Financial Markets Conduct Act 2013

1: Title
This Act is the Financial Markets Conduct Act 2013.
2: Commencement
1: Section 351 subpart 10 subpart 7 subparts 1 to 7
2: The rest of this Act comes into force on a date appointed by the Governor-General by Order in Council; and 1 or more orders may be made appointing different dates for different provisions and for different purposes.
3: To the extent that it is not previously brought into force under subsection (1) or (2), the rest of this Act comes into force on 1 April 2017.
4: In this section, provision
5: An order under this section is secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 2(2) brought into force 1 April 2014 clause 2(1) Section 2(2) brought into force 17 June 2014 clause 2(2) Financial Markets Legislation (Phase 1) Commencement Order 2014 Section 2(2) brought into force 1 December 2014 clause 2 Financial Markets Legislation (Phase 2) Commencement Order 2014 Section 2(2) brought into force 1 December 2015 section 2 Financial Markets Legislation (Phase 3) Commencement Order 2015 Section 2(5) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
1: Preliminary provisions
Purposes
3: Main purposes
The main purposes of this Act are to—
a: promote the confident and informed participation of businesses, investors, and consumers in the financial markets; and
b: promote and facilitate the development of fair, efficient, and transparent financial markets.
4: Additional purposes
This Act has the following additional purposes:
a: to provide for timely, accurate, and understandable information to be provided to persons to assist those persons to make decisions relating to financial products or the provision of financial services:
b: to ensure that appropriate governance arrangements apply to financial products and certain financial services that allow for effective monitoring and reduce governance risks:
c: to avoid unnecessary compliance costs:
d: to promote innovation and flexibility in the financial markets. Overview
5: Overview
1: In this Act,—
a: this Part deals with preliminary matters, including specifying the purposes of this Act and interpretation:
b: Part 2
i: prohibiting misleading or deceptive conduct, false or misleading representations, and the making of unsubstantiated representations in connection with financial products and financial services:
ii: prohibiting offers of financial products in the course of unsolicited meetings:
c: Part 3
i: disclosure to investors in relation to certain offers of financial products ( Schedule 1
ii: advertisements for those offers:
iii: ongoing disclosure to investors:
d: Part 4
i: the governance of debt securities (including the need for a trust deed and a supervisor):
ii: the governance of managed investment products (including the need for registration of the managed investment scheme, a governing document, and a supervisor):
iii: the duties of persons associated with debt securities or registered schemes to make protected disclosures:
iv: the powers of intervention to enable the supervision of debt securities and registered schemes by a supervisor or the FMA:
v: ongoing duties of issuers of all regulated products (for example, to maintain registers of regulated products):
e: Part 5
i: prohibiting insider trading and market manipulation:
ii: providing for continuous disclosure by listed issuers:
iii: providing for the disclosure of interests of substantial product holders in listed issuers and the disclosure of relevant interests by directors and senior managers of listed issuers:
iv: providing for the licensing of markets for trading financial products:
v: providing for the transfer of financial products:
vi: the making of regulations setting rules for unsolicited offers to purchase financial products:
f: Part 6
i: the licensing of certain financial market service providers (for example, providers of financial advice services,
ii: providing for disclosure obligations and the need for client agreements in connection with some of those financial market services:
iia: imposing other obligations on providers of financial advice services and persons who give financial advice:
iib: providing for disclosure and conduct obligations for providers of client money or property services:
iii: imposing other conduct obligations on providers of discretionary investment management services and on their custodians:
iv: providing for the making of regulations regulating the holding and application of investor funds and property by issuers of derivatives:
g: Part 7
ga: Part 7A
h: Part 8
i: providing the FMA and the High Court with certain powers to avoid, remedy, or mitigate any actual or likely adverse effects of contraventions of this Act or the regulations:
ii: the imposition of civil liability (including pecuniary penalty orders and compensation orders):
iii: offences:
iv: providing for appeals against the FMA's decisions or (in the case of financial advisers) the disciplinary committee’s decisions
i: Part 9
i: regulations and exemptions, including powers to prescribe matters relating to the form and content of product disclosure statements, and powers for the FMA to designate financial products and offers, and to grant exemptions, where this is necessary or desirable in order to promote the main purposes of this Act specified in section 3 section 4
ii: transitional provisions ( see Schedule 4
2: This section is only a guide to the general scheme and effect of this Act.
3: In addition, the Financial Markets (Repeals and Amendments) Act 2013 Section 5(1)﻿(f)﻿(i) amended 15 March 2021 section 4(1) Financial Services Legislation Amendment Act 2019 Section 5(1)﻿(f)﻿(iia) inserted 15 March 2021 section 4(2) Financial Services Legislation Amendment Act 2019 Section 5(1)﻿(f)﻿(iib) inserted 15 March 2021 section 4(2) Financial Services Legislation Amendment Act 2019 Section 5(1)﻿(ga) inserted 27 October 2022 section 4 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 5(1)﻿(h)﻿(iv) amended 15 March 2021 section 4(3) Financial Services Legislation Amendment Act 2019 Interpretation
6: Interpretation
1: In this Act, unless the context otherwise requires,— accounting period section 5(1) acquire
a: includes obtain by buying, subscribing, or taking an assignment or transfer of; and
b: includes, in Part 5
c: in relation to a derivative, a contract of insurance, a consumer credit contract, or a DIMS facility, includes entering into the legal relationship that constitutes the derivative, contract, or facility; and
d: in relation to a renewal or variation of the terms or conditions of an existing financial advice product, includes entering into the legal relationship that provides for the renewal or variation administration manager administrator of a financial benchmark advertisement
a: in relation to an offer, or intended offer, of financial products, means any form of communication made to the public or a section of the public for the purpose of promoting the offer or intended offer:
b: in relation to the supply of financial services, means any form of communication made to the public or a section of the public for the purpose of promoting the supply of the services agreement alternative disclosure obligation section 351 applicable auditing and assurance standard section 5(1) applicable financial reporting standard section 5(1) applicable climate standard section 5(1) application associated person associated section 12(1) audio or visual service authorised body section 400 authoritative notice section 5(1) balance date section 41 broadcaster section 2(1) broadcasting section 2(1) building society section 2(1) business business rules section 328(4)﻿(a) to (d) civil liability order section 484 civil liability provision section 485 class client clause 2 client money or property service section 431W(1) climate-related disclosure framework section 9AA climate reporting entity section 461O climate statements section 5(1) code of conduct code clause 39 company
a: means a company, or an overseas company, within the meaning of section 2(1)
b: does not include an overseas limited partnership (within the meaning of section 4 complying superannuation fund conduct in relation to a takeover offer
a: means conduct following the public announcement by a person of an intention to make an offer (being an offer that is regulated by the Takeovers Code
b: includes conduct incidental or preliminary to a takeover that is regulated by the Takeovers Code constitution
a: in the case of a company within the meaning of section 2(1)
b: in the case of any other entity, the documents or instruments constituting or defining the constitution of the entity consumer credit contract section 11 continuous disclosure exemption continuous disclosure obligation section 270 continuous disclosure provisions section 271 continuous issue PDS
a: relates to financial products that the issuer, in the ordinary course of its business, continuously offers; and
b: is not the first PDS to be lodged with the Registrar in respect of that class of financial products continuous issuer contract of insurance section 7 contributor section 448C(4) controlling owner section 4 convertible note section YA 1 co-operative company Co-operative Companies Act 1996 court see section 538 CRD records subpart 2 credit union section 2 custodial service section 431W(2) custodian
a: in relation to a managed investment scheme, each person who is designated or appointed to perform, or to whom is contracted, the function of holding some or all of the scheme property under the scheme:
b: in relation to a discretionary investment management service, each person holding investor money or investor property under that service (whether or not appointed by that investor) dealing
a: means any of the following:
i: acquiring or disposing of financial products; or
ii: offering financial products for issue or sale and issuing and transferring financial products; or
iii: underwriting financial products; or
iv: promoting by any means the acquisition or disposal of financial products; or
v: in relation to a derivative, discharging obligations under the derivative; or
vi: anything that is preparatory to, or related to, any dealing in financial products (for example, giving financial advice), unless an exception applies to the dealing under this Act; but
b: does not include a dealing excluded by the regulations debt security section 8(1) defined benefit scheme derivative section 8(4) derivatives issuer DIMS facility DIMS licensee section 432A(3) direction order section 468 director
a: in relation to a company, any person occupying the position of a director of the company by whatever name called:
b: in relation to a partnership (other than a limited partnership), any partner:
c: in relation to a limited partnership, any general partner:
d: 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:
e: in relation to any other person, that person disciplinary committee clause 49 disclosure document
a: a PDS:
b: a limited disclosure document clause 26
c: information made available under subpart 4
d: a disclosure statement or other information made available under subpart 4 , 5A 5B discretionary investment management service DIMS section 432A(1) dispose of
a: includes dispose of by issuing, selling, assigning, or transferring; and
b: includes withdrawing from, terminating, or closing out the legal relationship that constitutes the financial product or other financial advice product
ba: in relation to a renewal or variation of the terms or conditions of an existing financial advice product, includes withdrawing from or terminating the product or refusing to agree to the renewal or variation; and
c: includes agreeing to dispose of distribute
a: make available, publish, and circulate; and
b: communicate by letter, newspaper, an Internet site, broadcasting, an audio or visual service, sound recording, television, film, video, or any form of electronic or other means of communication document section 4(1) employee share purchase scheme clause 8 encourage subpart 2 engaged section 431E engaging in conduct
a: omitting to do an act; or
b: making it known that an act will or will not be done entity
a: a company or other body corporate:
b: a corporation sole:
c: in the case of a trust that has—
i: only 1 trustee, the trustee acting in his, her, or its capacity as trustee:
ii: more than 1 trustee, the trustees acting jointly in their capacity as trustees:
d: an unincorporated body (including a partnership) equity security section 8(2) exhibiting films to the public section 2 financial advice section 431C(1) financial advice product
a: a financial product (as defined in section 7
b: a DIMS facility; or
c: a contract of insurance; or
d: a consumer credit contract; or
e: any other product declared by the regulations to be a financial advice product; or
f: a renewal or variation of the terms or conditions of an existing financial advice product financial advice provider see section 431D financial advice service section 431D financial adviser
a: means an individual who is registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008
b: does not include a financial advice provider financial benchmark financial markets
a: means the financial markets in New Zealand; and
b: includes—
i: markets in New Zealand for the provision of financial services; and
ii: the capital markets in New Zealand financial markets legislation Schedule 1 financial markets participant section 4 financial product section 7 Part 2 section 18 financial product market section 309 financial product market licence subpart 7 financial service
a: has the same meaning as in section 5
b: includes a market service; but
c: does not include, for the purposes of any provision of this Act, any class or classes of services declared by the regulations not to be financial services for the purposes of that provision financial statements section 6 FMA Part 2 FMC reporting entity section 451 generally accepted accounting practice section 8 generally available to the market section 232 give governing document
a: means (in the case of a debt security) a trust deed:
b: means (in the case of a managed investment scheme constituted as a trust) the 1 or more trust deeds that constitutes the scheme or (in the case of any other managed investment scheme) the 1 or more deeds, agreements, or instruments that constitute or govern the scheme (for example, a partnership agreement):
c: includes (in each case) any amendments to a document referred to in paragraph (a) or (b) group
a: in Part 7 subpart 1
b: in Part 7A subpart 1 group climate statements section 5(1) group financial statements section 7 in the business of indemnify independent trustee industrial and provident society Industrial and Provident Societies Act 1908 information information insider section 234 infringement fee infringement notice section 514 infringement offence Inland Revenue Acts Schedule inside information section 234 insolvency event insolvent
a: in relation to an issuer of a debt security or a managed investment product,—
i: the issuer is unable to pay the issuer's debts as they become due in the normal course of business; or
ii: the value of the issuer's assets is less than the value of the issuer's liabilities, including contingent liabilities (and for this purpose section 4(4)
b: in relation to a registered scheme that is a defined benefit scheme, the value of the assets in the scheme is less than the value of the vested benefits that may in due course flow from, or are attributable to, membership of the scheme:
c: in relation to any other registered scheme,—
i: the funds in the scheme are not sufficient to enable debts in respect of the scheme to be paid as they become due in the normal course of business; or
ii: the value of the assets in the scheme is less than the value of the liabilities in respect of the scheme, including contingent liabilities (and for this purpose section 4(4) inspection period interim stop order section 465 investment authority section 432A(3) investment manager investor
a: a person to whom an offer of financial products is made; and
b: a person who acquires, or may acquire, a financial product; and
c: a person who receives, or may receive, a financial service investor money section 444 investor property section 444 involved in a contravention section 533 issued issuer section 11 issuer obligation
a: a governing document that relates to the financial product:
b: the terms of any regulated offer of the financial product:
c: a court order relating to the financial product:
d: this Act (including, in relation to a managed investment product, all obligations as manager):
e: the KiwiSaver Act 2006
f: the Non-bank Deposit Takers Act 2013 KiwiSaver scheme lawyer section 6 licence Financial Markets Supervisors Act 2011 licensed Financial Markets Supervisors Act 2011 licensed insurer
a: has the same meaning as in section 6
b: in Part 7 section 238(1)﻿(b)﻿(i)﻿(A) or (ii)
c: in Part 7A section 238(1)﻿(b) licensed market Part 5 section 351(1)﻿(d) licensed market operator licensed market services
a: that are required to be licensed under Part 6
b: for which a person holds a licence under Part 6 limited disclosure document LDD clause 26(1) listed issuer
a: a person that is a party to a listing agreement with a licensed market operator in relation to a licensed market (and includes a licensed market operator that has financial products quoted on its own licensed market):
b: a person to which paragraph (a) previously applied, in respect of any action or event or circumstance to which this Act applied at that time listing rules section 328(3)﻿(a) to (e) local authority section 5(1) see also section 8 managed investment product section 8(3) managed investment scheme section 9 manager
a: in relation to a registered scheme (other than a restricted scheme), the person designated or appointed as the manager of the scheme:
b: in relation to a restricted scheme, the persons designated or appointed as trustees of the scheme or, if only 1 person is designated or appointed as a trustee of the scheme, that person:
c: in relation to a managed investment scheme if there is no person to whom paragraph (a) or (b) applies or if it is not a registered scheme, a person occupying the position of, and carrying out any of the functions of, the manager set out in section 142 market operator obligation
a: a condition of the licence:
b: section 314
c: section 333
d: sections 337 340 341 342 market rules
a: the rules for a financial product market that deal with the matters required for that market by section 328
b: in the case of a financial product market licensed, or applying to be licensed, under section 317 section 334 market service
a: acting as a manager of a registered scheme:
b: acting as an independent trustee of a restricted scheme:
c: acting as a provider of a discretionary investment management service:
d: acting as a derivatives issuer:
e: acting as a custodian in respect of a registered scheme or a discretionary investment management service:
ea: acting as a provider of a financial advice service:
eb: providing a client money or property service:
f: acting as a provider of prescribed intermediary services:
g: acting as an administrator of a financial benchmark market services licence Part 6 market services licensee obligation
a: a condition of the licence:
b: this Act:
c: the terms of the offer of a financial product or the provision of a market service:
d: a court order made in connection with the offer of a financial product or the provision of a market service:
e: in the case of a manager or an independent trustee of a registered scheme,—
i: a governing document:
ii: the KiwiSaver Act 2006 material information
a: in Part 3 section 59
b: in Part 5 section 231 Minister money NBDT section 5 New Zealand resident for tax purposes sections YD 1 YD 2 nominated representative section 431T non-quoted financial products offer
a: inviting applications for the issue of financial products:
b: inviting applications to purchase financial products offeror
a: in relation to an offer of financial products for issue, the issuer; or
b: in any other case of an offer of financial products, the person who has the capacity, or who agrees, to transfer the financial products if the offer is accepted overseas climate reporting entity Part 7A
a: is incorporated outside New Zealand; and
b: is a climate reporting entity under section 461O(1)﻿(b) to (e) see section 461Q(3) and (4) Part 2 fair dealing provision section 38(1) Part 3 offer provision section 101(3) or (4) Part 4 governance provision section 228(3) or (4) Part 5 market provision section 385(3) or (4) Part 6 services provision section 449(3) or (4) Part 7 financial reporting provision section 461M(3) or (4) Part 7A climate-related disclosure provision section 461ZK(3) or (4) participant person prescribed intermediary services product disclosure statement PDS product holder
a: in the case of a financial product to which section 215(1)
b: in the case of any other financial product, the person who is registered as the holder of the product in a register kept under subpart 4
c: in the case of a derivative, any party to the derivative that did not make a regulated offer of the derivative product provider
a: for a financial product, the issuer:
b: for a DIMS facility, the person to whom the investment authority is granted:
c: for a contract of insurance, the insurer:
d: for a consumer credit contract, the creditor:
e: for any other financial advice product, the person specified in the regulations protected disclosure section 214(4) provider of a discretionary investment management service section 432A(3) qualified auditor section 461E qualified statutory accountant section 5(1) quoted
a: financial products of a listed issuer, means financial products of the issuer that are approved for trading on a licensed market (and, to avoid doubt, financial products do not cease to be quoted merely because trading in those products is suspended):
b: derivatives, means derivatives that are approved for trading on a licensed market (and, to avoid doubt, derivatives do not cease to be quoted merely because trading in those products is suspended) redeemable register entry
a: in relation to a regulated offer, means the entry for the offer in the register of offers of financial products:
b: in relation to an offer referred to in clause 26(1) register of managed investment schemes Schedule 2 register of offers of financial products Schedule 2 registered bank section 2(1) Banking (Prudential Supervision) Act 1989 registered scheme Registrar section 35 regulated client money or property service section 431W(4) regulated financial advice section 431C(3) regulated offer section 41 regulated product section 41 regulations related section 12(2) related party
a: in relation to a registered scheme, has the meaning set out in section 172
b: in relation to a DIMS licensee, has the meaning set out in section 439 related party benefit
a: in relation to a registered scheme, has the meaning set out in section 172
b: in relation to a DIMS licensee, has the meaning set out in section 439 relative clause 5(2) relevant event sections 276 to 279 relevant interest sections 235 to 238 relevant money
a: to acquire the financial products or an increased interest in the financial products; or
b: as a further contribution or investment or a further deposit as referred to in section 11(2)﻿(c) reporting period section 337 representation sections 23 to 27 section 23(4) Reserve Bank restricted communication section 464 restricted scheme retail client clause 3 retail investor clause 35 retail service clause 35 retirement scheme
a: a registered scheme that is a KiwiSaver scheme or a superannuation scheme:
b: a workplace savings scheme (subject to the enactment and the regulations):
c: a Schedule 3 scheme (subject to the enactment and the regulations) Schedule 3 scheme Schedule 3 scheme participant scheme property property of the scheme
a: contributions of money to the scheme; and
b: money borrowed or raised for the purposes of the scheme; and
c: financial products or other property acquired, directly or indirectly, with, or with the proceeds of, contributions or money referred to in paragraph (a), (b), or (d); and
d: income and property derived, directly or indirectly, from contributions, money, or property referred to in paragraphs (a) to (c) or this paragraph security
a: means an arrangement or a facility that has, or is intended to have, the effect of a person making an investment or managing a financial risk; and
b: includes—
i: a financial product; and
ii: any interest or right to participate in any capital, assets, earnings, royalties, or other property of any person; and
iii: any interest in, or right to be paid, money that is, or is to be, deposited with, lent to, or otherwise owing by, any person (whether or not the interest or right is secured by a charge over any property); and
iv: any renewal or variation of the terms or conditions of any existing security; but
c: does not include any interest or right that is declared by regulations not to be a security for the purposes of this Act senior manager A separate fund Parts 7 7A section 461A(2) service provider provider special resolution
a: holders of a financial product issued by a credit union, means a resolution approved by no less than 75% of the number of members of the credit union who are entitled to vote and who vote on the question:
b: holders of managed investment products in a superannuation scheme, a KiwiSaver scheme, a workplace savings scheme, or any other prescribed scheme, means a resolution approved by no less than 75% of the number of scheme participants who are entitled to vote and who vote on the question:
c: holders of debt securities in any other case, means a resolution approved by product holders holding debt securities with a combined nominal value of no less than 75% of the nominal value of the debt securities held by those persons who are entitled to vote and who vote on the question:
d: holders of managed investment products in any other case, means a resolution approved by product holders holding managed investment products with a combined value of no less than 75% of the value of the managed investment products held by those persons who are entitled to vote and who vote on the question stop order section 462 subsidiary
a: has the meaning set out in section 5
b: in Parts 7 7A substantial holding section 274 substantial product holder section 274(1) superannuation scheme supervisor supply Takeovers Code Takeovers Code Takeovers Act 1993 trade Part 2 section 18 trading day transacting shareholder
a: has the same meaning as in section 4
b: includes a supplying shareholder within the meaning of section 34 underlying section 8(4)﻿(a)﻿(iii) unsolicited offer section 381(1) unsolicited offer order section 472 unsolicited offer provision section 382 unsubstantiated sections 23 to 27 section 23(2) voting product
a: means a financial product of the entity that confers a right to vote at meetings of members or shareholders (whether or not there is any restriction or limitation on the number of votes that may be cast by or on behalf of the holder of the product); and
b: includes a financial product that is convertible into a financial product of the kind referred to in paragraph (a); but
c: does not include a financial product that confers only a right to vote that, under the conditions attached to the product, is exercisable only in 1 or more of the following circumstances:
i: during a period in which a dividend (or part of a dividend) in respect of the product is in arrears:
ii: on a proposal to reduce the capital of the entity:
iii: on a proposal that affects rights attached to the product:
iv: on a proposal to put the entity into liquidation:
v: on a proposal for the disposal of the whole or a material part of the property, business, and undertaking of the entity:
vi: during the liquidation of the entity wholesale client clause 4 wholesale investor
a: has the meaning set out in clause 3(2) and (3)
b: has the meaning set out in clause 36(b) clause 49 workplace savings scheme
2: Terms defined in other provisions of this Act have the meanings given unless the context otherwise requires.
3: In this Act, financial products are of the same class
4: In this Act, an insolvency event becomes subject to an insolvency event
a: a liquidator is appointed in respect of a liquidation under Part 16
b: an administrator is appointed in respect of a voluntary administration under Part 15A
c: a receiver is appointed in relation to the whole, or substantially the whole, of the assets and undertaking of the person; or
d: a liquidator is appointed in respect of a liquidation of an overseas company under section 342
e: a statutory manager is appointed in respect of a statutory management under Part 3
f: a person is appointed in respect of, or another event occurs that indicates the start of, a process in New Zealand or in any other country in which the company or other body corporate was incorporated, created, or established that is similar to any of those set out in paragraphs (a) to (e).
