended.

5 (5) An extension may relate separately to a licensed deposit taker and any 1 or more associated persons of the deposit taker.
283 Bank must publish notice on Internet site The Bank must, as soon as practicable, publish a notice under section 282(2) on the Bank’s Internet site.

10 284 Restriction on resolution trigger (1) This section applies if a licensed deposit taker (A) is party to an agreement, whether the proper law of the agreement is the law of New Zealand or the law of any other jurisdiction.
(2) Neither of the matters referred to in subsection (3) allows the agreement, or a 15 party to the agreement (other than A), to do any of the following: (a) (b) (c) (d) deny any liability or obligation under the agreement: accelerate or require the payment or performance of a liability or an obli‐ gation: terminate or close out any transaction relating to the agreement: 20 enforce any security interest under the agreement.
(3) The matters are as follows: (a) (b) A, or an associated person of A, entering into resolution: the Bank or the Minister performing or exercising 1 or more functions, powers, or duties under subpart 4, this subpart, or any of subparts 6 to 8 in relation to A or an associated person of A.

(4) (5) This section continues to apply despite the end of the period of the moratorium under section 282.

This section is subject to section 418(1) to (3).


285 Person may commence or continue proceeding with leave Despite sections 281 and 284, a person may commence or continue a pro‐ ceeding against the licensed deposit taker for the purpose of determining whether a right or liability exists if the leave of the Bank or the court is first obtained.
Compare: 1989 No 157 s 122(2) 25 30 35 129 Part 7 cl 286 Deposit Takers Bill 286 Bank may waive application of moratorium and restriction on resolution trigger (1) Despite sections 281 and 284, the Bank may waive the application in whole or in part of either or both of those sections to a creditor or class of creditors in respect of the whole or part of a claim of, or security interest held by, the cred‐ itor or class of creditors.

(2) This section does not apply to section 281(1)(c).
Compare: 1989 No 157 s 122(3) 287 Moratorium and restriction on resolution trigger do not affect existence or priority of security interest Sections 281 and 284 do not affect the existence of any security interest over the property of the licensed deposit taker or its priority over other debts.
Compare: 1989 No 157 s 122(4) 288 Moratorium does not limit or prevent obligations incurred or rights granted after deposit taker enters resolution Section 281(1)(a), (b), and (d) to (h) does not limit or prevent a person from taking any of the actions specified in those paragraphs in relation to an obligation incurred or a right granted under a deed, an instrument, a trust, or an agreement entered into by the licensed deposit taker after the date on which, and the time at which, the deposit taker enters resolution.
Compare: 1989 No 157 s 122(5) 5 10 15 20 289 Moratorium and restriction on resolution trigger do not limit or affect certain rights under netting agreement or rights under rules of designated FMI (1) In the case of a netting agreement to which sections 310A to 310O of the Com‐ panies Act 1993 apply,— 25 (a) (b) section 281(1)(h) does not apply to a right of set-off provided for in the netting agreement; and section 281(1) does not limit or prevent the exercise of any of the fol‐ lowing rights under the netting agreement: 30 (i) the termination, in accordance with the netting agreement, of all or any transactions that are subject to the netting agreement by reason of the occurrence of an event that is specified in the netting agreement and is an event (including entering resolution) that occurs not later than when the licensed deposit taker enters reso‐ lution: 35 (ii) the taking of an account, in accordance with the netting agree‐ ment, of all money due between the parties to the netting agree‐ ment in respect of transactions affected by the termination; and 130 Deposit Takers Bill Part 7 cl 290 (c) sections 281(1) and 284 do not limit or prevent the exercise of any right referred to in section 281(1)(d) to (f) in respect of any property of the licensed deposit taker (A) to the extent that the right is exercised to enforce, or to assist in enforcing, the due performance, by A, of obli‐ gations entered into by A under a recognised multilateral netting agree‐ ment (within the meaning of section 310A of the Companies Act 1993).
(2) (3) Subsection (1)(b) is subject to section 291.
If subpart 5 of Part 3 of the Financial Market Infrastructures Act 2021 applies to a transaction or an arrangement,— (a) (b) sections 281(1) and 284 do not limit or prevent the exercise of any right relating to the calculation of a netted balance under the rules of the FMI; and sections 281(1) and 284 do not limit or prevent the exercise of any right referred to in section 281(1)(d) to (f) in respect of any property of the licensed deposit taker (A) if the right that is exercised— (i) (ii) is provided under the rules of the FMI; and has been granted to secure, or to assist in securing, the due per‐ formance, by A, of obligations entered into by A under those rules.
(4) In this section,— (a) (b) designated FMI, netting, and participant have the meanings given in section 5 of the Financial Market Infrastructures Act 2021; and netted balance means any amount calculated in accordance with the rules of a designated FMI as the net debit payable by, or on behalf of, a participant of the designated FMI to, or on behalf of, another participant of that designated FMI for all or any claims or obligations to which those rules apply; and (c) rules is to be read in accordance with section 35 of the Financial Market Infrastructures Act 2021.
Compare: 1989 No 157 s 122(7)–(9) 290 Moratorium does not limit or prevent certain things in relation to derivatives, etc (1) Section 281(1) does not limit or prevent an agreement, or a party to an agree‐ ment, from doing any of the things referred to in subsection (2) in relation to a derivative, a relevant security interest, or a specified instrument.
(2) The things are as follows: (a) (b) denying any liability or obligation under the agreement: accelerating or requiring the payment or performance of a liability or an obligation: 131 Part 7 cl 291 Deposit Takers Bill (c) (d) terminating or closing out any transaction relating to the agreement: enforcing any security interest under the agreement.
(3) In this section and sections 291 and 293,— collateral has the same meaning as in section 62A of the Corporations (Investigation and Management) Act 1989 5 derivative means a derivative within the meaning of section 8(4) of the FMCA (but disregarding any specified declaration) possession has the same meaning as in section 62A of the Corporations (Investigation and Management) Act 1989 qualifying derivative has the same meaning as in section 62A of the Corpor‐ ations (Investigation and Management) Act 1989 10 relevant security interest means a security interest that secures payment or performance of an obligation under or in relation to a qualifying derivative specified declaration means a declaration under subpart 3 of Part 9 of the FMCA other than a declaration that has been specified in the regulations for the purposes of this definition 15 specified instrument means an agreement of a kind that is— (a) (b) prescribed in the regulations; and entered into in connection with a netting agreement (within the meaning of section 310A of the Companies Act 1993).
20 291 Restriction on resolution trigger does not limit or prevent certain things in relation to derivatives, etc, after stay (1) (2) Section 284 does not limit or prevent an agreement, or a party to an agree‐ ment, from doing any of the things referred to in subsection (2) in relation to a derivative, a relevant security interest, or a specified instrument if the thing is done after— (a) (b) the default time (see subsection (4)); or an earlier or a later time specified by the Bank in a notice issued under section 292.
The things are as follows: (a) (b) (c) (d) denying any liability or obligation under the agreement: accelerating or requiring the payment or performance of a liability or an obligation: terminating or closing out any transaction relating to the agreement: enforcing any security interest under the agreement.
(3) However, in the case of a relevant security interest, subsection (1) applies only if, before the agreement or party does the thing referred to in subsection 132 25 30 35 Deposit Takers Bill Part 7 cl 293 (2), the collateral is delivered, transferred, held, registered, or otherwise desig‐ nated so as to be in the possession or under the control of— (a) (b) the enforcing counterparty; or another person (who is not the grantor) on behalf of the enforcing coun‐ terparty, under the terms of an arrangement evidenced in writing.
5 (4) (5) In this section and section 292, default time means the close of the day after the date on which the licensed deposit taker enters resolution.

Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (3) (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (3) of this section).
Compare: 2021 No 13 s 125; 1989 No 157 s 122(9A), (9B) 292 Bank may reduce or extend stay (1) The Bank may, before the default time, issue a notice that specifies an earlier or a later time for the purposes of section 291(1)(b) in respect of a licensed deposit taker (A) that is in resolution.

(2) The time that is specified may be— 10 15 (a) (b) before the default time; or after the default time if the Bank is satisfied of all of the matters set out in section 293.
20 (3) The notice may relate to all things referred to in section 291(2) or to a class or classes of those things.
Compare: 1989 No 157 s 122C; 2021 No 13 s 126 293 Matters Bank must be satisfied of when reducing or extending stay The matters referred to in section 292(2)(b) are that— (a) A is able to meet all of the following liabilities as and when those liabil‐ ities become due and payable: (i) A’s liabilities under all netting agreements to which sections 310A to 310O of the Companies Act 1993 apply: (ii) A’s liabilities in respect of security interests over collateral to the extent that the security interests secure payment or performance of obligations under or in relation to derivatives: (iii) A’s liabilities that are subject to netting under the rules of a desig‐ nated FMI; and 25 30 (b) A is able to pay its debts as they become due in the normal course of 35 business; and (c) either— 133 Part 7 cl 294 Deposit Takers Bill (i) (ii) A complies with the minimum capital requirements (if any) to which it is subject under an applicable standard; or there are satisfactory arrangements in place to ensure that A meets all of its liabilities referred to in paragraph (a) as and when those liabilities become due and payable and those arrangements will remain in place until A complies with the requirements referred to in subparagraph (i) or the resolution ends, which‐ ever occurs first.
Compare: 1989 No 157 s 122D 294 Publication of notice (1) The Bank must, as soon as practicable,— (a) publish any notice issued under section 292 on the Bank’s Internet site; and (b) notify the issue of the notice in the Gazette.

(2) (3) The notice may take effect at any time after it is published under subsection (1)(a).

The notice cannot be varied or revoked.


Compare: 1989 No 157 s 122E Subpart 6—Conduct of resolution Bank must act as resolution authority 295 Bank is resolution authority The Bank must act as the resolution authority in relation to a resolution of a licensed deposit taker.

296 Function of resolution authority (1) (2) The Bank’s function as the resolution authority is to ensure that a resolution of a licensed deposit taker is carried out in a way that furthers the purposes set out in section 256.
The function includes performing or exercising the duties or powers imposed or conferred on the Bank under subparts 5 to 8.

297 Bank must supervise resolution manager (1) The Bank as the resolution authority must supervise a resolution manager to ensure that the resolution manager efficiently and effectively performs or exer‐ cises the resolution manager’s functions, powers, and duties.
(2) See— (a) section 350, which requires a resolution manger to comply with the Bank’s directions; and 35 134 Deposit Takers Bill Part 7 cl 302 (b) (c) section 351, which requires a resolution manager to consult the Bank and have regard to the Bank’s advice; and sections 352 and 353, which require a resolution manager to report to the Bank.
298 Bank must regularly report to Minister on conduct of resolution 5 (1) (2) The Bank must regularly report to the Minister on the conduct of a resolution.

The reports must— (a) (b) be made when required by the Minister; and contain the information required by the Minister.
Resolution manager has management and control of deposit taker 10 299 Management of licensed deposit taker vests in resolution manager The management of a licensed deposit taker in resolution vests in the resolution manager on and after the time when it enters resolution.
Compare: 1989 No 157 s 128 300 Directors, managers, and other persons may act only with resolution 15 manager’s permission (1) If a licensed deposit taker is in resolution, it is not lawful or competent for a director, a senior or any other manager, or any other person to be engaged in the management or conduct of its business, or to act as an officer, agent, or employee of the deposit taker, except with the permission of the resolution manager and to the extent that the permission extends.
(2) This section is subject to section 418(1) to (3).

Compare: 1989 No 157 s 128 Resolution manager’s general powers 301 Resolution manager’s general powers The resolution manager has all of the powers, rights, and authorities that are necessary or desirable to enable the resolution manager to further the purposes set out in section 256 in connection with the resolution of a licensed deposit taker.
Compare: 1989 No 157 s 129(1) 302 Resolution manager has powers of deposit taker and of its shareholders, members, and board The resolution manager has— 20 25 30 (a) all the powers, rights, and privileges that the licensed deposit taker in resolution has under any agreement or otherwise; and 35 (b) in the case of a body corporate in resolution,— 135 Part 7 cl 303 Deposit Takers Bill (i) all the powers of the shareholders or members in general meeting; and (ii) all the powers of the board of directors of the body corporate; and (c) (d) in the case of a partnership in resolution, all the powers exercisable by a partner or partners; and 5 in the case of any other unincorporated body of persons in resolution, all the powers exercisable by its governing body.
Compare: 1989 No 157 s 129(2) 303 Resolution manager may carry on business of licensed deposit taker The resolution manager may carry on all or any part of the business of the licensed deposit taker in resolution and has, in relation to the deposit taker, all of the powers, rights, and authorities that are necessary or desirable to carry on that business.
Compare: 1989 No 157 s 130 304 Resolution manager may pay creditors and compromise claims The resolution manager may do 1 or more of the following: (a) pay, in whole or in part, any creditor or class of creditors of the deposit taker: (b) make a compromise or an arrangement with a creditor, or person claim‐ ing to be a creditor, of the deposit taker: (c) (d) (e) compromise all calls, debts, and claims subsisting, or supposed to sub‐ sist, between the deposit taker and any other person: deal with all questions relating to the property of the deposit taker: give a complete or partial discharge in relation to any calls, debts, or claims subsisting, or supposed to subsist, between the deposit taker and any other person.
Compare: 1989 No 157 s 131 Resolution manager’s miscellaneous powers 305 Resolution manager may offer and issue deposit taker’s financial products (1) The resolution manager may offer and issue any financial products in respect of which a licensed deposit taker in resolution (A) is the issuer (for example, shares in A or debt securities in respect of which A is liable to repay money owing under the securities).
10 15 20 25 30 (2) An offer and issue of financial products may be made to any person or persons, and on any terms and conditions, that the resolution manager thinks fit.
35 136 Deposit Takers Bill Part 7 cl 309 306 Resolution manager may disclaim onerous property (1) (2) (3) The resolution manager has all of the powers conferred on a liquidator of a company by section 269 of the Companies Act 1993 and may exercise the powers in the same manner as if the resolution manager were the liquidator of a company in liquidation under that Act.
Section 269 of the Companies Act 1993 applies to the disclaimer of any prop‐ erty of the licensed deposit taker as if the property were property of a company to which that section applied.

This section does not limit section 301.


Compare: 1989 No 157 s 129(3) 307 Resolution manager may trace property improperly disposed of (1) This section applies if— (a) (b) any property has been acquired by a person in circumstances where it is just and equitable that the person should hold it on trust for a licensed deposit taker in resolution; or any property has been improperly disposed of, whether or not the prop‐ erty has become subject to a trust.
(2) The court may, if it thinks fit, make an order— (a) (b) that the property be transferred or delivered to the resolution manager: that any person who acquired or received the property, or their adminis‐ trator, pay to the resolution manager a sum not exceeding the value of the property.

For the purpose of giving effect to the order, the court may make any further order that it thinks fit.

This section and section 308 do not limit the Companies Act 1993.
Compare: 1989 No 157 s 138(1), (2), (4) (3) (4) 308 Order may not deprive good-faith purchaser for value An order under section 307 does not deprive any other person of any estate or interest in the property if the estate or interest was acquired in good faith and for valuable consideration.
Compare: 1989 No 157 s 138(3) 309 Resolution manager may change balance date (1) (2) (3) The resolution manager may change the balance date of a licensed deposit taker that is in resolution to any date that the resolution manager thinks fit.

The Commissioner of Inland Revenue’s approval of the change is not required.

35 Sections 42 and 43 of the Financial Reporting Act 2013 do not apply in relation to the change.
137 Part 7 cl 310 Deposit Takers Bill Bank may investigate affairs of licensed deposit taker 310 Bank’s investigation powers (1) (2) (3) (4) The Bank has all the powers conferred, and all the duties imposed, on a person appointed under subpart 5 of Part 4.
The following provisions apply, with any necessary modifications, as if the Bank were appointed under section 126: (a) sections 127 and 128 (which relate to powers to carry out an investi‐ gation of the affairs of a licensed deposit taker); and (b) section 129 (which sets out offences in relation to investigations).

Subsection (2) does not limit subsection (1).

This section does not limit any other power conferred on the Bank (for example, powers under subpart 1 of Part 4).
Compare: 1989 No 157 s 117(6) 5 10 Bank may form body corporate to acquire New Zealand business 311 Bank may form body corporate to acquire New Zealand business 15 (1) If an overseas licensed deposit taker (A) is in resolution, the Bank may do 1 or more of the following: (a) (b) (c) form and register a body corporate (B) under the Companies Act 1993: subscribe for or acquire, as trustee for A, all or any of B’s shares: issue all or any of B’s shares as fully or partly paid on the terms and con‐ ditions that the Bank thinks fit.
20 (2) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, declare that the whole or any part of any property, rights, and liabilities of A relating to its New Zealand business will vest in B on a date specified in the order.

(3) The property, rights, and liabilities of A vest in B on the date specified.
Compare: 1989 No 157 s 123(1), (2) 312 Vesting does not affect deposit taker’s obligations or place it in breach A vesting under section 311— (a) does not reduce, extinguish, or affect any obligation or liability of the overseas licensed deposit taker (A); and (b) does not constitute a breach or repudiation of any agreement entered into by A with any person.
Compare: 1989 No 157 s 123(3) 25 30 138 Deposit Takers Bill Part 7 cl 315 313 Body corporate is also subject to resolution (1) (2) (3) (4) The body corporate (B) referred to in section 311 must be treated as being in resolution.

The resolution manager of the licensed deposit taker is the resolution manager of B as if that resolution manager had been appointed under section 354, and the provisions of this Part apply accordingly.
5 Subsection (2) does not prevent the Bank from exercising a power to termin‐ ate a resolution manager’s appointment or to replace a resolution manager.

The period of moratorium under subpart 5 is initially the same as the period of moratorium that applies to the licensed deposit taker.

10 (5) However, the Bank may exercise a power under section 282(2) in relation to B separately from the licensed deposit taker.
Compare: 1989 No 157 s 123(4) 314 Vesting of property or rights subject to security interest (1) An order may be made under section 311 vesting any property and rights of an overseas licensed deposit taker (A) in a body corporate (B) despite the exis‐ tence, or the terms and conditions, of any security interest over the property, or over those rights, in favour of any other person.
(2) Any property or rights that are declared to vest under an order made under section 311 in B and that are subject to a security interest in favour of any other person continue to be subject to the security interest.
Compare: 1989 No 157 s 124 315 Proof of vesting (1) A registrar is not obliged solely by reason of section 311 to change the name of the licensed deposit taker (A) referred to in that section to that of the body corporate (B) formed and registered under that section in any register or in any document.
(2) If B presents to a registrar or any other person an instrument that meets the requirements of subsection (3), the instrument is, in the absence of evidence to the contrary, sufficient proof that the property that is the subject of the instrument is vested in B.
(3) The requirements are that the instrument— (a) (b) (c) is executed or purports to be executed by B; and relates to any property held by A before the date specified in an Order in Council made under section 311; and contains a statement that the property has become vested in B under that section.

(4) Subsection (2) applies whether or not the instrument is or includes an instru‐ ment of transfer.
15 20 25 30 35 139 Part 7 cl 316 Deposit Takers Bill (5) In this section, registrar means the Registrar-General of Land, a Registrar of Deeds, or any other person required under any legislation to keep any register.
Compare: 1989 No 157 s 125 Bank may dispose of business undertaking or property, rights, or liabilities 316 Bank’s disposal power 5 (1) The Bank may do 1 or more of the following in relation to a licensed deposit taker in resolution (A): (a) (b) (c) (d) sell, transfer, or otherwise dispose of the whole or any part of the busi‐ ness undertaking of A: sell, transfer, or otherwise dispose of any property or rights of A: 10 transfer or otherwise dispose of any liabilities of A: transfer any financial products (in respect of which A is the issuer).
(2) A sale, transfer, or disposal may be made to any person or persons, and on any terms and conditions, that the Bank thinks fit.

Example Deposit taker A is in resolution.

A’s business has 3 main parts: residential property lending, rural lending, and other business lending.

The Bank transfers A’s residential property lending business to another deposit taker.

The Bank then forms a company B under section 317 to act as a bridge institution.

The Bank transfers the rural lending business to B.
The Bank also forms a company C under section 317 to manage A’s other prop- erty.
The Bank transfers the property to C. 15 20 Compare: 1989 No 157 s 132(1) 317 Bank may dispose of business undertaking, etc, to bridge institution or 25 asset management vehicle (1) For the purposes of section 316, the Bank may do 1 or more of the following: (a) form and register a body corporate (B) under the Companies Act 1993: (b) subscribe for or acquire all or any of the shares of B: (c) make 1 or more sales, transfers, or dispositions to B under section 30 (d) (e) 316(1)(a) to (c): offer, issue, or sell all or any of the shares in B to any person, credited as fully or partly paid, on the terms and conditions that the Bank thinks fit: sell, transfer, or dispose of the whole or any part of the business under‐ taking of B to any 1 or more persons on the terms and conditions that the Bank thinks fit.
35 140 Deposit Takers Bill Part 7 cl 319 (2) This section does not limit any other powers of the Bank.

Compare: 1989 No 157 s 132(2) 318 Body corporate is also subject to resolution (1) The body corporate (B) referred to in section 317 must be treated as being in resolution.
5 (2) However, subsection (1) does not apply if, before B is formed and registered, the Bank publishes a notice in the Gazette that states— (a) (b) (c) that the Bank intends to form and register a body corporate under sec- tion 317; and B’s proposed name; and that subsection (1) will not apply to B.
(3) (4) (5) If subsection (1) applies, the resolution manager of the licensed deposit taker is the resolution manager of B as if that resolution manager had been appointed under section 354, and the provisions of this Part apply accordingly.

Subsection (3) does not prevent the Bank from exercising a power to termin‐ ate a resolution manager’s appointment or to replace a resolution manager.
If subsection (1) applies, the period of moratorium for B under subpart 5 is initially the same as the period of moratorium that applies to the licensed deposit taker.

10 15 (6) However, the Bank may exercise a power under section 282(2) in relation to 20 B separately from the licensed deposit taker.
Compare: 1989 No 157 s 123(4) 319 Consents not required under other legislation or agreement, and transactions do not constitute breach (1) The provisions of any legislation or agreement requiring any consent, licence, permission, clearance, or other authority do not apply to any of the following: 25 (a) (b) a sale, transfer, or other disposition under section 316(1)(a) to (c) or 317(1)(c) or (e): an offer, issue, sale, transfer, or other disposition of financial products under section 316(1)(d), 317(1)(d), or 305.
30 (2) A sale, transfer, disposition, offer, or issue referred to in subsection (1) does not constitute a breach or repudiation of any agreement entered into by the licensed deposit taker with any person.
Compare: 1989 No 157 s 133 141 Part 7 cl 320 Deposit Takers Bill 320 Bank may sell, transfer, or dispose of property despite security interest A Bank may exercise a power under section 316 or 317 in respect of any property despite the existence, and the terms and conditions, of any security interest over the property in favour of any other person.
Compare: 1989 No 157 s 134(1) 321 When proceeds of sale of licensed deposit taker’s property must be paid to holder of security interest (1) This section applies if— (a) (b) the Bank sells, transfers, or otherwise disposes of any property under section 316(1); and the property is subject to a security interest (other than a security interest of the kind described in section 324).
(2) The person entitled to the security interest must be paid out of the proceeds of sale, transfer, or other disposition in priority to all other claims other than the Bank’s costs in selling, transferring, or otherwise disposing of the property.
Compare: 1989 No 157 s 134(2) 322 When property continues to be subject to security interest If the Bank sells, transfers, or otherwise disposes of any property of the licensed deposit taker to a body corporate formed and registered under sec- tion 317(1)(a) and the property is subject to a security interest, the property continues to be subject to the security interest.
Compare: 1989 No 157 s 134(3) 323 When proceeds of sale of shares or property of new body corporate must be paid to holder of security interest (1) This section applies if— (a) (b) the Bank sells, transfers, or otherwise disposes of any shares in B, and any property of B is subject to a security interest (other than a security interest of the kind described in section 324); or the Bank sells, transfers, or otherwise disposes of any property of B, and the property is subject to a security interest (other than a security interest of the kind described in section 324).
The person entitled to the security interest must be paid out of the proceeds of sale, transfer, or other disposition in priority to all other claims other than the Bank’s costs in selling, transferring, or disposing of the shares or property.

In this section, B is a body corporate that is formed and registered under sec- tion 317(1)(a).
Compare: 1989 No 157 s 134(4), (5) (2) (3) 142 Deposit Takers Bill Part 7 cl 324 324 Kind of security interest referred to in various sections (1) The kind of security interest referred to in sections 321 and 323 is a secur‐ ity interest that— (a) (b) (c) is over all or any part of the licensed deposit taker’s or body corporate’s accounts receivable and inventory or all or any part of either of them; and 5 is not a purchase money security interest that has been perfected at the time specified in section 74 of the Personal Property Securities Act 1999; and is not a security interest that has been perfected under the Personal Prop‐ erty Securities Act 1999 at the time the licensed deposit taker entered resolution and that arises from the transfer of an account receivable for which new value is provided by the transferee for the acquisition of the account receivable (whether or not the transfer of the account receivable secures payment or performance of an obligation); and (d) is not a security interest referred to in subsection (3).
(2) (3) In this section, account receivable, inventory, new value, purchase money security interest, and security interest have the same meanings as in the Per‐ sonal Property Securities Act 1999.
For the purposes of subsection (1)(d), the security interest is a security inter‐ est over accounts receivable, inventory, or both to the extent that the security interest secures payment or performance of an obligation under or in relation to a qualifying derivative and— (a) the counterparties to the derivative are— (i) (ii) 2 qualifying counterparties; or a qualifying counterparty and an overseas person; and (b) before the exercise of rights to enforce the security interest, the collateral is delivered, transferred, held, registered, or otherwise designated so as to be in the possession or under the control of— (i) (ii) the enforcing counterparty; or another person (who is not the grantor) on behalf of the enforcing counterparty, under the terms of an arrangement evidenced in writing.
(4) (5) Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in subsection (3) have in that sub‐ section the same meanings as in that section.
Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (3)(b) 143 10 15 20 25 30 35 Part 7 cl 325 Deposit Takers Bill (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (3)(b) of this section).
Compare: 1989 No 157 s 134(3) 325 Proof of transactions (1) (2) (3) Subsection (2) applies if— (a) a person presents to a registrar an instrument transferring or otherwise disposing of any property of a licensed deposit taker or any shares in, or property of, a body corporate formed and registered under section 317(1)(a); and the instrument— (b) (i) is executed, or purports to be executed, by or on behalf of the licensed deposit taker or body corporate; and (ii) contains a statement that the transfer or other disposition of the property of the deposit taker, or the shares in, or property of, the body corporate, is made under section 316 or 317.
The instrument is, in the absence of evidence to the contrary, sufficient proof that the transfer or other disposition is made under section 316 or 317.
If the resolution manager presents to a registrar a certificate signed by or on behalf of the resolution manager that states that the amount secured by a secur‐ ity interest over any property of a licensed deposit taker or a body corporate formed and registered under section 317(1)(a) has been paid, the certificate is, in the absence of evidence to the contrary, sufficient proof that the amount secured by the security interest has been repaid.
5 10 15 20 (4) In this section, registrar means the Registrar-General of Land, a Registrar of Deeds, or any other person required under any legislation to keep any register.
25 Compare: 1989 No 157 s 135 326 Provisions applying where liabilities included in sale (1) If all or any part of a liability of a licensed deposit taker (A) is included in any sale, transfer, or other disposition under section 316,— (a) A, as from the date of the sale, transfer, or other disposition, is relieved from all its obligations in respect of the liability, or part of it; and (b) (c) the person entitled to performance in respect of the liability may enforce performance of the liability or part of it against the person to whom the business undertaking is sold, transferred, or otherwise disposed of in the same manner and to the same extent as the person was entitled to enforce performance against A; and the inclusion of part of a liability does not relieve A from any obligation in respect of any part of the liability not included in the sale, transfer, or other disposition.
30 35 144 Deposit Takers Bill Part 7 cl 329 (2) If all or any part of a liability of a body corporate formed and registered under section 311, or all or any part of a liability relating to the business carried on by an overseas person, is included in the sale, transfer, or other disposition, subsection (1)(a) does not relieve any overseas person from any obligation in respect of that liability.
5 Compare: 1989 No 157 s 137 Bank may suspend payment of money owing 327 Bank may suspend payment of money owing (1) The Bank may, in respect of a licensed deposit taker in resolution,— (a) suspend in whole or in part the repayment of any deposit, or the payment of any debt, or the discharge of any obligation, to any person; and 10 (b) cancel the obligation to provide funding to any person.

(2) This section applies despite the terms of any agreement.
(3) A suspension or cancellation does not constitute a breach or repudiation of any agreement entered into by the deposit taker with any person.

(4) This section is subject to sections 328, 329, and 418(1) to (3).
Compare: 1989 No 157 s 127(1), (2), (5) 328 Bank may not suspend or cancel obligation incurred after deposit taker enters resolution Section 327 does not authorise the Bank to suspend the repayment of a deposit, or the payment of a debt, or the discharge of an obligation, or to cancel an obligation to provide funding, if the obligation to repay the deposit, or to pay the debt, or the obligation, is incurred by the licensed deposit taker after it enters resolution.
Compare: 1989 No 157 s 127(3) 329 Bank may not suspend payment of amount included in netted balance (1) Section 327 does not authorise the Bank to suspend the payment of an amount that would be included in the calculation of a netted balance in accord‐ ance with— (a) (b) (c) section 310C of the Companies Act 1993; or section 257 of the Insolvency Act 2006; or a designated FMI’s rules.

(2) However, section 327 applies to the payment of the netted balance.
Compare: 1989 No 157 s 127(4) 15 20 25 30 145 Part 7 cl 330 Deposit Takers Bill Regulations may confer additional powers 330 Bank’s or resolution manager’s powers under regulations (1) The Governor-General may, by Order in Council, make regulations conferring on the Bank or the resolution manager ancillary or additional powers necessary or desirable for the purposes of this subpart.
5 (2) Regulations made under this section— (a) are secondary legislation (see Part 3 of the Legislation Act 2019 for pub‐ lication requirements); and (b) must be confirmed by an Act (see subpart 3 of Part 5 of the Legislation Act 2019).
Compare: 1989 No 157 s 152 10 Court may give directions 331 Court may give directions (1) The court may, on an application made by the Bank or the resolution manager, give directions concerning any of the following: 15 (a) (b) (c) the business or property of a licensed deposit taker in resolution: the management or administration of that business or property: the exercise of any powers under this subpart.

Every person is bound by the directions.


The resolution manager may apply only with the prior approval of the Bank.
20 Compare: 1989 No 157 s 142 Relationship between resolution and other legislation and processes (2) (3) 332 Application of certain provisions of Companies Act 1993 (1) Sections 275, 291A to 301, 310G, and 310I of the Companies Act 1993 apply to a licensed deposit taker (A) in resolution in all respects, and with all neces‐ sary modifications, as if— 25 (a) (b) (c) A were a company in liquidation under that Act; and the resolution manager were A’s liquidator; and the time at which A entered resolution were the time at which the liquid‐ ation commenced.
30 (2) Despite subsection (1), the following do not apply in relation to A: (a) (b) sections 120, 207P to 209C, and 214 of the Companies Act 1993: sections 129 and 291A to 296D of the Companies Act 1993, to the extent that those sections would otherwise apply to a transaction or dis‐ position under an agreement entered into after the licensed deposit taker enters into resolution.
35 146 Deposit Takers Bill Part 7 cl 335 (3) The reference in section 275(4) of the Companies Act 1993 to clause 1(1)(a) of Schedule 7 of the Companies Act 1993 must be read as a reference to section 344(1) of this Act.

Compare: 1989 No 157 s 139 333 Application of other Acts (1) The following do not apply in relation to a licensed deposit taker in resolution: (a) (b) the Receiverships Act 1993: sections 76 and 91 to 106 of the Building Societies Act 1965.
(2) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with the recommendation of the Bank, declare that the provisions of any Act that correspond with the provisions referred to in sec- tion 332(2) or subsection (1) do not apply to a licensed deposit taker in resolution.

(3) An Order in Council made under subsection (2) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Compare: 1989 No 157 s 153(4), (5), (7), (8) 334 Bank, resolution manager, and other persons are not directors under any legislation For the purposes of this Act, any other legislation, or any other rule of law, the Bank, the resolution manager, or any other person must not be treated as being a director of a licensed deposit taker by reason only of the fact that the Bank, resolution manager, or other person is performing or exercising any functions, powers, or duties under this Part.
Compare: 1989 No 157 s 153(9) 335 Prior insolvency process must cease (1) If a licensed deposit taker (A) enters resolution and A is already being wound up or is already in liquidation, receivership, or voluntary administration,— (a) (b) the winding up, liquidation, receivership, or voluntary administration must cease for so long as A continues to be in resolution; and the person appointed as liquidator, receiver, or administrator is dis‐ charged.
30 (2) If an Order in Council made under section 279(1) ends the resolution, the winding up, liquidation, receivership, or voluntary administration of A revives as if it had not ceased by reason of this section unless the order provides other‐ wise.

35 (3) Subsection (2) applies subject to the terms and conditions specified in the order.
147 Part 7 cl 336 Deposit Takers Bill (4) If the winding up, liquidation, receivership, or voluntary administration revives, the person specified in the order as such becomes, or resumes as, the liquidator, receiver, or administrator of A for the time being.
Compare: 1989 No 157 s 143 336 Continuation of resolution if restored 5 (1) This section applies if a licensed deposit taker (A)— (a) (b) has been removed from the New Zealand register under section 317 of the Companies Act 1993 while in resolution; but is restored to the New Zealand register under section 328 of the Com‐ panies Act 1993.

10 (2) A continues to be in resolution from the time A is restored.
(3) However, subsection (2) does not apply if, before A is restored, the Bank publishes a notice in the Gazette that states that subsection (2) will not apply to A.

Compare: 1989 No 157 s 143A 15 337 Appointment of auditors Auditors (1) (2) The Bank must appoint 1 or more persons (whether as individuals or as the members of a firm) to be the auditor of a licensed deposit taker in resolution.
The person or persons that are appointed must be licensed auditors (within the meaning of section 6(1) of the Auditor Regulation Act 2011).

20 (3) An appointment must be for a term of up to 2 years, but a person appointed as auditor continues in office until a successor comes into office.

(4) A person appointed as auditor is eligible for reappointment.
Compare: 1989 No 157 s 154(1)–(3) 338 Existing auditor ceases to hold office A person holding office as auditor of a licensed deposit taker at the time that it enters resolution ceases to hold that office but may be appointed under sec- tion 337.

Compare: 1989 No 157 s 154(7) 339 Bank may remove auditor from office The Bank may, at any time for just cause, remove an auditor from office.
In this section, just cause means any of the following proved to the satisfaction of the Bank: (a) (b) inability to perform the functions of the office: bankruptcy: (1) (2) 148 25 30 35 Deposit Takers Bill Part 7 cl 342 (c) neglect of duty: (d) misconduct.

(3) (4) The removal must be made by written notice to the auditor.

The notice must— (a) state the date on which the removal takes effect, which must not be earlier than the date on which the notice is given; and 5 (b) be published in the Gazette.
Compare: 1989 No 157 s 154(4), (8) 340 Auditor’s fees An auditor must be paid the fees that are fixed by the Bank.

10 Compare: 1989 No 157 s 154(5) 341 Auditor’s rights (1) An auditor has a right of access at all times to the information of the licensed deposit taker.

(2) The auditor is entitled to require from the licensed deposit taker’s directors and employees the information and explanations that the auditor thinks necessary for the performance of the auditor’s duties.
15 Compare: 1989 No 157 s 154(6) Offences 342 Offence to remove property (1) A person must not, without the resolution manager’s consent, transfer or remove from New Zealand any property of a licensed deposit taker that is in resolution.

(2) A person commits an offence if the person— (a) (b) contravenes subsection (1); and knows that, or is reckless as to whether, it must obtain the resolution manager’s consent.
(3) A person that commits an offence against this section is liable on conviction,— 20 25 (4) (5) (a) in the case of an individual, to imprisonment for a term not exceeding 2 years or to a fine not exceeding $500,000 (or both): 30 (b) in any other case, to a fine not exceeding $5,000,000.

This section does not prevent a court from issuing an injunction or making any order to prevent any property from being removed from New Zealand.

Subsection (1) is subject to section 418(1) to (3).
Compare: 1989 No 157 s 126 35 149 Part 7 cl 343 Deposit Takers Bill 343 Offence to destroy, alter, or conceal records (1) A person commits an offence against this Act if,— (a) with intent to defeat the purposes of this Part, they destroy, alter, or con‐ ceal any information of, or relating to, a licensed deposit taker in reso‐ lution; or 5 (b) without reasonable excuse, they fail or refuse to answer, to the best of their knowledge and ability, any question that they are asked by or behalf of the Bank or the resolution manager in relation to any such information or any property; or (c) they wilfully give a false or misleading answer to that question.
10 (2) A person who commits an offence under subsection (1) is liable on convic‐ tion,— (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): (b) in any other case, to a fine not exceeding $2,500,000.
(3) If, in any prosecution for an offence under this section, it is proved that the per‐ son charged with the offence destroyed, altered, or concealed any information of the kind referred to in subsection (1), it must be presumed, in the absence of evidence to the contrary, that the person did so with intent to defeat the pur‐ poses of this Part.
Compare: 1989 No 157 s 151 Expenses 344 Expenses of resolution (1) All costs, charges, and expenses properly incurred by Bank or the resolution manager in the performance or exercise of the Bank’s or the resolution manag‐ er’s functions, duties, and powers under this subpart and subparts 4, 5, 7, and 8 are payable out of the property of any 1 or more of the following in pri‐ ority to all other claims: (a) (b) the licensed deposit taker: a subsidiary or other associated person that is in resolution: (2) (c) a body corporate formed and registered under section 311 or 317.
The Bank or the resolution manager (as the case may be) may apportion the costs, charges, and expenses between those persons in the manner that the Bank or the resolution manager thinks fit.
Compare: 1989 No 157 s 148 15 20 25 30 35 150 Deposit Takers Bill Part 7 cl 346 Subsidiaries 345 Rules relating to subsidiaries do not apply (1) Nothing in subpart 8 of Part 2 of the Reserve Bank of New Zealand Act 2021 (subsidiaries) applies to anything the Bank does in the performance or exercise of its functions, powers, or duties under this subpart and subparts 4, 5, 7, and 8.
5 (2) No body corporate formed and registered in accordance with this subpart is a subsidiary of the Bank under the Reserve Bank of New Zealand Act 2021.
Subpart 7—Minister may give directions 346 When this subpart applies (1) This subpart applies if— (a) either or both of the following apply: (i) (ii) the Bank proposes to exercise a power under this Part in a particu‐ lar manner in relation to a licensed deposit taker (A) that is in resolution: the Minister considers that the Bank should exercise a power under this Part in a particular manner in relation to A; and (b) (c) public money is involved in the resolution; and the Minister is satisfied that,— (i) (ii) in the case of paragraph (a)(i), the exercise of the power in the manner referred to in that subparagraph would present a material risk to the prudent management of public money: in the case of paragraph (a)(ii), the exercise of the power in the manner referred to in that subparagraph would reduce a material risk to the prudent management of public money.
(2) In this subpart, public money is involved in a resolution if the Crown has done any of following in connection with dealing with A’s financial distress or other difficulties: (a) (b) (c) incurred expenses or capital expenditure or made a capital injection: given a guarantee or an indemnity: incurred a liability or made a commitment.

Example Public money is involved in relation to a Crown guarantee or indemnity, a Crown loan, or a Crown acquisition of A’s shares.
10 15 20 25 30 (3) However, public money is not involved in a resolution merely because— 35 (a) the Bank uses its own financial resources in the resolution; or 151 Part 7 cl 347 Deposit Takers Bill (b) money is applied under subpart 5 of Part 6 (use of the fund to support resolution actions); or (c) (d) grants or advances are made under subpart 8 of Part 6 (deficiency in fund); or compensation is paid under subpart 9 (compensation for pre-resolution creditors or shareholders that are worse off).
5 347 Minister may direct Bank relating to exercise of resolution power The Minister may direct the Bank to do 1 or more of the following: (a) (b) (c) (d) (e) (f) not exercise a power in the manner referred to in section 346(1)(a)(i): exercise a power in the manner referred to in section 346(1)(a)(i) only on the terms and conditions that are specified in the direction: 10 exercise a power in the manner referred to in section 346(1)(a)(ii): exercise a power in the manner referred to in section 346(1)(a)(ii) on the terms and conditions that are specified in the direction: have regard to the matters specified in the direction before exercising a power: 15 take any other action that is specified in the direction to avoid or mini‐ mise, or otherwise manage, the risk referred to in section 346(1)(c).
348 Procedural requirements (1) The Minister may give a direction under this subpart only if the Minister is satisfied that— 20 (a) (b) (c) (d) giving the direction is necessary or desirable for the purpose of avoiding or minimising, or otherwise managing, the risk referred to in section 346(1)(c); and giving the direction is the most appropriate way of avoiding or minimis‐ ing, or otherwise managing, the risk; and the direction is not inconsistent with any of the purposes in section 256(1)(a), (b), and (c); and the extent of the direction is not broader than is reasonably necessary to address the matters that gave rise to the direction.
25 30 (2) This section does not limit section 174 of the Reserve Bank of New Zealand Act 2021, which imposes additional procedural requirements for the direction.

152 Deposit Takers Bill Part 7 cl 354 Subpart 8—Resolution manager Key duties 349 Resolution manager must act to further purposes of this Part A resolution manager must perform or exercise their functions, powers, and duties efficiently and effectively in a way that furthers the purposes set out in section 256.
5 350 Resolution manager must comply with directions of Bank A resolution manager must comply with any directions given in writing by the Bank relating to the manager’s performance or exercise of any functions, powers, or duties.
10 Compare: 1989 No 157 s 120 351 Resolution manager must consult and have regard to Bank advice A resolution manager must, when performing or exercising any functions, powers, or duties,— (a) (b) consult the Bank to the extent required by the Bank; and 15 have regard to the Bank’s advice.
352 Resolution manager must regularly report as required by Bank A resolution manager must, in the manner specified by the Bank, provide the reports that the Bank may require about the state of the affairs, business, and resolution of the licensed deposit taker in resolution.
20 353 Resolution manager must report annually on conduct of resolution A resolution manager must, within 4 months after the balance date of a licensed deposit taker (A) that is in resolution,— (a) (b) prepare a report on the conduct of the resolution of A and of its associ‐ ated persons during the accounting period ending on that date; and 25 lodge the report with the Registrar of Financial Service Providers together with the documents that are lodged under section 461H of the FMCA in relation to A; and (c) give the Bank a copy of those documents.
Appointment of resolution manager 30 354 Bank may appoint resolution manager (1) (2) The Bank may appoint 1 or more persons as resolution managers.

The Bank makes an appointment by— (a) giving notice of the appointment to the person who is appointed; and 153 Part 7 cl 355 Deposit Takers Bill (b) publishing the notice in the Gazette.

(3) The notice must state the date on which, and time at which, the appointment takes effect.
(4) A resolution manager must be an employee of the Bank or any other person that the Bank is satisfied is suitably qualified.

(5) Nothing in this subpart prevents the Bank from appointing a person as reso‐ lution manager to replace another resolution manager whose term of appoint‐ ment has expired or who has had their appointment terminated, has resigned, or has died.
355 Bank may appoint itself as resolution manager The Bank may appoint itself as the resolution manager (or one of the resolution managers) under section 354.

356 Bank holds office as resolution manager if no other person holds office (1) If a licensed deposit taker (A) is in resolution but no other person holds office as resolution manager in respect of A, the Bank holds office as the resolution manager.

(2) This section does not limit the Bank’s powers under section 354.
5 10 15 357 How this Part applies if Bank holds office as resolution manager (1) If the Bank holds office as resolution manager,— (a) (b) the duty for the resolution manager to report to, obtain the consent of, or consult the Bank does not apply; and 20 the duty on the Bank (as resolution authority) to supervise the resolution manager does not apply; and (c) this Part applies with all other necessary modifications.
(2) If another person also holds office as resolution manager, the duties referred to in subsection (1)(a) and (b) continue to apply in relation to that person.

25 358 How 2 or more resolution managers may act (1) (2) If 2 or more persons hold office as resolution manager, a notice under section 354 must state whether the functions, powers, or duties of the resolution man‐ ager must be performed or exercised by those persons acting together or may be performed or exercised individually.
This section applies whether or not the functions, powers, or duties are per‐ formed or exercised under a delegation under section 74 of the Reserve Bank of New Zealand Act 2021.

359 Bank may terminate appointment of resolution manager 30 35 The Bank may, at any time and for any reason, terminate the appointment of a resolution manager.

(1) 154 Deposit Takers Bill Part 7 cl 363 (2) (3) The termination must be made by written notice to the resolution manager.
The notice must— (a) state the date on which the termination takes effect, which must not be earlier than the date on which the notice is given; and (b) be published in the Gazette.

5 (4) If the person holds office as resolution manager for 2 or more persons, the Bank may terminate the appointment in respect of all or any of those persons.

Compare: 1989 No 157 s 141(1) 360 Resolution manager may resign A resolution manager may resign office by notice in writing to the Bank.
10 Compare: 1989 No 157 s 141(2) 361 Bank may appoint replacement If the appointment of a resolution manager is terminated under section 359 or a resolution manager resigns office or dies, the Bank may, under section 354, appoint a person to replace that resolution manager.
15 Compare: 1989 No 157 s 141(3), (3A) 362 Resolution manager continues in office (1) A resolution manager (A) continues in office until a successor is appointed despite— (a) (b) their resignation; or the expiry of their period of appointment.