5: In this Act, a share in an entity or a managed investment product in a scheme is redeemable
a: the constitution of the entity, the governing documents of the scheme, or the terms of issue of the share or product make provision for the redemption of the share or product by the entity or the manager of the scheme in 1 or more of the following circumstances:
i: at the option of the entity or manager:
ii: at the option of the holder of the share or product:
iii: on a date specified in those documents or in those terms; and
b: that redemption is for a consideration that is 1 or more of the following:
i: specified:
ii: to be calculated by reference to a formula:
iii: required to be fixed by a suitably qualified person who is not associated with or interested in the entity or manager of the scheme.
6: In this Act, a financial benchmark
a: referenced or otherwise used for purposes that include 1 or more of the following:
i: calculating the interest, or other amounts, payable under financial products or other securities:
ii: calculating the price at which a financial product or other security may be traded, redeemed, or dealt in:
iii: calculating the value of a financial product or other security:
iv: measuring the performance of a financial product or other security; and
b: made available to users (whether or not for a fee); and
c: generated periodically from 1 or more—
i: transactions, instruments, currencies, prices, estimates, rates (including an interest rate or exchange rate), indices, values, financial products or other securities; or
ii: other interests or property (whether tangible or intangible).
7: A financial benchmark Section 6(1) accounting period inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) acquire replaced 15 March 2021 section 5(3) Financial Services Legislation Amendment Act 2019 Section 6(1) acquire inserted 15 March 2021 section 5(3) Financial Services Legislation Amendment Act 2019 Section 6(1) administrator of a financial benchmark inserted 14 March 2021 section 33(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 6(1) applicable auditing and assurance standard inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) applicable climate standard inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) applicable financial reporting standard inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) authorised body replaced 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) authorised financial adviser repealed 15 March 2021 section 5(1) Financial Services Legislation Amendment Act 2019 Section 6(1) authoritative notice inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) balance date replaced 1 April 2014 section 46(2) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) category 2 product repealed 15 March 2021 section 5(1) Financial Services Legislation Amendment Act 2019 Section 6(1) chartered accountant repealed 1 July 2015 section 17 Financial Reporting Amendment Act 2014 Section 6(1) client inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) client money or property service inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) climate-related disclosure framework inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) climate reporting entity inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) climate statements inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) code of conduct code inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) consumer credit contract inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) contract of insurance inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) contributor replaced 14 March 2021 section 33(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 6(1) CRD records inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) custodial service inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) DIMS facility inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) DIMS licensee amended 15 March 2021 section 5(4) Financial Services Legislation Amendment Act 2019 Section 6(1) disciplinary committee inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) disclosure document amended 9 August 2017 section 47(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 6(1) disclosure document amended 15 March 2021 section 5(5) Financial Services Legislation Amendment Act 2019 Section 6(1) discretionary investment management service repealed 15 March 2021 section 5(1) Financial Services Legislation Amendment Act 2019 Section 6(1) discretionary investment management service DIMS inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) dispose of amended 15 March 2021 section 5(6) Financial Services Legislation Amendment Act 2019 Section 6(1) dispose of inserted 15 March 2021 section 5(7) Financial Services Legislation Amendment Act 2019 Section 6(1) engaged inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial advice inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial advice product inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial advice provider inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial advice service inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial adviser inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) financial benchmark inserted 14 March 2021 section 33(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 6(1) financial statements inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) FMC reporting entity inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) generally accepted accounting practice inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) group replaced 27 October 2022 section 5(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) group climate statements inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) group financial statements inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) investment authority amended 15 March 2021 section 5(8) Financial Services Legislation Amendment Act 2019 Section 6(1) issuer obligation replaced 1 May 2014 section 102 Non-bank Deposit Takers Act 2013 Section 6(1) licensed insurer inserted 1 April 2014 section 46(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) licensed insurer amended 27 October 2022 section 5(3) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) licensed insurer inserted 27 October 2022 section 5(4) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) limited disclosure document inserted 9 August 2017 section 47(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 6(1) market service inserted 15 March 2021 section 5(9) Financial Services Legislation Amendment Act 2019 Section 6(1) market service inserted 15 March 2021 section 5(9) Financial Services Legislation Amendment Act 2019 Section 6(1) market service inserted 14 March 2021 section 33(1) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 6(1) NBDT inserted 1 May 2014 section 102 Non-bank Deposit Takers Act 2013 Section 6(1) nominated representative inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) overseas climate reporting entity inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) Part 7 financial reporting provision replaced 1 April 2014 section 46(3) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) Part 7A climate-related disclosure provision inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) product provider inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) provider of a discretionary investment management service amended 15 March 2021 section 5(10) Financial Services Legislation Amendment Act 2019 Section 6(1) QFE qualifying financial entity repealed 15 March 2021 section 5(1) Financial Services Legislation Amendment Act 2019 Section 6(1) QFE adviser repealed 15 March 2021 section 5(1) Financial Services Legislation Amendment Act 2019 Section 6(1) qualified auditor replaced 1 April 2014 section 46(4) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) qualified statutory accountant inserted 1 July 2015 section 17 Financial Reporting Amendment Act 2014 Section 6(1) register entry replaced 9 August 2017 section 47(3) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 6(1) registered bank amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021 Section 6(1) regulated client money or property service inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) regulated financial advice inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) retail client inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(1) separate fund inserted 27 October 2022 section 5(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) subsidiary replaced 1 April 2014 section 46(5) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 6(1) subsidiary amended 27 October 2022 section 5(5) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 6(1) wholesale client inserted 15 March 2021 section 5(2) Financial Services Legislation Amendment Act 2019 Section 6(6) inserted 14 March 2021 section 33(3) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 6(7) inserted 14 March 2021 section 33(3) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
7: Meaning of financial product
1: In this Act, financial product
a: a debt security; or
b: an equity security; or
c: a managed investment product; or
d: a derivative.
2: If an interest or a right is declared by regulations not to be a security for the purposes of this Act, the interest or right is not a financial product for the purposes of this Act.
8: Definitions relating to kinds of financial products
1: In this Act, subject to subsection (5)﻿(a) and (b), debt security
a: means a right to be repaid money or paid interest on money that is, or is to be, deposited with, lent to, or otherwise owing by, any person; and
b: includes—
i: a security commonly referred to in the financial markets as a debenture, bond, or note; and
ii: a convertible note; and
iii: a redeemable share in an entity that would otherwise be an equity security (except a share redeemable only at the option of the entity or a redeemable share in an industrial and provident society
c: does not include—
i: a share in a co-operative company that is issued or transferred to a transacting shareholder and that is, or may become, subject to the right of a transacting shareholder to surrender the share under section 20
ii: a derivative of the kind referred to in subsection (4)﻿(b); or
iii: a unit, proportionate interest, or membership interest in a registered scheme.
2: In this Act, subject to subsection (5)﻿(a) and (b), equity security
a: means—
i: a share in a company; and
ii: a share in an industrial and provident society; and
iii: a share in a building society; but
b: does not include a debt security.
3: In this Act, subject to subsection (5)﻿(a) and (b), managed investment product
a: means the interest in a managed investment scheme referred to in paragraph (b) of the definition of that term in section 9(1)
b: does not include—
i: an equity security; or
ii: a debt security.
4: In this Act, subject to subsection (5)﻿(a) and (b) and section 10 derivative
a: means an agreement in relation to which the following conditions are satisfied:
i: under the agreement, a party to the agreement must, or may be required to, provide at some future time consideration of a particular kind or kinds to another person; and
ii: that future time is not less than the time, prescribed for the purposes of this subparagraph, after the time at which the agreement is entered into; and
iii: the amount of the consideration, or the value of the agreement, is ultimately determined, is derived from, or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, 1 or more of the following:
A: an asset:
B: a rate (including an interest rate or exchange rate):
C: an index:
D: a commodity; and
b: includes a transaction that is recurrently entered into in the financial markets in New Zealand or overseas and is commonly referred to in those markets as—
i: a futures contract or forward; or
ii: an option (other than an option to acquire by way of issue an equity security, a debt security, or a managed investment product); or
iii: a swap agreement; or
iv: a contract for difference, margin contract, or rolling spot contract; or
v: a cap, collar, floor, or spread; but
c: does not include—
i: an agreement for the future provision of services; or
ii: a debt security, an equity security, or a managed investment product; and
d: does not include an agreement in relation to which all of the following subparagraphs are satisfied:
i: a party has, or may have, an obligation to buy, and another party has, or may have, an obligation to sell, property (other than financial products or New Zealand or foreign currency) at a price and on a date in the future; and
ii: the agreement does not permit the seller's obligations to be wholly settled by cash, or by set-off between the parties, rather than by delivery of the property; and
iii: neither usual market practice nor the rules of a market permit the seller's obligations to be closed out by the matching up of the agreement with another agreement of the same kind under which the seller has offsetting obligations to buy.
5: A financial product of a particular kind defined in subsection (1), (2), (3), or (4)—
a: includes—
i: a security declared to be a financial product of that kind under subpart 3
ii: a right attaching to, or a legal or an equitable interest in, a financial product of that kind; or
iii: an option to acquire, by way of issue, a financial product of that kind; but
b: does not include—
i: a security that is declared under subpart 3
ii: a security that is declared under subpart 3 Section 8(1)﻿(b)﻿(iii) amended 9 April 2019 section 6 Financial Services Legislation Amendment Act 2019
9: Definitions of financial benefit and of managed investment scheme
1: In this Act,— financial benefit managed investment scheme
a: the purpose or effect of the scheme is to enable persons taking part in the scheme to contribute money, or to have money contributed on their behalf, to the scheme as consideration to acquire interests in the scheme; and
b: those interests are rights to participate in, or receive, financial benefits produced principally by the efforts of another person under the scheme (whether those rights are actual, prospective, or contingent, and whether they are enforceable or not); and
c: the holders of those interests do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions).
2: However, a managed investment scheme Scheme only involves management of separate and direct interests in underlying property
a: a scheme under which each participant takes part in the scheme only by holding 1 or more interests in property if, in respect of each interest,—
i: it is an interest in separately identifiable underlying property; and
ii: either the participant holds both the legal and beneficial interest in the property or the legal interest in the property is held on a bare trust for the participant; and
iii: the value of the interest is not substantially dependent on contributions being made by other participants or the use of other participants' contributions: Discretionary investment management services
b: a discretionary investment management service supplied by a DIMS licensee: Insurance contracts
c: a scheme that would be a managed investment scheme only because it involves pure risk contracts of insurance:
d: a scheme that would be a managed investment scheme only because it involves life insurance policies (within the meaning of section 2(1)
3: In subsection (2), pure risk contract of insurance
4: A managed investment scheme as defined in subsection (1) also includes a scheme declared to be a managed investment scheme under subpart 3 Section 9(2)﻿(b) replaced 15 March 2021 section 7 Financial Services Legislation Amendment Act 2019
10: Miscellaneous matters relating to definition of derivative
1: Section 8(4)﻿(d)
2: An agreement under which one party has an obligation to buy, and the other has an obligation to sell, property is not a derivative merely because the agreement provides for the consideration to be varied by reference to a general inflation index (for example, the Consumers Price Index (All Groups) published by Statistics New Zealand).
3: Subsection (2) is subject to section 8(5)﻿(a)
11: Definitions of issued and issuer
1: In this Act,—
a: a financial product is issued
b: issuer
i: a debt security, the person that is liable to repay money or pay interest or other returns under the security (other than as a guarantor):
ii: an equity security, the company, industrial and provident society, building society, or other entity to which the security relates:
iii: a managed investment product, the manager of the managed investment scheme to which the product relates:
iv: a derivative, the derivatives issuer that entered into the derivative.
2: Despite subsection (1)﻿(a),—
a: a managed investment product that is an interest in a superannuation scheme, KiwiSaver scheme, workplace savings scheme, or other prescribed scheme is issued to a person when the person becomes a member of the scheme:
b: a derivative is issued to a person when the person enters into the legal relationship that constitutes the derivative:
c: none of the following are taken to give rise to the issue of a financial product to a person ( A
i: A making a further contribution to, or investment in, a superannuation scheme, a KiwiSaver scheme, a workplace savings scheme, or any other prescribed scheme of which A is already a scheme participant:
ii: an employer of A or any other person making, for the benefit of A, a further contribution to, or investment in, a superannuation scheme, a KiwiSaver scheme, a workplace savings scheme, or any other prescribed scheme of which A is already a scheme participant:
iii: A making a further deposit into a prescribed deposit product:
iv: A engaging in conduct specified in regulations made for the purposes of this subparagraph in relation to a financial product already held by A.
3: Despite subsection (1)﻿(b), if a debt security is offered for the purposes of a managed investment scheme, the manager of the scheme is the issuer for the purposes of this Act.
4: If each person that enters into a derivative is a derivatives issuer, each of those persons is the issuer. Example
A and B enter into a futures contract. Both A and B are derivatives issuers. Accordingly, both A and B are issuers of the futures contract. Although both parties are issuers, whether any particular party has disclosure or other obligations will depend on the circumstances. If both A and B hold a market services licence, both A and B will be wholesale investors under clause 37(1)﻿(f) Part 3
5: In this Act, a reference to an issuer in relation to events, circumstances, or other matters before the financial products are issued is a reference to the person that will be, or is intended to be, the issuer when those products are issued.
6: In this Act, a person ceases to be an issuer in relation to financial products when those products are cancelled, redeemed, or forfeited, or all of the obligations owing under those products have been discharged.
7: Subsections (1) to (6) are subject to a declaration under section 562(1)﻿(g)
8: For the purposes of this Act, the issue of a financial product is not a sale of the financial product.
9: If the terms of a financial product require or allow the person acquiring the product to pay separate amounts of money at different times, each of those payments must, for the purposes of this Act, be treated as payment for the same financial product as each of those other payments.
12: Meaning of associated person and related body corporate
1: In this Act, a person ( A associated associated person B
a: A is a body corporate and B has the power, directly or indirectly, to exercise, or control the exercise of, the rights to vote attaching to 25% or more of the voting products of the body corporate (or vice versa):
b: A and B are relatives or related bodies corporate:
c: A and B are partners to whom the Partnership Law Act 2019
d: A is a director or senior manager of B (or vice versa):
e: A and B are acting jointly or in concert:
f: A acts, or is accustomed to act, in accordance with the wishes of B (or vice versa):
g: A is able, directly or indirectly, to exert a substantial degree of influence over the activities of B (or vice versa):
h: A and B are bodies corporate that consist substantially of the same members or shareholders or that are under the control of the same persons:
i: there is another person with which A and B are both associated.
2: In this Act, a body corporate ( A related B
a: B is A's holding company or subsidiary within the meaning of section 5
b: more than half of A's voting products (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 B and bodies corporate that are related to B (whether directly or indirectly, but other than in a fiduciary capacity), or vice versa; or
c: more than half of the voting products (other than voting products that carry no right to participate beyond a specified amount in a distribution of either profits or capital) of each of A and B 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 so carried on that the separate business of each body corporate, or a substantial part of that business, is not readily identifiable; or
e: there is another body corporate to which A and B are both related. Section 12(1)﻿(c) amended 21 April 2020 section 86 Partnership Law Act 2019
13: Miscellaneous interpretation provisions relating to statements and information
1: In this Act and the regulations
a: the form or context in which the statement or information is made, published, or provided; or
b: the omission of any other information that is material in the form and context in which it is made, published, or provided.
2: For the purpose of considering whether a PDS, a register entry, or any other document or communication provided under this Act is false, misleading, deceptive, or confusing, a statement or other information must be treated as being included in the PDS, register entry, or other document or communication if it—
a: is contained in the PDS, register entry, or document or communication (as the case may be); or
b: appears on the face of the PDS, register entry, or document or communication (as the case may be); or
c: is contained in any financial statements, report, or other document that accompanies, or is incorporated by reference or referred to in, or distributed with, the PDS, register entry, or document or communication (as the case may be).
3: For the purposes of this section, if a PDS, a register entry, or any other document or communication specifically identifies a particular page or section of an Internet site or of another document, only that page or section is incorporated by reference or referred to in the PDS, register entry, or other document or communication (except in the prescribed circumstances).
4: If this Act or the regulations require information or any other matter to be contained or included in a PDS, register entry, or document or communication, the information or other matter may be incorporated by reference only if this is authorised by the regulations. Section 13(1) amended 9 August 2017 section 48 Regulatory Systems (Commercial Matters) Amendment Act 2017
14: Status of examples
1: An example used in this Act is only illustrative of the provisions to which it relates. It does not limit those provisions.
2: If an example and a provision to which it relates are inconsistent, the provision prevails. Transitional, savings, and related provisions Heading inserted 9 April 2019 section 8 Financial Services Legislation Amendment Act 2019
14A: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 4 Section 14A inserted 9 April 2019 section 8 Financial Services Legislation Amendment Act 2019 Act binds the Crown
15: Act binds the Crown
This Act binds the Crown. General application provision
16: Application of Act
1: The provisions of this Act have effect despite anything to the contrary in any other enactment or in any agreement, deed, application, disclosure document, or advertisement.
2: A provision of an agreement or a deed is void if it provides that a party to the agreement or deed is—
a: required or bound to waive compliance with any requirement of this Act or the regulations; or
b: taken to have notice of any agreement, document, or matter not specifically referred to in the relevant disclosure document (if any).
3: Nothing in this section or in any other provision of this Act or the regulations limits subpart 5 of Part 2 Section 16(3) amended 1 September 2017 section 347 Contract and Commercial Law Act 2017
2: Fair dealing
17: Overview
1: This Part provides for fair dealing in relation to financial products and financial services as follows:
a: sections 19 to 33
b: sections 34 to 37
2: Subsection (1) is only a guide to the general scheme and effect of this Part.
18: Interpretation in this Part
In this Part,— financial product
a: has the meaning set out in section 7
b: includes, for the purposes of any provision of this Part or section 464
i: any class or classes of financial advice product
ii: any security of a kind referred to in section 6(6)﻿(c) trade Section 18 financial product replaced 14 March 2021 section 34 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 18 financial product amended 15 March 2021 section 9 Financial Services Legislation Amendment Act 2019 Misleading or deceptive conduct, false or misleading representations, and unsubstantiated representations
19: Misleading or deceptive conduct generally
1: A person must not, in trade, engage in conduct that is misleading or deceptive or likely to mislead or deceive in relation to—
a: any dealing in financial products; or
b: the supply or possible supply of a financial service or the promotion by any means of the supply or use of financial services.
2: A person must not engage in conduct that is misleading or deceptive or likely to mislead or deceive in relation to any dealing in quoted financial products.
3: Subsection (2) applies regardless of whether or not the dealing is in trade. 1986 No 121 s 9 s 13
20: Misleading conduct in relation to financial products
A person must not, in trade, engage in conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of financial products. 1986 No 121 s 10
21: Misleading conduct in relation to financial services
A person must not, in trade, engage in conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of financial services. 1986 No 121 s 11
22: False or misleading representations
A person must not, in trade, in connection with any dealing in financial products, the supply or possible supply of financial services, or the promotion by any means of the supply or use of financial services, make a false or misleading representation—
a: that the products or services are of a particular kind, standard, quality, grade, quantity, composition, or value, or have had a particular history; or
b: that the products or services are offered, issued, transferred, or supplied by a particular person, by a person of a particular trade, qualification, or skill, or by a person who has other particular characteristics; or
c: that a particular person has agreed to acquire the products or services; or
d: that the products or services have any sponsorship, approval, endorsement, performance characteristics, accessories, uses, or benefits; or
e: that a person has any sponsorship, approval, endorsement, or affiliation; or
f: with respect to the price of the products or services; or
g: concerning the need for the products or services; or
h: concerning the existence, exclusion, or effect of any condition, warranty, guarantee, right, or remedy, including (to avoid doubt) in relation to any guarantee, right, or remedy available under the Consumer Guarantees Act 1993
i: concerning the place of origin of the products or services. 1986 No 121 s 13
23: Unsubstantiated representations
1: A person must not, in trade, make an unsubstantiated representation.
2: A representation is unsubstantiated
3: This section does not apply to a representation that a reasonable person would not expect to be substantiated.
4: In this section and sections 24 to 27 representation
a: in respect of financial products or financial services; and
b: in connection with—
i: any dealing in financial products; or
ii: the supply or possible supply of financial services or the promotion by any means of the supply or use of financial services.
24: Court must have regard to certain matters
1: In a proceeding concerning a contravention of section 23
a: the nature of the financial products or financial services in respect of which the representation was made:
b: the nature of the representation (for example, whether it was a representation about quality or quantity):
c: any research or other steps taken by or on behalf of the person before the person made the representation:
d: the nature and source of any information that the person relied on to make the representation:
e: the extent to which the person making the representation complied with the requirements of any standards, codes, or practices relating to the grounds on which such a representation may be made, and the nature of those requirements:
f: the actual or potential effects of the representation on any person.
2: Subsection (1) does not limit sections 499 to 504
25: Limitation on commencement of proceedings in relation to unsubstantiated representations
Despite anything to the contrary in Part 8 section 23
26: Section 23 does not apply to representations in PDSs, register entries, or other disclosure documents
Section 23
27: Section 23 subject to other enactments
Section 23
a: another enactment sets out requirements relating to the grounds on which representations may be made by a person in that trade, business, industry, profession, occupation, activity of commerce, or undertaking (whether more or less onerous than section 23
b: the person complies with those requirements.
28: Certain conduct does not contravene various provisions
1: Conduct that contravenes section 82 99 262 265 427 431P 431Y clause 27 sections 19 to 23
2: For the purpose of this section, conduct must be treated as contravening section 82 99 262 265 427 431P 431Y clause 27 Australian Securities and Investments Commission Act 2001 ss 12DA(1A), 12DB(2) (Aust) Section 28(1) amended 15 March 2021 section 10 Financial Services Legislation Amendment Act 2019 Section 28(2) amended 15 March 2021 section 10 Financial Services Legislation Amendment Act 2019
29: Limited application of provisions in relation to newspapers, magazines, broadcasting, etc
1: Nothing in sections 19 to 23
a: the publication of an advertisement; or
b: the publication of any information or matter relating to any dealing in financial products, the supply or possible supply of financial services, or the promotion by any means of the supply or use of financial services by—
i: the relevant person or, if the relevant person is a body corporate, by a related body corporate; or
ii: a person who is a party to any agreement with the relevant person relating to the content, nature, or tenor of the information or matter.
2: Nothing in sections 19 to 23
a: the broadcasting or exhibiting of an advertisement; or
b: the broadcasting or exhibiting of any information or matter relating to any dealing in financial products, the supply or possible supply of financial services, or the promotion by any means of the supply or use of financial services by—
i: the relevant person or, if the relevant person is a body corporate, by a related body corporate; or
ii: a person who is a party to any agreement with the relevant person relating to the content, nature, or tenor of the information or matter.