(2) Subsection (1) does not apply if the Bank informs A by written notice that no successor is to be appointed at that time.
Compare: 1989 No 157 s 141(4) 363 Licensed deposit taker continues to be in resolution A licensed deposit taker continues to be in resolution even though the term of office of a resolution manager who is acting in relation to the resolution has expired or the resolution manager— (a) (b) (c) (d) has had their appointment terminated; or has resigned from office; or has died; or has ceased to hold office because of the expiry of their period of appoint‐ ment; or (e) has otherwise ceased to hold office.
Compare: 1989 No 157 s 141(5) 20 25 30 35 155 Part 7 cl 364 Deposit Takers Bill Subpart 9—No creditor or shareholder worse off 364 Interpretation in this subpart In this subpart,— affected entity— (a) means a licensed deposit taker, or an associated person of a licensed 5 deposit taker, that is or has been in resolution; but (b) does not include— (i) (ii) an overseas licensed deposit taker; or an associated person of a licensed deposit taker that is an overseas person 10 creditor has the same meaning as in section 227 of the Companies Act 1993 pre-resolution creditor, in relation to an affected entity, means a person who was a creditor of the entity immediately before it entered into resolution pre-resolution shareholder,— (a) (b) (c) (d) in relation to an affected entity that is a company within the meaning of the Companies Act 1993, means a person who was a shareholder of the affected entity (within the meaning of section 96 of that Act) immedi‐ ately before it entered into resolution: in relation to an affected entity that is a building society, means a person who was a member of the affected entity (within the meaning of section 2 of the Building Societies Act 1965) immediately before it entered into resolution: in relation to an affected entity that is a credit union, means a person who was a member of the affected entity (within the meaning of the Friendly Societies and Credit Unions Act 1982) immediately before it entered into resolution: in relation to an affected entity that is not a company, a building society, or a credit union, means a person who was of a kind prescribed by the regulations immediately before the affected entity entered into resolution 15 20 25 valuer, in relation to an affected entity, means the person or persons appointed under section 366.
30 365 Eligibility for compensation under this subpart (1) A pre-resolution creditor or pre-resolution shareholder of an affected entity is eligible for a payment of compensation under this subpart if subsection (2) applies.
35 This subsection applies if the creditor or shareholder has received, is receiving, or is likely to receive, as a result of the resolution of the entity, less favourable treatment than would have been the case had a liquidation of the entity under (2) 156 Deposit Takers Bill Part 7 cl 368 New Zealand law commenced immediately before the entity entered into reso‐ lution.

(3) The amount of compensation is the amount calculated under sections 370 to 373.
Valuer’s role 5 366 Minister must appoint valuer (1) (2) (3) (4) The Minister must, as soon as is reasonably practicable after an affected entity enters into resolution, appoint 1 or more natural persons as valuer in relation to the entity for the purposes of this subpart.

The Minister makes an appointment by giving notice of the appointment to the appointee.

10 The notice must state the date on which, and time at which, the appointment takes effect.
The Minister may appoint the same person or different persons as the valuer for a licensed deposit taker and any of its associated persons.

15 (5) Nothing in this subpart prevents the Minister from appointing a person as valuer to replace another valuer who has had their appointment terminated, has resigned, or has died.

(6) See also sections 392 to 394, which relate to the appointment of a valuer.
367 Functions of valuer The functions of a valuer are to— (a) make a valuation in relation to an affected entity; and (b) decide whether any pre-resolution creditor or pre-resolution shareholder is eligible for a payment of compensation under this subpart and, if so, the amount of that compensation.

20 25 368 Valuer must act in manner prescribed by regulations (1) A valuer must perform or exercise the valuer’s functions, powers, and duties in the manner prescribed by the regulations.
(2) The regulations may, in particular, require a valuer to do 1 or more of the fol‐ lowing: 30 (a) (b) (c) (d) (e) to apply, or not to apply, specified methods of valuation: to apply specified principles: to assess values or average values at specified dates or over specified periods: to take specified matters into account in a specified manner: 35 to disregard specified matters: 157 Part 7 cl 369 Deposit Takers Bill (f) not to take specified matters into account.
The regulations may also require or permit a valuer to make assumptions.

The regulations may prescribe— (3) (4) (a) (b) the manner in which the Bank, pre-resolution creditors, pre-resolution shareholders, or other persons may or must give information, or submit claims, to the valuer; and 5 the manner in which the valuer must or may deal with the information and those claims.

(5) Subsections (2) to (4) do not limit subsection (1).
369 Valuer must prepare list of pre-resolution creditors and shareholders 10 A valuer must prepare a list of every known pre-resolution creditor or pre-reso‐ lution shareholder of the affected entity and, if known, each creditor’s or share‐ holder’s address for communications (which may be an electronic address).
How valuer must determine compensation 370 Valuer must determine compensation by reference to difference between 15 liquidation value and resolution value (1) A valuer must assess— Liquidation value (a) what each pre-resolution creditor or pre-resolution shareholder (or class of those persons) would have been likely to receive if a liquidation of the affected entity under New Zealand law had commenced immediately before it entered into resolution; and Resolution value (b) what each pre-resolution creditor or pre-resolution shareholder (or class of those persons) has received, is receiving, or is likely to receive as a result of the resolution.
If the valuer considers that, in relation to a pre-resolution creditor or pre-reso‐ lution shareholder (or class of those persons), the resolution value is less favourable than the liquidation value, the valuer must determine the compensa‐ tion payable to the pre-resolution creditor or pre-resolution shareholder (or class).
The valuer must determine the amount of compensation payable by reference to the difference in treatment assessed under subsection (2) and on the basis of the fair and equitable value of that difference in treatment.

The valuer’s assessment under subsection (1) must not take into account any debt owing by the licensed deposit taker to a pre-resolution creditor or pre- resolution shareholder if the debt was incurred by the licensed deposit taker after it entered resolution.
20 25 30 35 (2) (3) (4) 158 Deposit Takers Bill Part 7 cl 374 (5) In this subpart,— liquidation value means the amount assessed under subsection (1)(a) resolution value means the amount assessed under subsection (1)(b).

This section does not limit section 368.


(6) 371 Liquidation value 5 (1) The following apply to a valuer’s assessment of the liquidation value: (a) (b) the valuer must assume that the Bank and the Crown do not, directly or indirectly, provide any financial support or assistance in connection with the liquidation: the valuer must discount the liquidation value back to the time that the affected entity entered into resolution.

10 (2) This section does not limit section 368.


372 Resolution value (1) The valuer must, when assessing the resolution value, discount the resolution value back to the time that the affected entity entered into resolution.

15 (2) This section does not limit section 368.
373 Discount rate For the purpose of sections 371(1)(b) and 372, the valuer must apply— (a) a discount rate that— (i) (ii) is set out in, or determined in accordance with, the regulations; or 20 if subparagraph (i) does not apply, is determined by the valuer (on the basis of assumptions referred to in paragraph (b)); and (b) any assumptions determined by the valuer that— (i) are not inconsistent with any assumptions prescribed by the regu‐ lations; and 25 (ii) are fair and reasonable in the circumstances.
Valuer’s report 374 Valuer’s draft report (1) After acting under sections 368 to 373, the valuer must prepare a draft report setting out— (a) the valuer’s decision on— 30 (i) whether each pre-resolution creditor or pre-resolution shareholder of the affected entity (or each class of those persons) is eligible for compensation under this subpart; and 159 Part 7 cl 375 Deposit Takers Bill (ii) the amount of compensation to be paid to each pre-resolution creditor or pre-resolution shareholder (or each class of those per‐ sons); and (b) a description of the methods, principles, and assumptions that the valuer has applied, and how they have been applied, in sufficient detail to enable the Minister and the Bank to make an informed assessment of the draft report and the valuer’s decision; and 5 (c) the information (if any) that is prescribed by the regulations.
(2) The valuer may set out an amount of compensation by specifying the manner in which the amount must be calculated.

10 375 Valuer must give draft report to Minister and Bank The valuer must provide the draft report to the Minister and the Bank as soon as is reasonably practicable after it is prepared.
376 Minister or Bank may require valuer to reconsider (1) This section applies if, after receiving the draft report, the Minister or the Bank is of the view that— 15 (a) (b) (c) the valuer’s decision has not been made in accordance with sections 368 to 373; or the valuation report was not prepared in accordance with section 374; or the valuer should have had regard to any additional information not taken into account in the draft report.
(2) The Minister or the Bank (or both) may, by notice, require the valuer to recon‐ sider the draft report or any aspect of the draft report in the manner that the Minister or the Bank specifies in the notice.
377 Valuer must finalise and publish report (1) (2) If a notice is given under section 376, the valuer must— (a) reconsider the draft report or any aspect of the draft report in the manner specified in the notice; and (b) (c) finalise the report; and provide the finalised report to the Minister and the Bank.
If no notice is given under section 376 within 20 working days after the draft report is given under section 375, the valuer must— (a) finalise the report; and (b) provide the finalised report to the Minister and the Bank.

(3) The Bank must publish the report on its Internet site.
20 25 30 35 160 Deposit Takers Bill Part 7 cl 381 (4) (5) The regulations may require or permit the Bank to redact information from the copy of the report that is published (for example, to protect privacy, confiden‐ tiality, or commercially sensitive information).
The Bank may also redact from the copy of the report that is published any information if the Bank considers there would be a good reason for withhold‐ ing the information under the Official Information Act 1982 if a request for that information were made under that Act.
5 Compensation notice and payments 378 Valuer must send compensation notice (1) The valuer must, within 20 working days after the copy of the finalised report is published, send to each pre-resolution creditor and each pre-resolution share‐ holder a notice (a compensation notice).
(2) A compensation notice sent to a pre-resolution creditor or pre-resolution share‐ holder (A) must set out— (a) the valuer’s decision on— (i) (ii) whether A is eligible for compensation; and the amount of compensation payable to A (if any); and (b) if compensation is payable to A, information from the Bank about how the compensation will be paid, including information about anything A must do before the compensation is paid (for example, a requirement to give to the Bank A’s account details); and (c) a brief description of A’s appeal rights under section 388, including the period within which an appeal may be brought; and (d) all other information that is prescribed by the regulations (if any).
10 15 20 379 Bank must make available public information if compensation notice 25 cannot be sent (1) (2) Section 378 does not apply if it is not reasonably practicable to send a com‐ pensation notice to a pre-resolution creditor or a pre-resolution shareholder (or to a class of those persons).

If subsection (1) is relied on, the Bank must instead make the information that is prescribed by the regulations available to the public in the manner pre‐ scribed by those regulations.
30 380 Bank must manage and administer payments of compensation The Bank must manage and administer payments of compensation under this subpart.
35 381 Bank must pay in accordance with regulations (1) This section applies if— 161 Part 7 cl 382 Deposit Takers Bill (a) the valuer has sent a compensation notice to a person (A) that specifies that A is eligible for compensation of a particular amount; and (b) either— (i) (ii) no appeal has been brought under section 388 in relation to A within the period specified in section 389; or such an appeal has been brought, and it has been determined by, or under, an order of the court that A is eligible for compensation of a particular amount.
(2) The Bank must pay the compensation to, or on account of, A— (a) (b) in the manner prescribed by the regulations; and otherwise in the manner that the Bank thinks fit.

(3) The amount of compensation is— (a) (b) the amount determined by the valuer (unless paragraph (b) applies); or the amount determined by, or under, an order of the court.

(4) The Bank’s power to decide the manner in which compensation is paid includes deciding to pay it to a person to hold on behalf of A (whether or not on trust).
382 Crown must provide money necessary to pay compensation (1) (2) This section applies if an amount paid under subpart 5 of Part 6 (use of fund to support resolution) is not sufficient to pay the entitlements to compensation under this subpart.

The Minister must provide to the Bank out of public money, without further appropriation than this section, the money that is necessary to meet the defi‐ ciency.
383 Transfer of entitlement by assignment or operation of law (1) This section applies if— (a) a person (A) is— (i) (ii) a pre-resolution creditor who has or may have an entitlement to compensation under this subpart in respect of a debt owing by the affected entity; or a pre-resolution shareholder who has or may have an entitlement to compensation under this subpart in respect of shares issued by the affected entity; and (b) (c) (d) the debt or the shares are transferred by assignment or by operation of law to a person (B); and 35 the transfer occurs before the compensation is paid; and the Bank has been given notice of the transfer in the prescribed manner before the compensation is paid.
162 Deposit Takers Bill Part 7 cl 385 (2) If this section applies,— (a) (b) A’s entitlement (if any) to compensation under this subpart in respect of the transferred debt or shares is transferred to B; and B must be treated as being a pre-resolution creditor or shareholder to the extent that A’s entitlement has been transferred.

5 (3) However, this section does not apply— (a) (b) if an agreement between A and B provides otherwise; or in the circumstances prescribed by the regulations.
Valuer’s information-gathering power 384 Valuer may require person to supply information for purposes of this 10 subpart (1) If the valuer considers it necessary or desirable for the purposes of performing or exercising the valuer’s functions, powers, or duties under this subpart, the valuer may, by notice to any relevant person, require the person to do 1 or more of the following: 15 (a) (b) (c) give to the valuer any information, or class of information, that is speci‐ fied in the notice: produce for inspection any documents, or class of documents, that is specified in the notice: if necessary, reproduce, or assist in reproducing, in usable form, infor‐ mation recorded or stored in those documents.
20 (2) In this section, relevant person means any of the following: (a) (b) the Bank: the affected entity, any associated person of the affected entity, or any creditor or shareholder of the affected entity: 25 (c) any financial service provider.

(3) (4) The relevant person must comply with a requirement under subsection (1) within the period, and otherwise in the manner, that is specified in the notice.

The valuer may take copies of any documents produced for inspection under subsection (1).
30 385 Offence to fail to supply information (1) A person referred to in section 384(2)(b) or (c) commits an offence if they refuse or fail, without reasonable excuse, to comply with a notice under sec- tion 384.

(2) A person who commits an offence against subsection (1) is liable on convic‐ 35 tion to,— (a) in the case of an individual, a fine not exceeding $50,000: 163 Part 7 cl 386 Deposit Takers Bill (b) in any other case, a fine not exceeding $500,000.
386 Person required to give information has same privileges as witnesses in court A person who is required to give information under this subpart has the same privileges in relation to that duty as witnesses have in a proceeding before a court.
5 387 Use of information and confidentiality (1) A valuer who, in their capacity as valuer, has information that would not other‐ wise be available to them must not make use of or act on the information, except— (a) for the purposes of performing or exercising the valuer’s functions, powers, and duties; or (b) as required by law.
(2) Subpart 3 of Part 8 (confidentiality) applies to information given to a valuer under this subpart (and to information derived from or based on that informa‐ tion)— (a) as if references to the Bank were references to the valuer; and (b) with all other necessary modifications.

(3) A valuer commits an offence if they intentionally or recklessly— (a) (b) contravene subsection (1); or disclose information in contravention of section 439 (as applied by this section).
(4) A valuer who commits an offence against subsection (3) is liable on convic‐ tion to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both).
Appeals 388 Appeal against valuer’s decision on question of law (1) If the Minister or the Bank considers (or both consider) that any of the follow‐ ing decisions of a valuer is wrong in law, the Minister or the Bank (or both) may appeal to the court against the decision on a question of law only: (a) (b) a decision on whether a person, a class of persons, or persons generally are eligible for compensation: a decision on the amount of compensation to be paid to all or any of those persons.
If a person (A) considers that either of the following decisions of the valuer is wrong in law, A may appeal to the court against the decision on a question of law only: (2) 164 10 15 20 25 30 35 Deposit Takers Bill Part 7 cl 392 (a) (b) a decision on whether A is eligible for compensation: a decision on the amount of compensation to be paid to A.

389 Time for bringing appeal An appeal must be brought within 3 months after the date on which the final‐ ised report is first published under section 377.
5 390 Appeals to Court of Appeal (1) A party to an appeal under section 388 may appeal to the Court of Appeal, with the leave of the Court of Appeal, against any determination of the High Court on a question of law arising in that appeal.

(2) The Court of Appeal hearing an appeal under this section has the same power to adjudicate on the appeal as the High Court had.

10 391 No limit on judicial review Nothing in this subpart limits or affects the Judicial Review Procedure Act 2016.
Appointment of valuer 15 392 Who may be appointed as valuer (1) A person may be appointed as valuer in relation to an affected entity (A) if— (a) the Minister is satisfied that the person— (i) has the knowledge, skills, and experience that are prescribed by the regulations; and 20 (ii) meets the independence requirements; and (b) the person is not disqualified under subsection (3).
(2) The independence requirements are as follows: (a) a requirement that the person has not, within the 2 years immediately before A enters into resolution, been any of the following: 25 (i) (ii) a member of the board of the Bank: a member of the monetary policy committee: (iii) an employee of the Bank or of a subsidiary of the Bank: (b) the requirements about independence from the Bank that are prescribed by the regulations.
30 (3) The following persons are disqualified from being appointed or acting as valuer in relation to A: (a) a creditor of A: 165 Part 7 cl 392 Deposit Takers Bill (b) (c) (d) a person who has, within the 2 years immediately before A enters into resolution, been a director, an auditor, or a receiver of A or of an associ‐ ated person: a person who has, within the 2 years immediately before A enters into resolution, been a director of a creditor of A: 5 a person who has, within the 2 years immediately before A enters into resolution,— (i) (ii) a direct interest in a share issued by A; or an interest, direct or indirect, in 5% or more of any class of shares issued by a creditor of A (but only if the person is aware that they have the interest): 10 (e) a person who has— (i) (ii) a direct interest in a share issued by an associated person of A; or an indirect interest in 5% or more of any class of shares issued by an associated person of A: 15 if an instrument confers a power to appoint a receiver of any property of A, a person who is disqualified by the instrument from acting as the receiver of any property of A: a person who is a relative of a person described in any of paragraphs (a) to (f): a person who has, or whose firm has, within the 2 years immediately before A enters into resolution,— (i) (ii) provided professional services to A; or had a continuing business relationship with A, its majority share‐ holder, or any of its directors, or with any of A’s shareholders that (under its constitution or any other agreement) have a power to appoint or remove a director of A: 20 25 a person to whom a prohibition order applies (within the meaning of the Companies Act 1993): a person whom the Bank has suspended, removed, or replaced as a director of A.
30 (f) (g) (h) (i) (j) (4) A person is not disqualified under subsection (3)(h)— (a) if the professional services are provided, or the relationship arises, by reason only of the appointment of the person, or of the person’s firm,— (i) (ii) by, or at the instigation of, A or a creditor or other party that has an actual or potential financial interest in A; and 35 to investigate or to advise on the solvency of A or to monitor the affairs of A; or (b) if the Minister consents to the appointment of the person.
166 Deposit Takers Bill Part 7 cl 396 (5) (6) The Minister must, before giving their consent under subsection (4)(b), be satisfied that the provision of the professional services, or the continuing busi‐ ness relationship, will not have a materially adverse effect on the person’s abil‐ ity to perform or exercise their functions, powers, or duties.
If subsection (4)(a) applies, subsection (3)(a) or (c) does not disqualify a person merely because the person is (or was) a creditor, or a director of a cred‐ itor, of A as a consequence of the appointment referred to in subsection (4)(a).
393 Application of this subpart to joint valuers If a notice or notices under section 366 appoint 2 or more persons as valuer in relation to an entity, the Minister must state in the notice or notices whether the powers conferred by this subpart must be exercised by those persons acting together or may be exercised individually.

5 10 394 Appointment notice must be published (1) (2) The Minister must publish the notice of appointment of a valuer in the Gazette.
15 The Bank must publish the notice of appointment on the Bank’s Internet site.

395 Minister may terminate appointment of valuer (1) (2) (3) (4) The Minister may, at any time for just cause and after consulting the Bank, ter‐ minate the appointment of a valuer.
In this section, just cause means any of the following proved to the satisfaction of the Minister: 20 (a) (b) (c) (d) (e) inability to perform the functions of the office: bankruptcy: neglect of duty: being disqualified for appointment under section 392: serious misconduct.

25 The termination must be made by giving written notice to the valuer.
The notice must— (a) state the date on which the termination takes effect, which must not be earlier than the date on which the notice is given; and 30 (b) be published in the Gazette.

Compare: 1989 No 157 s 141 396 Valuer may resign A valuer may resign office by giving written notice to the Minister.

Compare: 1989 No 157 s 141(2) 35 167 Part 7 cl 397 Deposit Takers Bill 397 Valuer continues in office (1) A valuer (A) continues in office until a successor is appointed despite their res‐ ignation.
(2) Subsection (1) does not apply if the Minister informs A by written notice that no successor is to be appointed at that time.

5 398 Valuer’s costs, charges, and expenses The Minister may pay to a valuer (A), out of a Crown Bank Account, the amounts that the Minister thinks fit in respect of costs, charges, and expenses (including remuneration) due to, or incurred by, A.
399 Valuer’s duties in relation to records (1) A valuer must— (a) keep records and other documents relating to the performance or exer‐ cise of their functions, powers, or duties; and (b) permit those records and other documents to be inspected by— (i) (ii) the Bank; and if the court so orders, a pre-resolution creditor or shareholder; and (c) keep the records and other documents for not less than 7 years after the end date (or any longer period specified in a notice referred to in sub- section (2)).
(2) The Bank may, by notice given to the valuer before or after the end of the reso‐ lution, require any records and documents to be retained for longer than 7 years after the end date.

(3) A valuer who contravenes subsection (1) commits an offence and is liable on conviction to a fine not exceeding $50,000.

(4) The end date is the earlier of the following: (a) (b) the date of the valuer’s finalised report under section 377: the date on which the valuer ceases to hold office under this subpart.
Subpart 10—Covered bonds Interpretation relating to covered bonds 400 Interpretation In this subpart, unless the context otherwise requires,— cover pool, in relation to a covered bond programme, means property that— 10 15 20 25 30 is owned by the relevant covered bond SPV; and secures the obligations of that SPV under the covered bond programme (a) (b) 168 Deposit Takers Bill Part 7 cl 402 cover pool monitor means a person that meets the requirements of section 416(1) covered bond means a bond, note, or other debt security that has the following features: (a) (b) (c) it represents an unsecured obligation of the issuer; and 5 the principal and interest owing under the bond, note, or other debt security are guaranteed by a covered bond SPV; and the obligations under that guarantee are secured by property that is owned by that SPV covered bond programme means any programme of covered bonds under which, on the security of a single cover pool, covered bonds may be issued 10 covered bond SPV has the meaning given to it by section 401 issuer has the meaning given to it by section 402 own includes to hold a beneficial, or legal, interest or entitlement registered covered bond programme means a covered bond programme that has been registered under section 409.
Compare: 1989 No 157 s 139A 15 401 Meaning of covered bond SPV In this subpart, covered bond SPV means, in relation to a covered bond pro‐ gramme, a person that— 20 (a) (b) (c) (d) is, or will be, the owner of property that has been, or will be, sold, assigned, or otherwise transferred to it by, or on behalf of, an issuer or an associated person of an issuer; and has granted, or may grant, a security interest in the property for the bene‐ fit of the secured creditors under the covered bond programme; and 25 carries on a business of acting as covered bond guarantor under the covered bond programme (including any business incidental to that pur‐ pose); and (other than as described in paragraph (c)) does not carry on any other kind of business.
30 Compare: 1989 No 157 s 139B 402 Meaning of issuer (1) For the purposes of this subpart, issuer— (a) means— (i) a licensed deposit taker that issues or intends to issue covered bonds, or guarantees covered bonds: 35 169 Part 7 cl 403 Deposit Takers Bill (ii) an entity, or a member of a class of entities, specified in the regu‐ lations that issues or intends to issue covered bonds, or guarantees such covered bonds; and (b) includes a deposit taker referred to in paragraph (a)(i) that— (i) has had its licence cancelled under subpart 6 of Part 2; and has a registered covered bond programme.
(ii) 5 (2) However, if an issuer (issuer A) transfers all of the rights and obligations relat‐ ing to a covered bond programme to another issuer (issuer B), issuer B is, from the time of the transfer, the issuer for the purposes of this subpart.