3: In this section,— exhibiting
a: exhibiting by means of an audio or visual service; or
b: exhibiting films to the public newspaper section 2 relevant person
a: a newspaper or magazine, the proprietor of the newspaper or magazine:
b: a news media or financial market commentary Internet site, the person that controls the content of the Internet site:
c: broadcasting, the broadcaster:
d: an audio or visual service, the person that controls the content of the audio or visual service:
e: exhibiting films to the public, the person that exhibits the films. 1986 No 121 s 15
30: Defence for publisher
In any proceeding against a person ( A sections 19 to 23
a: A's business is publishing or arranging for the publication of advertisements; and
b: A received the advertisement, or the information contained in the advertisement, as the case may be, in the ordinary course of that business and did not know and had no reason to suspect that the publication of the advertisement or the publication of the advertisement containing that information, as the case may be, would constitute a contravention of the provision. 1986 No 121 s 44(4)
31: Licensed market operator does not contravene by notifying disclosures
A licensed market operator does not contravene any of sections 19 to 23 subpart 4 5 6
32: Other exceptions
1: Sections 19 to 23 Takeovers Code Takeovers Act 1993
2: Sections 19 to 23 Companies Act 1993 1988 No 234 ss 14 15
33: Territorial scope of sections 19 to 23
1: Sections 19 to 23
a: conduct in New Zealand; and
b: conduct outside New Zealand by any person resident, incorporated, registered, or carrying on business in New Zealand to the extent that that conduct relates to dealing in financial products, or the supply of a financial service, that occurs (in part or otherwise) within New Zealand.
2: Sections 19 to 23
3: Despite anything to the contrary in Part 8
4: In this section, registered Financial Service Providers (Registration and Dispute Resolution) Act 2008 1988 No 234 s 18 s 7(3) Offers in course of unsolicited meetings
34: Prohibition of offers in course of unsolicited meetings with persons acting otherwise than in trade
1: A person must not offer financial products for issue or sale to a person who is acting otherwise than in trade ( A
2: Subsection (1) does not prohibit an offer of financial products if—
a: the offer does not require disclosure under Part 3 Part 1 clause 12 16
b: the offer is through a financial advice provider that is acting in the ordinary course of business as a financial advice provider; or
c:
d: the offer is an offer of the financial products of a co-operative where becoming a holder of those products is—
i: a necessary incident of doing business with the co-operative; or
ii: the means by which a person can access the benefits of membership of the co-operative; or
e: the offer is made in the prescribed circumstances.
3: This section applies to offers of financial products received by persons in New Zealand, regardless of—
a: where any resulting issue or transfer occurs:
b: where the issuer or offeror is resident, incorporated, or carries on business.
4: In this section,— meeting
a: a telephone call; or
b: a meeting held by means of audio, audio and visual, or electronic communication where the participants can simultaneously communicate with each other throughout the meeting co-operative
a: a co-operative company; or
b: an industrial and provident society; or
c: an entity of a prescribed kind. Corporations Act 2001 s 736 (Aust) Section 34(2)﻿(b) replaced 15 March 2021 section 11 Financial Services Legislation Amendment Act 2019 Section 34(2)﻿(c) repealed 15 March 2021 section 11 Financial Services Legislation Amendment Act 2019
35: Right to withdraw
1: If financial products are issued or transferred to a person ( A section 34
a: withdraw from holding the financial products and to have the relevant money repaid (in any case other than a derivative); or
b: in the case of a derivative, withdraw from the derivative.
2: The right referred to in subsection (1) is exercisable by A giving to the offeror notice of the exercise of the right within 1 month after the date of the issue or transfer.
3: Notice under this section may be expressed in any way (including oral or written) that shows the intention of A to withdraw from holding the financial product or from the derivative.
4: This section and sections 36 37 section 34 Corporations Act 2001 s 738 (Aust)
36: Offeror obligations if notice of withdrawal given
1: If a notice is given under section 35
a: the offeror must ensure that the relevant money is repaid as soon as practicable; and
b: if the relevant money is not repaid within 1 month after the notice is given, the offeror and the directors of the offeror are jointly and severally liable to repay the relevant money together with interest at a prescribed rate from the date on which the notice was given.
2: If a notice is given under section 35
a: no party to the derivative is obliged or entitled to perform it further; and
b: each party to the derivative must, as soon as practicable, repay any money, or return any other property, received by the party under the derivative to the party from whom it was received; and
c: if money owed by the offeror is not repaid within 1 month after the notice is given, the offeror and the directors of the offeror are jointly and severally liable to repay the money together with interest at a prescribed rate from the date on which the notice was given.
3: For the purposes of subsection (2)﻿(b), an amount of money due from one party must be set off against an amount due from the other party.
37: Director not liable if no misconduct or negligence
A director is not liable under section 36(1)﻿(b) or (2)﻿(c) Civil liability
38: Civil liability for certain contraventions of this Part
1: Sections 19 to 23 34 36
2: A contravention of any of sections 19 to 23 see subpart 3
3: A contravention of section 34 36 see subpart 3
3: Disclosure of offers of financial products
1: Application
39: Issue offers that need disclosure
An offer of financial products for issue requires disclosure to an investor under this Part unless an exclusion under Part 1 Corporations Act 2001 s 706 (Aust)
40: Sale offers that need disclosure
An offer of financial products for sale requires disclosure to an investor under this Part only if disclosure is required under Part 2 Corporations Act 2001 s 707(1) (Aust)
41: Meaning of regulated offer and of regulated product
1: In this Act, regulated offer
a: means an offer of financial products to 1 or more investors where the offer to at least 1 of those investors requires disclosure under this Part (regardless of whether or not an exclusion under Schedule 1
b: does not include an offer of financial products to 1 or more investors if—
i: the only investors who are able, under the terms of the offer, to acquire the products are investors to whom disclosure under this Part is not required; and
ii: all of the investors who acquire the products under the offer are investors to whom disclosure under this Part is not required. Example
ABC Limited makes an offer of its ordinary shares to 100 investors. Of those investors, 5 are wholesale investors, 15 are relatives of directors of ABC Limited, and 20 are close business associates of ABC Limited. Exclusions under Schedule 1 However, none of the exclusions in Schedule 1 section 50 section 51 The offer of ABC Limited's ordinary shares, as a whole, is a regulated offer because at least some of the offers to investors require disclosure. Some obligations under this Act apply to the regulated offer as a whole. These obligations apply to all of the investors even if the offers to some of those investors do not require disclosure. For example, all money paid for the shares must be held in trust under section 87 subpart 4 subpart 4 of Part 4
2: In this Act, regulated product
a: a financial product offered under a regulated offer; or
b: a managed investment product in a registered scheme (whether or not there has been a regulated offer).
42: Regulated offers that need to meet additional governance requirements
1: A regulated offer of debt securities must meet requirements under subpart 1
2: A regulated offer of managed investment products must meet requirements under subpart 2
43: Options over financial products
1: For the purposes of this Part and Schedule 1
a: an offer of an option to acquire, by way of issue, a financial product is an offer both of the option and of the underlying financial product; and
b: the grant of an option without an offer of the option is an offer of the option; and
c: an offer to grant an option is an offer to issue the option.
2: See clause 11 Corporations Act 2001 s 702 (Aust)
44: Treatment of offers of convertible financial products
For the purposes of this Part and Schedule 1
45: Treatment of offers of renewals and variations
1: For the purposes of this Part and Schedule 1
2: A change to the terms or conditions of a financial product is not a variation for the purposes of this section if the change is made in accordance with the existing terms or conditions of the financial product (for example, if the issuer exercises a power under the terms or conditions to change an interest rate).
3: See clause 24 clause 26
46: Offers of financial products involving customised terms
1: Offers of a type of financial product to 2 or more investors are not prevented from being part of the same regulated offer merely because the product involves terms that are customised for each investor.
2: The PDS and register entry for a regulated offer are not required to include specific information about any customised terms that apply to a particular investor.
3: Subsection (2) does not prevent the regulations from requiring a PDS or register entry to contain information about the kinds of terms that may be customised for each investor. Example
A derivatives issuer makes an offer of a particular type of swap agreement to retail investors (where the offer to at least 1 of those investors requires disclosure under this Part). These derivatives involve some standard or generic terms. They also involve customised terms that are negotiated with each retail investor (for example, terms relating to particular dates or amounts). The offer of those derivatives to those investors is a regulated offer. The PDS or register entry relates to the regulated offer as a whole. The PDS and register entry do not include specific information about the customised terms that apply to a particular investor. This does not prevent the regulations requiring the PDS or register entry to contain a description of the kinds of customised terms that may be negotiated (such as a range of dates or amounts).
47: Territorial scope of Part
1: This Part applies to offers of financial products in New Zealand, regardless of—
a: where any resulting issue or transfer occurs:
b: where the issuer or offeror is resident, incorporated, or carries on business.
2: For the purposes of subsection (1), financial products are offered in New Zealand if an offer of the financial products 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 (other than persons referred to in subsection (3)) may not accept the offer.
3: The persons referred to in this subsection are persons to whom disclosure under this Part is not required because of an exclusion under any of clauses 3 to 5 1978 No 103 s 7
2: Procedure for making regulated offers
Product disclosure statement must be prepared and lodged
48: PDS must be prepared and lodged
1: A person must not make a regulated offer, or distribute an application form for a regulated offer, unless the issuer of the financial products has—
a: prepared a product disclosure statement ( PDS
b: lodged the PDS with the Registrar; and
c: supplied to the Registrar all of the information that the register entry (if any) is required to contain by this Act or the regulations.
2: A person who contravenes subsection (1) commits an offence if the person knows that, or is reckless as to whether, the offer is a regulated offer.
3: A person who commits an offence under subsection (2) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. Corporations Act 2001 ss 709(1), 718, 727(1) (Aust)
49: Purpose of PDS
The purpose of a PDS is to provide certain information that is likely to assist a prudent but non-expert person to decide whether or not to acquire the financial products. Disclosure to investors
50: PDS must be given if offer requires disclosure
1: This section applies if an offer of financial products is made to a person ( A
2: A person must not accept an application, or issue or transfer the financial products to A, if a PDS for the regulated offer was not given to A before the application was made.
3: In this section, application
4: See sections 39 40 Schedule 1
51: Certain situations in which section 50 does not need to be complied with
1: An offeror does not have to comply with section 50 A
a: if A has already been given a PDS (for the same or a different offer) that contains all of the information that the PDS referred to in section 50
b: if the offeror believes on reasonable grounds that paragraph (a) applies; or
c: in any other prescribed circumstances.
2: For the purposes of subsection (1)﻿(a), immaterial differences in the information that is contained in the PDS that has been given to A and the PDS referred to in section 50 Corporations Act 2001 s 1012D(1) (Aust)
52: PDS treated as having been given if application form used was included in, or accompanied by, PDS
1: An offeror must be treated as having complied with section 50 A
a: the offeror issues or transfers the financial products to A in response to an application form; and
b: the application form identifies the PDS to which it relates; and
c: A confirms in the application form that A has received the PDS; and
d: the offeror has reasonable grounds to believe that—
i: the application form was included in, or accompanied by, the PDS when the form was distributed by or on behalf of the offeror; or
ii: the form was copied, or directly derived, by the person making the application from a form referred to in subparagraph (i).
2: The identification of the PDS under subsection (1)﻿(b) must be reasonably prominent.
53: Offence to knowingly or recklessly contravene section 50
1: A person who contravenes section 50
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million.
54: Right to withdraw
1: If a person contravenes section 50 A
a: withdraw from holding the financial products and to have the relevant money repaid (in any case other than a derivative); or
b: in the case of a derivative, withdraw from the derivative.
2: The right referred to in subsection (1) is exercisable by A giving to the offeror notice of the exercise of the right within the earlier of—
a: 6 months after A knows, or ought reasonably to know, that section 50
b: 12 months after the financial products are issued or transferred to A.
3: Notice under this section may be expressed in any way (including oral or written) that shows the intention of A to withdraw from holding the financial product or from the derivative.
4: This section and sections 55 56 section 50
55: Offeror obligations if notice of withdrawal given
1: If a notice is given under section 54
a: the offeror must ensure that the relevant money is repaid as soon as practicable; and
b: if the relevant money is not repaid within 1 month after the notice is given, the offeror and the directors of the offeror are jointly and severally liable to repay the relevant money together with interest at a prescribed rate from the date on which the notice was given.
2: If a notice is given under section 54
a: no party to the derivative is obliged or entitled to perform it further; and
b: each party to the derivative must, as soon as practicable, repay any money, or return any other property, received by the party under the derivative to the party from whom it was received; and
c: if money owed by the offeror is not repaid within 1 month after the notice is given, the offeror and the directors of the offeror are jointly and severally liable to repay the money together with interest at a prescribed rate from the date on which the notice was given.
3: For the purposes of subsection (2)﻿(b), an amount of money due from one party must be set off against an amount due from the other party.
56: Director not liable if no misconduct or negligence
A director is not liable under section 55(1)﻿(b) or (2)﻿(c) Content and presentation of product disclosure statements and register entries
57: Disclosure of material information and content of PDS and register entry
1: An issuer that prepares, or is required to prepare, a PDS must ensure that, as at the date on which the PDS is lodged with the Registrar,—
a: the PDS—
i: contains all of the information that it is required to contain by the regulations; and
ii: is accompanied by all of the documents that the regulations require it to be accompanied by; and
iii: complies with all other requirements of the regulations relating to the content of the PDS; and
iv: is dated not later than the date on which it is lodged with the Registrar; and
v: if applicable, specifies its expiry date ( see section 84
vi: complies with section 60
b: the register entry (if any)—
i: contains all of the information that it is required to contain by the regulations; and
ii: contains all material information relating to the regulated offer that is not contained in the PDS; and
iii: complies with all other requirements of the regulations relating to the content of the register entry; and
iv: complies with section 60
2: Subsection (1)﻿(b)﻿(ii) does not limit subsection (1)﻿(a).
3: Subsection (1)﻿(b)﻿(ii) does not apply in the prescribed circumstances (which may include, for example, certain offers to existing product holders or certain situations in which information about an offer is available by means of a continuous disclosure obligation).
58: Register entry not required in prescribed circumstances
A register entry for a regulated offer is not required in the prescribed circumstances.
59: Meaning of material information in this Part
1: In this Part, material information
a: a reasonable person would expect to, or to be likely to, influence persons who commonly invest in financial products in deciding whether to acquire the financial products on offer; and
b: relates to the particular financial products on offer or the particular issuer, rather than to financial products generally or issuers generally.
2: However, material information
a: information about the specific terms of a financial product that have been customised for a particular investor; or
b: information about an identifiable investor. Example
A derivatives issuer makes an offer of a particular type of swap agreement to retail investors. These derivatives involve some standard or generic terms. They also involve customised terms that are negotiated with the particular retail investor (for example, terms relating to particular dates or amounts). The material information for the regulated offer as a whole does not include specific information about the customised terms that apply to a particular investor. This does not prevent the regulations requiring the PDS or register entry to contain a description of the kinds of customised terms that may be negotiated. Corporations Act 2001 ss 674, 677, 710, 1013E (Aust)
60: Consent of experts and persons who make endorsements
1: An issuer that prepares, or is required to prepare, a PDS must ensure that the PDS and the register entry only include an expert statement or endorsement made by a person ( A A
a: A has consented in writing to the statement being included in the PDS or register entry in the form and context in which it is included; and
b: the PDS or register entry states that A has given the consent; and
c: A has not withdrawn the consent before the PDS is lodged with the Registrar.
2: Nothing in subsection (1) applies in relation to any statement given by an approved rating agency in connection with a rating given, or to be given, by it.
3: In this section and section 83(3) approved rating agency section 80 Banking (Prudential Supervision) Act 1989 , section 86 section 62 endorsement
a: may reasonably be regarded as encouraging or persuading persons to acquire the financial products on offer; and
b: relates to the particular financial products on offer or the particular issuer, rather than to financial products generally or issuers generally expert
a: means a person who holds himself or herself out to be of a profession or calling that gives authority to a statement made by him or her; but
b: does not include a person acting in his or her capacity as a director or senior manager of an entity expert statement Corporations Act 2001 ss 716, 735(1) (Aust) Section 60(3) approved rating agency amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021 Section 60(3) approved rating agency amended 1 May 2014 section 102 Non-bank Deposit Takers Act 2013
61: PDS must be worded and presented in clear, concise, and effective manner
1: An issuer that prepares, or is required to prepare, a PDS must ensure that the information in the PDS is worded and presented in a clear, concise, and effective manner.
2: This section is not a civil liability provision for the purposes of subpart 3 see subpart 1 Corporations Act 2001 s 715A (Aust)
62: PDS must comply with prescribed requirements relating to form and presentation
An issuer that prepares, or is required to prepare, a PDS must ensure that the PDS complies with all requirements of the regulations relating to the form and presentation of the PDS. Other provisions relating to lodging of PDS and other documents
63: Supply of prescribed information
1: An issuer that lodges a PDS or other document under this Part must supply the prescribed information to the Registrar when the PDS or document is lodged.
2: Information referred to in subsection (1) may include, for example, a copy of the consent of a prescribed person to the lodgement.
3: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5
64: Registrar must notify FMA of lodgement of PDS
1: The Registrar must, immediately after a PDS is lodged, notify the FMA of the lodgement for the purpose of allowing the FMA an opportunity to consider the PDS, any governing document, and whether the offer, or intended offer, of financial products will be made in compliance with this Act.
2: The nature and extent of the consideration under subsection (1) (if any) is at the FMA's discretion.
3: Nothing in this section or any other provision of this Act limits the FMA's power to consider or reconsider at any time any of the matters referred to in subsection (1). 1978 No 103 s 43C(1)
65: Waiting period after lodgement before processing applications for financial products
1: An offeror must not accept an application for, or issue or transfer, financial products offered under a regulated offer until—
a: the period of 5 working days after lodgement of the PDS has ended; or
b: if the period is extended under section 66
2: An offeror that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5
4: This section does not prevent an offeror from receiving applications for financial products or money during the period that applies under this section. 1978 No 103 s 43D
66: FMA may extend period
1: The FMA may extend the period under section 65(1)﻿(a)
2: The period, as extended, must end no later than 10 working days after lodgement of the PDS with the Registrar.
3: The FMA must give a copy of the notice under subsection (1) to the Registrar.
67: Waiting period restriction does not prevent offeror from acting under another PDS
If section 65
68: FMA may remove restrictions if its consideration complete or consideration or further consideration unnecessary
1: This section applies if the FMA is satisfied that—
a: its consideration as referred to in section 64
b: consideration as referred to in section 64
2: The FMA may give notice to the offeror that—
a: the period that applies under section 65
b: section 65
3: Nothing in this section limits subpart 2 section 65 1978 No 103 s 43E
69: Waiting period does not usually apply to continuous issue PDSs
1: Section 65
2: The FMA may issue a notice that prescribes the class or classes of continuous issue PDSs to which section 65
3: The FMA must, before issuing a notice in respect of a class of continuous issue PDSs, be satisfied that it is in the public interest for the FMA to have an opportunity to consider those PDSs before any person accepts applications for, or issues or transfers, financial products offered under those PDSs (for example, where in the circumstances, a particular risk relates to a particular class of offerors or financial products).
4: Subpart 5 1978 No 103 s 43EA
70: No guarantee or representation as to compliance
1: Nothing done or omitted to be done under this Act or the regulations by the Registrar or the FMA guarantees or represents that—
a: a PDS, register entry, or governing document—
i: complies with this Act and the regulations:
ii: does not contain any material misdescription or material error or any material matter that is not clearly legible:
iii: is not false or misleading:
b: the FMA has considered a PDS, register entry, or governing document with a view to determining whether it—
i: complies with this Act and the regulations:
ii: contains any material misdescription or material error or any material matter that is not clearly legible:
iii: is false or misleading.
2: This section does not limit section 22 1978 No 103 s 43M
71: When supplementary document or replacement PDS may be lodged
1: An issuer that lodges a PDS with the Registrar may lodge a supplementary document or replacement PDS with the Registrar to—
a: correct a false or misleading statement in the PDS; or
b: correct an omission from the PDS of information that it is required to contain by this Act or the regulations; or
c: correct the PDS because it is not worded and presented in a clear, concise, and effective manner; or
d: update, or add to, the information contained in the PDS.
2: However, a supplementary document must not be lodged with the Registrar in the prescribed circumstances. Corporations Act 2001 s 1014A (Aust)
72: Supplementary document
1: If a supplementary document is lodged with the Registrar, the PDS together with the supplementary document is taken to be the PDS for the purposes of the application of this Act or the regulations to events that occur after the lodgement.
2: The issuer must ensure that, at the beginning of a supplementary document, there is—
a: a statement that it is a supplementary document; and
b: an identification of the PDS that it supplements; and
c: an identification of all previous supplementary documents lodged with the Registrar in relation to the regulated offer; and
d: a statement that it is to be read together with the PDS that it supplements and the previous supplementary documents.
3: The supplementary document must be dated with the date on which it is lodged with the Registrar. Corporations Act 2001 s 719(2), (4) (Aust)
73: Replacement PDS
1: If a replacement PDS is lodged with the Registrar, the PDS is taken to be the replacement PDS for the purposes of the application of this Act or the regulations to events that occur after the lodgement.
2: The issuer must ensure that, at the beginning of a replacement PDS, there is—
a: a statement that it is a replacement PDS; and
b: an identification of the PDS that it replaces.
3: The replacement PDS must be dated with the date on which it is lodged with the Registrar. Corporations Act 2001 s 719(3), (5) (Aust)
74: Registrar must notify FMA of lodgement of supplementary document or replacement PDS
1: The Registrar must, immediately after a supplementary document or replacement PDS is lodged, notify the FMA of the lodgement for the purpose of allowing the FMA an opportunity to consider the supplementary document or replacement PDS.
2: The nature and extent of the consideration (if any) that the FMA gives to a supplementary document or replacement PDS are at the FMA's discretion.
3: Section 65 1978 No 103 s 43C(1)
75: Publication of lodgement
1: If a PDS, supplementary document, or replacement PDS is lodged by an issuer under this Part, the issuer must, as soon as practicable after it receives the certificate of lodgement from the Registrar, ensure that an Internet site maintained by or on behalf of the issuer—
a: contains a reasonably prominent statement—
i: to the effect that the PDS, supplementary document, or replacement PDS has been lodged; and
ii: describing where and how a copy of the PDS, supplementary document, or replacement PDS can be obtained; or
b: contains a reasonably prominent link to such a statement.
2: The statement or link referred to in subsection (1) may be removed from the Internet site maintained by or on behalf of the issuer on or after the date that the offeror ceases to offer financial products in reliance upon the PDS. Amending register entry
76: When register entry may be amended
An issuer of financial products offered under a regulated offer may give notice to the Registrar to amend the register entry in order to—
a: correct a false or misleading statement in the register entry; or
b: correct an omission from the register entry of information it is required to contain by this Act or the regulations; or
c: update, or add to, the information contained in the register entry. Conditions referred to in PDS
77: Minimum number or amount condition must be fulfilled before issue or transfer
1: This section applies if a PDS states that the financial products will not be issued or transferred unless—
a: applications for a minimum number of the financial products are received; or
b: a minimum amount is raised.
2: The offeror must not issue or transfer any of the financial products under the regulated offer until the condition referred to in subsection (1) is satisfied.
3: For the purpose of working out whether a condition referred to in this section or section 79(2)﻿(a) Corporations Act 2001 s 723(2) (Aust)
78: Issue or transfer void if quotation condition not fulfilled
1: This section applies if—
a: a PDS states or implies that the financial products are to be quoted on a financial market (whether in New Zealand or elsewhere); and
b: the financial products are not admitted to quotation within—
i: the period specified in, or determined in accordance with, the PDS; or
ii: if there is no such period, 3 months after the date of the PDS.
2: An issue or a transfer of financial products under the regulated offer is void.
3: The offeror must deal under section 80 Corporations Act 2001 s 723(3) (Aust) Dealing with applications where condition referred to in PDS not met or disclosure defective
79: Application of section 80
1: An offeror must, if any of subsections (2) to (5) apply, deal under section 80
2: This subsection applies if—
a: a PDS states that the financial products will not be issued or transferred unless—
i: applications for a minimum number of the financial products are received; or
ii: a minimum amount is raised; and
b: a condition referred to in paragraph (a) is not satisfied within 4 months after the date of the PDS.
3: This subsection applies if—
a: a PDS states or implies that the financial products are to be quoted on a financial market (whether in New Zealand or elsewhere); and
b: the financial products are not admitted to quotation within—
i: the period specified in, or determined in accordance with, the PDS; or
ii: if there is no such period, 3 months after the date of the PDS.
4: This subsection applies if—
a: the offeror becomes aware—
i: that a statement in the PDS is false or misleading or is likely to mislead; or
ii: that there is an omission from the PDS of information that is required to be contained in the PDS by this Act or the regulations; or
iii: of a circumstance that has arisen since the PDS was lodged with the Registrar that would have been required by this Act or the regulations to be disclosed or otherwise contained in the PDS if it had arisen before the PDS was lodged, and the circumstance is not so disclosed or otherwise contained in the PDS; and
b: the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.
5: This subsection applies if—
a: the offeror becomes aware—
i: that a statement in the register entry is false or misleading or is likely to mislead; or
ii: that there is an omission from the register entry of information that is required to be contained in the register entry by this Act or the regulations; or
iii: of a circumstance that has arisen since the PDS was lodged with the Registrar that would have been required by this Act or the regulations to be disclosed or otherwise contained in the register entry if it had arisen before the PDS was lodged, and the circumstance is not so disclosed or otherwise contained in the register entry; and
b: the matter referred to in paragraph (a) is materially adverse from the point of view of an investor. Corporations Act 2001 s 724(1) (Aust)
80: Choices open to offeror
1: If this section applies, the offeror must do 1 of the following in respect of each applicant:
a: ensure that the money received from the applicant in respect of the application for financial products is repaid; or
b: in the case of section 78 79(2), (3), or (4)
i: a supplementary document or replacement PDS that corrects the deficiency or changes the terms of the offer; and
ii: 1 month to confirm whether or not the applicant still wants to acquire the financial products; or
c: in the case of section 79(5)
i: amend the register entry to correct the deficiency; and
ii: give notice in the prescribed manner to the applicant that the register entry has been amended; and
iii: give the applicant 1 month to confirm whether or not the applicant still wants to acquire the financial products; or
d: if permitted by the regulations, in the case of section 79(4) or (5)
i: give the applicant the document or PDS referred to in paragraph (b)﻿(i) or comply with paragraph (c)﻿(i) and (ii) (as the case may be); and
ii: give the applicant a prescribed period to withdraw their application and be repaid.
2: If an applicant does not confirm that the applicant still wants to acquire the financial products within 1 month after being given the opportunity to do so under subsection (1)﻿(b)﻿(ii) or (c)﻿(iii) or an applicant withdraws an application under subsection (1)﻿(d), the offeror must ensure that the money received from the applicant in respect of the application for financial products is repaid as soon as practicable.
3: If the money referred to in subsection (2) is not repaid within 1 month after the offeror is required to ensure that it is repaid under that subsection, the offeror and the directors of the offeror are jointly and severally liable to repay the money together with interest at a prescribed rate from the expiry of the 1-month period referred to in subsection (2) or from the date on which the application is withdrawn (as the case may be).
4: An offeror must, when acting under this section (including in respect of a withdrawal under subsection (1)﻿(d)), comply with the prescribed requirements (if any). Corporations Act 2001 s 724(2) (Aust)
81: Director not liable if no misconduct or negligence
A director is not liable under section 80(3) Prohibition of offers where defective disclosure in PDS or register entry
82: False or misleading statements, omissions, and new matters requiring disclosure
1: An offeror must not offer, or continue to offer, financial products under a regulated offer if—
a: there is—
i: a statement in the PDS, any application form that accompanies the PDS, or the register entry that is false or misleading or is likely to mislead; or
ii: an omission from the PDS, or the register entry, of information that is required to be contained in the PDS, or the register entry, by this Act or the regulations; or
iii: a circumstance that has arisen since the PDS was lodged with the Registrar that would have been required by this Act or the regulations to be disclosed or otherwise contained in the PDS, or the register entry, if it had arisen before the PDS was lodged, and the circumstance is not so disclosed or otherwise contained in the PDS or the register entry; and
b: the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.
2: For the purposes of this section, a statement about a future matter (including the doing of, or refusing to do, an act) must be taken to be misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2) does not limit the meaning of a reference to a misleading statement.
4: See section 510 section 496 Corporations Act 2001 s 728 (Aust)
83: Persons who must inform offeror about disclosure deficiencies
1: A person referred to in subsection (2) must, in relation to a regulated offer, notify the offeror in writing as soon as practicable if the person becomes aware at any time before the end of the application period that—
a: a material statement in the PDS, or the register entry, is false or misleading or is likely to mislead; or
b: there is a material omission from the PDS, or the register entry, of information that is required to be contained in the PDS, or the register entry, by this Act or the regulations; or
c: there is a material circumstance that has arisen since the PDS was lodged with the Registrar that would have been required by this Act or the regulations to be disclosed or otherwise contained in the PDS, or the register entry, if it had arisen before the PDS was lodged, and the circumstance is not so disclosed or otherwise contained in the PDS or register entry.
2: The persons are—
a: each director of the offeror:
b: each person named in the PDS or register entry with the person's consent as a proposed director of the offeror:
c: the issuer (if the offeror is not the issuer) and each director of the issuer:
d: a person referred to in section 60
3: A person referred to in subsection (2)﻿(d) is required to notify the offeror of matters under this section only if the matters relate to the expert statement or endorsement to which the person's consent relates.
4: In subsection (1), application period Corporations Act 2001 s 730(1) (Aust) Expiry
84: Expiry
1: A PDS must, if required by the regulations, specify its expiry date.
2: The expiry date must not be later than the end of the prescribed period (if any).
3: The expiry date of a replacement PDS must be the same as that of the original PDS it replaces. Corporations Act 2001 s 711(6) (Aust)
85: How offeror must deal with applications on expiry
1: If a PDS expires, the offeror must deal with applications for the financial products offered under the regulated offer in accordance with subsections (2) and (3).
2: If an application is received on or before the expiry date, the offeror may issue or transfer financial products to the applicant.
3: If an application is received after the expiry date, the offeror must do 1 of the following:
a: ensure that the money received from the applicant in respect of the application is repaid; or
b: give the applicant—
i: a new PDS (unless the applicant is not a person to whom disclosure under this Part is required or, under section 51 section 50
ii: 1 month to confirm whether or not the applicant still wants to acquire the financial products.
4: If an applicant does not confirm that the applicant still wants to acquire the financial products within 1 month after being given the opportunity to do so under subsection (3), the offeror must ensure that the money received from the applicant in respect of the application for financial products is repaid as soon as practicable.
5: If the money referred to in subsection (4) is not repaid within 1 month after the offeror is required to ensure that it is repaid under that subsection, the offeror and the directors of the offeror are jointly and severally liable to repay the money together with interest at a prescribed rate from the expiry of the 1-month period referred to in subsection (4).
6: An offeror must, when acting under this section, comply with the prescribed requirements (if any). Corporations Act 2001 s 725 (Aust)
86: Director not liable if no misconduct or negligence
A director is not liable under section 85(5) Money for financial products must be held in trust
87: Money for financial products must be held in trust
1: This section applies to money paid to an issuer or offeror of regulated products if the money is paid by a person ( A
a: to acquire the financial products or an increased interest in the financial products; or
b: as a further contribution or investment or a further deposit as referred to in section 11(2)﻿(c)
2: The issuer or offeror must hold the money in trust for A until—
a: the financial products are issued or transferred; or
b: the money is otherwise applied for the purpose for which it was paid (for example, to increase the extent of A's interest in a scheme or A's deposit or to pay a fee); or
c: the money is repaid to A; or
d: the money is applied in accordance with A's express instructions given after the application for financial products was made and the money was paid.
3: The issuer or offeror must—
a: deal with the money, while it is held in trust, in the prescribed manner (including ensuring that any prescribed requirements relating to the investment of the money are complied with); and
b: if the money needs to be repaid, ensure the money is repaid as soon as practicable and, in any event, no later than 1 month after the obligation to repay arises.
4: This section does not apply to derivatives (but see section 448 Corporations Act 2001 ss 722, 1017E (Aust) Offering financial products in entity that does not exist
88: Offering financial products of entity that does not exist
1: A person must not offer financial products of an entity that has not been formed or does not exist if the offer would be a regulated offer if the entity did exist.
2: Subsection (1) applies even if it is proposed to form or incorporate the entity.
3: A person who contravenes this section commits an offence if the person knows that the offer would be a regulated offer if the entity did exist.
4: A person who commits an offence under this section is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 3 years, a fine not exceeding $200,000, or both; and
b: in any other case, to a fine not exceeding $600,000. Corporations Act 2001 s 726 (Aust)
3: Advertising
89: Advertising for regulated offers
1: If an offer, or intended offer, of financial products is or will be a regulated offer, a person must not, except in accordance with any of sections 90 to 92
2: Subsection (1) applies only if the advertisement is authorised or instigated by, or on behalf of, the issuer, the offeror, or an associated person of the issuer or offeror. Corporations Act 2001 s 734(2), (2A) (Aust)
90: Distribution of PDS or registered documents
A person may distribute either of the following without contravening section 89
a: a PDS that has been lodged with the Registrar:
b: a copy of any part of the register entry or of any document that is contained in the register entry. Corporations Act 2001 s 734(4) (Aust)
91: Advertising before PDS lodged
1: Before the PDS is lodged with the Registrar, an advertisement does not contravene section 89
a: that no money is currently being sought; and
b: that financial products cannot currently be applied for or acquired under the offer or intended offer; and
c: that, if the offer is made, the offer will be made in accordance with this Act; and
d: if the offeror wishes, that specifies that the offeror is seeking preliminary indications of interest and, in that case, also specifies—
i: how indications of interest may be made; and
ii: that no indication of interest will involve an obligation or a commitment to acquire the financial products.
2: A statement required under subsection (1)﻿(a) to (c) and (d)﻿(ii) must be reasonably prominent. 1978 No 103 s 5(2CA)
92: Advertising after PDS lodged
1: After the PDS is lodged with the Registrar, an advertisement does not contravene section 89
a: includes a statement that identifies,—
i: if the financial products are offered by way of issue, the issuer of the products; and
ii: if the financial products are offered pursuant to sale offers to which section 40
b: includes a statement that indicates that the PDS for the offer is available and where and how it can be obtained; and
c: does not contain any information, sound, image, or other matter that is materially inconsistent with the PDS, or register entry, for the offer to which it relates.
2: A statement required under this section must be reasonably prominent. Corporations Act 2001 s 734(6) (Aust)
93: Documents to which subpart does not apply
Nothing in this subpart applies to the distribution of any of the following:
a: a document that relates to the financial products of a listed issuer and consists solely of—
i: a statement or report relating to the affairs of the issuer made to the relevant licensed market operator, by or on behalf of the issuer, for the purposes of compliance with any market rules; or
ii: a report of a statement or report referred to in subparagraph (i):
b: a document that consists solely of—
i: a statement or report made to or for the purposes of a meeting of the issuer's product holders or any class of those product holders; or
ii: a report of the proceedings of such a meeting:
c: information that consists solely of information that is required by law to be provided or made available (for example, an annual report of a company) whether directly or as a condition of carrying out any activity or as a condition of an exemption from any enactment.
94: Defence for publishers
In any proceeding against a person ( A section 89
a: A's business is publishing or arranging for the publication of advertisements; and
b: A received the advertisement, or the information contained in the advertisement, as the case may be, in the ordinary course of that business and did not know and had no reason to suspect that the publication of the advertisement or the publication of the advertisement containing that information, as the case may be, would constitute a contravention of section 89 1986 No 121 s 44(4)
4: Ongoing disclosure and updating of registers
Duty to update register of offers of financial products and register of managed investment schemes
95: Duty to notify changes to Registrar
1: An issuer of regulated products must notify the Registrar of a prescribed change within the prescribed period.
2: In this section,— prescribed change
a: means a prescribed change that relates to the issuer, any offeror of those products, the regulated products, or any registered scheme to which those products relate; but
b: does not include a change in respect of which the FMA is required to notify the Registrar (for example, an order made under subpart 1 prescribed period
a: the period (if any) that is prescribed in respect of the change; or
b: 5 working days after the issuer becomes aware of the change (if paragraph (a) does not apply).
3: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 43Q Section 95(1) replaced 9 August 2017 section 49 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 95(2) replaced 9 August 2017 section 49 Regulatory Systems (Commercial Matters) Amendment Act 2017 Disclosure to particular persons
96: Information to be made available to investors
, FMA, Registrar,
1: Every issuer of regulated products must, at the request of a prescribed person or at the prescribed times or on the occurrence of the prescribed events, make available to a prescribed person the information that is required to be made available under this section by the regulations.
2: The information must be made available in the prescribed manner.
3: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5
5: To avoid doubt, information may be required to be made available to a person under this section even though Schedule 1 Section 96 heading amended 9 August 2017 section 50 Regulatory Systems (Commercial Matters) Amendment Act 2017 Public disclosure
97: Information to be made publicly available
1: Every issuer of regulated products must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, make publicly available the information that is required to be made publicly available by the regulations.
2: An issuer commits an offence and is liable on conviction to a fine not exceeding $50,000 if—
a: the regulations made for the purposes of this section require the issuer to make information publicly available by lodging that information with the Registrar; and
b: the issuer contravenes this section by failing to lodge that information with the Registrar in accordance with subsection (1).
3: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 54C Section 97(2) inserted 9 August 2017 section 51 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 97(3) inserted 9 August 2017 section 51 Regulatory Systems (Commercial Matters) Amendment Act 2017
98: Issuer must provide information to Registrar
1: An issuer of regulated products must lodge with the Registrar a copy of any information made, or to be made, publicly available under section 97
2: Subsection (1) does not apply—
a: if the regulations made for the purposes of section 97
b: otherwise in the prescribed circumstances.
3: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5 Defective ongoing disclosure
99: Defective ongoing disclosure
1: An issuer must not provide to the Registrar, or make available to any person or the public, any information under any of sections 95 to 98 ongoing disclosure
a: there is—
i: a statement in the ongoing disclosure that is false or misleading or is likely to mislead; or
ii: an omission from the ongoing disclosure of information that is required to be contained in the ongoing disclosure by this Act or the regulations; and
b: the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.
2: For the purposes of this section, a statement about a future matter (including the doing of, or refusing to do, an act) must be taken to be misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2) does not limit the meaning of a reference to a misleading statement.
4: This section does not limit sections 95 to 98
5: See section 511 section 496 Confirmation
100: Issuer or offeror must provide confirmation
1: An issuer or offeror of a regulated product must, in the prescribed circumstances, provide to a product holder either the financial product or confirmation information.
2: The financial product or confirmation information must be provided in the prescribed manner.
3: Confirmation information provided to a product holder under this section is, in the prescribed circumstances, prima facie evidence of the matters to which it relates.
4: In this section, confirmation information
5: An issuer or offeror that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
6: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 54(1)
5: Civil liability for certain contraventions of this Part
101: Part 3 offer provisions
1: All of the provisions specified in subsections (3) and (4) are Part 3 offer provisions.
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: The provisions are the following:
a: section 48
b: section 50
c: section 57
d: section 60
e: section 77
f: section 80
g: section 82
h: section 87(2)
i: section 89
j: sections 97 99
k: clauses 13 17
l: any provision of regulations made for the purposes of clause 26
m: clause 27
4: A contravention of any of the following may give rise to civil liability ( see subpart 3
a: section 55
b: section 62
c: section 75
d: section 83
e: section 85
f: section 87(3)
g: section 88
ga: any provision of regulations made for the purposes of clause 26
h: clause 28 disclosure deficiencies Section 101(3)﻿(l) replaced 9 August 2017 section 52(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 101(4)﻿(ga) inserted 9 August 2017 section 52(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 101(4)﻿(h) amended 9 August 2017 section 52(3) Regulatory Systems (Commercial Matters) Amendment Act 2017
4: Governance of financial products
102: Overview
1: This Part provides for the governance of regulated products as follows:
a: subpart 1
b: subpart 2
c: subpart 3
i: requires persons associated with those debt securities or registered schemes to make protected disclosures; and
ii: provides powers of intervention to enable the supervision of those debt securities or registered schemes by the supervisor or the FMA (in addition to the powers in Part 8
d: subpart 4
2: Subsection (1) is only a guide to the general scheme and effect of this Part.
1: Governance of debt securities
103: Need for governing document and supervisor for regulated offer of debt security
1: A person must not make a regulated offer of a debt security unless—
a: there is a trust deed for the debt security that—
i: complies with sections 104 to 106
ii: is lodged with the Registrar with a certificate from the issuer and supervisor to the effect that the trust deed complies with those sections on the basis set out in the certificate; and
b: there is a licensed supervisor—
i: who is designated or appointed as the trustee under the trust deed for the debt security (or under the Financial Markets Supervisors Act 2011
ii: whose licence covers supervision of the debt security.
2: A reference in this subpart to—
a: a trust deed is a reference to the trust deed required by subsection (1); and
b: a debt security is a reference to a debt security offered under a regulated offer.
3: The issuer of the debt security must ensure that there continues to be a trust deed and licensed supervisor as required by subsection (1) until the debt security is cancelled, redeemed, or forfeited, or all of the obligations owing under the debt security have been discharged. 1978 No 103 s 33(2) Governing document requirements
104: Contents of trust deed for debt securities
1: A trust deed for a debt security must provide that the following are held in trust by the supervisor for the benefit of the holders of the debt security:
a: the right to enforce the issuer's duty to repay, or to pay interest, under the terms of the debt security; and
b: any charge or security for repayment; and
c: the right to enforce any other duties that the issuer, any guarantor, and any other person have under—
i: the terms of the debt security; or
ii: the provisions of the trust deed or this Act in relation to the debt security.
2: Subsection (1) does not prevent a holder of a debt security from enforcing the issuer's duty to repay, or to pay interest, or any other duties that the issuer, any guarantor, or any other person owes to the holder.
3: The trust deed is treated as containing any provision that is implied into it by or under this Act.
4: The trust deed must also provide adequately for all of the matters required to be contained in it by section 105
5: The trust deed must provide for the contents required by this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 Corporations Act 2001 s 283AB (Aust)
105: Limits on permitted exemptions and indemnities
1: If a supervisor of a debt security has any rights to be indemnified in relation to the performance of the supervisor's licensee obligations (as defined in section 4
a: must be set out in the trust deed for the debt security; and
b: are available only in relation to the proper performance of the duties under sections 112(1) 113
2: No other agreement has any effect to the extent that it purports to confer a right of a kind set out in subsection (1). Corporations Act 2001 s 283DB (Aust); 1978 No 103 s 62
106: Trust deed must be legally enforceable
A trust deed for a debt security must be contained in 1 or more documents that are legally enforceable as between the supervisor, the issuer of the debt security, and the product holders.
107: Effect of trust deed
A trust deed for a debt security has no effect to the extent that it contravenes, or is inconsistent with, this Act, the regulations, or any term implied into it by this Act or the regulations.
108: Changes to trust deed
1: An amendment to or a replacement of a trust deed for a debt security has no effect unless made—
a: with the consent of the supervisor of the debt security under this section; or
b: under section 109
c: under section 22(7) 37(6)
2: The supervisor must not consent to an amendment to, or a replacement of, the trust deed under this section unless—
a: either—
i: the amendment or replacement is approved by, or is contingent on approval by, the holders of the debt security; or
ii: the supervisor is satisfied that the amendment or replacement does not have a material adverse effect on the holders of the debt security; and
b: the supervisor certifies to that effect and certifies, or obtains a certificate from a lawyer, that the trust deed, as amended or replaced, will comply with sections 104 to 106
3: The approval of the holders of the debt security for the purposes of subsection (2)﻿(a) must be the approval of a special resolution of—
a: the holders of the debt security; or
b: each class of holders of the debt security that is or may be adversely affected by the amendment or replacement.
4: Subsection (2) is subject to section 112(2)﻿(b)
109: Power to make FMA-approved changes to trust deeds
1: An issuer may amend or replace a trust deed for a debt security with the FMA's consent if the FMA is satisfied that it is necessary to enable the trust deed to comply with this subpart or any enactment or rule of law.
2: Subsection (1) applies despite anything to the contrary in the trust deed or in any enactment, rule of law, or agreement, including anything relating to the consent of any person to the making of amendments to the trust deed.
3: The FMA's discretion to set preconditions for requests to it includes (without limitation) a discretion to set preconditions that satisfy the FMA that it is appropriate for the amendment or replacement to be made under this section rather than by means of another power or process.
4: An amendment or a replacement made under this section must be treated for all purposes as if it were authorised by, and made in accordance with, the trust deed.
110: Lodging of changes to trust deed
1: Within 5 working days after an amendment to or a replacement of a trust deed for a debt security, the issuer must ensure that notice of the amendment or replacement, and a copy of the certificate for the amendment or replacement (if any), is lodged with the Registrar.