(3) Subsection (2) does not affect the rights or obligations of issuer A before the transfer.
10 Compare: 1989 No 157 s 139C Main duties of issuer 403 Issuer may issue covered bond only under registered programme (1) An issuer must not issue, or permit the issue of, a covered bond other than 15 under a registered covered bond programme.

(2) An issuer that contravenes subsection (1) commits an offence and is liable on conviction,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: in any other case, to a fine not exceeding $2,500,000.
Compare: 1989 No 157 s 139E(4) Registration of covered bond programmes 404 Register of registered covered bond programmes (1) (2) The Bank must keep a public register of registered covered bond programmes.
The Bank— (a) must determine the form and content of the register and may amend that form and content as it considers necessary; and (b) may, based on the property in, or that may be included in, the relevant cover pool, designate registered covered bond programmes to particular classes of registered covered bond programmes, as specified by the Bank.
(3) The Bank must take all reasonable steps to ensure that the information con‐ tained in the public register is available to members of the public at all reason‐ able times.

Compare: 1989 No 157 s 139D(1)–(3) 20 25 30 35 170 Deposit Takers Bill Part 7 cl 408 405 When programme must remain or be removed from register (1) A registered covered bond programme must remain on the register despite— (a) (b) any defects in the registration process; or any failure by an issuer to comply with section 413.
(2) However, the Bank may remove a registered covered bond programme from 5 the register— (a) if— (i) (ii) all obligations under that programme have been fulfilled; or the security interest over the cover pool has been enforced; or (iii) the issuer has requested the removal; and (b) if, in all cases, the Bank has received evidence, acceptable to the Bank, that both the relevant bond trustee and security trustee consent to the removal.
Compare: 1989 No 157 s 139D(4), (5) 406 Other matters relating to registration (1) Registration occurs at the time and date that the Bank enters the details relating to the covered bond programme on the register.

(2) A defect in the registration process of a covered bond programme does not affect a person’s ability to enforce their rights in relation to the programme or any covered bond issued under the programme.
(3) The failure of an issuer to register a covered bond programme or to comply with any requirement under section 413 does not affect any other person’s ability to enforce their rights in relation to the programme or any covered bond issued under the programme.

Compare: 1989 No 157 s 139D(6) 407 Application for registration of covered bond programme (1) Only an issuer may apply to the Bank to register a covered bond programme.

(2) An application must be made in the manner specified by the Bank.
Compare: 1989 No 157 s 139E(1), (2) 10 15 20 25 408 Determination of application for registration of covered bond programme 30 (1) (2) The Bank must not register a covered bond programme unless it is satisfied that the requirements set out in subsection (2) are met.
The requirements are as follows: (a) that the cover pool property is, or will be, owned by an identified covered bond SPV that— 35 (i) is a company (within the meaning given in section 2(1) of the Companies Act 1993); or 171 Part 7 cl 409 Deposit Takers Bill (b) (c) (d) (e) (f) (ii) (iii) is a person or partnership specified in the regulations; or is a member of a class of persons or partnerships specified in the regulations; and that a cover pool monitor has been appointed; and that a register of cover pool property will be maintained; and 5 that the covered bond programme specifies, or refers to documents that specify, procedures and internal controls that ensure— (i) (ii) the up-to-date and accurate keeping of the register; and that the property in the cover pool remains consistent with any class designation under section 404(2)(b); and 10 that the covered bond programme specifies a test, or tests, to determine, in accordance with any procedures specified in the programme, whether the value of the cover pool property is at least equal to the principal amount outstanding on the covered bonds; and that the covered bond programme provides for the covered bond SPV to perform, or arrange to have performed on its behalf, the requirements of section 413(1)(a) and (b)(i)— (i) in the event that any amounts become due and payable by the covered bond SPV under the covered bond programme; and 15 (ii) until the security interest over the cover pool property has been enforced; and 20 (g) that the issuer is in compliance with all other requirements imposed in relation to covered bonds by, or under, all applicable standards.
Compare: 1989 No 157 s 139F 409 Bank must approve or decline application (1) Having considered an application made under section 407(2), the Bank must either approve or decline the application.

(2) If the Bank is satisfied that an issuer meets the requirements of section 408(2), the Bank must approve the application and register the covered bond programme.

25 30 (3) Otherwise, the Bank must decline the application.
Compare: 1989 No 157 s 139G(1)–(3) 410 Bank must give notice of approval If the Bank approves the application, it must give notice of its decision to the issuer within 60 working days after receiving all of the information required by the Bank to determine the application.
35 Compare: 1989 No 157 s 139G(4) 172 Deposit Takers Bill Part 7 cl 413 411 Bank must give notice of proposal to decline application If the Bank proposes to decline the application, the Bank must, within 60 work‐ ing days after receiving all of the information required to determine the appli‐ cation,— (a) (b) (c) (d) give the issuer notice of the proposed decision and the reasons for it; and 5 invite the issuer to provide, within 10 working days after the date of the notice, submissions or further information in response to the proposed decision; and have regard to any submissions and further information it receives from the issuer; and 10 give notice of its final decision to the issuer within 5 working days after the period specified in paragraph (b) (whether or not the Bank receives any submissions or further information).
Compare: 1989 No 157 s 139G(5) 412 Bank and issuer may agree to modify time limits The Bank and the issuer may agree to modify the time limits specified in sec- tions 410 and 411.
Compare: 1989 No 157 s 139G(6) Ongoing duties of issuer 413 Requirements relating to registered covered bond programmes (1) Every issuer must, in relation to a registered covered bond programme,— (a) ensure that the test or tests specified in section 408(2)(e) are carried out at intervals of not more than 12 months and notify the Bank if the result of the test or tests is that the value of the cover pool property is less than the principal amount outstanding on the covered bonds; and (b) ensure that— (i) (ii) a register of cover pool property is maintained; and the issuer complies with the procedures and internal controls referred to in section 408(2)(d); and (c) notify the Bank— (i) (ii) (iii) of every covered bond issued; and of any material changes to the registered covered bond pro‐ gramme that would be likely to result in the registered covered bond programme failing to comply with the requirements of sec- tion 408(2); and if the covered bond programme or the cover pool no longer com‐ plies with any class designation under section 404(2)(b); and 15 20 25 30 35 173 Part 7 cl 414 Deposit Takers Bill (d) provide the Bank with any further information it requests in relation to the covered bond programme; and (e) ensure that— (i) (ii) (iii) (iv) the registered covered bond programme complies with the requirements of section 408(2); and the reports referred to in section 417(b) are provided to any bond trustee and security trustee appointed under the covered bond programme; and the Bank is provided with a copy of every report prepared by the cover pool monitor in accordance with section 417(c) and (d); and if requested by the Bank, the Bank is provided with a copy of any other report prepared by the cover pool monitor in accordance with section 417(b).
5 10 (2) However, if any amounts become due and payable by the covered bond SPV 15 under the covered bond programme,— (a) (b) the issuer is not required to comply with subsection (1); and the covered bond SPV must provide the Bank with any information it requests in relation to the covered bond programme.
Compare: 1989 No 157 s 139H(1)–(2) 414 Bank may require corrective action If an issuer fails to comply with any of the requirements of section 413(1), the Bank may, by notice to the issuer, require the issuer to take the corrective action that the Bank may specify in the notice.

Compare: 1989 No 157 s 139H(3) 415 Offence to fail to take corrective action 20 25 (1) An issuer commits an offence if the issuer, without reasonable excuse, fails to comply with a notice issued under section 414.
(2) An issuer that commits an offence against this section is liable on conviction,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: 30 in any other case, to a fine not exceeding $2,500,000.
Cover pool monitor 416 Cover pool monitor (1) A cover pool monitor must— (a) (b) be independent of the issuer; and be 1 or more of the following: 174 35 Deposit Takers Bill Part 7 cl 417 (i) (ii) a licensed auditor under the Auditor Regulation Act 2011: a registered audit firm under the Auditor Regulation Act 2011, if the issuer ensures that appropriate arrangements are in place to ensure that the functions of the cover pool monitor are performed by, or under the supervision of, a licensed auditor: 5 (iii) a member of any other class of persons or firms that has been approved by the Bank; and (c) be required, under its contract of appointment, to do the things specified in section 417.
(2) For the purposes of this section, independent means independent of both the issuer and any associated person of the issuer.

10 (3) However, a person’s appointment as auditor does not affect their independence.
Compare: 1989 No 157 s 139I(1), (3), (4) 417 Cover pool monitor must perform certain services under contract A cover pool monitor must be required to do the following under the contract of appointment: 15 (a) assess, at a given point in time, and in accordance with any agreed pro‐ cedures specified in the covered bond programme,— (i) (ii) the arithmetical accuracy of the tests carried out in accordance with section 413(1)(a); and the issuer’s compliance with the requirements of section 413(1)(b); and (b) (c) provide the issuer with reports on the matters required under paragraph (a) at intervals of not more than 12 months; and provide reports at intervals of not more than 3 months if the cover pool monitor is not satisfied— (i) (ii) as to the arithmetical accuracy of the tests carried out in accord‐ ance with section 413(1)(a); or that the issuer has complied with the requirements of section 413(1)(b); and (d) if paragraph (c) applies, continue to provide 3-monthly reports until the cover pool monitor is satisfied that the issuer has remedied those matters; and (e) report on all other matters required by the regulations (if any).
Compare: 1989 No 157 s 139I(1)(c) 20 25 30 35 175 Part 7 cl 418 Deposit Takers Bill Resolution or statutory management, etc, of issuer 418 Limitation on application of resolution, statutory management, etc, provisions to covered bond SPV (1) Subsections (2) and (3) apply in relation to the following provisions: (a) sections 281(1), 284, 300, 327(1), and 342(1) of this Act: section 248 of the Companies Act 1993: 5 sections 42(1), 43(1), 44(1), and 45(2) of the Corporations (Investigation and Management) Act 1989.
(b) (c) (2) Nothing in a provision referred to in subsection (1)— (a) (b) (c) (d) (e) prevents the transfer of the legal title to property in a cover pool from an issuer to a covered bond SPV: 10 prevents the transfer, under a contract, of any documentation or data relating to property in a cover pool from the issuer to a covered bond SPV or a person acting on behalf of that SPV: prevents a covered bond SPV, or a person acting on behalf of that SPV, from exercising a power of attorney granted by the issuer in relation to property in a cover pool: 15 affects the issuer’s obligation to pay money collected on behalf of, and held on trust for, a covered bond SPV, to that SPV: prevents the enforcement of any of the above rights by, or on behalf of, a covered bond SPV.
20 (3) However, subsection (2) applies only if— (a) (b) the covered bond SPV is the owner of the property in the cover pool; and the covered bond programme is registered under section 409.

(4) Subsection (5) applies to a person if the person is— (a) a covered bond SPV; or (b) an SPV that— 25 (i) is involved in a securitisation arrangement of a type prescribed by the regulations; and (ii) is otherwise of a class that is prescribed by the regulations.
30 (5) The SPV is not— (a) (b) an associated person for the purposes of section 38(1)(a) of the Corpor‐ ations (Investigation and Management) Act 1989 or section 170(1)(b) of the Insurance (Prudential Supervision) Act 2010; or a subsidiary for the purposes of section 38(2) of the Corporations (Inves‐ tigation and Management) Act 1989 or section 170(2) of the Insurance (Prudential Supervision) Act 2010; or 35 176 Deposit Takers Bill Part 7 cl 420 (c) a related company for the purposes of section 271 of the Companies Act 1993.
Compare: 1989 No 157 s 139J Subpart 11—Bank may apply to put deposit takers and associated persons into liquidation 5 419 Liquidation of licensed deposit takers and associated persons (1) This section applies to a person (A) if— (a) A is a licensed deposit taker (whether or not it is in resolution); or (b) A— (i) (ii) is an associated person of a licensed deposit taker; and 10 is in resolution; and (iii) is not itself a licensed deposit taker.
(2) (3) The Bank or a resolution manager may apply to the court under the Companies Act 1993 to put A into liquidation under that Act.

Subsection (2) applies whether A is a company, an association, or an over‐ seas company within the meaning of the Companies Act 1993.

15 (4) A resolution manager may apply only with the prior approval of the Bank.
(5) An application under this section must be treated as if it were an application under section 241(2)(c) of the Companies Act 1993 (and, in the case of an overseas company, also an application under section 342 of that Act).

(6) This section does not limit or affect any other legislation that provides for the winding up, liquidation, or dissolution of a body corporate or a class of body corporate.
Compare: 1989 No 157 s 136 420 When court may appoint liquidator (1) The court may, on an application under section 419, appoint a liquidator for A if it is satisfied that— (a) A is unable to pay its debts (and, for that purpose, section 287 of the Companies Act 1993 applies with all necessary modifications whether or not A is a company); or (b) A has persistently or seriously contravened any prudential obligation; or (c) it is just and equitable that the deposit taker be put into liquidation.
(2) In the case of an application under section 419, subsection (1) applies instead of section 241(4) of the Companies Act 1993.
20 25 30 177 Part 7 cl 421 Deposit Takers Bill Subpart 12—Miscellaneous 421 Licensed deposit taker not entitled to be informed about exercise of powers under this Part None of the following have a right to be consulted or informed about the exer‐ cise, or possible exercise, of any powers conferred by this Part or to make rep‐ resentations to any person about the exercise, or possible exercise, of those powers: (a) (b) a licensed deposit taker, an associated person, or a subsidiary: a director or an employee of a person referred to in paragraph (a).
Compare: 1989 No 157 s 147 Part 8 Miscellaneous Subpart 1—Use of words bank, banker, and banking Limit on use of restricted words in name or title 422 Limit on use of restricted words in name or title (1) A financial service provider must not— 5 10 15 (a) (b) (c) be formed, incorporated, or registered using a name or title that includes a restricted word; or change its name or title to a name or title that includes a restricted word; or 20 use a name or title that includes a restricted word when carrying on any activity directly or indirectly in New Zealand (whether through an agent or otherwise).
(2) In sections 424, 425, and 426, use, in relation to a restricted word, means to act in a manner prohibited by this section.

25 Compare: 1989 No 157 s 64(1), (7) 423 Offence to contravene limit on use of restricted words A financial service provider that contravenes section 422 commits an offence and is liable on conviction,— (a) (b) in the case of an individual, to a fine not exceeding $100,000: 30 in any other case, to a fine not exceeding $2,500,000.
Compare: 1989 No 157 s 64(5), (6) 424 When restriction does not apply Section 422 does not apply to— 178 Deposit Takers Bill Part 8 cl 428 (a) (b) the Bank; or a person who is authorised by the Bank under section 425 or 426 to use a name or title that includes a restricted word (but only to the extent that the person is acting within the scope of the authorisation).
Compare: 1989 No 157 s 64(2) 425 Bank may authorise particular persons to use restricted words in name or title The Bank may, by written notice given to any of the following persons, author‐ ise that person to use a name or title that includes a restricted word: (a) (b) a licensed deposit taker: a person licensed or registered as a bank in a country other than New Zealand: (c) an associated person of a licensed deposit taker.
Compare: 1989 No 157 s 65(1), (2)(a), (4)(a) 5 10 426 Bank may authorise class of persons to use restricted words in name or 15 title (1) The Bank may issue a notice that authorises a class of licensed deposit takers or overseas banks to use a name or title that includes a restricted word.

(2) A notice issued under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
(3) In this section, overseas bank means a person licensed or registered as a bank in a country other than New Zealand.

Compare: 1989 No 157 s 65(1), (3)(a) 427 Authorisation extends to Registrar of Companies, etc An authorisation under section 425 or 426 applies to any other person (for example, the Registrar of Companies), but only to the extent that the acts of that person are necessary to allow the person to whom the authorisation is given to have the benefit of the authorisation.
Compare: 1989 No 157 s 65(7) 428 Bank’s policies for giving authorisation (1) (2) The Bank’s statement of prudential policy under section 254 of the Reserve Bank of New Zealand Act 2021 must outline in general terms the Bank’s policies about how the Bank acts, or proposes to act, when exercising a power under section 425 or 426.

The statement must set out the Bank’s policies in relation to minimum require‐ ments for a deposit taker to be authorised to use a name or title that includes a restricted word.
20 25 30 35 179 Part 8 cl 429 Deposit Takers Bill Example A deposit taker that is authorised to use “bank” may be required to comply with higher financial strength requirements than those that would otherwise apply.

429 Conditions The Bank may give an authorisation under section 425 or 426 subject to any conditions that the Bank thinks fit.

5 Examples Example 1 The Bank gives an authorisation to company A on the condition that A use a par- ticular name or title approved by the Bank.
10 Example 2 The Bank gives an authorisation to overseas bank B on the condition that B carries on in New Zealand only those activities specified by the Bank.

Compare: 1989 No 157 s 65(2)(b), (3)(b), (4)(b), (5) 430 Application of Companies Act 1993 15 Sections 424 to 429 do not affect or limit the following sections of the Companies Act 1993: (a) (b) sections 20 to 24 (which relate to company names): section 333 (which relates to the reservation of the name of an overseas company).
20 Compare: 1989 No 157 s 66A Limit on use of restricted words in advertisement 431 Limit on use of restricted words in advertisement (1) A specified person must not use a restricted word in an advertisement unless the advertisement contains a statement that complies with subsection (2).
The statement must— (2) (a) (b) state that the specified person is not a licensed deposit taker; and be communicated in a manner that ensures, as far as is reasonably prac‐ ticable, that the statement attracts the attention of the persons to whom the advertisement is directed.
(3) In this subpart,— advertisement — (a) means anything used to promote— (i) (ii) the interests of a specified person; or the services or products of that person; and (b) includes a trade mark of a specified person; but 180 25 30 35 Deposit Takers Bill Part 8 cl 435 (c) does not include the name or title of a specified person specified person means a person that— (a) (b) is a financial service provider; but is not a licensed deposit taker.
Compare: 1989 No 157 s 66B(1), (2), (5) 432 Offence to contravene advertising limit A specified person that contravenes section 431 commits an offence and is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
Compare: 1989 No 157 s 66B(3), (4) Bank may require change of name, etc 5 10 433 Power to require change of name, etc (1) If the Bank is satisfied on reasonable grounds that a person has contravened, or is contravening, section 422 or 431, the Bank may, by notice, require the person to do any of the following: 15 (a) (b) (c) change the person’s name or title to a name or title that does not include a restricted word: cease using a restricted word in an advertisement: cease carrying on any activity using a name or title that includes a restricted word.
20 (2) A person must comply with the requirement within the period of time and in the manner specified in the notice.

Compare: 1989 No 157 s 66D(1)–(3) 434 Offence to contravene requirement to change name, etc A person that contravenes a requirement under section 433 commits an offence and is liable on conviction to,— (a) (b) in the case of an individual, a fine not exceeding $50,000: in any other case, a fine not exceeding $500,000.
Compare: 1989 No 157 s 66D(4), (5) Subpart 2—Trans-Tasman co-operation 25 30 435 Interpretation in this subpart In this subpart,— 181 Part 8 cl 436 Deposit Takers Bill action that is likely to have a detrimental effect on financial system stabil‐ ity in Australia includes an action that prevents or interferes with any out‐ sourcing arrangement authorised deposit-taking institution has the same meaning as in section 5(1) of the Banking Act 1959 (Aust) 5 outsourcing arrangement means an arrangement for business, or functions relating to any business, of an authorised deposit-taking institution to be carried on by a person other than that authorised deposit-taking institution.
Compare: 1989 No 157 s 67A 436 Trans-Tasman co-operation When performing or exercising functions, powers, or duties under this Act or other prudential legislation, the Bank must— (a) (b) support Australian financial authorities in meeting their statutory respon‐ sibilities relating to prudential regulation and financial system stability in Australia; and to the extent reasonably practicable, avoid any action that is likely to have a detrimental effect on financial system stability in Australia.
Compare: 1989 No 157 s 68A(1) 437 Bank’s duty to consult (1) (2) This section applies if the Bank has reasonable cause to believe that an action it proposes to take under this Act or any other prudential legislation is an action that is likely to have a detrimental effect on financial system stability in Aus‐ tralia.
Before taking the proposed action, the Bank must, to the extent it considers reasonably practicable in the circumstances having regard to urgency or any other similar constraint, consult and consider the advice of every Australian financial authority it considers to be relevant in the circumstances.
Compare: 1989 No 157 s 68A(2), (3) 10 15 20 25 438 Failure to comply with subpart does not affect validity of Bank’s actions The performance or exercise of a function, power, or duty is not invalid by rea‐ son only of a failure to comply with this subpart.
30 Compare: 1989 No 157 s 68A(4) Subpart 3—Confidentiality 439 Disclosure of information by Bank (1) This section applies to the following: (a) information given to the Bank under this Act: 35 182 Deposit Takers Bill Part 8 cl 440 (b) (c) information derived from or based on information referred to in para- graph (a): information relating to the exercise, or possible exercise, of the powers conferred by this Act.
(2) The Bank may publish or disclose any information to which this section applies only if— 5 (a) (b) (c) (d) (e) (f) the information is available to the public under an Act (other than the Official Information Act 1982) or is otherwise publicly available infor‐ mation; or the information is in a statistical or summary form; or 10 the disclosure is for the purposes of, or in connection with, the perform‐ ance or exercise of any function, power, or duty conferred or imposed on the Bank by this Act or any other legislation; or the disclosure is made under subpart 3 of Part 6 of the Reserve Bank of New Zealand Act 2021 (which relates to information sharing); or 15 the publication or disclosure is to a person who the Bank is satisfied has a proper interest in receiving the information; or the publication or disclosure is with the consent of the person to whom the information relates or of the person to whom the information is con‐ fidential.
(3) The Bank must not publish or disclose information under subsection (2)(e) unless satisfied that satisfactory provision exists to protect the confidentiality of the information.

(4) Nothing in this section limits the Privacy Act 2020 (see, in particular, the limits on the disclosure of personal information in information privacy principles 11 and 12 set out in section 22 of that Act).
(5) A member of the board of the Bank, the Governor, any other office holder of the Bank, or any employee of the Bank must not publish or disclose any infor‐ mation to which this section applies except for the purposes of, or in connec‐ tion with, the performance or exercise of any function, power, or duty under this Act or any other legislation.
440 Relationship with other Acts (1) Nothing in any Act, other than this Act, the Official Information Act 1982, or the Privacy Act 2020, requires the Bank or any person to whom information has been published or disclosed under section 439 to make that information available to any other person.