2: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Application of Trusts Act 2019 Heading inserted 30 January 2021 section 166 Trusts Act 2019
110A: Application of Trusts Act 2019
1: This section applies to a trust constituted (or to be constituted) under a trust deed for a debt security if the trust deed—
a: has been lodged under section 103
b: has been or will be entered into with the intention that the deed will be lodged under section 103
2: The following provisions of the Trusts Act 2019
a: section 25
b: section 29
c: section 39
d: sections 40 to 42
e: section 43
f: section 44
g: sections 45 to 48
h: sections 49 to 55
i: section 56
j: sections 67 to 73
k: sections 74 to 76
l: sections 81(2) and (3) 82 to 85
m: sections 92 to 115
n: sections 121 to 123
o: sections 142 to 148
p: sections 153 to 158 Section 110A inserted 30 January 2021 section 166 Trusts Act 2019 Role of supervisor
111: Functions of supervisor
1: The supervisor of a debt security is responsible for the following functions:
a: acting on behalf of the holders of the debt security in relation to—
i: the issuer of the debt security; and
ii: any matter connected with the trust deed for the debt security or the terms of the regulated offer; and
iii: any contravention or alleged contravention of the issuer obligations; and
b: supervising the issuer's performance—
i: of its issuer obligations; and
ii: in order to ascertain whether the assets of the issuer and of each guarantor that are or may be available, whether by way of security or otherwise, are sufficient or likely to be sufficient to discharge the amounts of the debt securities as they become due; and
c: performing or exercising any other functions, duties, and powers conferred or imposed on the supervisor by or under this Act, the Financial Markets Supervisors Act 2011
2: The supervisor must not delegate any of its functions under subsection (1) (except as expressly permitted by this Act or as permitted by, and then subject to, conditions imposed under the Financial Markets Supervisors Act 2011
112: General duties applying in exercise of supervisor's functions
1: The supervisor of a debt security must—
a: act honestly and in good faith
b: in exercising its powers and performing its duties as a supervisor, act in the best interests of the holders of the debt security; and
c: exercise reasonable diligence in carrying out its functions as a supervisor.
2: The supervisor of a debt security must also—
a: do all the things it has the power to do to cause any contravention referred to in section 111(1)﻿(a)﻿(iii)
b: act in accordance with any direction given by a special resolution of the holders of the debt security that is not inconsistent with any enactment, rule of law, or the trust deed in relation to—
i: seeking a remedy to a contravention referred to in section 111(1)﻿(a)﻿(iii)
ii: any other matter connected with the supervisor's functions.
3: The supervisor is not liable for anything done, or omitted to be done, in good faith in giving effect to a direction to it by holders of the debt security.
4: The duty in subsection (2)﻿(b) is subject to any order of the court made under section 210 SR 2009/230 Schedule 15 cl 1 Section 112(1)﻿(a) amended 30 January 2021 section 167 Trusts Act 2019
113: Duty of supervisor to comply with professional standard of care
The supervisor of a debt security must, in exercising its powers and performing its duties as a supervisor, exercise the care, diligence, and skill that a prudent person engaged in the business of acting as a licensed supervisor would exercise in the same circumstances.
114: Duty of issuer to provide reports to supervisor
The issuer of a debt security must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, prepare and provide to the supervisor reports that contain the information that is required to be provided by the regulations. SR 2009/230 Schedule 15 cl 4
115: Duty of issuer to provide requested information and reports to supervisor
1: If requested by the supervisor of a debt security (or a person authorised by the supervisor to exercise its powers under this section), the issuer must—
a: make available to the supervisor (or other authorised person) all documents and records relating to the issuer; and
b: provide the supervisor (or other authorised person) with any other reports or information required by the supervisor (or other authorised person).
2: Reports or information required under subsection (1) may—
a: be about any matter relevant to the performance of the supervisor's functions; and
b: include forward-looking reports.
3: The reports or information must be provided within the time and in the manner (which must be reasonable in the circumstances) specified by the supervisor. SR 2009/230 Schedule 15 cls 2(3) 3A
116: Issuer must report contravention or possible contravention of issuer obligations
If an issuer of a debt security has reasonable grounds to believe that it has contravened, may have contravened, or is likely to contravene any of its issuer obligations in a material respect, the issuer must, as soon as practicable,—
a: report the contravention or possible contravention to the supervisor; and
b: advise the supervisor of the steps (if any) that the issuer has taken or intends to take in light of the contravention or possible contravention and the date by which the steps were taken or are to be taken.
117: Restriction on use of reports on contraventions
A report provided by an issuer under section 116
118: Duty of issuer to report serious financial problems
1: This section applies if an issuer of a debt security becomes aware of information on the basis of which it could reasonably form the opinion that the issuer is, or is likely to become, insolvent.
2: The issuer must, as soon as practicable,—
a: disclose to the supervisor all information relevant to that matter that is in the possession or under the control of the issuer and that was obtained in the course of, or in connection with, the performance of its functions as issuer; and
b: advise the supervisor of the steps (if any) that the issuer intends to take in respect of that matter and the date by which the steps are to be taken. 2011 No 10 s 47
119: Power of supervisor to engage expert
1: The supervisor of a debt security is entitled, in the performance of the supervisor's functions, to engage an expert (for example, an auditor, investigating accountant, valuer, or actuary) if the supervisor considers, on reasonable grounds, that it requires the assistance of the expert to—
a: determine the financial position of the issuer; or
b: review the business, operation, or management systems, or the governance, of the issuer.
2: If the supervisor engages an expert under this section,—
a: the issuer must provide reasonable assistance to the expert to allow the expert to provide the assistance under subsection (1); and
b: the fees and expenses of the expert, which must be reasonable in the circumstances, must be paid by the issuer. SR 2009/230 Schedule 15 cl 3C Meetings of product holders
120: Meetings of product holders
1: A meeting of a class of holders of a debt security must be called by the issuer on the written request of—
a: the supervisor; or
b: holders of the debt securities that have a combined nominal value of no less than 5% of the nominal value of the debt securities on issue in that class; or
c: in the case of an issuer that is a credit union, no less than 5% of the number of members of the credit union who hold debt securities on issue in that class; or
d: a person who is authorised by the trust deed or by the regulations to call the meeting.
2: Other requirements for meetings, proceedings at meetings, and provision for resolutions in lieu of meetings are governed by the regulations (if any) and the trust deed (if there are no regulations or to the extent that the trust deed is not inconsistent with the regulations). SR 2009/230 Schedule 15 cl 3(1)
121: Supervisor's attendance at meetings of product holders and power to appoint chair
The issuer of a debt security must ensure that the supervisor—
a: is permitted to attend any meeting of holders of the debt security; and
b: receives the notices and communications that any holder of the debt security is entitled to receive in relation to a meeting of those holders; and
c: may be heard at any meeting of holders of the debt security on any part of the business of the meeting that concerns the supervisor's functions or the holders for whom the supervisor is acting; and
d: may appoint the chairperson of any meeting of holders of the debt security. SR 2009/230 Schedule 15 cl 3(3) Change of supervisor
122: Change of supervisor
1: The supervisor of a debt security ceases to hold that appointment (subject to subsection (2)) if the supervisor—
a: is removed by the FMA or the issuer under Part 2
b: is removed by a special resolution of the holders of the debt security; or
c: is removed or resigns in accordance with the trust deed.
2: However, a supervisor may not—
a: be removed or resign under subsection (1)﻿(b) or (c) unless—
i: all functions and duties of the position have been performed; or
ii: another licensed supervisor has been appointed, and accepted the appointment, in its place; or
iii: the court consents:
b: (despite anything in the trust deed) be removed by an issuer of the debt security under subsection (1)﻿(c) without the FMA's consent. 1978 No 103 s 48
123: Lodging of notice of change of supervisor
1: Within 5 working days after a change to the supervisor of a debt security under section 122
2: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5
2: Governance of managed investment products
124: Overview
1: This subpart—
a: sets out when managed investment schemes need to be registered; and
b: requires registered schemes, irrespective of legal form, to meet key common governance and reporting requirements; and
c: provides for the manager and independent supervisor of a registered scheme to owe statutory duties of care to investors; and
d: provides for the custodianship of scheme property of a registered scheme to be independent from the manager.
2: This section is only a guide to the general scheme and effect of this subpart. Need to register
125: Need to register managed investment scheme for regulated offer of managed investment product
1: A person must not make a regulated offer of a managed investment product, or accept further contributions if there has been a regulated offer of a managed investment product, unless the managed investment scheme is registered.
2: However, a managed investment scheme may be registered even if there is no regulated offer of a managed investment product in the scheme but, in this case,—
a: the managed investment products in the scheme are regulated products under section 41
b: this Act applies accordingly (for example, in addition to this subpart, see section 87 subpart 4
3: A scheme that is approved as a Schedule 3 scheme under Schedule 3 1960 No 99 s 8 s 33(3) Registration
126: Application for registration
1: A person may apply to the Registrar for registration of a managed investment scheme.
2: The application must—
a: be made in the prescribed manner; and
b: be accompanied by the written consent to the registration of the manager and supervisor of the scheme; and
c: contain a copy of the governing document for the scheme; and
d: contain a certificate from the manager and supervisor of the scheme to the effect that the scheme complies with the registration requirements for schemes that apply to it under section 127(1)﻿(b) to (f)
e: if the application is for registration as a particular type of scheme under sections 128 to 132
i: state that fact; and
ii: comply with any additional prescribed requirements for applications for that type of registration; and
iii: contain a certificate from the FMA that it is satisfied that the scheme complies with any additional registration requirements for that type of scheme that apply to it under those sections.
3: The Registrar must register a managed investment scheme if satisfied that the application meets the requirements of this section and section 127(1)﻿(a) clause 7
127: Initial and ongoing registration requirements for all managed investment schemes
1: Every registered scheme must meet the following registration requirements:
a: it must not have a name that, in the opinion of the Registrar, is misleading or offensive or the use of which would contravene an enactment; and
b: its governing document must comply with sections 135 to 137
c: it must have a licensed manager designated or appointed under the governing document (or this Act) whose licence covers management of the scheme; and
d: it must have a licensed supervisor designated or appointed under the governing document (or the Financial Markets Supervisors Act 2011
e: the manager and the supervisor of the scheme must not be the same or associated persons; and
f: the scheme property must be held by the supervisor or another person who meets the custodianship requirements in section 156
2: However, subsection (1)﻿(c) to (e) do not apply to a restricted scheme (and any reference in this Act to a supervisor in relation to a registered scheme does not apply in relation to a restricted scheme (unless the context otherwise requires)). 1960 No 99 s 3(1), (4) ss 116F 116G
128: Additional initial and ongoing registration requirements for KiwiSaver schemes
1: Every KiwiSaver scheme must meet the following registration requirements in addition to those in section 127
a: it must be a trust established and governed by a trust deed that is interpreted and administered in accordance with New Zealand law; and
b: its purpose must be to provide retirement benefits directly to individuals; and
c: it must, accordingly, restrict redemptions, withdrawals, and the provision of benefits in respect of a member's accumulation (including in the way the trust deed is applied) to those permitted under the KiwiSaver scheme rules
d: it must admit as members (both in its conditions of entry of scheme participants and in the way those conditions are applied on entry) only persons who meet the New Zealand criteria set out in subsection (2) or (3); and
e: it must be a scheme under which contributions are allocated to scheme participants on an individual basis; and
f: the benefits provided by the scheme must be fully funded as they accrue; and
g: its manager must have at least 1 director who is a New Zealand resident for tax purposes; and
h: its manager must be a party to a scheme provider agreement with the Commissioner of Inland Revenue (if required by regulations made under the KiwiSaver Act 2006
i: the FMA must be satisfied that the fees charged in accordance with any information provided in the application will comply with clause 2
2: The New Zealand criteria are that the person, at the time of becoming a scheme participant,—
a: is, or normally is, living in New Zealand, or is an employee of the State services (within the meaning of the Public Service Act 2020
i: serving outside New Zealand; and
ii: employed on New Zealand terms and conditions; and
iii: serving in a jurisdiction where offers of superannuation scheme membership are lawful; and
b: is a New Zealand citizen or is entitled, in terms of the Immigration Act 2009
3: A person also meets the New Zealand criteria if the person—
a: is, immediately before becoming a participant of the KiwiSaver scheme ( scheme A scheme B
b: is transferring the member's entitlements from scheme B to scheme A.
4: If the KiwiSaver scheme is a restricted scheme,—
a: subsection (1)﻿(g) does not apply; but
b: at least 1 of the trustees or 1 of the directors of the corporate trustee of the scheme must be a New Zealand resident for tax purposes. 2006 No 40 s 116 Section 128(2)﻿(a) amended 7 August 2020 section 135 Public Service Act 2020
129: Additional initial and ongoing registration requirements for superannuation schemes
1: Every superannuation scheme must meet the following registration requirements in addition to those in section 127
a: it must be a trust established and governed by a trust deed that is interpreted and administered in accordance with New Zealand law; and
b: its purpose must be to provide retirement benefits directly or indirectly to individuals; and
c: it must, accordingly, restrict redemptions, withdrawals, and the provision of benefits (including in the way that the trust deed is applied) to those permitted under the superannuation scheme rules set out in the regulations; and
d: it must admit as members (both in its conditions of entry of scheme participants and in the way those conditions are applied on entry) only either or both of the following:
i: individuals:
ii: persons who are the trustees or managers of a retirement scheme; and
e: it must be—
i: a defined benefit scheme; or
ii: a scheme under which contributions are allocated to scheme participants on an individual basis and the benefits provided by the scheme must be fully funded as they accrue; and
f: it must meet any additional requirements of the superannuation scheme rules that apply to it under the regulations; and
g: it must not be registered as a KiwiSaver scheme.
2: However, a superannuation scheme may meet the requirements in subsection (1)﻿(b) to (f) in respect of a section of the scheme only, and, in that case, the scheme is a superannuation scheme in respect of that section of the scheme.
3: Subsection (1)﻿(b), (c), and (f) do not apply to a scheme, or a section of a scheme, that is closed to new members at the time of its registration (a legacy scheme
a: its principal purpose must be to provide retirement benefits directly or indirectly to individuals; and
b: the scheme or section must continue to be closed to new members. 1989 No 10 ss 2A 3(1)
130: Additional initial and ongoing registration requirements for workplace savings schemes
1: Every workplace savings scheme must meet the following registration requirements in addition to those in section 127
a: it must be a trust established and governed by a trust deed that is interpreted and administered in accordance with New Zealand law; and
b: its purposes must be to provide—
i: retirement benefits directly or indirectly to individuals; and
ii: benefits to eligible individuals on ceasing employment or engagement with 1 or more persons specified in the trust deed or in an industry specified in the trust deed (whether immediately on ceasing that employment or engagement, or subsequently); and
c: it may allow redemptions, withdrawals, and benefits for other purposes (including in the way the trust deed is applied) only if—
i: they are in accordance with other limited circumstances defined in the trust deed (for example, financial hardship or early partial withdrawal criteria, or insurance benefits to members (including in the event of a death or disability of a member)); and
ii: they are incidental or secondary to the purposes of the scheme; and
d: it must admit as members (both in its conditions of entry of scheme participants and in the way those conditions are applied on entry) only either or both of the following:
i: eligible individuals:
ii: persons who are the trustees or managers of a retirement scheme; and
e: it must be—
i: a defined benefit scheme; or
ii: a scheme under which contributions are allocated to scheme participants on an individual basis and the benefits provided by the scheme must be fully funded as they accrue; and
f: it must meet any additional prescribed registration requirements for workplace savings schemes that apply to it; and
g: it must not be registered as a KiwiSaver scheme.
2: In this section, eligible individual
a: an employee or director of that person; and
b: an individual who provides personal services (other than as an employee) principally to that person; and
c: an individual who is employed or engaged in that industry.
3: However, a workplace savings scheme may meet the requirements in subsection (1)﻿(b) to (f) in respect of a section of the scheme only, and, in that case, the scheme is a workplace savings scheme in respect of that section of the scheme.
131: Additional ongoing registration requirements for restricted schemes
1: Every restricted scheme registered under clause 22 section 127
a: it must be—
i: a KiwiSaver scheme; or
ii: a superannuation scheme or workplace savings scheme
b: it must—
i: admit as members (both in its conditions of entry of scheme participants and in the way in which those conditions are applied on entry) only 1 or more of the classes of persons referred to in subsection (2); or
ii: be closed to new members; and
c: the conditions of entry of scheme participants, or the way in which those conditions have been applied on entry, must not have been changed without the FMA's consent since the date of the scheme's registration under clause 22
d: its trustees must—
i: include at least 1 licensed independent trustee whose licence covers the scheme and who is independent under subsection (3); or
ii: consist only of a sole corporate trustee that has at least 1 director who is a licensed independent trustee whose licence covers the scheme and who is independent under subsection (3); and
e: the trustees of the scheme must be designated or appointed to manage the scheme under the governing document (or this Act).
2: The classes of persons for the purpose of subsection (1)﻿(b)﻿(i) are—
a: persons who are employed by a particular employer:
b: persons who are employed by a related body corporate of a particular employer:
c: persons who belong to a particular profession, calling, trade, occupation, or industry:
d: persons who belong to a particular association, society, or other entity with a definable community of interest:
e: persons who are immediate family members of, or wholly or partially financially dependent on, a person in 1 or more of the classes of persons described in paragraphs (a) to (d).
3: In this section,— immediate family member independent
a: is not a related body corporate of any other trustee of the restricted scheme; and
b: is not an employer that provides access to the scheme for its employees, or an administration manager or an investment manager of the restricted scheme (or a related body corporate of any of them); and
c: is not a director of, shareholder in, or an employee of any person referred to in paragraph (a) or (b); and
d: is not a current scheme participant; and
e: is not a representative in any capacity of an organisation (such as a trade union) that represents the interests of 1 or more scheme participants; and
f: is not a representative in any capacity of an organisation that represents the interests of 1 or more employer contributors to the scheme; and
g: is not a corporate trustee if none of its directors are independent under this definition. 2006 No 40 s 116A Section 131(1)﻿(a)﻿(ii) amended 9 August 2017 section 53 Regulatory Systems (Commercial Matters) Amendment Act 2017
132: Additional prescribed registration requirements for other particular prescribed types of schemes
A scheme of a particular type of registered scheme specified in the regulations must meet the prescribed registration requirements for that type of scheme (if any) that apply to it in addition to those in section 127
133: Manager must ensure that ongoing registration requirements are complied with
The manager of a registered scheme must ensure that, until all of the managed investment products in the scheme are cancelled, redeemed, or forfeited, or all of the obligations owing under those products have been discharged, the scheme—
a: continues to comply with the registration requirements that apply to the scheme under section 127
b: if it is registered as a particular type of scheme under sections 128 to 132
134: Changes to registration as particular type of registered scheme
1: The FMA may direct the removal of the registration of a registered scheme as a particular type of scheme—
a: if the FMA is satisfied that the scheme does not meet the registration requirements for that type of scheme that apply to it under sections 128 to 132
b: on the written request of the manager of the scheme, if the supervisor certifies or, if there is no supervisor, the manager certifies
i: the removal has been approved by a special resolution of the scheme participants (subject to any restrictions in the governing document); or
ii: there is no material adverse effect on scheme participants from the removal.
2: The FMA must not direct removal under subsection (1)﻿(a) unless—
a: the FMA gives the manager of the scheme no less than 10 working days' written notice of the following matters before it exercises the power:
i: that the FMA may direct removal; and
ii: the reasons why it may exercise that power; and
b: the FMA gives the manager or the manager's representative an opportunity to make written submissions on the matter within that notice period.
3: The FMA may direct that a registered scheme be registered as a particular type of scheme on the written request of the manager of the scheme if the FMA is satisfied that the scheme meets the registration requirements for that type of scheme that apply to it under sections 128 to 132
4: A direction under subsection (1)﻿(a) in relation to the removal of a registration as a restricted scheme must not take effect before the expiry of 6 months after the direction is made (unless the manager consents to an earlier date).
5: If the FMA makes a direction under this section,—
a: the FMA must notify the manager and the supervisor of the registered scheme of the direction; and
b: as soon as practicable after being notified of the direction, the manager must notify the scheme participants of the direction. 2006 No 40 s 168A Section 134(1)﻿(b) amended 9 August 2017 section 54 Regulatory Systems (Commercial Matters) Amendment Act 2017 Governing document requirements
135: Contents of governing document for registered scheme
1: The governing document for a registered scheme must provide adequately for all of the following matters under the scheme:
a: whether or not managed investment products are transferable or redeemable and the rules applying to acquiring or disposing of the managed investment products and, if they are redeemable,—
i: the manner in which, and the conditions on which, interests are to be redeemed; and
ii: the method of calculating the price at which interests are to be redeemed; and
b: the rules applying to becoming a scheme participant or withdrawing from participation in the scheme (if there are any rules); and
c: the contributions payable, or the manner of calculating the contributions payable, and the rules applying to changing the contributions payable or the manner of their calculation; and
d: the methodology, or the rules applying to determining the methodology, and other rules applying to valuations of assets of the scheme and pricing of interests in the scheme; and
e: the rules applying to the determination and payment of benefits to scheme participants; and
f: the fees and expenses that can be paid out of scheme property to any manager, investment manager, administration manager, supervisor, or custodian, or the basis on which those fees and expenses are to be determined, and any rights of any of those persons to be indemnified out of scheme property (and any other matters required by section 136
g: the appointment and removal of the supervisor (unless none is required under this Part); and
h: the appointment and removal of the manager; and
i: the winding up of the scheme; and
j: any matters required to be contained in it by the regulations; and
k: any other matters (other than the matters contained in the statement of investment policy and objectives) that materially affect—
i: the management and operation of the scheme by the manager:
ii: the rights and duties of scheme participants in the scheme:
iii: the powers, rights, and duties of the manager and the supervisor of the scheme.
2: The governing document is treated as containing any provision that is implied into it by or under this Act or the KiwiSaver Act 2006
3: The governing document must provide for the contents of the document that are required by this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 1989 No 10 s 7 s 119
136: Limits on permitted exemptions and indemnities
1: If a manager or supervisor of a registered scheme has any rights to be indemnified for liabilities or expenses incurred in relation to the performance of the manager's issuer obligations or the supervisor's licensee obligations (as defined in section 4
a: must be set out in the scheme's governing document; and
b: must be available only in relation to the proper performance of the duties under sections 143(1) 144 sections 153(1) 154
2: If an investment manager of a registered scheme has any rights to be indemnified for liabilities or expenses incurred in relation to the performance of the investment manager's contracted functions, those rights—
a: must be set out—
i: in the scheme's governing document; or
ii: in the contract between the investment manager and the manager, provided that the scheme's governing document contains a power that permits such an indemnity; and
b: must be available only in relation to the proper performance of the duty under section 144
3: No other agreement has any effect to the extent that it purports to confer a right of a kind referred to in subsection (1) or (2). 1960 No 99 s 24(2) s 62 s 116J(1)
137: Governing document must be legally enforceable
A governing document for a registered scheme must be contained in 1 or more documents that are legally enforceable as between the supervisor, the manager, and the scheme participants. Corporations Act 2001 s 601GB (Aust)
138: Effect of governing document
A governing document for a registered scheme has no effect to the extent that it contravenes, or is inconsistent with, this Act, the regulations, or any term implied into it by this Act or the regulations.
139: Changes to governing document
1: An amendment to or a replacement of a governing document has no effect unless made—
a: under this section with the consent of the supervisor or, if there is no supervisor, the FMA; or
b: under section 140 187(3)
c: under section 22(7) 37(6)
2: The supervisor or the FMA must not consent to an amendment to, or a replacement of, the governing document under this section unless—
a: either—
i: the amendment or replacement is approved by, or contingent on approval by, the scheme participants; or
ii: the supervisor or the FMA is satisfied that the amendment or replacement does not have a material adverse effect on the scheme participants; and
b: in the case of the supervisor, the supervisor certifies to that effect and certifies, or obtains a certificate from a lawyer, that the governing document, as amended or replaced, will comply with sections 135 to 137
3: The approval of scheme participants for the purposes of subsection (2)﻿(a) must consist of,—
a: in the case of an amendment to or a replacement of a governing document of a defined benefit scheme or a superannuation scheme or workplace savings scheme that is registered under clause 22
b: in any other case, a special resolution of the scheme participants or each class of scheme participants that is or may be adversely affected by the amendment or replacement.
4: Subsection (2) is subject to section 153(2)﻿(b) 1989 No 10 ss 9 12 ss 119A 129 129A
140: Power to make FMA and court-approved changes to governing documents
1: A manager of a registered scheme may amend or replace the governing document—
a: with the FMA's consent if the FMA is satisfied that the amendment or replacement is necessary to enable the governing document to comply with sections 135 to 137
b: with the court's consent, in the case of a defined benefit scheme or a superannuation scheme or workplace savings scheme that is registered under clause 22
i: the amendment or replacement would otherwise require the consent of all the scheme participants who would be adversely affected by it; and
ii: the court considers that it is in the interests of the scheme participants.
2: Subsection (1) applies despite anything to the contrary in the governing document or in any enactment, rule of law, or agreement, including anything relating to the consent of any person to the making of amendments to the governing document.
3: The FMA's discretion to set preconditions for requests to it includes (without limitation) a discretion to set preconditions that satisfy the FMA that it is appropriate for the amendment or replacement to be made under this section rather than by means of another power or process.
4: An amendment or a replacement made under this section must be treated for all purposes as if it were authorised by, and made in accordance with, the governing document.
141: Lodging of changes to governing document
1: Within 5 working days after an amendment to or a replacement of a governing document, the manager of a registered scheme must ensure that notice of the amendment or replacement, and a copy of the certificate for the amendment or replacement (if any), is lodged with the Registrar.
2: A manager that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Role of manager
142: Management and administration functions of manager
1: The manager of a registered scheme is responsible for performing the following functions:
a: offering the managed investment products; and
b: issuing the managed investment products; and
c: managing the scheme property and investments; and
d: administering the scheme.
2: In the case of a restricted scheme, the trustees of the scheme acting together as the manager of the scheme have responsibility for those functions and the duties of the manager under this Act (and each trustee is jointly and severally liable with the other trustees for the performance of those functions and duties) unless this Act or the regulations otherwise provide. 1960 No 99 s 3(2)﻿(a) and (b) s 116B(1)
143: General duties applying in exercise of manager's functions
1: A manager of a registered scheme must—
a: act honestly and in good faith
b: in exercising any powers or performing any duties as a manager,—
i: act in the best interests of the scheme participants; and
ii: treat the scheme participants equitably; and
c: not make use of information acquired through being the manager in order to—
i: gain an improper advantage for itself or any other person; or
ii: cause detriment to the scheme participants.
2: The manager must also carry out the functions of a manager in accordance with the governing document, the statement of investment policy and objectives, and all other issuer obligations.
3: If the registered scheme is established under a trust deed, the manager has the same duties and liability in the performance of its functions as manager as it would if it performed those functions as a trustee (except to the extent that those duties are altered by or are inconsistent with this Act). 1960 No 99 ss 3(2)﻿(c) 12(1)﻿(c) 24(1) cl 3(1) Section 143(1)﻿(a) amended 30 January 2021 section 168 Trusts Act 2019
144: Duty of manager and investment manager to comply with relevant professional standard of care
1: A professional manager of a registered scheme must, in exercising any powers, or performing any duties, exercise the care, diligence, and skill that a prudent person engaged in that profession would exercise in the same circumstances.
2: In this section, a professional manager
a: a manager of a registered scheme (other than a restricted scheme):
b: an investment manager of a registered scheme:
c: a licensed independent trustee of a restricted scheme:
d: any other trustee of a restricted scheme whose profession or business is or includes acting as a trustee or investing money on behalf of others.
3: A trustee of a restricted scheme who is not a professional manager must, in exercising any powers or performing any duties, exercise the care, diligence, and skill that a prudent person of business would exercise in the same circumstances. 1960 No 99 ss 3(2)﻿(c) 24(1) s 117 cl 3(3)
145: Duties of directors and senior managers of manager
A director or senior manager of a manager of a registered scheme—
a: must not make use of information acquired through being the director or senior manager of the manager in order to—
i: gain an improper advantage for himself or herself or any other person; or
ii: cause detriment to the scheme participants; and
b: must not make improper use of the position as a director or senior manager of the manager to gain, directly or indirectly, an advantage for himself or herself or any other person or to cause detriment to the scheme participants. Corporations Act 2001 s 601FE (Aust); 1960 No 99 s 26
146: Contracting out of management functions
1: A manager may, unless prohibited by the governing document, contract out to 1 or more persons (whether or not the person or persons hold a market services licence under this Act covering management of the scheme) some or all of its functions as a manager.
2: However,—
a: the manager must take all reasonable steps to—
i: ensure that those functions are performed in the same manner, and are subject to the same duties and restrictions, as if the manager were performing them directly; and
ii: monitor the performance of those functions; and
b: the contracting out does not affect the liability of the manager for the performance of those functions.
147: Duty of manager to provide reports to supervisor or FMA
The manager of a registered scheme must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, prepare and provide to the supervisor (or, if there is no supervisor Section 147 amended 9 August 2017 section 55 Regulatory Systems (Commercial Matters) Amendment Act 2017
148: Duty of manager to provide requested information and reports to supervisor
1: If requested by the supervisor of a registered scheme (or a person authorised by the supervisor to exercise its powers under this section), the manager must—
a: make available to the supervisor (or other authorised person) all documents and records relating to the manager and the scheme (including those held by an investment manager or administration manager); and
b: provide the supervisor (or other authorised person) with any other reports or information required by the supervisor (or other authorised person).
2: Reports or information required under subsection (1) may—
a: be about any matter relevant to the performance of the supervisor's functions; and
b: include forward-looking reports.
3: The reports or information must be provided within the time and in the manner (which must be reasonable in the circumstances) specified by the supervisor. 1960 No 99 s 12(1)﻿(b) cl 2
149: Duty of manager to report contravention or possible contravention of issuer obligations
If a manager of a registered scheme has reasonable grounds to believe that it has contravened, may have contravened, or is likely to contravene any of its issuer obligations in a material respect, the manager must, as soon as practicable,—
a: report the contravention or possible contravention to the supervisor (or, if there is no supervisor
b: advise the supervisor (or, if there is no supervisor Section 149(a) amended 9 August 2017 section 56 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 149(b) amended 9 August 2017 section 56 Regulatory Systems (Commercial Matters) Amendment Act 2017
150: Restriction on use of reports on contraventions
A report provided by a manager under section 149
151: Duty of manager to report serious financial problems
1: This section applies if a manager of a registered scheme becomes aware of information on the basis of which it could reasonably form the opinion that—
a: the manager is, or is likely to become, insolvent; or
b: the registered scheme is, or is likely to become, insolvent.
2: The manager must, as soon as practicable,—
a: disclose to the supervisor (or, if there is no supervisor, to the FMA) all information relevant to that matter that is in the possession or under the control of the manager (including information held by an investment manager or administration manager) and that was obtained in the course of, or in connection with, the performance of its functions as manager; and
b: advise the supervisor (or the FMA, as the case may be) of the steps (if any) that the manager intends to take in respect of that matter and the date by which the steps are to be taken. 2011 No 10 s 47 Role of supervisor
152: Functions of supervisor
1: The supervisor of a registered scheme is responsible for the following functions:
a: acting on behalf of the scheme participants in relation to—
i: the manager; and
ii: any matter connected to the governing document or the terms of any regulated offer; and
iii: any contravention or alleged contravention of the issuer obligations; and
iv: any contravention or alleged contravention of this Act by any other person in connection with the registered scheme; and
b: supervising—
i: the performance by the manager of its functions and its issuer obligations; and
ii: the financial position of the manager and the scheme in respect of the managed investment product to ascertain that it is adequate; and
c: holding the scheme property, or ensuring that the scheme property is held, in accordance with sections 156 to 158
d: performing or exercising any other functions, powers, and duties conferred or imposed on the supervisor by or under this Act, the Financial Markets Supervisors Act 2011
2: The supervisor must not delegate its functions under subsection (1) (except as expressly permitted by section 156 Financial Markets Supervisors Act 2011 2006 No 40 s 116D(3), (4)
153: General duties applying in exercise of supervisor's functions
1: The supervisor of a registered scheme must—
a: act honestly and in good faith
b: in exercising its powers and performing its duties as a supervisor, act in the best interests of the scheme participants; and
c: exercise reasonable diligence in carrying out its functions as a supervisor.
2: The supervisor of a registered scheme must also—
a: do all the things it has the power to do to cause any contravention referred to in section 152(1)﻿(a)
b: act in accordance with any direction given by a special resolution of the scheme participants that is not inconsistent with any enactment, rule of law, or the governing document in relation to—
i: seeking a remedy to a contravention referred to in section 152(1)﻿(a)
ii: any other matter connected with the supervisor's functions.
3: The supervisor is not liable for anything done, or omitted to be done, in good faith in giving effect to a direction to it by scheme participants.
4: If the registered scheme is established under a trust deed,—
a: the supervisor is the trustee of the trust; and
b: the supervisor has the same duties and liability in the performance of its functions as supervisor as it would if it performed those functions as a trustee (except to the extent that those duties are altered by or are inconsistent with this Act).
5: The duty in subsection (2)﻿(b) is subject to any order of the court made under section 210 1960 No 99 s 18(2)–(4) cl 1 Section 153(1)﻿(a) amended 30 January 2021 section 169 Trusts Act 2019
154: Duty of supervisor to comply with professional standard of care
The supervisor of a registered scheme must, in exercising its powers and performing its duties as a supervisor, exercise the care, diligence, and skill that a prudent person engaged in the business of acting as a licensed supervisor would exercise in the same circumstances.
155: Power of supervisor to engage expert
1: The supervisor of a registered scheme is entitled, in the performance of the supervisor's functions, to engage an expert (for example, an auditor, investigating accountant, valuer, or actuary) if the supervisor considers, on reasonable grounds, that it requires the assistance of the expert to—
a: determine the financial position of the manager or the scheme; or
b: review the business, operation, or management systems, or the governance, of the manager or the scheme.
2: If the supervisor engages an expert under this section,—
a: the manager must provide reasonable assistance to the expert to allow the expert to provide the assistance under subsection (1); and
b: the manager must pay the fees and expenses of the expert, which must be reasonable in the circumstances; and
c: the manager is entitled to be indemnified for those fees and expenses out of scheme property, subject to any limits referred to in section 136 SR 2009/230 Schedule 15 cl 11 Application of Trusts Act 2019 Heading inserted 30 January 2021 section 170 Trusts Act 2019
155A: Application of Trusts Act 2019
1: This section applies to a managed investment scheme constituted (or to be constituted) as 1 or more trusts or as including 1 or more trusts (or both) if the scheme—
a: has been registered under this subpart; or
b: has been or will be constituted as 1 or more trusts or as including 1 or more trusts (or both) with the intention that the scheme will be registered under this subpart.
2: The following provisions of the Trusts Act 2019
a: section 25
b: section 29
c: section 30
d: section 35
e: section 38
f: section 39
g: sections 40 to 42
h: section 43
i: section 44
j: sections 45 to 48
k: sections 49 to 55
l: section 56
m: sections 60 61
n: sections 67 to 73
o: sections 74 to 76
p: sections 81(2) and (3) 82 to 85
q: sections 92 to 115
r: sections 121 to 123
s: sections 142 to 148
t: sections 153 to 158
3: In this section, relevant trust
4: Despite section 16(1) Section 155A inserted 30 January 2021 section 170 Trusts Act 2019 Custodianship of scheme property
156: Requirement to have supervisor or other independent person as custodian
1: The supervisor of a registered scheme ( A B
2: If there is no supervisor for the scheme (for example, in the case of a restricted scheme), the scheme property must be held in 1 of the following ways:
a: in the case of a restricted scheme, by a body corporate that is either a corporate trustee of the restricted scheme or has, as its directors, only persons who are trustees of the restricted scheme; or
b: by a person ( B A
3: B may, if authorised in writing by A, in turn contract the holding of the scheme property to another person who meets the external custodianship requirements.
4: To meet the external custodianship requirements, a person must—
a: be a body corporate that A or (if B contracted the custodian) B believes, on reasonable grounds, to be appropriate to hold, and safeguard, the scheme property; and
b: not be the same person as, or be associated with, the manager or, in the case of a restricted scheme, any of the trustees (other than by virtue of the custodianship).
5: If a person contracts the holding of the scheme property to another person ( the nominee
a: must take all reasonable steps to—
i: ensure that the function is performed by the nominee in the same manner and subject to the same duties and restrictions as if that person were performing it directly; and
ii: monitor the performance of that function; and
b: is jointly and severally liable with the nominee (and any other person who has contracted out the function) for the performance of that function in accordance with paragraph (a).
6: This section does not apply to the extent that scheme property is held directly by the scheme participants. 1960 No 99 ss 3(3) 6–6C ss 116G 116H 116I
157: Custodian holds scheme property on trust
1: The custodian for a registered scheme holds the scheme property on trust for the scheme.
2: The custodian for a registered scheme must ensure that the scheme property is held separate from property held by any of the following persons on their own account:
a: the custodian:
b: any related party of the scheme.
3: The custodian must also comply with any other prescribed duties and other requirements in relation to the scheme property.
4: Scheme property—
a: is not available for the payment of the debts of the custodian or any other creditor of the custodian; and
b: is not liable to be attached or taken in execution under the order or process of any court at the instance of the custodian or any other creditor of the custodian.
5: Nothing in this section takes away or affects any lawful lien or claim that a custodian who holds scheme property has against the scheme property.
158: Custodian must keep records of scheme property
1: The custodian for a registered scheme must keep, or ensure that there are kept, records that—
a: identify the scheme property; and
b: show when the scheme property was received; and
c: if the scheme property has been disposed of, show when the scheme property was disposed of and to whom.
2: The custodian for a registered scheme must also keep all other prescribed records.
3: The custodian for a registered scheme must—
a: keep the records required by this section, or ensure that they are kept, in a manner that enables those records to be conveniently inspected by the manager and the supervisor and conveniently and properly audited or reviewed; and
b: comply with the prescribed requirements (if any) relating to those records and their audit, review, or inspection.
159: Custodian must report on scheme property
1: A custodian for a registered scheme must, in the prescribed circumstances, provide confirmation information to the manager or other prescribed persons in respect of the scheme property held by the custodian.
2: The confirmation information must be provided in the prescribed manner.
3: In this section, confirmation information
160: Duty of supervisor to refuse to act on wrongful directions
1: The supervisor of a registered scheme must refuse, and must direct any other custodian to refuse, to act on a direction of the manager that relates to the acquisition or disposal of scheme property if the supervisor considers that the proposed acquisition or disposal would be—
a: in breach of the scheme's governing document, any rule of law, or any enactment; or
b: manifestly not in the interests of the scheme participants.
2: A custodian of a registered scheme must comply with any direction given to it by a supervisor under this section.
3: If the supervisor refuses, or directs any other custodian to refuse, to act on a direction of the manager, the supervisor must notify the manager and the FMA in writing of that fact and the supervisor's reasons for the refusal or direction.
4: A supervisor of a registered scheme, and any other custodian of the scheme, is not liable to the scheme participants or the manager for refusing, or directing any other custodian to refuse, to act on a direction of the manager in accordance with this section. 1960 No 99 s 12(1)﻿(c) Meetings of scheme participants
161: Meetings of scheme participants
1: A meeting of a class of scheme participants must be called by the manager of the registered scheme on the written request of—
a: the supervisor; or
b: scheme participants holding managed investment products that have a combined value of no less than 5% of the value of the managed investment products on issue in that class; or
c: in the case of a superannuation scheme, a KiwiSaver scheme, a workplace savings scheme, or any other prescribed scheme, no less than 5% of the number of scheme participants who hold managed investment products in that class; or
d: a person who is authorised by the governing document or by the regulations to call the meeting.
2: Other requirements for meetings, proceedings at meetings, and provision for resolutions in lieu of meetings are governed by the regulations (if any) and the governing document (if there are no regulations or to the extent that the governing document is not inconsistent with any regulations). 1960 No 99 ss 12(1)﻿(d) 18(1)
162: Supervisor's attendance at meetings of scheme participants and power to appoint chair
The manager of a registered scheme must ensure that the supervisor—
a: is permitted to attend any meeting of scheme participants; and
b: receives the notices and communications that any scheme participant is entitled to receive in relation to a meeting of those participants; and
c: may be heard at any meeting of scheme participants on any part of the business of the meeting that concerns the supervisor's functions or the scheme participants for whom the supervisor is acting; and
d: may appoint the chairperson of any meeting of scheme participants. 1960 No 99 s 18(1) cl 2(1)
163: Manager and associated persons cannot vote if interested in resolution
1: The manager of a registered scheme and its associated persons are not entitled to, and must not, vote their interest on a resolution of scheme participants if they have an interest in the resolution or matter other than as a scheme participant.
2: However,—
a: if the managed investment products in the registered scheme are quoted, subsection (1) does not prevent the manager and its associated persons from voting their interest on resolutions to remove the manager and appoint a new manager:
b: the manager or its associated persons may vote as proxies if the proxy appointment specifies the way they are to vote on the resolution and they vote that way:
c: subsection (1) does not apply in the prescribed circumstances.
3: An exercise of a voting right in contravention of subsection (1) is of no effect and must be disregarded in counting the votes concerned.
4: However, subsections (1) and (3) do not invalidate a resolution if the votes concerned were counted in good faith and without knowledge that the voting rights were exercised in contravention of subsection (1). Corporations Act 2001 ss 253A(2), 253E (Aust) Management of scheme
164: Requirement for statement of investment policy and objectives
1: A manager of a registered scheme must ensure that there is a statement of investment policy and objectives that provides adequately for the investment policy and objectives of the scheme and for the following matters:
a: the nature or type of investments that may be made, and any limits on those; and
b: any limits on the proportion of each type of asset invested in; and
c: the methodology used for developing and amending the investment strategy and for measuring performance against the investment objectives of the scheme.
2: However, if there are no limits on a matter referred to in subsection (1)﻿(a) or (b), the statement of investment policy and objectives must clearly disclose that fact.
3: The statement must provide for the matters set out in this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4
165: Changes to statement of investment policy and objectives
1: The manager of a registered scheme may amend or replace a statement of investment policy and objectives only after giving prior written notice to the supervisor.
2: This section does not apply if the scheme does not have a supervisor Section 165(2) amended 9 August 2017 section 57 Regulatory Systems (Commercial Matters) Amendment Act 2017
166: Lodging of statement of investment policy and objectives and changes to statement
1: The manager of a registered scheme must, except in the prescribed circumstances,—
a: lodge the statement of investment policy and objectives with the Registrar before a regulated offer of managed investment products is made or, if no regulated offer is made, before any managed investment product is issued; and
b: lodge any change to the statement of investment policy and objectives with the Registrar within 5 working days after the change takes effect.
2: A manager that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5
167: Action that must be taken on limit breaks
1: This section applies to a registered scheme if, under the scheme's statement of investment policy and objectives, there is a material breach of any limits on either of the following (a limit break
a: the nature or type of investments that may be made; or
b: the proportion of each type of assets that may be invested in.
2: If this section applies, the manager of the registered scheme must report the limit break to the supervisor or to the FMA (if there is no supervisor) in the prescribed circumstances and in the prescribed manner.
3: Whether or not a limit break is material must be determined in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4
168: Action that must be taken on pricing errors and failure to comply with pricing methodologies
1: This section applies to a registered scheme if—
a: the managed investment products under the scheme are transferable or redeemable; and
b: the manager (or any person to whom the manager has contracted some or all of its functions as a manager)—
i: makes or includes an error in the calculation of the price at which the managed investment products are issued
ii: fails to comply with the methodology for pricing the managed investment products as set out in the governing document or notices issued by the FMA under subpart 4
c: the pricing error or non-compliance is material.
2: If this section applies, the manager must ensure that—
a: the pricing error or non-compliance is corrected; and
b: the pricing error or non-compliance is reported to the supervisor (or to the FMA if there is no supervisor) in the prescribed manner; and
c: the prescribed steps are taken (which may include steps to remedy the pricing error or non-compliance and to inform current or former scheme participants).
3: Whether or not a pricing error or non-compliance is material must be determined in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 Section 168(1)﻿(b)﻿(i) amended 9 August 2017 section 58 Regulatory Systems (Commercial Matters) Amendment Act 2017
169: Actuarial examination of defined benefit scheme or life benefit scheme
1: This section applies to a registered scheme that—
a: is a defined benefit scheme; or
b: provides benefits that provide for the payment of money on the happening of a contingency dependent on the termination or continuance of human life, and the risks associated with those benefits are not fully insured with a life insurer within the meaning of section 6(1) life benefit scheme)
2: The manager of a defined benefit scheme or a life benefit scheme must ensure that a suitably qualified actuary examines the financial position of the scheme as at dates that are no more than 3 years apart.
3: The manager must ensure that—
a: the report of the actuary is received no later than 7 months after the date as at which the financial position of the scheme was examined; and
b: the manager gives a copy of the report, as soon as practicable, to the supervisor (or, if there is no supervisor, to the FMA); and
c: if there is a supervisor, the manager also gives a copy of the report to the FMA within 20 working days after its receipt by the supervisor.
4: A manager that contravenes subsection (3)﻿(b) or (c) commits an offence and is liable on conviction to a fine not exceeding $50,000.
5: The offence in subsection (4) is an infringement offence ( see subpart 5 1989 No 10 s 15
170: Power of manager to adjust financial benefits to comply with portfolio investment entity rules
The manager of a registered scheme to which section HM 48 1960 No 99 ss 12A 22
171: Limits on reversion of scheme property in certain schemes to non-scheme participant contributor
1: Neither the manager nor the supervisor of a registered scheme may permit any part of the scheme property of a KiwiSaver scheme, superannuation scheme, or workplace savings scheme to revert to a contributor who is not a scheme participant under the governing document without the prior written consent of the FMA.
2: The FMA must not give consent to the reversion of any assets of the scheme to a person under this section unless satisfied that—
a: sufficient assets will remain to support the interests of all of the scheme participants; and
b: the reversion is fair and equitable to the scheme participants, taking into account the manner in which the scheme acquired those assets. 1989 No 10 s 10 ss 129B 130 Related party transactions
172: Definition of related party benefit
1: A related party benefit
a: that either is given out of scheme property or creates an exposure to loss for scheme property; and
b: that is given to, or received by, a related party of the scheme; but
c: does not include fees or expenses that are paid or reimbursed to the manager in accordance with this Act or the governing document of the scheme.