(2) The Bank may make information to which this section applies available under the Official Information Act 1982 only if 1 or more grounds under section 439(2) apply.
183 20 25 30 35 Part 8 cl 441 Deposit Takers Bill 441 Offence to make unauthorised disclosure A member of the board of the Bank, the Governor, any other office holder of the Bank, or any employee of the Bank who intentionally or recklessly disclo‐ ses information in contravention of section 439 commits an offence and is liable on conviction to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both).
442 Conditions relating to disclosure of information (1) (2) The Bank may, by notice to a person to whom any information is published or disclosed under section 439(2)(c), (e), or (f)), impose any conditions in relation to the publication, disclosure, or use of the information by the person.

The Bank must, in considering what conditions to impose, have regard to whether conditions are necessary or desirable in order to protect the privacy of any individual.
(3) Conditions imposed may include, without limitation, conditions relating to— (a) maintaining the confidentiality of anything provided: (b) (c) the storing of, the use of, or access to anything provided: the copying, returning, or disposing of copies of documents provided.
5 10 15 443 Restrictions on further disclosure of information (1) If information is published or disclosed to a person under section 439(2)(c), the person may publish, disclose, or use the information only— 20 (a) (b) for the purposes of, or in connection with, functions, powers, or duties referred to in section 439(2)(c); and in accordance with any conditions imposed by the Bank.
(2) If information is published or disclosed to a person under section 439(2)(e), the person may publish, disclose, or use the information only if the publication, disclosure, or use— 25 (a) (b) is authorised by the Bank and is in accordance with any conditions imposed by the Bank; or is for the purposes of, or in connection with, the functions, powers, or duties of a person under any legislation.
30 (3) If information is published or disclosed to a person under section 439(2)(f), the person may publish, disclose, or use the information only in accordance with the conditions of the consent (if any).

444 Offence for unauthorised disclosure or use (1) A person who intentionally or recklessly publishes, discloses, or uses informa‐ 35 tion in contravention of section 443 commits an offence.
(2) A person who commits an offence against this section is liable on convic‐ tion,— 184 Deposit Takers Bill Part 8 cl 448 (a) in the case of an individual, to imprisonment for a term not exceeding 1 year or to a fine not exceeding $100,000 (or both): (b) in any other case, to a fine not exceeding $2,500,000.
Subpart 4—Bank’s power to specify how things are done 445 When subpart applies (1) This subpart applies if this Act provides for any thing to be done in the manner specified by the Bank (including where the manner is specified in a notice given by the Bank).

Examples An application for a licence must be made in the manner specified by the Bank.

The Bank may require information to be given under section 99 in a manner spe- cified in a notice given or issued by the Bank.
(2) In this subpart, a relevant person is a person who must or may do the thing.

Guidance note See also section 292 of the Reserve Bank of New Zealand Act 2021, which allows regulations to be made that may require a person to pay fees or charges in con- nection with the Bank’s performance or exercise of any of its functions, powers, or duties.

446 Bank may require particular persons to comply with specified requirements (1) (2) The Bank may give a notice to 1 or more named relevant persons.
The notice may specify 1 or more of matters referred to in section 448.

5 10 15 20 447 Bank may require class of persons to comply with requirements (1) The Bank may issue under this section a notice that applies to a class of rele‐ vant persons.

25 (2) The notice may specify 1 or more of matters referred to in section 448.

(3) A notice issued under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
448 Requirements that may be specified A notice under section 446 or 447 may specify 1 or more of the following: (a) by whom, when, where, and how the thing must be done: 30 (b) (c) the form that must be used in connection with doing the thing: what information or other evidence or documents must be provided in connection with the thing: 185 Part 8 cl 449 Deposit Takers Bill (d) requirements with which information, evidence, or documents that are provided in connection with the thing must comply.
449 Bank may also require further information A relevant person must also provide to the Bank the information that is required by the Bank to assist the Bank in performing or exercising its func‐ tions, powers, or duties in relation to the thing (for example, to supply further information in support of an application on request).
5 450 Bank may refuse to act if requirements not complied with (1) The Bank may refuse to perform or exercise a function, power, or duty if— (a) a thing is not done in the manner specified by the Bank in a notice given or issued under this subpart; or 10 (b) a person fails to comply with section 449.

Example An applicant for a licence does not apply in the manner specified by the Bank in a notice issued under section 447.

15 The Bank may refuse to consider the application.
(2) This section does not limit any other provision of this Act that provides for an offence, a penalty, or any other consequence for a failure to do a thing in the manner specified by the Bank.
Subpart 5—Regulations 20 451 General regulations (1) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for all or any of the following purposes: (a) (b) providing for anything this Act says may or must be provided for by regulations: 25 prescribing, for the purposes of any provision of this Act that requires a thing to be done in a manner prescribed by the regulations, the manner in which the thing must be done, including prescribing— (i) (ii) by whom, when, where, and how the thing must be done: 30 the form that must be used in connection with doing the thing: (iii) what information or other evidence or documents must be provi‐ ded in connection with the thing: (iv) requirements with which information, evidence, or documents that are provided in connection with the thing must comply: 35 (c) authorising the Bank to determine or prescribe, by notice, any of the matters under paragraph (b): 186 Deposit Takers Bill Part 8 cl 452 (d) providing for anything incidental that is necessary for carrying out, or giving full effect to, this Act.
See section 292 of the Reserve Bank of New Zealand Act 2021, which allows regulations to be made that impose fees, charges, and costs in connection with this Act.

5 Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
If regulations made under subsection (1)(c) authorise the Bank to determine or prescribe matters by notice,— (2) (3) (4) (a) a notice made under the regulations is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements); and 10 (b) the regulations must contain a statement to that effect.
452 Regulations relating to depositor compensation scheme (1) The Governor-General may, by Order in Council, on the advice of the Minister given after consulting the Bank, make regulations for all or any of the follow‐ ing purposes: (a) (b) (c) (d) (e) prescribing classes of persons that are not eligible investors under Part 6: prescribing requirements and kinds of debt securities for the purposes of section 191(1)(c): declaring classes of debt securities not to be protected deposits under Part 6: specifying kinds of licensed deposit takers for the purposes of section 191(2)(c): providing for matters relating to temporary high balance limits, includ‐ ing 1 or more of the following: (i) (ii) (iii) prescribing limits or how limits must be determined: providing for the circumstances or other matters relating to when a limit applies (for example, providing for how long an amount may be held in a protected deposit before the limit ceases to apply): providing for a limit to apply in relation to an eligible investor only if the eligible investor or another person does 1 or more things in the manner prescribed by the regulations or in the man‐ ner specified by the Bank (for example, supplies information to the Bank): Example A couple sells their family home and deposit the proceeds of the sale into a bank account.
Ordinarily, the limit for compensation under Part 6 is 187 15 20 25 30 35 Part 8 cl 453 Deposit Takers Bill $100,000.

However, as a result of the deposit, the amount of the protected deposit exceeds this limit.

The regulations may provide for the $100,000 limit to be increased in these circumstances.

However, the extra protection will cease to apply if the pro- ceeds are held in the bank account for longer than a specified period.
5 (f) (g) (h) providing for matters referred to in sections 211 and 214: providing for matters referred to in section 212: providing for matters referred to in section 213.

(2) Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
10 453 Regulations prescribing classes of persons that are not eligible investors The Minister must, before giving advice for regulations under section 452(1)(a),— (a) have regard to the purpose of Part 6 set out in section 189; and be satisfied that the regulations are necessary or desirable in order to pre‐ vent entitlements to compensation under Part 6 from being available to a class of persons where— (b) (i) those persons have entered into arrangements with a purpose or an effect of circumventing, evading, or defeating the principle that the compensation should be limited to $100,000 per eligible investor per deposit taker; or (ii) making the compensation available to those persons may reduce incentives for them to prudently assess risk when making invest‐ ment decisions; or 15 20 (iii) making the compensation available would otherwise present a risk 25 to the stability of New Zealand’s financial system.
454 Regulations prescribing matters relating to protected deposits The Minister must, before giving advice for regulations under section 452(1)(b) and (c),— (a) have regard to the purpose of Part 6 set out in section 189; and have regard to the economic substance of the securities to which the regulations relate; and be satisfied that the regulations are necessary or desirable in order to ensure that compensation under that Part is available only in relation to the following: (i) debt securities that are commonly referred to in the financial mar‐ kets as current account, savings account, or term deposit products: (b) (c) 188 30 35 Deposit Takers Bill Part 8 cl 455 (ii) debt securities whose economic substance is substantially similar to any of the debt securities referred to in subparagraph (i).
455 Regulations providing for licensed deposit takers that do not issue protected deposits (1) (2) The Minister must, before giving advice for regulations under section 452(1)(d),— (a) have regard to advice given by the Bank under section 456; and be satisfied that the regulations— (b) (i) (ii) are not inconsistent with the purposes set out in section 3; and are not likely to cause significant detriment to public confidence in the depositor compensation scheme; and (c) be satisfied of either or both of the following: (i) that, having regard to the matters set out in subsection (2), applying Part 6 in relation to the deposit takers to which the regulations relate is unnecessary or unreasonable in the circum‐ stances: (ii) that there are arrangements (other than under Part 6) for protect‐ ing relevant investors that are satisfactory in the circumstances.
For the purposes of subsection (1)(c)(i), the Minister must have regard to— (a) the nature of the businesses carried out by the deposit takers to which the regulations relate (and, in particular, whether those deposit takers do not generally issue debt securities that would otherwise be protected depos‐ its and whether the issue of any debt securities that would otherwise be protected deposits is only an incidental part of the businesses of those deposit takers); and (b) the kinds of clients of the deposit takers to which the regulations relate (and, in particular, whether the deposit takers mainly provide services to wholesale clients that are unlikely to need the benefit of compensation under Part 6).
(3) In this section,— relevant investor means a person who— (a) is a holder of a debt security issued by a deposit taker to which the regu‐ lations relate or a person on whose behalf such a debt security is held; and (b) would be an eligible investor under Part 6 in respect of that debt secur‐ 35 ity if the regulations were not in force wholesale client has the same meaning as in section 49(2) of the Financial Ser‐ vice Providers (Registration and Dispute Resolution) Act 2008.
189 Part 8 cl 456 Deposit Takers Bill 456 Bank must give advice about regulations providing for licensed deposit takers that do not issue protected deposits (1) (2) The Bank must, before regulations are made under section 452(1)(d), give the Minister advice about the proposed regulations.

The Bank must, before giving the advice, consult the persons or representatives of the persons that the Bank considers will be substantially affected by the regulations.
5 457 Regulations providing for temporary high balance limits The Minister must, before giving advice for regulations under section 452(1)(e),— (a) be satisfied that the regulations are necessary or desirable to protect eli‐ gible investors in circumstances where the amount of a protected deposit is temporarily higher as a result of special events or circumstances of a personal, domestic, or household character (for example, the sale of a family home); and (b) have regard to— (i) (ii) (iii) (iv) (v) the advice given by the Bank under section 458; and the purpose of Part 6 set out in section 189; and the size and composition of the protected deposits to which the regulations will relate; and the likely effect that the regulations will have on the costs referred to in section 237(2); and the principle that the regulations should be consistent with the Bank efficiently and effectively performing its functions under Part 6 (in particular, providing compensation as soon as practic‐ able after the Bank has issued a specified event notice and ensur‐ ing that determining entitlements does not involve undue cost or delay).
458 Bank must give advice about regulations for temporary high balance limits (1) (2) The Bank must, before regulations are made under section 452(1)(e), give the Minister advice about the proposed regulations.

The Bank must, before giving the advice, consult licensed deposit takers or the persons or organisations that the Bank considers are able to represent the views of licensed deposit takers.
459 Regulations providing for calculation of amount of person’s protected deposits or share of protected deposits The Minister must, before giving advice for regulations under section 452(1)(f),— 190 10 15 20 25 30 35 Deposit Takers Bill Part 8 cl 461 (a) (b) have regard to the purpose of Part 6 set out in section 189; and have regard to the economic substance of the arrangements referred to in section 211(1), under which persons are entitled, or may receive, benefits in connection with protected deposits; and (c) have regard to the principles that— (i) (ii) compensation under Part 6 should be limited to $100,000 per eli‐ gible investor per deposit taker; and the regulations should be consistent with the Bank efficiently and effectively performing its functions under Part 6 (in particular, providing compensation as soon as practicable after the Bank issues a specified event notice and ensuring that determining entitlements does not involve undue cost or delay).
460 Regulations providing for transactions that have not been processed The Minister must, before giving advice for regulations under section 452(1)(g),— (a) be satisfied that the regulations are necessary or desirable to provide cer‐ tainty about the treatment of payments made under transactions to which section 212 applies; and have regard to the purpose of Part 6 set out in section 189 and to advice given by the Bank.
(b) 461 Regulations providing for taking into account funds that are withdrawn or available to eligible investors during resolution The Minister must, before giving advice for regulations under section 452(1)(h),— (a) be satisfied that the regulations are necessary or desirable to fairly take into account the matter referred to in section 213(1)(b); and be satisfied that eligible investors are likely to receive in connection with the regulations no less favourable treatment than would have been the case had a liquidation of the entity under New Zealand law commenced immediately before the entity entered into resolution; and (b) (c) have regard to the purpose of Part 6 set out in section 189 and to advice given by the Bank.
191 Part 8 cl 462 Deposit Takers Bill Subpart 6—Levy for Crown to recover cost of public support of deposit taker in financial distress or other difficulties 462 Licensed deposit takers must pay levy to allow Crown to recover cost of public support (1) Every person that is included in a prescribed class of licensed deposit takers must pay to the Bank, or a prescribed person on behalf of the Bank (the pre‐ scribed person), a levy prescribed by the regulations made under this subpart.
5 (2) A licensed deposit taker must pay the levy by the date specified for payment, whether in an invoice or other appropriate document given to the deposit taker by the Bank or the prescribed person.

(3) (4) The specified date for payment must be not less than 30 days after the date of the invoice or other appropriate document.

The amount of any unpaid levy and any interest under section 464 is recover‐ able in a court of competent jurisdiction as a debt due to the Bank or the pre‐ scribed person.
10 15 463 Bank or prescribed person collects levy on behalf of Crown (1) (2) The Bank or the prescribed person collects the levy under this subpart on behalf of the Crown.

The Bank or the prescribed person must ensure that each levy payment is paid into a Crown Bank Account within 30 days after the payment is received.
20 464 Interest on unpaid levy (1) A person who owes a levy under this subpart is liable to pay to the Bank or the prescribed person interest assessed at the rate and applied by the method (if any) prescribed by the regulations made under this subpart.

(2) The interest is payable on— 25 (a) (b) (c) any unpaid levy; and any unpaid instalment payment in respect of any levy; and any unpaid interest that has been charged already.
465 Levy regulations (1) The Governor-General may, by Order in Council, on the recommendation of the Minister, make regulations providing for the levies.

30 (2) Before making a recommendation under this section, the Minister must— (a) (b) consult the Bank; and comply with sections 466 and 467.
(3) Levies must be prescribed on the basis that the following costs should be met fully out of the levies: 35 192 Deposit Takers Bill Part 8 cl 466 (a) (b) a portion of the costs to the Crown of expenses or capital expenditure that has been incurred or a capital injection that has been made as referred to section 466(1)(a), where the size of the portion to be met by levies under this subpart is determined by the Minister under sub- section (4); and the costs of collecting the levy money.
5 (4) In determining the portion, the Minister must take into account the following: (a) (b) any recovery of the costs to the Crown that has occurred or is likely to occur (other than under this subpart): the extent to which incurring the expenses or capital expenditure or mak‐ ing the capital injection was necessary or desirable for either or both of the purposes referred to in section 466(1)(b)(i) and (ii).
10 (5) The regulations may— (a) (b) (c) (d) (e) (f) (g) specify the class or classes of licensed deposit taker that are required to pay a levy: 15 provide for different levies for different classes of licensed deposit taker: specify the amount of levies, or the method of calculating or ascertaining the amount of levies for each class: include in levies, or provide for the inclusion in levies of, any shortfall in recovering the costs referred to in subsection (3): provide for the payment and collection of levies (which may include providing for instalment payments): provide for interest under section 464: provide for waivers, discounts, or refunds of the whole or any part of a levy for any case or class of cases.
20 25 (6) Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
466 Process matters for recommendation (1) The Minister must, before making a recommendation,— (a) be satisfied that the Crown has incurred expenses or capital expenditure or made a capital injection— 30 (i) (ii) in connection with dealing with the financial distress or other dif‐ ficulties of a licensed deposit taker or an associated person that is or was in resolution; or under sections 25B and 25C of the Public Finance Act 1989 in connection with a licensed deposit taker or an associated person; and 35 193 Part 8 cl 467 Deposit Takers Bill (b) be satisfied that incurring the expenses or capital expenditure or making the capital injection were necessary or desirable for either or both of the following purposes (whether or not there were other purposes): (i) (ii) to maintain the stability of the financial system: to maintain the continuity of systemically important activities undertaken by 1 or more licensed deposit takers or associated per‐ sons; and 5 (c) be satisfied that the expenses or capital expenditure was incurred or the capital injection was made within the 5-year period before the regula‐ tions will be made; and (d) have regard to the following: (i) (ii) (iii) the extent to which deposit takers of each class that will be required to pay a levy under this subpart directly or indirectly benefited, or are likely to benefit, from the expenses or capital expenditure that was incurred or the capital injection that was made: the effect that the obligation to pay a levy under this subpart is likely to have on the soundness of a deposit taker of each of those classes: the net cost to the Crown of incurring the expenses or capital expenditure or making a capital injection (taking into account any recovery of those costs that has occurred or is likely to occur).
(2) The reference to expenses, capital expenditure, or a capital injection in sub- section (1)(a) does not include— (a) any grants or advances made under subpart 8 of Part 6 (deficiency in fund); or (b) any compensation paid under subpart 9 of Part 7 (compensation for pre-resolution creditors or shareholders that are worse off).
10 15 20 25 467 Consultation about proposed levy regulations (1) (2) (3) The Minister must, before making a recommendation, ensure that licensed deposit takers or the persons or organisations that the Bank considers are able to represent the views of licensed deposit takers are consulted.

30 The consultation must include consultation relating to the amount of levies or method of calculating or ascertaining the amount of levies.
The Bank may carry out the consultation on the Minister’s behalf if the Minis‐ ter and the Bank agree to the Bank acting under this subsection.

35 468 Effect of failure to comply A failure to comply with section 467 does not affect the validity of any regu‐ lations made under this subpart.
194 Deposit Takers Bill Part 8 cl 471 Subpart 7—Other miscellaneous provisions 469 How notices, directions, and other documents must be given (1) (2) This section and section 470 apply (unless this Act provides otherwise) if a provision of this Act requires or authorises any notice, direction, or other docu‐ ment, or any notification, to be given or provided to a person.
5 The notice, direction, document, or notification must be in writing and must, in the case of a notice, direction, document, or notification being given or provi‐ ded to— (a) an individual, be given— (i) (ii) (iii) by delivering it personally or by an agent (such as a courier) to the person; or 10 by sending it by post addressed to the person at the person’s usual or last known place of residence or business; or by sending it by email to the person’s email address provided by the person for the purpose; or 15 (iv) in any other manner a District Court Judge directs: (b) (c) (d) a company within the meaning of the Companies Act 1993, be served in a manner provided for in section 387(1) or 388 of that Act: an overseas company, be served in a manner provided for in section 389(1) or 390 of the Companies Act 1993: 20 any other body corporate, be served in a manner in which it could be given or served if the body corporate were a company within the mean‐ ing of the Companies Act 1993.
(3) (4) If a person is absent from New Zealand, a notice, direction, document, or noti‐ fication given to the person’s agent in New Zealand in accordance with sub- section (2) must be treated as having been given or provided to the person.

If a person has died, the notice, direction, document, or notification may be given, in accordance with subsection (2), to their personal representative.
470 When certain notices, directions, or documents treated as given (1) In the absence of proof to the contrary, a notice, direction, document, or notifi‐ cation sent to a person in accordance with section 469(2)(a)(iii) must be treated as having been given or provided to the person on the second working day after the day on which it is sent.

25 30 (2) Section 392 of the Companies Act 1993 applies for the purposes of section 469(2)(b) to (d).
35 471 Meaning of deposit taker The provisions set out in Schedule 2 have effect according to their terms.

195 Part 9 cl 472 Deposit Takers Bill Part 9 Repeals and amendments to other Acts Repeals 472 Repeals The following are repealed: (a) (b) the Banking (Prudential Supervision) Act 1989 (1989 No 157): the Non-bank Deposit Takers Act 2013 (2013 No 104).

Amendments to Reserve Bank of New Zealand Act 2021 473 Principal Act (1) (2) Sections 474 to 479 amend the Reserve Bank of New Zealand Act 2021.
See also Schedule 3 for further amendments to that Act.

474 Section 10 amended (Bank’s functions) (1) After section 10(1)(b)(iii), insert: (iiia) issuing warnings, reports, or guidelines, or making comments in connection with compliance with that legislation; and (2) In section 10(1)(b)(iv), after “difficulties”, insert “(for example, acting as the resolution authority in relation to a licensed deposit taker that is in resolution)”.
(3) After section 10(1)(b), insert: (ba) to manage and administer the depositor compensation scheme under the Deposit Takers Act 2022, including doing the things set out in section 194 of that Act: 5 10 15 20 475 Section 74 amended (Ability to delegate) (1) After section 74(1)(f), insert: (fa) a person appointed as a resolution manager under Part 7 of the Deposit Takers Act 2022 (subject to subsection (2A)): 25 (2) After section 74(2), insert: (2A) The board may delegate to a resolution manager only any of the functions or powers under sections 282, 283, 286, 292 to 294, 310 to 329, and 337 to 339 of the Deposit Takers Act 2022.
476 Section 182 amended (Protection for certain persons) 30 In section 182(1)(g), after “statutory manager”, insert “or resolution manager”.

196 Deposit Takers Bill Part 9 cl 482 477 Section 189 amended (Crown indemnities in relation to statutory management) (1) (2) (3) (4) In the heading to section 189, after “statutory management”, insert “or reso‐ lution”.

In section 189(a), after “statutory manager”, insert “, and each resolution man‐ ager,”.
5 In section 189(a), replace “the statutory manager’s” with “their”.

In section 189(b), after “statutory management”, insert “or resolution”.
478 New section 190A and cross-heading inserted After section 190, insert: Qualified privilege protection 190A Bank’s warnings, reports, guidelines, or comments protected by qualified privilege For the purposes of clause 3 of Part 2 of Schedule 1 of the Defamation Act 1992, any warning, report, guideline, or comment issued or made by the Bank in the course of the performance or intended performance of its functions must be treated as an official report made by a person holding an inquiry under the authority of the Parliament of New Zealand.
Compare: 2011 No 5 s 23 479 Section 240 amended (Form and content of annual report) After section 240(1)(n), insert: (na) the financial statements of the depositor compensation fund, and the statement of responsibility and audit report for those statements, required under subpart 9 of Part 6 of the Deposit Takers Act 2022; and Amendments to Financial Markets Conduct Act 2013 480 Principal Act (1) (2) Sections 481 to 483 amend the Financial Markets Conduct Act 2013.
See also Schedule 3 for further amendments to that Act.

481 Section 6 amended (Interpretation) In section 6(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 10 15 20 25 30 482 Section 22 amended (False or misleading representations) In section 22(h), after “the Consumer Guarantees Act 1993”, insert “or Part 6 of the Deposit Takers Act 2022”.
35 197 Part 9 cl 483 Deposit Takers Bill 483 Schedule 1 amended In Schedule 1, replace clause 21 and the cross-heading above clause 21 with: Exclusion for licensed deposit takers 21 Offers of prescribed financial products or debt securities by licensed deposit takers An offer of financial products does not require disclosure under Part 3 of this Act if the financial products are— (a) (b) (c) (d) financial products of a kind prescribed for the purposes of this paragraph that are issued by a licensed deposit taker; or debt securities issued by a licensed deposit taker; or financial products of a kind prescribed for the purposes of this paragraph that are issued by a subsidiary of a licensed deposit taker; or prescribed currency forwards that are issued by a licensed deposit taker or a subsidiary of a licensed deposit taker.
Amendments to Public Finance Act 1989 484 Principal Act Sections 485 to 487 amend the Public Finance Act 1989.

485 Section 8 amended (Appropriation limited by amount) In section 8(b), after “section 25 or” insert “section 25C or”.
486 New sections 25B and 25C inserted After section 25A, insert: 25B When Minister may exercise certain powers in connection with financial institution in serious financial difficulties (1) The Minister may exercise a power under section 25C only if— (a) the Reserve Bank of New Zealand has advised the Minister that 1 or more regulated entities are, or are likely to be, insolvent or otherwise in serious financial difficulties (the situation); and (b) the Minister is satisfied of the matters set out in subsection (2) on reasonable grounds.
(2) The matters that the Minister must be satisfied of are as follows: (a) that incurring expenses or capital expenditure under section 25C in relation to the situation is necessary or desirable to do either or both of the following: (i) maintain the stability of the financial system: 198 Deposit Takers Bill Part 9 cl 489 (ii) maintain the continuity of systemically important activities under‐ taken by 1 or more regulated entities; and (b) that there is no reasonable prospect of the situation being adequately dealt with to the Minister’s satisfaction in a timely and orderly way other than through exercising the power under section 25C.
5 (3) In this section, regulated entity has the same meaning as in section 5(1) of the Reserve Bank of New Zealand Act 2021.
25C Expenses or capital expenditure in connection with financial institution in serious financial difficulties (1) (2) The Minister may approve the incurring of expenses or capital expenditure in relation to the situation referred to in section 25B(1)(a) and, whether or not there is an appropriation by Parliament available for the purpose and despite sections 4, 8, and 9, the expenses or capital expenditure may be incurred accordingly.
Public money may be spent, without further authority than this section, for the purpose of meeting expenses or capital expenditure incurred in accordance with subsection (1) that have not been appropriated.

(3) A statement about any expenses and capital expenditure incurred under this section in any financial year that have not been appropriated must be included in— 10 15 20 (a) (b) the annual financial statements of the Government; and an Appropriation Bill for confirmation by Parliament.
(4) Subsection (3) does not limit the validity of any expenses or capital expend‐ iture incurred under this section.

487 Section 27 amended (Annual financial statements of Government) 25 After section 27(2)(c)(iii), insert: (iiia) a statement of expenses and capital expenditure incurred under section 25C: Amendments to Insurance (Prudential Supervision) Act 2010 488 Principal Act Section 489 amends the Insurance (Prudential Supervision) Act 2010.
489 Section 8 amended (Meaning of carrying on insurance business in New Zealand) (1) After section 8(2)(a), insert: (aa) the Bank or a subsidiary of the Bank; or (2) In section 8(2)(b), before “an entity”, insert “the Crown, or”.

30 35 199 Part 9 cl 490 Deposit Takers Bill Consequential amendments 490 Consequential amendments (1) Amend the Acts specified in Part 1 of Schedule 3 as set out in that Part.

(2) Amend the secondary legislation specified in Part 2 of Schedule 3 as set out in that Part.
5 200 Deposit Takers Bill Schedule 1 Schedule 1 Transitional, savings, and related provisions Contents Part 1 Provisions relating to this Act as enacted Overview Interpretation Subpart 1—Depositor compensation scheme Existing registered banks and non-bank deposit takers treated as licensed deposit takers for purposes of depositor compensation scheme Debt securities issued before issuer becomes licensed deposit taker are protected When Bank may issue specified event notice Use of fund to support statutory management Depositor compensation standards may apply during transitional period Subpart 2—Licences for registered banks and licensed non-bank deposit takers When Bank must issue licence to existing deposit taker Existing deposit takers treated as deposit takers for purposes of Act Application for licence made by existing deposit taker Subpart 3—Provisions relating to new deposit takers Persons may not apply to be registered as banks or licensed as NBDTs after prescribed date Licence holder may be treated as registered bank or licensed NBDT during transitional period Pending applications on main commencement date Subpart prevails over former Acts Subpart 4—Miscellaneous Existing statutory management continues First statement of funding approach First statement of approach to resolution Existing registered banks authorised to use restricted words in name or title s 8 Page 202 202 203 203 203 204 204 205 205 205 205 206 207 207 207 207 207 207 201 Schedule 1 Deposit Takers Bill Part 1 Provisions relating to this Act as enacted Overview Subpart 1 allows the depositor compensation scheme (and other provisions of Part 6 of this Act) to come into force before deposit takers are required to hold a licence under this Act.
5 Subpart 2 provides for the licensing of registered banks and licensed non- bank deposit takers under this Act.

Subpart 3— (a) prevents applications for registration under the Banking (Prudential Supervision) Act 1989 or a licence under the Non-bank Deposit Takers Act 2013 from being made after a date prescribed by the regulations; and (b) provides for pending applications to be treated as withdrawn on the main commencement date.

Subpart 4 provides for miscellaneous matters.


This clause is only a guide to the general scheme and effect of this Part.
Interpretation In this Part,— core standards means the standards referred to in— (a) (b) (c) (d) (e) section 78(a) (which relates to capital); and section 78(b) (which relates to liquidity); and section 85 (which relates to depositor compensation); and section 87 (which relates to the disclosure of information); and regulations made for the purposes of this definition existing deposit taker means a person that, immediately before the com‐ mencement of clause 8, is a registered bank or a licensed NBDT licensed NBDT means a licensed NBDT under the Non-bank Deposit Takers Act 2013 10 15 20 25 main commencement date means the date on which section 10 comes into force 30 registered bank means a registered bank under the Banking (Prudential Super‐ vision) Act 1989 specified deposit taker means a person that is treated as being a licensed deposit taker under clause 3 transitional period means the period that— 35 (a) starts on the commencement of clause 3; and 1 (1) (2) (3) (4) (5) 2 202 Deposit Takers Bill Schedule 1 (b) ends when section 10 comes into force.
Subpart 1—Depositor compensation scheme 3 (1) Existing registered banks and non-bank deposit takers treated as licensed deposit takers for purposes of depositor compensation scheme This clause applies to a person that, immediately before the commencement of this clause, is a registered bank or a licensed NBDT.
5 (2) During the transitional period, the person must be treated as being a licensed deposit taker for the purposes of— (a) (b) Part 6 of this Act (which relates to the depositor compensation scheme); and 10 any other provision of this Act relating to the enforcement, application, or effect of Part 6 of this Act.
4 Debt securities issued before issuer becomes licensed deposit taker are protected (1) This clause applies to a debt security if— (a) (b) the issuer (A) is a licensed deposit taker (or a specified deposit taker); and the debt security meets the requirements of section 191(1) (and is not a security of the kind referred to in section 191(2)).
(2) However, this clause does not apply if the debt security has been cancelled, redeemed, or forfeited, or all of the obligations owing under the security have been discharged.

(3) The debt security is a protected deposit even if it was issued before A became a licensed deposit taker (or a specified deposit taker).
5 When Bank may issue specified event notice (1) During the transitional period, the Bank may issue a specified event notice for the purposes of Part 6 in relation to a specified deposit taker (A) if— (a) 1 or more of the following apply: (i) (ii) A is put into liquidation under New Zealand law: a receiver is appointed in relation to the whole, or substantially the whole, of the assets and undertaking of A and the Receiverships Act 1993 applies to the receivership: (iii) A has become subject to statutory management under the Banking (Prudential Supervision) Act 1989 or the Corporations (Investiga‐ tion and Management) Act 1989; and (b) the Bank is satisfied that— 15 20 25 30 35 203 Schedule 1 Deposit Takers Bill (2) 6 (1) (i) A’s financial or other difficulties are likely to cause serious and prolonged disruption to the ability of eligible investors to deal with their protected deposits in accordance with their applicable terms and conditions; and (ii) issuing the notice is the most appropriate means to deal with that disruption.
5 Section 193(2) to (4) and the rest of Part 6 of this Act apply with all neces‐ sary modification to the notice as if it were issued under section 193(1).
Use of fund to support statutory management For the purposes of supporting a statutory management measure undertaken or to be undertaken for a specified deposit taker (A) and other matters in connec‐ tion with the measure, the Bank may authorise an amount to be paid out of the fund (as defined in section 190) if— (a) the Bank is satisfied that eligible investors are likely to receive, as a result of the statutory management measure, no less favourable treatment than would have been the case had the eligible investors been paid com‐ pensation under subpart 3 of Part 6; and the total amount paid out of the fund under this clause in connection with the statutory management of A does not exceed the maximum amount calculated under section 230.
(b) (2) In this clause, statutory management measure means any action taken by— (a) (b) the statutory manager or managers; or the Bank to further the purposes set out in section 256 in connection with A being subject to statutory management, whether the Bank per‐ forms or exercises its functions, powers, or duties under this Act or any other legislation (and that section applies with all necessary modifica‐ tions as if references to resolution were references to statutory manage‐ ment).
(3) For the purposes of this clause, subpart 5 of Part 6 of this Act applies with all necessary modifications as if— 30 (a) (b) a statutory management measure were a resolution measure; and the statutory management were a resolution.

(4) However, section 232(2)(a) does not apply for the purposes of this clause.

Depositor compensation standards may apply during transitional period The Bank may make standards referred to in section 85 that apply during all or any part of the transitional period.
35 The standards may apply to all specified deposit takers, a particular specified deposit taker, or a class of specified deposit takers.

7 (1) (2) 204 10 15 20 25 Deposit Takers Bill Schedule 1 (3) For that purpose, subpart 2 of Part 3 and subpart 2 of Part 5 of this Act apply with all necessary modifications as if specified deposit takers were licensed deposit takers.
Subpart 2—Licences for registered banks and licensed non-bank deposit takers 5 8 (1) When Bank must issue licence to existing deposit taker The Bank must issue a licence under this subpart to an existing deposit taker (A) if the Bank is satisfied that A— (a) (b) (c) has applied for the licence in accordance with clause 10; and has the ability to comply with the core standards; and 10 the eligibility criteria (if any) that are prescribed by the regulations are satisfied.
(2) The licence must be treated as being a licence issued under subpart 2 of Part 2 of this Act.

9 Existing deposit takers treated as deposit takers for purposes of Act 15 An existing deposit taker must be treated as being a deposit taker within the meaning of clause 2 of Schedule 2.

10 Application for licence made by existing deposit taker (1) An existing deposit taker may apply for a licence in the manner that is speci‐ fied by the Bank.
(2) See subpart 4 of Part 8 of this Act (which provides for the Bank’s power to specify the manner in which an application is made).

Example In order to facilitate the orderly and efficient processing of applications from exist- ing deposit takers, the Bank may specify that if a particular existing deposit taker or an existing deposit taker of a particular class wants a licence by a particular date, the existing deposit taker must apply by some other date.
A different date may apply to different classes of existing deposit takers.
Subpart 3—Provisions relating to new deposit takers 11 Persons may not apply to be registered as banks or licensed as NBDTs after prescribed date (1) On and after the date that is prescribed by the regulations for the purposes of this clause, a person— (a) may not apply to be registered as a registered bank under section 70 of the Banking (Prudential Supervision) Act 1989; and 20 25 30 35 205 Schedule 1 Deposit Takers Bill (b) may not apply to be licensed as an NBDT under section 13 of the Non- bank Deposit Takers Act 2013.
Example Company A wants to enter the market as a non-bank deposit taker.

However, regulations have come into force for the purposes of this clause.

A can no longer apply under the Non-bank Deposit Takers Act 2013.

Instead, A must apply for a licence under this Act.

(2) The date that is prescribed— (a) must be on or after the date on which section 15 comes into force (which allows the Bank to issue a licence); and (b) must not be more than 6 months before the main commencement date.
5 10 12 (1) (2) Licence holder may be treated as registered bank or licensed NBDT during transitional period This clause applies if a person (A) is issued a licence before the main com‐ mencement date.
15 The Bank may issue the licence subject to a condition that A must be treated as being— (a) (b) a registered bank for the purposes of any provision or provisions of the Banking (Prudential Supervision) Act 1989 or any other specified legis‐ lation; or 20 a licensed NBDT for the purposes of any provision or provisions of the Non-bank Deposit Takers Act 2013 or any other specified legislation.
(3) Until the main commencement date, A must be treated as being a registered bank or a licensed NBDT in accordance with the condition.

This clause does not limit any prudential obligation that A has as a licensed deposit taker.

25 If any prudential obligation conflicts with any obligation that A has by virtue of A being treated as being a registered bank or a licensed NBDT, the pruden‐ tial obligation prevails.
Example continued from clause 11 A applies for and is issued with a licence under subpart 2 of Part 2 of this Act.

However, before the main commencement date, the Non-bank Deposit Takers Act 2013 remains in force.

This includes licensing and holding out requirements for non-bank deposit takers in sections 11 and 12 of that Act.
Under the conditions of A’s licence, A must be treated as being a licensed NBDT for the purposes of those sections (and for the purposes of certain other legislation that refers to licensed NBDTs).

Accordingly, A does not breach those sections.
30 35 (4) (5) 206 Deposit Takers Bill Schedule 1 13 (1) Pending applications on main commencement date This clause applies if,— (a) before the main commencement date, a person has— (i) (ii) applied to be registered as a registered bank under section 70 of the Banking (Prudential Supervision) Act 1989; or 5 applied to be licensed as an NBDT under section 13 of the Non- bank Deposit Takers Act 2013; but (b) on that date, the application has not yet been determined.
(2) The application must be treated as withdrawn (and, accordingly, the Bank is not required to consider the application further).

10 14 Subpart prevails over former Acts This subpart applies despite anything to the contrary in the Banking (Prudential Supervision) Act 1989 or the Non-bank Deposit Takers Act 2013.
Subpart 4—Miscellaneous 15 (1) (2) Existing statutory management continues This clause applies if, immediately before the main commencement date, a registered bank, a licensed NBDT, or an associated person of a registered bank or a licensed NBDT is subject to statutory management under the Banking (Prudential Supervision) Act 1989 or the Corporations (Investigation and Man‐ agement) Act 1989.
The person continues to be subject to statutory management (and the Acts referred to in subclause (1) continue to apply) as if this Act had not been enacted.

16 First statement of funding approach The Minister must take all reasonable steps to ensure that the first statement of funding approach is issued before the first anniversary of the commencement of subpart 7 of Part 6.
17 First statement of approach to resolution The Bank must take all reasonable steps to ensure that the first statement of approach to resolution is issued before the first anniversary of the commence‐ ment of subpart 2 of Part 7.
18 (1) Existing registered banks authorised to use restricted words in name or title If a person (A), immediately before the commencement of this clause, is a registered bank, the person must be treated as being authorised to use a name or title that includes a restricted word under section 425(a).
15 20 25 30 35 207 Schedule 1 Deposit Takers Bill (2) Despite subclause (1), A must not use, without an authorisation from the Bank under section 425 or 426, a name or title that includes a restricted word in respect of a managed investment scheme of which A is a supervisor or a manager within the meaning of section 6(1) of the FMCA.

(3) This clause does not extend to a person carrying on any activity by means of, or through the agency of, a registered bank.
5 208 Deposit Takers Bill Schedule 2 Schedule 2 Deposit takers Contents Interpretation Meaning of deposit taker Receiving money from conduit issuer of debt securities Miscellaneous matters relating to territorial scope Schedule may not apply if borrowing in New Zealand is below threshold prescribed in regulations Declarations for purposes of this schedule Procedural requirements for recommendation Bank’s reasons Interpretation In this schedule,— s 471 Page 209 210 211 211 212 212 212 213 5 business includes any profession, trade, or undertaking, whether or not carried on with the intention of making a pecuniary profit call debt security means a debt security under which— (a) (b) (c) (d) the product holder has a right to demand repayment of the principal sum in full at any time; and 10 the issuer has an obligation to repay the principal sum in full not later than 5 working days after the demand is made; and the rate of 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 principal sum not having been held by the issuer for a particular period of time 15 credit has the same meaning as in section 6 of the Credit Contracts and Con‐ sumer Finance Act 2003 credit contract— (a) has the same meaning as in section 7 of the Credit Contracts and Con‐ sumer Finance Act 2003; but 20 (b) does not include— (i) (ii) a contract under which no interest charges, and no credit fees, as defined in section 5 of that Act, are payable; or a contract of a class that is declared by Order in Council not to be a credit contract for the purposes of this schedule (see clause 6) 25 209 Schedule 2 Deposit Takers Bill DT regulated offer— (a) means a regulated offer within the meaning of section 41 of the FMCA; and (b) includes an offer of debt securities that would be a regulated offer within the meaning of that section if clause 21 of Schedule 1 of the FMCA were not in force 5 issuer has the same meaning as in section 6(1) of the FMCA offer has the same meaning as in section 6(1) of the FMCA product holder has the same meaning as in section 6(1) of the FMCA.
2 (1) Meaning of deposit taker In this Act, deposit taker— (a) means either of the following: (i) (ii) a person that carries on the business of borrowing and lending money: a person, or a member of a class of persons, that is declared by Order in Council to be a deposit taker for the purposes of this Act (see clause 6); but (b) does not include any of the following: 10 15 (i) (ii) (iii) (iv) (v) (vi) a local authority: the New Zealand Local Government Funding Agency Limited (see section 7 of the Local Government Borrowing Act 2011): 20 the Crown (as defined in the Public Finance Act 1989): a Crown entity under section 7(1)(a) of the Crown Entities Act 2004: the Bank or any subsidiary of the Bank: a person, or a member of a class of persons, that is declared by Order in Council not to be a deposit taker for the purposes of this Act (see clause 6).
25 30 (2) A person carries on the business of borrowing and lending money if the per‐ son— Borrowing (a) does 1 or more of the following: (i) makes a DT regulated offer of debt securities: (ii) makes, in New Zealand, an offer of call debt securities: (iii) makes, in New Zealand, an offer of any debt securities of a class that is declared by the Bank for the purposes of this subparagraph: 35 (iv) receives money from a conduit issuer of debt securities; and 210 Deposit Takers Bill Schedule 2 Lending (b) carries on a business of providing credit under credit contracts.
(3) Subclauses (1)(a)(i) and (2) apply whether or not the business of borrowing and lending money is the person’s only business or the person’s principal busi‐ ness.
5 3 Receiving money from conduit issuer of debt securities In this schedule, a person (A) receives money from a conduit issuer of debt securities if— (a) (b) (c) (d) (e) (f) A is an associated person of another person (the conduit issuer); and the conduit issuer raises an amount of money under an offer of a kind referred to in clause 2(2)(a)(i), (ii), or (iii); and that money is raised as part of an agreement under which 75% or more of that money is provided, directly or indirectly and whether by 1 trans‐ action or a series of transactions, for the use of— (i) A; or (ii) A and 1 or more third persons that are associated persons of A; and the money that is provided to A under paragraph (c) is 10% or more of the money that is raised under paragraph (b); and all or part of the money that is provided under paragraph (c) has not yet been repaid or returned to the conduit issuer; and all other requirements prescribed in the regulations for the purposes of this clause (if any) are satisfied.
4 (1) Miscellaneous matters relating to territorial scope For the purposes of clause 2(2)(a)(ii) and (iii), debt securities are offered in New Zealand if an offer of the debt securities is received by a person in New Zealand, unless the offeror demonstrates that it has taken all reasonable steps to ensure that persons in New Zealand may not accept the offer.
10 15 20 25 (2) The following must be disregarded when considering whether debt securities are offered in New Zealand: 30 (a) where any resulting issue or transfer occurs: (b) where the issuer or offeror is resident, incorporated, or carries on busi‐ ness.

(3) Clause 2(2)(b) applies regardless of whether the business of providing credit under credit contracts is wholly or partly in a country outside New Zealand.
35 Example An overseas company in the business of borrowing and lending makes a DT regu- lated offer of debt securities to investors in New Zealand.

The extent of borrowing 211 Schedule 2 Deposit Takers Bill in New Zealand is above the threshold (if any) prescribed by the regulations (see clause 5).

The overseas company lends money only to overseas borrowers.

Despite lending only to overseas borrowers, the company is still a deposit taker under this Act (unless clause 2(1)(b) applies).
5 5 Schedule may not apply if borrowing in New Zealand is below threshold prescribed in regulations For the purposes of this schedule, an offer referred to in clause 2(2)(a)(i), (ii), or (iii) must be disregarded if— (a) the extent to which debt securities are offered to persons in New Zealand is less than a threshold prescribed in the regulations; and 10 (b) all other requirements prescribed in the regulations for the purposes of this clause (if any) are satisfied.
6 (1) Declarations for purposes of this schedule The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank,— 15 (a) declare that a person or a person of a particular class— (i) (ii) is a deposit taker for the purposes of this Act; or is not a deposit taker for the purposes of this Act: (b) (c) declare that a contract of a particular class is not a credit contract for the purposes of this schedule: 20 declare that debt securities of a particular class are debt securities for the purposes of clause 2(2)(iii).
(2) An Order in Council made under this clause is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
25 30 Procedural requirements for recommendation The Bank may give a recommendation under clause 6 only if the Bank— (a) is satisfied that the declaration is necessary or desirable in order to pro‐ mote the main purpose of this Act, or any of the additional purposes, specified in section 3; and in the case of clause 6(1)(a), has had regard to the nature of the busi‐ ness activities carried on by the person or class of persons that are the subject of the declaration; and in the case of clause 6(1)(b), has had regard to the economic substance of the contracts that are the subject of the declaration; and 35 in the case of clause 6(1)(c), has had regard to the economic substance of the debt securities that are the subject of the declaration; and 7 (1) 212 (b) (c) (d) Deposit Takers Bill Schedule 2 (e) has consulted the persons or representatives of the persons that the Bank considers will be substantially affected by the declaration.
(2) A failure to comply with subclause (1)(e) does not affect the validity of the Order in Council.

8 Bank’s reasons 5 The Bank’s reasons for making a recommendation under clause 6 (including why the declaration is appropriate) must be published together with the Order in Council.

213 Schedule 3 Deposit Takers Bill Schedule 3 Consequential amendments Part 1 Amendments to Acts s 490 5 Accident Compensation Act 2001 (2001 No 49) In Schedule 1, clause 49(5), delete “registered”.
In Schedule 1, after clause 49(5), insert: (5A) In subclause (5), banks means licensed deposit takers (as defined in the Deposit Takers Act 2022) that are authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”.