2: A related party
a: any of the following persons (a scheme-connected person
i: the manager of the scheme or any trustee of a restricted scheme; and
ii: any investment manager, administration manager, or other person to whom the manager has contracted out some or all of its functions as a manager; and
iii: for a restricted scheme that is identified on the register of managed investment schemes as an employer-related scheme, any contributor to the scheme who is not a scheme participant (other than the Crown); or
b: an associated person of a scheme-connected person.
3: A person is also a related party of the scheme at a particular time if—
a: the person was a related party of the scheme under subsection (2) at any time within the previous 6 months; or
b: the person believes or has reasonable grounds to believe that the person is likely to become a related party of the scheme under subsection (2) at any time within the next 12 months. Corporations Act 2001 ss 601LA–601LE (Aust)
173: General prohibition on transactions giving related party benefits
1: A manager of a registered scheme (and any investment manager, administration manager, or other person to whom the manager has contracted out some or all of its functions as a manager) must not enter into a transaction that provides for a related party benefit to be given.
2: However, subsection (1) does not apply to a transaction or series of transactions if the manager notifies the supervisor of the transaction or transactions, including the related party benefits given under the transaction or transactions, and the key terms of the transaction or transactions and either—
a: the manager obtains the supervisor's consent to the transaction or transactions; or
b: section 174
3: The supervisor must not consent to a transaction or transactions under this section unless 1 of the following applies and the supervisor certifies to that effect:
a: the supervisor considers that the transaction or transactions are in the best interests of the scheme participants; or
b: the transaction or transactions are approved by, or contingent on approval by, a special resolution of the class of scheme participants affected, or potentially affected, by the transaction or transactions.
4: However, if the registered scheme does not have a supervisor
a: the transaction or transactions are in the best interests of the scheme participants; or
b: section 174
c: the transaction or transactions are approved by, or contingent on approval by, a special resolution of the class of scheme participants affected, or potentially affected, by the transaction or transactions.
5: The manager may not certify under subsection (4) unless the licensed independent trustee has consented to the certification.
6: However, a failure to comply with this section does not affect the validity of any transaction (subject to any court order under Part 8
7: See section 126 Corporations Act 2001 ss 601LA–601LE (Aust) Section 173(4) amended 9 August 2017 section 59 Regulatory Systems (Commercial Matters) Amendment Act 2017
174: Certain related party benefits permitted
This section applies to— Arm's-length terms
a: a benefit that is given on terms that—
i: would be reasonable in the circumstances if the parties were connected or related only by the transaction in question, each acting independently, and each acting in its own best interests; or
ii: are less favourable to the related party than the terms referred to in subparagraph (i): Investments in other registered schemes
b: an acquisition or a disposal of a managed investment product in another registered scheme or of a prescribed interest in a prescribed overseas scheme: Certain registered bank investments
c: investments made in the ordinary course of business in products referred to in clause 21(a) to (c) Other prescribed benefits or transactions
d: a prescribed benefit or transaction. Corporations Act 2001 ss 601LA–601LE (Aust)
175: Requirements for certificates as to related party benefits
1: A certificate under section 173
a: states the specific grounds on which it is given under section 173 section 174
b: complies with the prescribed requirements (if any) as to its form, content, or the manner in which it is given.
2: Nothing in section 173
176: Additional restrictions on acquisitions by restricted schemes of in-house assets
1: A manager of a restricted scheme (or any person to whom the manager has contracted some or all of its functions as a manager) must not acquire any new in-house asset if, as a result of the acquisition, the restricted scheme would have, or increase, an in-house assets ratio of 5% or more in relation to any related party or scheme participant ( A
2: The in-house assets ratio of a scheme, in relation to A, must be calculated as the ratio, expressed as a percentage, of paragraph (a) to paragraph (b):
a: the sum of the net asset values of—
i: the in-house assets of A; and
ii: the in-house assets of any other related parties of the scheme, or scheme participants, that are associated with A; and
b: the net asset value of the scheme property.
3: In this section,— acquire in-house asset
a: means, in relation to a related party or scheme participant ( A
b: excludes investments referred to in section 174(b) or (c) investment lease arrangement loan
4: The in-house assets ratio of a scheme must be calculated under this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4
5: This section does not apply in the prescribed circumstances. Superannuation Industry (Supervision) Act 1993 s 83 (Aust)
177: General duties not affected
The fact that a transaction is consented to, approved by scheme participants, or otherwise permitted under sections 172 to 176 Corporations Act 2001 s 230 (Aust) Scheme participant transfer rules for KiwiSaver, superannuation, and workplace savings schemes
178: Application of scheme participant transfer rules
1: Sections 179 to 182 transfer
a: the transfer of a scheme participant from one KiwiSaver scheme or superannuation scheme or workplace savings scheme to another KiwiSaver scheme or superannuation scheme or workplace savings scheme:
b: the transfer of a scheme participant from one section of a KiwiSaver scheme to another section of the same scheme:
c: the transfer of a scheme participant from one section of a superannuation scheme or workplace savings scheme to another section of the same scheme (but only if
2: In sections 179 to 182
a: a person proposed to be transferred is a proposed transferee
b: the scheme, or section of the scheme, from which the person is proposed to be transferred is the old scheme
c: the scheme, or section of the scheme, into which the person is proposed to be transferred is the new scheme
3: Sections 179 to 182 subpart 3 1989 No 10 s 9B ss 119B 119D(6) Section 178(1)﻿(c) amended 9 August 2017 section 60 Regulatory Systems (Commercial Matters) Amendment Act 2017
179: Methods of transfer of scheme participants to another scheme or another section of scheme
1: No scheme participant may be transferred from one registered scheme to another registered scheme, or to another section of the same scheme, except in accordance with this section.
2: A scheme participant may be transferred—
a: with the scheme participant's written consent (which must be obtained in accordance with section 180
b: in accordance with the FMA's consent under section 181
c: in accordance with regulations made under section 230 section 138
3: However, the FMA may permit a transfer to occur under subsection (2)﻿(a) without the scheme participant's consent if the FMA is satisfied that—
a: the manager of the old scheme has taken all reasonable steps to contact all of the relevant scheme participants, but has not been able to do so; and
b: the proposed action is not unreasonable in relation to the best interests of any of those scheme participants who have not been contacted.
4: No scheme participant may be transferred from a KiwiSaver scheme into another scheme that is not a KiwiSaver scheme under this section. 1989 No 10 ss 9B 9BAA(1) 9BA ss 119C 119G(1) 119I
180: Transfer of substantial numbers of scheme participants with scheme participant consent
1: This section applies to a transfer (whether at the same time or over an extended period) of all, or a substantial number, of the scheme participants from an old scheme to a new scheme.
2: The manager of the old scheme and the manager of the new scheme must each consult their own scheme's supervisor about the proposed transfer and give notice of the proposed transfer in accordance with this section.
3: The notice must—
a: be given to the FMA and every scheme participant of the old scheme and the new scheme, other than scheme participants who, in the opinion of the FMA, are not likely to be affected by the proposed transfer; and
b: set out—
i: the proposal and its implications for the proposed transferees; and
ii: the date of the proposed transfer; and
iii: the date on which the proposed transferees' written consent must be received by the manager or the trustees; and
iv: the fact that the notice has also been sent to the FMA; and
c: be given at least 1 month before the date on which, under the notice, the proposed transferees' written consent must be received by the manager or the trustees.
4: Giving notice under this section does not derogate from the need to comply with any other requirement of the KiwiSaver Act 2006 1989 No 10 s 9B s 119D
181: Transfer with FMA consent
1: The FMA may consent to a transfer if the FMA is satisfied that—
a: the terms and conditions of the new scheme are no less favourable to the proposed transferees than the terms and conditions of the old scheme; and
b: the transfer is otherwise reasonable in all the circumstances (including having regard to the value of the assets transferred from the old scheme to the new scheme); and
c: the person applying for the transfer is the manager of the old or new scheme, a relevant employer, or another person who the FMA considers has an appropriate interest in the transfer; and
d: the applicant has given notice to every proposed transferee that—
i: the applicant has applied for the FMA's consent to transfer the person without the person's written consent; and
ii: the person may make submissions to the FMA about the transfer.
2: The FMA must have regard to any submissions received by proposed transferees before deciding whether or not to give its consent.
3: The FMA may give its consent subject to any terms and conditions that the FMA sets out in the written notice of consent.
4: The transfer must be carried out in accordance with those terms and conditions. 1989 No 10 s 9BAA ss 119G 119H
182: Transfers from KiwiSaver scheme
1: This section applies to an old scheme if it was a KiwiSaver scheme.
2: The provider of the old scheme must give the following information to the provider of the new scheme in respect of a scheme participant ( A sections 179 to 181
a: A's name, address, and date of birth; and
b: A's tax file number; and
c: the date on which A first became a member of a KiwiSaver scheme and (if known and different) the date on which A first contributed to a KiwiSaver scheme; and
d: (if known) the aggregate amounts of each of—
i: A's contributions to the old scheme; and
ii: the Crown contribution to the old scheme in respect of A; and
iii: any employer contributions to the old scheme in respect of A; and
e: the name, address, and tax file number of both the provider and the old scheme; and
f: any other information that the Commissioner of Inland Revenue requires the provider of the old scheme to give to the provider of the new scheme.
3: In this section, provider section 5 2006 No 40 s 119F Provisions as to deferred benefits for superannuation schemes and workplace savings schemes
183: Deferred benefits
1: A scheme participant in respect of a superannuation scheme or workplace savings scheme who continues to be employed by an employer after the participant's expected age or date of retirement (as defined in the governing document of the scheme) may elect to defer the receipt of any benefit that the participant is eligible to receive under the scheme until the date on which the participant ceases to be employed by that employer.
2: Subsection (1) applies despite anything to the contrary contained in the governing document of the scheme.
3: Nothing in subsection (1) or in the Human Rights Act 1993
4: If a scheme participant has the right, under subsection (1), to elect to defer receipt of any benefit that the participant is eligible to receive under the scheme, the manager must inform the participant in writing of that right. 1989 No 10 s 9C Change of manager
184: Application of sections 185 to 192
Sections 185 to 192
a: the manager of a registered scheme (other than a restricted scheme); or
b: each of the trustees of a restricted scheme (including, to avoid doubt, the independent trustee).
185: Removal of manager of registered scheme
1: A manager of a registered scheme ceases to hold that office if—
a: the manager is removed by written direction of the supervisor after the supervisor certifies that it is in the best interests of scheme participants that the manager be removed; or
b: the manager is removed by a special resolution of the scheme participants; or
c: in the case of an independent trustee of a restricted scheme,—
i: the trustee's licence expires or is cancelled under Part 6
ii: the trustee is removed by the FMA if it is satisfied that the trustee no longer meets the requirements in section 131(1)﻿(d)
d: the manager is substituted by the court under section 209
e: the manager is otherwise removed or resigns in accordance with the governing document.
2: Subsection (1)﻿(a) and (b) do not apply to a restricted scheme.
3: However, a licensed independent trustee may not—
a: be removed or resign under subsection (1)﻿(e) unless—
i: all functions and duties of the position have been performed; or
ii: another licensed independent trustee has been appointed, and accepted the appointment, in its place; or
iii: the court consents:
b: (despite anything in the governing document) be removed under subsection (1)﻿(e) without the FMA's consent.
4: If a manager ceases to hold office under subsection (1), the manager and any delegate of the manager must immediately desist from all activities relating to the registered scheme unless the supervisor agrees to the contrary. 1960 No 99 s 19
186: Supervisor or FMA may make temporary appointment
1: This section applies if a registered scheme does not, for any reason, have a manager or (in the case of a restricted scheme) a licensed independent trustee.
2: The supervisor or the FMA must appoint a person (the temporary manager
3: That person must be,—
a: if the appointment is by the supervisor, a person who meets the requirements in section 127(1)﻿(c)
b: if the appointment is by the FMA, a person whom the FMA considers appropriate (but who need not be a person who meets the requirements in section 127(1)﻿(c) and (e) section 131(1)﻿(d)
4: However, the FMA may act under this section only if—
a: it is satisfied that the supervisor has had a reasonable opportunity to act under this section but has not done so; or
b: it is satisfied that it is necessary as a matter of urgency for the FMA to do so and it is not reasonably practicable to wait for the supervisor to do so; or
c: the supervisor requests the FMA to act; or
d: there is no supervisor.
5: If the FMA appoints a person who does not meet the requirements of section 127(1)﻿(c) and (e) 131(1)﻿(d) section 388 1960 No 99 s 23
187: Term, powers, and duties of temporary manager
1: A temporary manager may hold the appointment until a substitute manager is appointed—
a: under the governing document; or
b: otherwise under this Act.
2: The temporary manager has all of the powers and duties of the manager of the registered scheme and (if applicable) of the independent trustee that are conferred or imposed by the governing document or by law.
3: However, the FMA may, in the prescribed manner (if any), amend a governing document, in so far as it applies to a temporary manager appointed by the FMA, if—
a: the supervisor consents; and
b: the FMA is satisfied that the change will have no material adverse effect on the interests of scheme participants.
4: An amendment made under this section must be treated for all purposes as if it were made in accordance with the governing document.
5: Section 141
188: FMA's costs must be reimbursed from scheme
1: The FMA's costs and expenses incurred in connection with the holding of the appointment by a temporary manager appointed by the FMA must be reimbursed out of scheme property of the registered scheme.
2: An amount payable under subsection (1) is recoverable by the FMA in any court of competent jurisdiction as a debt due to the FMA.
189: Supervisor or FMA must take reasonable steps to arrange for new appointment
1: The supervisor of a registered scheme or the FMA (if there is no supervisor) must take all reasonable steps to secure, in accordance with the governing document, the appointment of a person as a permanent manager in place of the temporary manager (other than a temporary independent trustee).
2: The trustees of a restricted scheme must take all reasonable steps to secure, in accordance with the governing document, the appointment of a person as a permanent licensed independent trustee in place of the temporary independent trustee.
3: The temporary manager may be appointed to hold the office as a permanent manager, but in this case—
a: if the person was appointed by the FMA, the person ceases to be appointed by the FMA for the purposes of sections 186 to 188
b: must meet the requirements in section 127(1)﻿(c) and (e) 131(1)﻿(d)
4: The supervisor or trustees must, when acting under this section, comply with the prescribed requirements (if any).
190: Former manager must hand over records and give reasonable assistance
1: If the person who holds an appointment as a manager of a registered scheme changes, the person who previously held the appointment (the former manager
a: as soon as practicable, give the person that currently holds the appointment (the current manager
b: give the current manager all reasonable assistance to facilitate the change.
2: The former manager may withhold information, or retain a copy of information,—
a: with the FMA's written consent; or
b: otherwise in the prescribed circumstances.
3: If a temporary manager has been appointed to an office, for the purposes of this section, former manager current manager
191: Statutory novation of rights, obligations, and liabilities of former manager
1: If the manager of a registered scheme changes, the rights, obligations, and liabilities of the former manager in relation to the scheme become the rights, obligations, and liabilities of the new manager.
2: Despite subsection (1), the following rights, obligations, and liabilities remain rights, obligations, and liabilities of the former manager:
a: any right of the former manager to be paid fees for the performance of its functions, or to be indemnified for liabilities or expenses it incurred, before it ceased to be the manager of the scheme; and
b: any right, obligation, or liability that the former manager had as a scheme participant; and
c: any liability for which the former manager could not have been indemnified out of the scheme property if it had remained the scheme's manager.
3: This section is subject to any order of the court under section 209
192: Lodging of notice of changes to manager
1: Within 5 working days after a change to the manager of a registered scheme, the new manager must ensure that notice of the change is lodged with the Registrar.
2: A manager that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Change of supervisor
193: Change of supervisor
1: The supervisor of a registered scheme ceases to hold that appointment (subject to subsection (2)) if the supervisor—
a: is removed by the FMA if it is satisfied that the manager and the supervisor no longer meet the requirements in section 127(1)﻿(e)
b: is removed by the FMA or the issuer under Part 2
c: is removed by a special resolution of the scheme participants; or
d: is removed or resigns in accordance with the governing document.
2: However, a supervisor may not—
a: be removed or resign under subsection (1)﻿(c) or (d) unless—
i: all functions and duties of the position have been performed; or
ii: another licensed supervisor has been appointed, and accepted the appointment, in its place; or
iii: the court consents:
b: (despite anything in the governing document) be removed by the manager under subsection (1)﻿(d) without the FMA's consent. 1960 No 99 s 10 s 48 s 116E(2)
194: Lodging of notice of change of supervisor
1: Within 5 working days after a change of supervisor of a registered scheme, the manager must ensure that notice of the change is lodged with the Registrar.
2: A manager that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Cancellation of registration
195: Cancellation of registration
1: The FMA may direct that the registration of a registered scheme be cancelled—
a: if satisfied on reasonable grounds that the scheme does not meet the registration requirements under section 127
b: if the FMA has reasonable cause to believe that the scheme has no scheme participants; or
c: on the written request of the manager of the scheme (subject to subsection (4)), if the supervisor certifies or, if there is no supervisor, the manager certifies
i: the cancellation has been approved by a special resolution of the scheme participants (subject to any restriction in the governing document); or
ii: there is no material adverse effect on the scheme participants from the cancellation; or
d: if the scheme has been wound up or dissolved or has otherwise ceased to exist.
2: The FMA must not direct cancellation under subsection (1)﻿(a) or (b) unless—
a: the FMA gives the manager of the scheme no less than 20 working days' written notice of the following matters before it exercises the power:
i: that the FMA may direct cancellation; and
ii: the reasons why it may exercise that power; and
b: the FMA gives the manager or the manager's representative an opportunity to make written submissions on the matter within that notice period.
3: If the FMA makes a direction under this section,—
a: the FMA must notify the manager and the supervisor of the registered scheme of the direction; and
b: as soon as practicable after being notified of the direction, the manager must notify the scheme participants of the direction.
4: The FMA may, instead of cancelling a scheme's registration on the request of the manager under this section, exercise its rights to apply for an order winding up the scheme under section 211 1989 No 10 s 19 s 168 Section 195(1)﻿(c) amended 9 August 2017 section 61 Regulatory Systems (Commercial Matters) Amendment Act 2017
196: Registrar must remove scheme from register on cancellation of registration
1: On the cancellation of the registration of a scheme under section 195
2: The cancellation must be treated as taking effect on the date on which the scheme is removed from the register.
3: The Registrar must give notice of the cancellation of registration, as soon as practicable after the registration of the scheme is cancelled, to—
a: the manager of the scheme; and
b: the supervisor of the scheme; and
c: the Commissioner of Inland Revenue (in the case of a KiwiSaver scheme). 2006 No 40 s 170
3: Intervention in debt securities offered under regulated offer or registered schemes
Provisions assisting supervisor or FMA to intervene
197: Application
This subpart applies in relation to debt securities offered under a regulated offer and registered schemes.
198: Duty of auditor to report to supervisor or FMA
1: This section applies to the auditor of an issuer of a debt security or a registered scheme.
2: If the auditor provides the issuer, any of the issuer's members or shareholders, or any of the holders of the debt security or managed investment product with any document required by an Act or a trust deed relating to the financial product or scheme, the auditor must, as soon as practicable, send a copy to the supervisor of the debt security or registered scheme or, if there is no supervisor, to the FMA.
3: If, in the performance of the auditor's duties, the auditor becomes aware of a matter that, in the auditor's opinion, is relevant to the exercise or performance of the powers or duties of the supervisor of the debt security or registered scheme, the auditor must, within 7 working days of becoming aware of the matter, send—
a: a written report on the matter to the issuer; and
b: a copy of the report to the supervisor or, if there is no supervisor, to the FMA.
4: The auditor must, from time to time, at the request of the supervisor, provide the supervisor with any information relating to the issuer or registered scheme—
a: that the supervisor requests; and
b: that is within the auditor's knowledge; and
c: that is, in the auditor's opinion, relevant to the exercise or performance of the powers or duties of the supervisor.
5: Section 214 1978 No 103 s 50
199: Duty of auditor, investment manager, administration manager, custodian, or actuary to report serious problems
1: This section applies to an auditor of an issuer of a debt security and to an investment manager, an administration manager, a custodian, an auditor, or an actuary of a registered scheme.
2: A person to whom this section applies must take the steps set out in section 200 serious problem
a: the issuer of the relevant financial product has contravened, may have contravened, or is likely to contravene an issuer obligation in a material respect; or
b: the issuer or scheme is, or is likely to become, insolvent; or
c: the financial position of the scheme or issuer or the security of benefits or the management of the scheme or issuer is otherwise inadequate; or
d: the manager of the scheme has contravened, may have contravened, or is likely to contravene any of the manager's market services licensee obligations in a material respect; or
e: the supervisor of the scheme has contravened, may have contravened, or is likely to contravene any of the supervisor's licensee obligations (as defined in section 4
f: the custodian of the scheme has contravened, may have contravened, or is likely to contravene any of the custodian's obligations in a material respect. 2006 No 40 s 191
200: What person must do if duty to report serious problem applies
1: If section 199
a: report the serious problem to the supervisor or, if subsection (2) applies, to the FMA; and
b: disclose to the supervisor or the FMA (as applicable under paragraph (a)) all information relevant to the serious problem that is in the possession or control of the relevant person and was obtained in the course of, or in connection with, the performance of functions of that relevant person.
2: A serious problem must be reported to the FMA instead of the supervisor if—
a: there is no supervisor; or
b: the serious problem concerns a contravention or likely contravention of an obligation by the supervisor; or
c: the contravention relates to the custodian and the custodian is a related body corporate of the supervisor.
3: Section 214
4: To avoid doubt, section 199 2006 No 40 s 191(2), (4)
201: Protections extend to volunteers of supporting information for other protected disclosures
1: Section 214
2: A person volunteers supporting information under this section if the person—
a: is an employee of a person in respect of whom a protected disclosure is made by another person under this Act; and
b: provides information, in support of that other protected disclosure, to—
i: the supervisor or the FMA (whichever receives the other protected disclosure); or
ii: the person who made the disclosure; and
c: makes the disclosure in good faith; and
d: wishes to provide the supporting information so that a serious problem can be investigated.
3: However, an employee does not volunteer supporting information under this section if the employee provides the supporting information only after being—
a: required to do so under any enactment, rule of law, or agreement for the purposes of the investigation; or
b: approached during the course of the investigation by, or on behalf of, the FMA or any other person investigating the matter.
202: FMA may require supervisor to attest as to issuer's compliance with issuer obligations
1: The FMA may require a supervisor of a debt security or registered scheme to attest to the FMA, at a time and in a manner specified by the FMA, as to whether the supervisor is satisfied that the issuer has not contravened an issuer obligation in a material respect.