10 Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (2009 No 35) In section 5(1), repeal the definitions of non-bank deposit taker and registered bank.
15 In section 5(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 Replace section 18(2)(n) with: (n) a licensed deposit taker: Replace section 48(b)(v) with: (v) the Deposit Takers Act 2022: Replace section 130(1)(a) and (b) with: 20 (a) (b) for licensed deposit takers and life insurers, the Reserve Bank of New Zealand (Reserve Bank) is the relevant AML/CFT supervisor: 25 for persons referred to in subsection (1A) (other than licensed deposit takers and life insurers), the Financial Markets Authority is the relevant AML/CFT supervisor: Replace section 137(2) and (3) with: (2) The Reserve Bank may use any information obtained or held by it in the exer‐ cise of its powers or the performance of its functions and duties under any pru‐ dential legislation for the purpose of exercising its powers or performing its functions and duties under this Act as an AML/CFT supervisor.
30 (3) The Reserve Bank may use any information obtained or held by it in the exer‐ cise of its powers or the performance of its functions and duties under this Act 35 214 Deposit Takers Bill Schedule 3 Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (2009 No 35)—continued as an AML/CFT supervisor for the purpose of exercising its powers or per‐ forming its functions and duties under any prudential legislation.
(3A) In subsections (2) and (3), prudential legislation has the same meaning as in section 5 of the Reserve Bank of New Zealand Act 2021.

After section 140(2)(d), insert: (e) the Deposit Takers Act 2022: Repeal section 140(2)(p) and (t).

5 Banking (Prudential Supervision) Act 1989 (1989 No 157) After section 70(2), insert: (2A) However, an application may not be made on and after the date prescribed for the purposes of subpart 3 of Part 1 of Schedule 1 of the Deposit Takers Act 2022.
10 Biosecurity Act 1993 (1993 No 95) Replace section 100O(3)(a)(i) with: (i) at a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022; and 15 Replace section 100ZE(3)(a)(i) with: (i) at a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022; and In section 140A(1), replace “a registered bank within the meaning of the Banking (Prudential Supervision) Act 1989” with “a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022”.
Burial and Cremation Act 1964 (1964 No 75) In section 2(1), repeal the definition of registered bank.

In section 2(1), insert in its appropriate alphabetical order: 20 25 bank means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” In section 28(3), replace “registered bank” with “bank”.
Chartered Professional Engineers of New Zealand Act 2002 (2002 No 17) 30 In Schedule 1, replace clause 41(1) with: (1) The Council must establish, maintain, and operate 1 or more bank accounts at 1 or more licensed deposit takers (within the meaning of section 6 of the 215 Schedule 3 Deposit Takers Bill Chartered Professional Engineers of New Zealand Act 2002 (2002 No 17)—con‐ tinued Deposit Takers Act 2022) that are authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”.
Child Support Act 1991 (1991 No 142) Replace section 155(4)(a) with: (a) any licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”: 5 Community Trusts Act 1999 (1999 No 54) Repeal section 20.
Companies Act 1993 (1993 No 105) In section 2(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 In section 236(2A), after “Reserve Bank of New Zealand under”, insert “subpart 5 of Part 2 of the Deposit Takers Act 2022 or”.

In section 239Z(3), delete “registered”.


After section 239Z(4), insert: (5) In this section, bank means a licensed deposit taker that is authorised under section 425 or 426 of the Deposit Takers Act 2022 to use a name or title that includes the word “bank”.

In section 239ABMA(1)(b), replace “transferred or otherwise dealt with” with “deliv‐ ered, transferred, held, registered, or otherwise designated”.
Replace section 239ABMA(3) and (4) with: Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in subsection (1) have in that subsec‐ tion the same meanings as in that section.
Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (1)(b), and those modifications include— (a) (b) (c) treating references to section 42(10)(b) of that Act as references to sub‐ section (1)(b) of this section; and 30 treating references to the enforcing counterparty as references to the secured creditor; and treating references to the grantor as references to the company that gran‐ ted the security interest.
35 10 15 20 25 (3) (4) 216 Deposit Takers Bill Schedule 3 Companies Act 1993 (1993 No 105)—continued After section 241(2)(c)(vii), insert: (viia) if the company is a licensed deposit taker or an associated person of a licensed deposit taker under the Deposit Takers Act 2022, the Reserve Bank of New Zealand; or (viib) the Reserve Bank of New Zealand (if the application is made under section 151 of the Insurance (Prudential Supervision) Act 2010 or section 12 of the Deposit Takers Act 2022); or 5 Replace section 248(3) with: (3) This section is subject to section 418(1) to (3) of the Deposit Takers Act 2022.
10 In section 256A(1) and (2), delete “registered”.

After section 256A(1), insert: (1A) In this section, bank means a licensed deposit taker that is authorised under section 425 or 426 of the Deposit Takers Act 2022 to use a name or title that includes the word “bank”.

After section 286(1)(i), insert: (j) the Reserve Bank of New Zealand if the failure to comply concerns sec- tion 254 of the Deposit Takers Act 2022.
Replace section 271(3) with: (3) This section is subject to section 418(5) of the Deposit Takers Act 2022.

In section 365(3), replace “registered bank (within the meaning of section 2 of the Banking (Prudential Supervision) Act 1989)” with “licensed deposit taker”.
In Schedule 7, after clause 1(1)(a), insert: 15 20 (aa) the costs, charges, and expenses referred to in section 344 of the Deposit Takers Act 2022; and 25 In Schedule 7, clause 2(3A)(b), replace “transferred or otherwise dealt with” with “delivered, transferred, held, registered, or otherwise designated”.
In Schedule 7, replace clause 2(3B) and (3C) with: (3B) Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in subclause (3A) have in that sub‐ clause the same meanings as in that section.
(3C) Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subclause (3A)(b) (and those modifications include treating references to section 42(10)(b) of that Act as references to subclause (3A)(b) of this clause and treating references to the grantor as references to the company that granted the security interest).
30 35 217 Schedule 3 Deposit Takers Bill Compensation for Live Organ Donors Act 2016 (2016 No 96) In Schedule 2, clause 1(1) repeal the definition of registered bank.

In Schedule 2, clause 1(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 5 In Schedule 2, clause 14(3), replace “registered bank” with “licensed deposit taker”.
Construction Contracts Act 2002 (2002 No 46) Replace section 18FB(2)(b) with: (b) a licensed deposit taker: Replace section 18FB(8) with: (8) In this section,— licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 licensed insurer has the same meaning as in section 6(1) of the Insurance (Pru‐ dential Supervision) Act 2010.
10 15 Corporations (Investigation and Management) Act 1989 (1989 No 11) Replace section 8 with: 8 (1) Consultation with Reserve Bank The Registrar must consult the Reserve Bank of New Zealand before— (a) (b) (c) giving a written notice requiring any licensed insurer or licensed deposit taker to supply any information under section 9: 20 appointing any person to carry out an investigation of the affairs of any licensed insurer or licensed deposit taker under section 19: giving a written notice to any licensed insurer or licensed deposit taker that it is considered to be a corporation at risk.
25 (2) The FMA must consult the Reserve Bank of New Zealand before making a rec‐ ommendation to the Minister under section 38 in respect of any licensed insurer, licensed deposit taker, or covered bond SPV.
(3) In this section,— covered bond SPV has the same meaning as in section 401 of the Deposit Takers Act 2022 licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 licensed insurer means a licensed insurer within the meaning of the Insurance (Prudential Supervision) Act 2010.
30 35 Replace section 38(5) with: 218 Deposit Takers Bill Schedule 3 Corporations (Investigation and Management) Act 1989 (1989 No 11)—continued (5) Subsections (1)(a) and (2) are subject to section 418(5) of the Deposit Takers Act 2022.

Replace section 42(8A) with: (8A) Subsection (1) is subject to section 418(1) to (3) of the Deposit Takers Act 2022.

In section 42(10)(b), replace “transferred or otherwise dealt with” with “delivered, transferred, held, registered, or otherwise designated”.
Replace section 42(11) and (12) with: (11) See sections 62A and 62B for definitions and other matters relating to sub‐ section (10).

Replace section 43(4) with: 5 10 (4) Subsection (1) is subject to section 418(1) to (3) of the Deposit Takers Act 2022.

Replace section 44(5) with: (5) Subsection (1) is subject to section 418(1) to (3) of the Deposit Takers Act 2022.

15 Replace section 45(3) with: (3) Subsection (2) is subject to section 418(1) to (3) of the Deposit Takers Act 2022.
Replace section 51(9) and (10) with: (9) See sections 62A and 62B for definitions and other matters relating to sub‐ section (8).
After section 62, insert: 62A Definitions of terms relating to qualifying derivatives (1) For the purposes of sections 42, 51, and 62B,— collateral means any 1 or more of the following: (a) (b) (c) (d) a financial product: gold, silver, or platinum: a document of title, a chattel paper, an investment security, money, a negotiable instrument, or an intangible (and terms and expressions used in this paragraph have the same meanings as in section 16(1) of the Per‐ sonal Property Securities Act 1999): if a person (an intermediary) maintains an account to which interests in property, or rights to payment or delivery of property, of a kind specified in any of paragraphs (a) to (c) may be credited or debited, the rights of a person in whose name the intermediary maintains the account, to the 20 25 30 35 219 Schedule 3 Deposit Takers Bill Corporations (Investigation and Management) Act 1989 (1989 No 11)—continued extent that those rights relate to the interests in that property or the rights to payment or delivery of that property: (e) the proceeds of property of a kind specified in any of paragraphs (a) to (d) default time means the close of the day after the date on which the statutory management commences 5 derivative means a derivative within the meaning of section 8(4) of the Finan‐ cial Markets Conduct Act 2013 (but disregarding any declaration referred to in section 8(5)(b) of that Act) grantor means the corporation that granted the security interest intermediated collateral means collateral of the kind referred to in para- graph (d) of the definition of collateral in this subsection overseas person means— (a) (b) a natural person who is not ordinarily resident in New Zealand; or an entity (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) that is incorporated or established outside New Zea‐ land possession includes possession within the meaning of section 18 of the Per‐ sonal Property Securities Act 1999 (subject to section 62B and the regula‐ tions) proceeds has the same meaning as in
 section 16(1) of the Personal Property Securities Act 1999 but applied with all necessary modifications, including treating references to collateral in the definition in that section as references to property of a kind specified in any of paragraphs (a) to (d) of the definition of collateral in this subsection qualifying counterparty means— (a) (b) (c) (d) (e) (f) a licensed deposit taker; or the Accident Compensation Corporation (as continued by section 259 of the Accident Compensation Act 2001); or the Guardians of New Zealand Superannuation established under section 48 of the New Zealand Superannuation and Retirement Income Act 2001; or a specified operator within the meaning of section 5 of the Financial Market Infrastructures Act 2021; or any prescribed entity; or any other entity of a prescribed class 10 15 20 25 30 35 220 Deposit Takers Bill Schedule 3 Corporations (Investigation and Management) Act 1989 (1989 No 11)—continued qualifying derivative, in relation to enforcing a security interest over collat‐ eral, means a derivative to which both of the following apply: (a) the derivative is subject to— (i) (ii) a netting agreement to which sections 310A to 310O of the Com‐ panies Act 1993 or sections 255 to 263 of the Insolvency Act 2006 apply; or 5 netting under the rules of a designated FMI to which subpart 5 of Part 3 of the Financial Market Infrastructures Act 2021 applies; and (b) the enforcing counterparty’s interest in the collateral is evidenced in writing 10 security interest has the same meaning as in section 17 of the Personal Prop‐ erty Securities Act 1999.
(2) For the purposes of the definition of overseas person, a natural person is ordin‐ arily resident in New Zealand if that person— 15 (a) (b) is domiciled in New Zealand; or is living in New Zealand and the place where that person usually lives, and has been living for the immediately preceding 12 months, is in New Zealand, whether or not that person has on occasions been away from New Zealand during that 12-month period.
20 Compare: 1989 No 157 s 122A 62B Matters relating to possession or control of collateral (1) For the purposes of section 42(10)(b) and 51(8)(b),— (a) collateral must be taken not to be in the possession or under the control of the enforcing counterparty if,— 25 (i) under the security interest, the grantor is free to deal with the col‐ lateral in the ordinary course of business until the enforcing coun‐ terparty’s interest in the collateral becomes fixed and enforceable; or (ii) regulations made under section 62C so provide: (b) (c) (d) intermediated collateral must be taken to be in the possession of the enforcing counterparty if that counterparty is the person in whose name the intermediary maintains the account: intermediated collateral must be taken to be under the control of the enforcing counterparty if subsection (3) applies: collateral must be taken to be in the possession or under the control of the enforcing counterparty if regulations made under section 62C so provide.
30 35 221 Schedule 3 Deposit Takers Bill Corporations (Investigation and Management) Act 1989 (1989 No 11)—continued (2) (3) Subsection (1)(a)(i) applies even if the enforcing counterparty’s interest in the collateral becomes fixed and enforceable before the enforcement of the security interest over that collateral.
For the purposes of subsection (1)(c), this subsection applies if— (a) the intermediary is not the grantor (but may be the enforcing counter‐ party or any other person); and 5 (b) there is an agreement in force between the intermediary and 1 or more other persons, 1 of which is the enforcing counterparty or the grantor; and (c) the agreement has 1 or more of the following effects: (i) (ii) (iii) the person in whose name the intermediary maintains the account is not able to transfer or otherwise deal with the collateral: the intermediary must not comply with instructions given by the grantor in relation to the collateral without seeking the consent of the enforcing counterparty (or a person who has agreed to act on the instructions of the enforcing counterparty): the intermediary must comply, or must comply in 1 or more speci‐ fied circumstances, with instructions (including instructions to debit the account) given by the enforcing counterparty in relation to the collateral without seeking the consent of the grantor (or any person who has agreed to act on the instructions of the grantor).
(4) (5) Subsections (1)(a)(i), (b), and (c), (2), and (3) and the definition of pos‐ session in section 62A are subject to regulations made under section 62C.
The fact that a grantor retains a right of 1 or more of the following kinds does not by itself prevent section 42(10)(b) or 51(8)(b) from being satisfied: 10 15 20 25 (a) (b) (c) (d) (e) (f) a right to receive and withdraw income in relation to the collateral: a right to receive notices in relation to the collateral: a right to vote in relation to the collateral: a right to substitute other collateral that the parties agree is of equivalent value for the collateral: 30 a right to withdraw excess collateral: a right to determine the value of collateral.
Compare: 1989 No 157 s 122B 62C Regulations relating to qualifying derivatives (1) The Governor-General may, by Order in Council, make regulations for all or any of the following purposes: 35 222 Deposit Takers Bill Schedule 3 Corporations (Investigation and Management) Act 1989 (1989 No 11)—continued (a) (b) prescribing entities and classes of entities for the purposes of the defin‐ ition of qualifying counterparty in section 62A: providing for when collateral must or must not be taken to be in the pos‐ session or under the control of a person for the purposes of section 62B or any legislation that applies section 62B (and those matters may be specified with reference to different kinds of collateral or any other circumstances): 5 (c) providing that section 62B(1)(a)(i), (b), or (c) does not apply to spe‐ cified kinds of collateral or in any other specified circumstances.
(2) Regulations under this section must be made on the recommendation of— 10 (a) (b) the Minister of Finance; and the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is responsible for the adminis‐ tration of the Companies Act 1993.
(3) The Ministers may make a recommendation under subsection (2) only if the Ministers have— 15 (a) (b) had regard to the matters set out in subsection (4); and consulted the persons (or representatives of the persons) that the Minis‐ ters consider will be substantially affected by the regulations, and those persons have had the opportunity to comment to the Ministers.
(4) The Ministers must have regard to the following under subsection (3)(a): (a) the purposes of this Act and of the Companies Act 1993, the Personal Property Securities Act 1999, the Property Law Act 2007, and the Receiverships Act 1993: (b) the effect of the regulations on— 20 25 (i) (ii) (iii) the maintenance of a sound and efficient financial system; and the creditors of qualifying counterparties; and the integrity of statutory management, deposit taker resolution, corporate insolvency, and personal property securities law.
(5) Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
30 Compare: 1989 No 157 s 173(1)(fb) to (fd), (2)–(4) Crown Entities Act 2004 (2004 No 115) In section 136(1), insert in its appropriate alphabetical order: licensed deposit taker means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” 35 223 Schedule 3 Deposit Takers Bill Crown Entities Act 2004 (2004 No 115)—continued In section 136(1), repeal the definition of registered bank.
In section 158(1)(a) and (b) and (6), replace “registered bank” with “licensed deposit taker”.

In section 161(1)(a), replace “registered bank” with “licensed deposit taker”.
Customs and Excise Act 2018 (2018 No 4) Replace section 415(1)(a) with: (a) keep a bank account at a licensed deposit taker; and In section 415(7), insert in its appropriate alphabetical order: 5 licensed deposit taker means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” 10 In section 415(7), repeal the definition of registered bank.
Education and Training Act 2020 (2020 No 38) In section 10(1), insert in its appropriate alphabetical order: bank means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” In section 154(2)(a)(i), replace “registered bank” with “bank”.

In section 297(1), replace “registered bank” with “bank”.

In Schedule 12, clause 8(1), replace “registered bank” with “bank”.
Electoral Act 1993 (1993 No 87) In section 212, insert in its appropriate alphabetical order: 15 20 licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 In section 212, definition of loan, paragraph (b), replace “registered bank” with “licensed deposit taker”.

25 In section 212, repeal the definition of registered bank.
Evidence Act 2006 (2006 No 69) Replace section 75(3)(a) with: (a) a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”: 30 Financial Market Infrastructures Act 2021 (2021 No 13) In section 5, definition of insolvency manager, repeal paragraph (c)(ii).
224 Deposit Takers Bill Schedule 3 Financial Market Infrastructures Act 2021 (2021 No 13)—continued In section 5, definition of insolvency manager, after paragraph (c), insert: (ca) the Bank, when it is performing or exercising functions under subparts 4 to 8 of Part 7 of the Deposit Takers Act 2022: Replace section 59(1)(a) with: (a) sections 289(3) and 329 of the Deposit Takers Act 2022: 5 Financial Markets Conduct Act 2013 (2013 No 69) In section 6(1), repeal the definitions of NBDT and registered bank.
In section 6(1), definition of issuer obligation, replace paragraph (f) with: (f) the Deposit Takers Act 2022 In section 60(3), replace the definition of approved rating agency with: 10 approved rating agency means a rating agency nominated or approved under section 61 of the Deposit Takers Act 2022 or section 62 of the Insurance (Prudential Supervision) Act 2010 In the heading above section 174(c), replace “registered bank” with “licensed deposit taker”.
15 Replace section 372(3)(e) with: (e) a licensed deposit taker: In section 426(1), replace “Banking (Prudential Supervision) Act 1989” with “Deposit Takers Act 2022”.

In the heading above section 441(c), replace “registered bank” with “licensed deposit taker”.

Replace section 451(1)(g) with: (g) a licensed deposit taker: Repeal section 451(1)(i) and (j).

Replace section 461K(1)(d) with: (d) licensed deposit takers: Repeal section 461K(1)(f) and (g).
Replace section 561A(2) with: (2) In deciding whether to grant, amend, or revoke an exemption under this subpart in relation to any provision of Part 7, the FMA must consult the Reserve Bank if the exemption concerns— (a) (b) a licensed deposit taker; or a licensed insurer.
In Schedule 1, replace clause 37(1)(b) and (c) with: (b) a licensed deposit taker; or 225 20 25 30 35 Schedule 3 Deposit Takers Bill Financial Markets Supervisors Act 2011 (2011 No 10) In section 4(1), repeal the definition of deposit taker.
In section 4(1), definition of issuer obligation, replace paragraph (g) with: (g) the Deposit Takers Act 2022 In section 4(1), insert in its appropriate alphabetical order: 5 licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 In section 4(1), definition of licensee obligation, replace paragraph (g) with: (g) the Deposit Takers Act 2022: In section 14(4)(b), replace “deposit taker” with “licensed deposit taker”.
10 In section 18(1)(a), replace “deposit taker” with “licensed deposit taker”.
Financial Service Providers (Registration and Dispute Resolution) Act 2008 (2008 No 97) In section 4, insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 15 Replace section 5(1)(b) and (c) with: (b) being a licensed deposit taker: Replace section 67(1)(c) with: (c) if A has reasonable grounds to believe that a member that is a licensed deposit taker or a licensed insurer has contravened or is likely to contra‐ vene the Deposit Takers Act 2022 or the Insurance (Prudential Supervi‐ sion) Act 2010 in a material respect, communicate that fact to the Reserve Bank; and In Schedule 2, replace the item relating to registered banks with: Reserve Bank of New Zea‐ land Licensed deposit takers Deposit Takers Act 2022 In Schedule 2, repeal the item relating to licensed NBDTs.
Fisheries Act 1996 (1996 No 88) In section 2(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 Replace section 59(11)(c) with: (c) no licensed deposit taker is to be regarded as being included with any other person merely because the deposit taker has, in the ordinary course of its business as a financier, been granted any interest in quota owned by the person; and 20 25 30 35 226 Deposit Takers Bill Schedule 3 Fisheries Act 1996 (1996 No 88)—continued Replace section 78(12)(c) with: (c) no licensed deposit taker is to be regarded as being included with any other person merely because the deposit taker has, in the ordinary course of its business as a financier, been granted any interest in quota owned by that person.
Replace section 79(6)(c) with: (c) no licensed deposit taker is to be regarded as being included with any other person merely because the deposit taker has, in the ordinary course of its business as a financier, been granted any interest in quota owned by that person.
Replace section 255(6) and (7) with: (6) No quota owned by any licensed deposit taker is to be regarded as associated quota merely because the deposit taker has in the ordinary course of its busi‐ ness as a financier become the owner of that quota.

Friendly Societies and Credit Unions Act 1982 (1982 No 118) Replace section 107F(2)(c) with: (c) the Reserve Bank of New Zealand, but only if the credit union is a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022.
Gambling Act 2003 (2003 No 51) In section 4(1), definition of approved surety, replace paragraph (b) with: (b) includes a licensed deposit taker In section 4(1), insert in its appropriate alphabetical order: 5 10 15 20 licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 25 In section 4(1), repeal the definition of registered bank.

In section 104(1), replace “registered bank” with “licensed deposit taker”.
In section 105(1), replace “registered bank” with “licensed deposit taker”.

In section 211(2), replace “registered bank” with “licensed deposit taker”.

Income Tax Act 2007 (2007 No 97) 30 In section EB 24, in the list of defined terms, delete “registered bank,”.

In section EW 34(4)(a) and (b), replace “New Zealand registered bank” with “licensed bank”.

In section EW 34, in the list of defined terms, delete “registered bank,”.
In section EW 34, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

35 227 Schedule 3 Deposit Takers Bill Income Tax Act 2007 (2007 No 97)—continued In section EZ 49(1)(a) and (b), replace “registered bank” with “licensed bank”.

In the heading above section FE 2(5), replace “registered bank” with “licensed bank”.

In section FE 2(5), replace “registered bank” with “licensed bank”.
In section FE 2, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

5 Replace section FE 20(2) with: (2) In section FE 19, the regulatory value of an item for a New Zealand banking group at a time is the total risk-weighted value for the item for the purposes of standards issued under section 78(a) of the Deposit Takers Act 2022.

In section FE 20, in the list of defined terms, delete “registered bank,”.
10 In section FE 20, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

In section FE 28(1)(c) and (2)(b), replace “registered bank” with “licensed bank”.

In section FE 28, in the list of defined terms, delete “registered bank,”.

In section FE 28, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

15 In section FE 33(a), replace “registered bank” with “licensed bank”.
In section FE 33, in the list of defined terms, delete “registered bank,”.

In section FE 33, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

20 In the heading above section FE 34(2), replace “Registered bank’s” with “Licensed bank’s”.

In section FE 34(2) and (3), replace “registered bank” with “licensed bank” in each place.

In section FE 34(3), replace “registered bank’s” with “licensed bank’s”.
25 In section FE 34, in the list of defined terms, delete “registered bank,”.

In section FE 34, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

In section FE 36(1), (2), (3), and (5), replace “registered bank” with “licensed bank” in each place.

30 In the heading above section FE 36(2), replace “Registered bank” with “Licensed bank”.

In section FE 36(2)(b), replace “registered bank’s” with “licensed bank’s”.
In section FE 36(3) and (5), subsection headings, replace “registered bank” with “licensed bank”.

35 In section FE 36, in the list of defined terms, delete “registered bank,”.

228 Deposit Takers Bill Schedule 3 Income Tax Act 2007 (2007 No 97)—continued In section FE 36, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

In section FE 36B(1), (2), and (3), replace “registered bank” with “licensed bank” in each place.
In the heading above section FE 36B(2), replace “Registered bank” with “Licensed bank”.

5 In section FE 36B, in the list of defined terms, delete “registered bank,”.

In section FE 36B, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

In section FE 37, replace “registered bank” with “licensed bank” in each place.

10 In the heading above section FE 37(2), replace “Registered bank” with “Licensed bank”.
In section FE 37, in the list of defined terms, delete “registered bank,”.

In section FE 37, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.

15 In section FG 1(2)(a), replace “registered bank” with “licensed bank”.

In section FG 1, in the list of defined terms, delete “registered bank”.

In section FG 1, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.
In section GC 15(2)(a), replace “registered bank” with “licensed bank”.

Replace section GC 15(2)(c) with: (c) a licensed deposit taker that is not a licensed bank or an associated per‐ son under the Deposit Takers Act 2022 of a licensed deposit taker that is not a licensed bank: In section GC 16(9)(a), replace “section 86 of the Non-bank Deposit Takers Act 2013” with “section 61 of the Deposit Takers Act 2022”.

In section GC 18(10)(a), replace “registered bank” with “licensed bank”.
Replace section GC 18(10)(e) with: (e) for a borrower referred to in section GC 15(2)(c), the feature reflects minimum capital ratio requirements that relate to features of loans and are imposed, when the financial arrangement is entered, on a deposit taker by standards issued under section 78(a) of the Deposit Takers Act 2022: Replace section HD 15(2)(c) with: (c) at the time of the arrangement, the company was under statutory man‐ agement under the Corporations (Investigation and Management) Act 1989, the Insurance (Prudential Supervision) Act 2010, or the Financial 20 25 30 35 229 Schedule 3 Deposit Takers Bill Income Tax Act 2007 (2007 No 97)—continued Market Infrastructures Act 2021, or in resolution under the Deposit Tak‐ ers Act 2022.
Replace section HD 16(7) and the heading above section HD 16(7) with: Licensed bank or building society (7) If a premium is paid by a licensed bank or a building society on behalf of a person to the insurer or to some other person not carrying on a business in New Zealand through a fixed establishment in New Zealand,— 5 (a) (b) the licensed bank or building society is not an agent of the insurer; and the person who provides the licensed bank or building society with the funds from which the premium is paid is an agent of the insurer.
10 In section HD 16, in the list of defined terms, delete “registered bank,”.

In section HD 16, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.
Replace section HD 17B(4) and the heading above section HD 17B(4) with: Licensed deposit takers 15 (4) If a premium is paid by a licensed deposit taker on behalf of a person to Lloyd’s of London or to some other person, acting on behalf of Lloyd’s of Lon‐ don, not carrying on a business in New Zealand through a fixed establishment in New Zealand,— (a) (b) the licensed deposit taker is not an agent of Lloyd’s of London; and 20 the person who provides the licensed deposit taker with the funds from which the premium is paid is an agent of Lloyd’s of London.
In section HD 17B, in the list of defined terms, delete “licensed non-bank deposit taker,”.

In section HD 17B, in the list of defined terms, delete “registered bank,”.

In section HD 17B, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed deposit taker,”.

In section RE 10C(6)(b), replace “Banking (Prudential Supervision) Act 1989” with “Deposit Takers Act 2022”.

In section RF 2(2B)(b)(i), replace “registered bank” with “licensed bank”.
25 30 In section RF 2, in the list of defined terms, delete “registered bank,”.

In section RF 2, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.
Replace section RL 4(8) and the heading above section RL 4(8) with: 230 Deposit Takers Bill Schedule 3 Income Tax Act 2007 (2007 No 97)—continued A definition (8) In this section, licensed security holder means a person who has a mortgage or other security over the relevant residential land, if that person is a licensed deposit taker.

In section RL 4, in the list of defined terms, delete “licensed non-bank deposit taker,”.

5 In section RL 4, in the list of defined terms, delete “registered bank,”.
In section RL 4, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed deposit taker,”.

In section RP 6(1), replace “registered bank within the meaning of the Banking (Pru‐ dential Supervision) Act 1989” with “licensed bank”.

10 In section RP 6, in the list of defined terms, insert, in its appropriate alphabetical order, “licensed bank,”.
In section YA 1, replace the definition of financial institution, with: financial institution means a licensed deposit taker that must use IFRSs to prepare financial statements 15 In section YA 1, definition of New Zealand banking group replace “registered bank” with “licensed bank”.

In section YA 1, repeal the definitions of licensed non-bank deposit taker and regis‐ tered bank.
In section YA 1, insert in their appropriate alphabetical order: 20 licensed bank means a licensed deposit taker that is authorised under section 425 or 426 of the Deposit Takers Act 2022 to use a name or title that includes the word “Bank” licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 25 Infrastructure Funding and Financing Act 2020 (2020 No 47) In section 106, repeal the definition of registered bank.
In section 106, insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 30 In section 107(a), replace “registered bank” with “licensed deposit taker”.
Insolvency Act 2006 (2006 No 55) Replace section 202(3) with: (3) Nothing in this section applies to any payments received in good faith in the ordinary course of business and without negligence by any licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022.
35 231 Schedule 3 Deposit Takers Bill Insolvency (Cross-border) Act 2006 (2006 No 57) In Schedule 1, replace paragraph (2) of article 1 with: (2) This Schedule does not apply to a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 that is in resolution under that Act.
In Schedule 1, replace paragraph (4)(a) of article 22 with: 5 (a) an application for recognition has been made in respect of a debtor that is a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022; In Schedule 1, article 22(4)(c), replace “is placed in statutory management” with “enters resolution under that Act”.
10 Insurance Intermediaries Act 1994 (1994 No 41) Replace section 17(1)(e) with: (e) that is a licensed deposit taker or an associated person of a licensed deposit taker that is in resolution under the Deposit Takers Act 2022.
Insurance (Prudential Supervision) Act 2010 (2010 No 111) 15 In section 6(1), insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 In section 6(1), replace the definitions of voting right and voting security with: voting right has the same meaning as in section 6 of the Deposit Takers Act 2022 20 voting security means a security (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) that confers a voting right.
Replace section 99(6)(a)(i) with: (i) a licensed deposit taker; or Replace section 100(2)(b) with: (b) does not include an investment of assets of a statutory fund by way of deposit with a licensed deposit taker, even though the deposit taker is a related party of the life insurer concerned.

Replace section 170(4) with: (4) Subsections (1)(b) and (2) are subject to section 418(5) of the Deposit Takers Act 2022.
25 30 KiwiSaver Act 2006 (2006 No 40) Replace section 221(4) with: In this section, bank account means an account with a licensed deposit taker that is authorised under section 425 or 426 of the Deposit Takers Act 2022 to use a name or title that includes the word “bank”.
35 (4) 232 Deposit Takers Bill Schedule 3 Lawyers and Conveyancers Act 2006 (2006 No 1) In section 6, replace the definition of bank with: bank means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” 5 In section 322(3)(b)(ii), replace “a financial institution within the meaning of the Banking (Prudential Supervision) Act 1989” with “a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022)”.
Legislation Act 2019 (2019 No 58) In Schedule 4, repeal the item relating to the Banking (Prudential Supervision) Act 1989.
10 In Schedule 4, insert in its appropriate alphabetical order: Deposit Takers Act 2022 s 330 Limitation Act 2010 (2010 No 110) Replace section 16(1)(j) with: (j) (k) a claim under section 54 of the Corporations (Investigation and Manage‐ ment) Act 1989—the date on which the corporation was declared to be subject to statutory management: a claim under section 307 of the Deposit Takers Act 2022—the date on which the licensed deposit taker entered resolution under that Act.
Replace section 16(2) with: (2) When section 301 of the Companies Act 1993 applies, in accordance with— (a) (b) section 55 of the Corporations (Investigation and Management) Act 1989, to a corporation subject to statutory management, the date in sub‐ section (1)(i) must be read as the date on which the corporation was declared to be subject to statutory management: section 332 of the Deposit Takers Act 2022, to a licensed deposit taker in resolution, the date in subsection (1)(i) must be read as the date on which the deposit taker entered resolution.
Replace section 38(1)(e) with: (e) (f) a claim under section 54 of the Corporations (Investigation and Manage‐ ment) Act 1989—the date on which the corporation was declared to be subject to statutory management: a claim under section 307 of the Deposit Takers Act 2022—the date on which the licensed deposit taker entered resolution under that Act.
Replace section 38(2) with: (2) When section 301 of the Companies Act 1993 applies, in accordance with— 15 20 25 30 35 233 Schedule 3 Deposit Takers Bill Limitation Act 2010 (2010 No 110)—continued (a) (b) section 55 of the Corporations (Investigation and Management) Act 1989, to a corporation subject to statutory management, the date in sub‐ section (1)(d) must be read as the date on which the corporation was declared to be subject to statutory management: section 332 of the Deposit Takers Act 2022, to a licensed deposit taker in resolution, the date in subsection (1)(d) must be read as the date on which the deposit taker entered resolution.
5 Local Government Borrowing Act 2011 (2011 No 77) Replace section 7 and the cross-heading above section 7 with: Application of Deposit Takers Act 2022 10 7 Funding Agency not deposit taker The Funding Agency is not a deposit taker for the purposes of the Deposit Tak‐ ers Act 2022.
Māori Television Service (Te Aratuku Whakaata Irirangi Māori) Act 2003 (2003 No 21) 15 In Schedule 2, replace clause 31(1)(a) with: (a) at any licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”; and Masterton Trust Lands Act 2003 (2003 No 1 (L)) In Schedule 2, clause 10(1), replace “registered bank within the meaning of the Bank‐ ing (Prudential Supervision) Act 1989” with “bank”.
In Schedule 2, after clause 10(2), insert: (3) In this clause, bank means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of the Deposit Takers Act 2022 to use a name or title that includes the word “bank”.
Non-bank Deposit Takers Act 2013 (2013 No 104) After section 13(2), insert: (2A) However, an application may not be made on or after the date prescribed for the purposes of subpart 3 of Part 1 of Schedule 1 of the Deposit Takers Act 2022.
20 25 30 Overseas Investment Act 2005 (2005 No 82) Replace section 111(1) with: 234 Deposit Takers Bill Schedule 3 Overseas Investment Act 2005 (2005 No 82)—continued (1) This section applies if a person who will be made subject to statutory manage‐ ment by an order under section 95 is any of the following: (a) (b) (c) (d) a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022): a covered bond SPV (within the meaning of section 401 of the Deposit Takers Act 2022): a licensed insurer (within the meaning of section 6 of the Insurance (Pru‐ dential Supervision) Act 2010): 5 an operator of a designated FMI (within the meaning of section 5 of the Financial Market Infrastructures Act 2021).
10 Personal Property Securities Act 1999 (1999 No 126) In section 103B(1)(b), replace “transferred or otherwise dealt with” with “delivered, transferred, held, registered, or otherwise designated”.

Replace section 103B(2) and (3) with: (2) (3) Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in this section (including the defini‐ tions of collateral and possession) have in this section the same meanings as in section 62A.
Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of this section (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (1)(b) of this section and treating references to the grantor as references to the debtor that granted the security interest).
15 20 Pork Industry Board Act 1997 (1997 No 106) In section 41(1), replace “registered bank within the meaning of the Banking (Pruden‐ tial Supervision) Act 1989” with “licensed deposit taker”.

25 After section 41(1), insert: (1A) In subsection (1), licensed deposit taker means a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”.
Primary Products Marketing Act 1953 (1953 No 10) In section 3(7)(a), replace “registered bank within the meaning of the Banking (Pru‐ dential Supervision) Act 1989” with “licensed deposit taker”.
After section 3(7), insert: (7A) In subsection (7), licensed deposit taker means a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 that is authorised 30 35 235 Schedule 3 Deposit Takers Bill Primary Products Marketing Act 1953 (1953 No 10)—continued under section 425 or 426 of that Act to use a name or title that includes the word “bank”.
Prisoners’ and Victims’ Claims Act 2005 (2005 No 74) Replace section 54(2) with: (2) The bank must be a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank”.

5 Property Law Act 2007 (2007 No 91) In section 153(7)(b), replace “transferred or otherwise dealt with” with “delivered, transferred, held, registered, or otherwise designated”.
10 Replace section 153(8) and (9) with: (8) (9) Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in subsection (7) have in that subsec‐ tion the same meanings as in that section.
Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (7)(b) (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (7)(b) of this section and treating references to the grantor as references to the person who granted the security interest).
Public Audit Act 2001 (2001 No 10) Replace section 16(3) with: 15 20 (3) Subsection (1)(a) does not apply to any licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022).

Replace section 18(2) with: (2) Subsection (1) does not apply to any licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022).
25 Public Finance Act 1989 (1989 No 44) In section 2(1), replace the definition of bank with: bank, in relation to a bank operating within New Zealand, means— (a) (b) the Reserve Bank of New Zealand; or 30 a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022) that is authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank” 236 10 15 20 Deposit Takers Bill Schedule 3 Receiverships Act 1993 (1993 No 122) In section 30(6)(b), replace “transferred or otherwise dealt with” with “delivered, transferred, held, registered, or otherwise designated”.
Replace section 30(7) and (8) with: (7) (8) Terms and expressions defined in section 62A of the Corporations (Investiga‐ tion and Management) Act 1989 and used in subsection (6) have in that subsec‐ tion the same meanings as in that section.
5 Section 62B of the Corporations (Investigation and Management) Act 1989 applies with all necessary modifications for the purposes of subsection (6)(b) (and those modifications include treating references to section 42(10)(b) of that Act as references to subsection (6)(b) of this section and treating references to the grantor as references to the company that granted the security interest).
Registered Architects Act 2005 (2005 No 38) In the Schedule, clause 41(1), replace “registered banks (within the meaning of the Banking (Prudential Supervision) Act 1989)” with “licensed deposit takers (within the meaning of section 6 of the Deposit Takers Act 2022) that are authorised under section 425 or 426 of that Act to use a name or title that includes the word “bank””.
Reserve Bank of New Zealand Act 2021 (2021 No 31) Replace section 4(3)(b) with: (b) the Bank’s functions, including acting as New Zealand’s central bank, acting as a prudential regulator and supervisor of banks, other deposit takers, insurers, and other financial institutions, and monitoring the financial system; and In section 5(1), repeal the definitions of licensed NBDT and registered bank.
25 In section 5(1), definition of prudential legislation, replace paragraph (a) with: (a) the Deposit Takers Act 2022: In section 5(1), definition of prudential legislation, repeal paragraph (c).

In section 5(1), definition of regulated entity, replace paragraph (a) with: (a) a licensed deposit taker: In section 5(1), definition of regulated entity, repeal paragraph (c).
Replace section 10(1)(e)(iii) with: (iii) Australian financial authorities within the meaning of section 6 of the Deposit Takers Act 2022; and In section 10(4), replace “section 105 of the Banking (Prudential Supervision) Act 1989” with “section 439 of the Deposit Takers Act 2022”.
Replace section 22(1)(g) with: 30 35 237 Schedule 3 Deposit Takers Bill Reserve Bank of New Zealand Act 2021 (2021 No 31)—continued (g) under the prudential legislation (for example, giving consent for the Bank to exercise certain powers, giving directions to the Bank, and giv‐ ing advice to the Governor-General about putting an entity into statutory management or resolution): In section 49(2), definition of standards, after paragraph (c), insert: (d) standards issued under subpart 2 of Part 3 of the Deposit Takers Act 2022.
In section 154(3)(e), replace “bank or licensed NBDT” with “licensed deposit taker”.

Replace section 171(3)(a) with: (a) subpart 7 of Part 7 of the Deposit Takers Act 2022; or Repeal section 175(2).

Repeal section 176(5)(a).

After section 248(2), insert: (2A) This section is subject to section 253 of the Deposit Takers Act 2022, which provides for consolidation of financial information about the Depositor Com‐ pensation Fund only if consolidation is required by financial reporting stand‐ ards.
Replace section 282(2)(c) with: 5 10 15 (c) Australian financial authorities within the meaning of section 6 of the Deposit Takers Act 2022: 20 Russia Sanctions Act 2022 (2022 No 6) After section 31(3)(e), insert: (ea) the Deposit Takers Act 2022: Repeal section 31(3)(o) and (t).

Search and Surveillance Act 2012 (2012 No 24) In the Schedule, repeal the items relating to the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013.
In the Schedule, insert in its appropriate alphabetical order: Investigator may enter and Deposit Takers Act search any place by consent or 2022 with warrant for purposes of investigating affairs of licensed deposit taker or associated person 128 All (except sections 118 and 119) Social Security Act 2018 (2018 No 32) Replace section 111(2) with: 238 25 30 Deposit Takers Bill Schedule 3 Social Security Act 2018 (2018 No 32)—continued (2) Bank account, in this section, means an account with a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022).
State-Owned Enterprises Act 1986 (1986 No 124) In section 30(1), replace “Banking (Prudential Supervision) Act 1989” with “Deposit Takers Act 2022”.
5 Summary Proceedings Act 1957 (1957 No 87) In section 2(1), definition of infringement notice, after paragraph (ea), insert: (eb) section 168 of the Deposit Takers Act 2022; or Tax Administration Act 1994 (1994 No 166) In section 3(1), definition of bank account, paragraph (a), replace “registered bank, or with a licensed NBDT as defined in section 4 of the Non-bank Deposit Takers Act 2013” with “licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022)”.
In section 25MB(2) and (7)(b), replace “Banking (Prudential Supervision) Act 1989” with “Deposit Takers Act 2022”.

Replace section 80KL(2) with: (2) The account must be held with a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022).
Wages Protection Act 1983 (1983 No 143) In section 2, replace the definition of financial institution with: financial institution— (a) means a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022); and includes the Reserve Bank of New Zealand (b) Westpac New Zealand Act 2011 (2011 No 1 (P)) In section 4(1), replace the definition of Minister with: Minister means the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is responsible for the administration of the Deposit Takers Act 2022 10 15 20 25 239 Schedule 3 Deposit Takers Bill Part 2 Amendments to secondary legislation Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018 (LI 2018/101) In the Schedule, Part 13, clause 2, definitions of designated issuer and intermedi‐ ary, replace “registered bank” with “licensed deposit taker”.
5 In the Schedule, Part 13, clause 2, revoke the definition of registered bank.

In the Schedule, Part 13, clause 2, insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 10 Commodity Levies (Meat) Order 2021 (LI 2021/336) In clause 3, replace the definition of trust account with: trust account means an account at a licensed deposit taker within the meaning of the Deposit Takers Act 2022.
Companies Act 1993 Liquidation Regulations 1994 (SR 1994/130) In regulation 2, revoke the definition of registered bank.

Deer Industry New Zealand Regulations 2004 (SR 2004/323) In regulation 16(1), replace “registered bank (within the meaning of the Reserve Bank of New Zealand Act 1989)” with “licensed deposit taker (within the meaning of the Deposit Takers Act 2022)”.
Electronic Identity Verification Regulations 2013 (SR 2013/9) Replace regulation 4(1)(c) with: (c) every licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022: Revoke regulation 4(1)(f).
Insolvency (Personal Insolvency) Regulations 2007 (SR 2007/333) Replace regulation 6(2)(ha) with: (ha) the following details for each account held by the debtor (solely or with other persons) with any deposit taker in the previous 5 years: (i) (ii) (iii) (iv) the account name: the account number: the deposit taker and branch of the deposit taker: the name of each signatory: 15 20 25 30 Replace regulation 6(4) with: 240 Deposit Takers Bill Schedule 3 Insolvency (Personal Insolvency) Regulations 2007 (SR 2007/333)—continued (4) In subclause (2)(ha), deposit taker means a licensed deposit taker within the meaning of section 6 of the Deposit Takers Act 2022 or a body corporate or other organisation of the same, or substantially the same, nature operating out‐ side New Zealand.
Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (SR 2008/183) 5 In regulation 39(2)(b), replace “a financial institution within the meaning of the Banking (Prudential Supervision) Act 1989” with “a licensed deposit taker within the meaning of the Deposit Takers Act 2022”.
Overseas Investment Regulations 2005 (SR 2005/220) Replace regulation 3C(5A)(a) with: 10 (a) is carried on by a licensed deposit taker (as defined in section 6 of the Deposit Takers Act 2022) and the value of the deposit taker’s assets is at least $80 billion; or Securities Transfer (Approval of Austraclear New Zealand Electronic Registries Interface System) Order 2010 (SR 2010/4) 15 In the Schedule, clause 1, revoke the definition of registered bank.
In the Schedule, clause 1, insert in its appropriate alphabetical order: licensed deposit taker has the same meaning as in section 6 of the Deposit Takers Act 2022 In the Schedule, replace clause 2(o)(i) with: (i) licensed deposit takers, subsidiaries and holding companies of licensed deposit takers, and other subsidiaries of holding compan‐ ies of licensed deposit takers: Social Security Regulations 2018 (LI 2018/202) In the heading to regulation 221, replace “banks” with “deposit takers”.
In regulation 221(1) and (3), replace “bank” with “deposit taker” in each place.

Replace regulation 221(2) with: (2) In this regulation, deposit taker means any of the following: (a) (b) a licensed deposit taker (within the meaning of section 6 of the Deposit Takers Act 2022): the Reserve Bank of New Zealand continued under the Reserve Bank of New Zealand Act 2021, but only in relation to an account maintained by that bank for an employee of that bank.
In regulation 221(3), replace “bank” with “deposit taker”.

20 25 30 241 Schedule 3 Deposit Takers Bill Social Security Regulations 2018 (LI 2018/202)—continued In regulation 221(4), replace “bank is, for the purposes of this regulation, taken to be held by the bank” with “deposit taker is, for the purposes of this regulation, taken to be held by the deposit taker”.

In regulation 221(4)(a), replace “joint bank account” with “joint account”.
Wellington, New Zealand: Published under the authority of the New Zealand Government—2022 242