2: If the FMA requires a supervisor to attest to the FMA under this section, the supervisor must—
a: provide that attestation; or
b: if unable to attest to the FMA as required, report the reason, including the details of any contravention or possible contravention and, if applicable, the report under section 203
3: Section 214 2011 No 10 s 45
203: Duty of supervisor to report contravention or possible contravention of issuer obligations to FMA
1: If a supervisor of a debt security or registered scheme has reasonable grounds to believe that the issuer has contravened, may have contravened, or is likely to contravene an issuer obligation in a material respect, the supervisor must, as soon as practicable,—
a: report the contravention or possible contravention to the FMA; and
b: advise the FMA of the steps (if any) that the supervisor intends to take in respect of the contravention or possible contravention and the date by which the steps are to be taken.
2: Section 214 2011 No 10 s 46
204: Duty of supervisor to report serious financial problems to FMA
1: This section applies if a supervisor of a debt security or registered scheme becomes aware, in the course of or in connection with the performance of its functions as supervisor, of information on the basis of which it could reasonably form the opinion that—
a: the issuer is, or is likely to become, insolvent; or
b: in the case of a registered scheme, the scheme is, or is likely to become, insolvent.
2: The supervisor must, as soon as practicable,—
a: disclose to the FMA all information relevant to that matter that is in the possession or under the control of the supervisor and that was obtained in the course of, or in connection with, the performance of its functions as supervisor; and
b: advise the FMA of the steps (if any) that the supervisor intends to take in respect of that matter and the date by which the steps are to be taken.
3: Section 214 2011 No 10 s 47
205: FMA's powers of direction
1: The FMA may exercise a power under subsection (2) if it is satisfied that—
a: there is a significant risk that the interests of holders of a debt security or scheme participants in a registered scheme will be materially prejudiced; and
b: 1 of the following applies:
i: the supervisor of the debt security or registered scheme is aware of that risk and has had a reasonable opportunity to take action to eliminate or reduce the risk but has not done so; or
ii: action is urgently required to eliminate or reduce the risk and it is not reasonably practicable to wait for the supervisor to do so; or
iii: there is no supervisor.
2: The FMA may, by written notice to the supervisor and otherwise in the prescribed manner, give a direction to the supervisor.
3: If there is no supervisor, the FMA may, by written notice to the issuer and otherwise in the prescribed manner, give a direction to the issuer. 2011 No 10 s 49(1), (2)
206: FMA's directions to supervisor (or issuer)
1: If the notice under section 205
a: the step or steps that the supervisor (or issuer) must take in relation to the issuer, the registered scheme (if any), or the financial products; and
b: the date by which each step will be taken.
2: The supervisor or the issuer (as the case may be) must comply with the direction ( see subpart 3
3: A supervisor or issuer (as the case may be) that refuses or fails, without reasonable excuse, to comply with the direction commits an offence and is liable on conviction to a fine not exceeding $300,000. 2011 No 10 s 49(3)–(5) Powers to obtain court orders to intervene
207: Power of supervisor or FMA to apply for order to remedy problems
1: A supervisor of a debt security or a registered scheme, or the FMA, may apply for an order under section 208
a: the issuer and any guarantor of the financial products are unlikely to be able to pay all money owing in respect of the financial products when it becomes due; or
b: the issuer is insolvent; or
c: in the case of a registered scheme, the scheme is insolvent; or
d: the financial position of the scheme or issuer or the security of benefits or the management of the scheme or issuer is otherwise inadequate; or
e: in the case of a registered scheme, the scheme does not meet the registration requirements, or the requirements for registration as a particular type of scheme, that apply to it under sections 127 to 132
f: there is a significant risk that the interests of product holders will be materially prejudiced for any other reason; or
g: the provisions of a governing document are no longer adequate to give proper protection to product holders.
2: However, the FMA may apply for the order only if it is satisfied that—
a: the supervisor has had a reasonable opportunity to apply for the order but has not done so; or
b: it is necessary as a matter of urgency for the FMA to do so and it is not reasonably practicable to wait for the supervisor to do so; or
c: there is no supervisor. 1960 No 99 s 19A s 49 s 116K(1) s 50(1)–(3)
208: Court orders to remedy problems
1: The court may, on the application by a supervisor or the FMA under section 207
2: The order or orders may—
a: amend the provisions of the governing document:
b: impose restrictions on the activities of the issuer (including restrictions on advertising) that the court thinks are necessary to protect the interests of product holders:
c: direct that no offers, issues, sales, or transfers of debt securities or managed investment products specified in the order be made while the order is in force:
d: direct that an issuer must not accept further contributions or deposits in respect of debt securities or managed investment products specified in the order while the order is in force:
e: direct the issuer or the supervisor to convene a meeting of product holders for the purpose of—
i: having placed before the product holders by the issuer or the supervisor the information or proposal that the court, the supervisor, or the FMA thinks necessary or appropriate relating to the product holders' interests; and
ii: obtaining the opinions or directions of product holders:
f: give directions in relation to the conduct of any meeting convened in accordance with paragraph (e):
g: stay any civil actions or civil proceedings before the court by or against the supervisor, the issuer, or any guarantor of the financial products:
h: restrain the payment of money by the custodian, the issuer, or any guarantor of the financial products to product holders or a class of product holders or restrain the transfer of scheme property by the custodian:
i: appoint a receiver or manager of the property that constitutes the security (if any) for the financial products (with any powers that the court orders):
j: remove a receiver or manager of the property that constitutes the security (if any) for the financial products:
k: give any other directions that the court considers necessary to protect the interests of product holders, any guarantor of the financial products, or the public.
3: The court may vary or cancel an order made under this section.
4: In exercising its powers under this section, the court must have regard to the interests of all creditors of the issuer (in the case of a debt security) and all creditors in respect of the registered scheme (in the case of a managed investment product). 1960 No 99 s 19A s 49 s 116K(3)–(6) s 50(4)–(7)
209: Power of court to appoint new manager, provide for manager powers, and deal with changes of managers
1: The court may, on the application of the supervisor of a registered scheme, the FMA, a scheme participant in a registered scheme, or (in the case of an order under paragraph (b)) a manager of a registered scheme, make an order to—
a: appoint a new manager of a registered scheme (with any powers that the court orders) if there is no manager or in substitution for an existing manager:
b: confer an additional power on the manager of a registered scheme (either generally or specifically) to facilitate a transaction or type of transaction that the court considers to be in the interests of the scheme participants, and provide for the exercise of that additional power:
c: direct that section 191
i: vary the agreement or any collateral agreement as specified in the order and, if the court thinks fit, declare the agreement to have had effect as so varied on and after a date before the order was made, as specified in the order; or
ii: cancel the agreement and, if the court thinks fit, declare the cancellation to have had effect on and after a date before the order was made, as specified in the order:
d: amend the governing document to provide for a new or temporary appointment of a manager of a registered scheme (whether the appointment is by a court order or under the governing document or this Act) or otherwise in connection with another order made under this section:
e: cancel in whole or in part any liability of the scheme to make any payment or transfer any property to a manager of a registered scheme that has been removed.
2: The court may under this section (without limiting subsection (1)) appoint a new manager in substitution for a manager who—
a: has been held by the court to have contravened any issuer obligation; or
b: is insolvent.
3: A manager appointed by the court under this section has all of the powers and duties of the manager of the registered scheme that are conferred or imposed by the governing document or by law. 1960 No 99 s 22
210: Power of court to direct supervisor
1: The court may, on an application made under subsection (2), make an order directing a supervisor of a debt security under a regulated offer or of a registered scheme not to comply with a special resolution of product holders if the court is satisfied that compliance would be objectionable (for example, because it would be oppressive to the minority).
2: The supervisor, the FMA, or a product holder may apply for an order under this section within 20 working days after the special resolution (or, with leave of the court, within any longer period).
211: Court power to order winding up of scheme
1: The court may, on the application of the FMA or a supervisor of the registered scheme, direct that a registered scheme must be wound up if it is satisfied that—
a: the manager or the scheme is insolvent; or
b: the manager has persistently or seriously failed to comply with this Act or any other financial markets legislation; or
c: no permanent manager is appointed under the governing document or this Act; or
d: no supervisor is appointed under the governing document or the Financial Markets Supervisors Act 2011
e: the scheme does not meet the registration requirements that apply to it under sections 127 to 132
f: it is just and equitable that the scheme be wound up.
2: However, the FMA may apply for an order to wind up a scheme only if it is satisfied that—
a: the supervisor has had a reasonable opportunity to do so but has not done so; or
b: it is necessary as a matter of urgency for the FMA to do so rather than wait for the supervisor to do so; or
c: there is no supervisor.
3: The court may give any other directions that it thinks fit for the purpose of facilitating the winding up (and, if there is any conflict between those directions and the provisions of the governing document, those directions prevail).
212: Initial steps in winding up of registered scheme
1: If a registered scheme is to be wound up, the supervisor or (if there is no supervisor) the manager
a: give a copy of any order or resolution to the FMA; and
b: in the case of a KiwiSaver scheme or a complying superannuation fund,—
i: give a copy of any order or resolution to the Commissioner of Inland Revenue; and
ii: give notice to the Commissioner of Inland Revenue of the name, tax file number, and address of each member of the registered scheme.
2: See sections 50 to 52 subpart 3
3: A supervisor or manager
4: The offence in this section is an infringement offence ( see subpart 5 2006 No 40 s 173 Section 212(1) amended 9 August 2017 section 62(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 212(3) amended 9 August 2017 section 62(2) Regulatory Systems (Commercial Matters) Amendment Act 2017
213: Winding-up report
1: The person who was the supervisor of the relevant registered scheme or, if there was no supervisor, the person who was the manager of the relevant registered scheme
a: must, within 4 months after the date on which the winding up takes effect, ensure that final financial statements of the scheme, showing the financial position of the scheme as at the date on which the winding up takes effect, are prepared in accordance with generally accepted accounting practice and audited; and
b: must, within 20 working days after the final financial statements have been audited, ensure that—
i: a copy of those financial statements is sent to the FMA and to every person who was a scheme participant immediately before it was wound up; and
ii: the FMA and the scheme participants are advised in writing as to the manner in which the remaining assets (if any) of the scheme are to be distributed; and
c: may make a partial distribution of assets of the scheme at any time before a copy of the final financial statements is sent to the FMA under paragraph (b) (unless prohibited by the governing document); and
d: must inform the FMA of the date on which the distribution of the assets is completed.
2: The FMA may, by giving notice to the relevant person, extend the time period within which a person must comply with any of the requirements set out in this section.
3: A person that contravenes—
a: subsection (1)﻿(a) commits an offence:
b: subsection (1)﻿(b) commits an offence:
c: subsection (1)﻿(d) commits an offence.
4: A person that commits an offence under subsection (3) is liable on conviction to a fine not exceeding $50,000.
5: Each offence in subsection (3) is an infringement offence ( see subpart 5 1989 No 10 s 21(1), (1A) ss 174 175 Section 213(1) amended 9 August 2017 section 63 Regulatory Systems (Commercial Matters) Amendment Act 2017 Miscellaneous
214: Protection for persons in respect of disclosure under this subpart or subpart 4
1: No civil, criminal, or disciplinary proceedings may be brought against a person by reason of the person having made a protected disclosure.
2: No person may terminate the appointment of a person by reason of the person having made a protected disclosure.
3: No tribunal, body, or authority that has jurisdiction in respect of the professional conduct of a person may make an order against, or do any act in relation to, the person by reason of the person having made a protected disclosure.
4: In this Act, protected disclosure subpart 4 1978 No 103 s 50C s 192 s 48
4: Registers and keeping copies of documents
Registers
215: Issuers must keep registers of regulated products
1: Every issuer of regulated products must ensure that there is kept, in the manner specified in section 216
a: a register of those regulated products and of all financial products that are of the same class as those regulated products of which it is the issuer; and
b: a register of other financial products of which it is the issuer that is required to be kept by the regulations.
2: However, subsection (1) does not apply—
a: to derivatives (unless those derivatives are of a prescribed type); or
b: to prescribed financial products; or
c: otherwise in the prescribed circumstances.
3: If subsection (1) does not apply to derivatives of a particular type, the issuer must comply with the requirements prescribed for the purposes of this subsection (if any).
4: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
5: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 51(1)
216: Manner of keeping registers
1: A register kept under this subpart must be kept in New Zealand.
2: A register kept under this subpart may—
a: be an electronic register; or
b: be kept in any other reasonable manner that the issuer thinks fit.
217: Contents of registers
1: Every issuer of regulated products must ensure that every register kept by, or on behalf of, the issuer under this subpart contains, in respect of every financial product entered in the register,—
a: the name and address of the holder; and
b: the date on which the product was issued or transferred to the holder, as the case may be; and
c: the nature of the product; and
d: the amount of the product (if any); and
e: the due date of the product (if any); and
f: all other prescribed particulars (if any).
1A: However, a register is not required to contain the information specified in a paragraph in subsection (1) if the circumstances prescribed in respect of that paragraph apply.
2: No notice of any trust, expressed, implied, or constructive, may be entered on a register kept under this subpart (except in the prescribed circumstances).
3: Every register kept under this subpart is prima facie evidence of the matters required by this Act to be entered in it.
4: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
5: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 51(2)–(5) Section 217(1A) inserted 9 August 2017 section 64 Regulatory Systems (Commercial Matters) Amendment Act 2017
218: Audit or review of registers
1: Every issuer of regulated products must ensure that registers kept by, or on behalf of, the issuer under this subpart are audited or reviewed in accordance with the prescribed requirements by a qualified auditor.
2: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 51(6)
219: Auditor must advise if auditor considers that subpart is not being complied with
1: If the auditor referred to in section 218
a: advise the issuer and the FMA; and
b: advise,—
i: in the case of equity securities, the security holders at their next meeting if the non-compliance is material:
ii: in the case of debt securities or managed investment products, the supervisor.
2: Section 214 1978 No 103 s 51(8)
220: Issuer must notify Registrar of registers
1: Every issuer of regulated products must send a notice to the Registrar of the place where its registers under this subpart are kept and of any change in that place.
2: The notice must be sent within 10 working days after the register being established or after the change in place (as the case may be).
3: This section does not apply to an issuer that is a company if the registers of the company are kept at its registered office.
4: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
5: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 51(9), (10)
221: Public inspection of register
1: Every issuer of regulated products must ensure that every register kept by, or on behalf of, the issuer under this subpart is available for inspection in the manner referred to in section 222
2: Subsection (1) does not apply—
a: to a register of managed investment products in respect of a superannuation scheme, workplace savings scheme, or KiwiSaver scheme:
b: to a register of derivatives:
c: in the prescribed circumstances.
3: However,—
a: a register of managed investment products in respect of a superannuation scheme, workplace savings scheme, or KiwiSaver scheme must be available for inspection by the supervisor in the manner referred to in section 222
b: the part of a register of managed investment products in respect of a superannuation scheme, workplace savings scheme, or KiwiSaver scheme that concerns financial products of a particular scheme participant must be available for inspection by the scheme participant in the manner referred to in section 222
c: the part of a register of derivatives that concerns derivatives entered into by a particular person must be available for inspection by the person in the manner referred to in section 222
4: An issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
5: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 52
222: Manner of inspection
For the purposes of section 221
a: be available for inspection, by a person who serves on the issuer written notice of intention to inspect, at the place at which the register is kept between the hours of 9 am and 5 pm on each working day during the inspection period; and
b: otherwise be available for inspection in the prescribed manner (if any). 1993 No 105 s 217
223: Copies of documents
1: A person may require a copy of, or an extract from, a register that is available for inspection by the person under section 221
a: within 5 working days after the person has made a written request for the copy or extract to the issuer; and
b: if the person has paid the prescribed fee (if any).
2: The issuer must comply with the request (subject to section 224
3: An issuer that contravenes subsection (2) commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5 1993 No 105 s 218
224: Reasons for request must be given and FMA may authorise non-compliance
1: A person who makes a request under section 223(1)
2: If the issuer provides a copy of the statement to the FMA before the expiry of the 5-working-day period referred to in section 223(1)﻿(a)
a: the period within which the request may be complied with is 10 working days after the person made the request (rather than 5 working days); and
b: the issuer does not have to comply with the request at all if the FMA, within that 10-working-day period, gives written notice to the issuer that it is not required to comply.
225: Restriction on use of information in registers
1: A person must not—
a: use information about a person obtained from a register kept under this subpart to contact or send material to that person; or
b: disclose information of that kind knowing that the information is likely to be used to contact or send material to the person. Example
An example of using information to send material to a person is putting a person's name and address on a mailing list for advertising material.
2: Subsection (1) does not apply if the use or disclosure of the information is—
a: relevant to the holding of the interests recorded in the register or the exercise of the rights attaching to those interests; or
b: approved by the issuer that keeps the register.
3: A person must not—
a: use information obtained from a register kept under this subpart—
i: for any prescribed purpose; or
ii: in the case of a request under section 223(1) section 224(1)
b: disclose information of that kind knowing that the information is likely to be used for any such purpose.
4: Subsection (3)﻿(a)﻿(ii) does not apply to a person who makes a request under section 223(1) Corporations Act 2001 s 177 (Aust)
226: Certain provisions prevail over Companies Act 1993
If a provision of sections 221 to 225 Companies Act 1993 sections 221 to 225 Copies of documents to be retained
227: Copies of documents must be retained for 7 years
1: The issuer of a regulated product, the offeror under a regulated offer, or the manager of a registered scheme must, in respect of each document required by or for the purposes of this Act in respect of the regulated product, regulated offer, or registered scheme,—
a: keep a copy of the document for a period of at least 7 years after the date on which the document comes into the possession of the issuer, offeror, or manager; and
b: comply with the prescribed requirements relating to where the copy is kept, inspection of the copy, and making copies of the document available on payment of a reasonable printing and administration fee set by the issuer, offeror, or manager.
2: Subsection (1) applies only if the document is given, made, or provided by or to the issuer, offeror, or manager.
3: A person that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5
5: Civil liability for certain contraventions of this Part
228: Part 4 governance provisions
1: All of the provisions specified in subsections (3) and (4) are Part 4 governance provisions.
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: The provisions are the following:
a: section 103
b: section 125
c: sections 156 to 158
d: section 185(4)
4: A contravention of any of the following may give rise to civil liability ( see subpart 3
a: section 108(2)
b: sections 112 113
c: sections 114 to 118 119(2)
d: sections 120 121 161 162
e: section 133
f: section 134(5)﻿(b)
g: section 139(2)
h: sections 143 to 146
i: sections 147 to 151 155(2)
j: sections 153 154
k: section 159
l: section 160
m: section 163(1)
n: sections 164 165
o: sections 167 to 169
p: section 171
q: section 173
r: section 176
s: sections 179 180 181(4) 182
t: section 190
u: section 195(3)﻿(b)
v: sections 198 to 200 202 to 204
w: section 206(2)
wa: section 219
x: section 225 Section 228(4)﻿(wa) inserted 9 August 2017 section 65 Regulatory Systems (Commercial Matters) Amendment Act 2017
5: Dealing in financial products on markets
1: Purposes, overview, and interpretation
229: Additional purposes of Part
1: This Part has the following purposes for financial product markets (in addition to those set out in sections 3 4
a: to promote fair, orderly, and transparent financial product markets:
b: to encourage a diversity of financial product markets to take account of the differing needs and objectives of issuers and investors.
2: This section does not limit section 3 4
230: Overview
1: In this Part,—
a: this subpart contains the additional purposes of this Part and interpretation provisions:
b: subpart 2
c: subpart 3
d: subpart 4
e: subpart 5
f: subpart 6
g: subpart 7
h: subpart 8
i: subpart 9
j: subpart 10
2: Provisions of this Part may be disapplied or modified in relation to a licensed market (and any issuers listed on that licensed market) under regulations made under section 351
3: This section is a guide only to the general scheme and effect of this Part. Material information and generally available to the market
231: Meaning of material information
1: In this Part, material information
a: a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of quoted financial products of the listed issuer; and
b: relates to particular financial products, a particular listed issuer, or particular listed issuers, rather than to financial products generally or listed issuers generally.
2: In this Part, material information
a: a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of the derivatives; and
b: relates to particular derivatives, a particular underlying, or a particular issuer of a financial product underlying quoted derivatives, rather than to derivatives generally or underlyings generally or issuers generally. 1988 No 234 ss 3 3A
232: Meaning of generally available to the market
1: In this Part, information is generally available to the market
a: if—
i: it is information that has been made known in a manner that would, or would be likely to, bring it to the attention of persons who commonly invest in relevant financial products; and
ii: since it was made known, a reasonable period for it to be disseminated among those persons has expired; or
b: if it is likely that persons who commonly invest in relevant financial products can readily obtain the information (whether by observation, use of expertise, purchase from other persons, or any other means); or
c: if it is information that consists of deductions, conclusions, or inferences made or drawn from either or both of the kinds of information referred to in paragraphs (a) and (b).
2: In this section, relevant financial products
3: Information that is notified in accordance with a continuous disclosure obligation is generally available to the market under subsection (1)﻿(a) immediately on it being made available to participants in a licensed market (without limiting how quickly the reasonable period of dissemination in subsection (1)﻿(a)﻿(ii) may be satisfied in other cases). 1988 No 234 s 4 Certain derivatives treated as being quoted financial products of listed issuer
233: Certain derivatives treated as being quoted financial products of listed issuer
1: If the underlying of a derivative is a quoted financial product of a listed issuer, the derivative must, for the purposes of this subpart and subpart 2
2: Subsection (1) does not apply in relation to subpart 5
3: See also section 275 section 298 Insider conduct
234: Meaning of information insider, inside information, and adviser
1: In this Part, a person is an information insider
a: has material information relating to the listed issuer that is not generally available to the market; and
b: knows or ought reasonably to know that the information is material information; and
c: knows or ought reasonably to know that the information is not generally available to the market.
2: A listed issuer may be an information insider of itself.
3: In this Part, a person is an information insider
a: has material information relating to any of the following that is not generally available to the market:
i: the derivatives:
ii: the underlying:
iii: the issuer of a financial product underlying the derivatives; and
b: knows or ought reasonably to know that the information is material information; and
c: knows or ought reasonably to know that the information is not generally available to the market.
4: In this Part, inside information
a: the information in respect of which a person is an information insider of the listed issuer in question; or
b: in the case of quoted derivatives, the information in respect of which a person is an information insider in relation to the derivatives in question.
5: In this Part, adviser 1988 No 234 ss 8A 8B 11E Relevant interests
235: Relevant interests in financial products (basic rule)
1: In this Act, a person has a relevant interest
a: is a registered holder of the product; or
b: is a beneficial owner of the product; or
c: has the power to exercise, or to control the exercise of, a right to vote attached to the product; or
d: has the power to acquire or dispose of, or to control the acquisition or disposal of, the product.
2: Subsection (1) applies regardless of whether the power or control is express or implied, direct or indirect, legally enforceable or not, related to a particular financial product or not, exercisable presently or in the future, or exercisable alone or jointly with another person or persons (but a power to cast merely 1 of many votes is not, in itself, a joint power of this kind).
3: Subsection (1) applies regardless of whether or not the power or control is or can be made subject to restraint or restriction or is exercisable only on the fulfilment of a condition.
4: If 2 or more persons can jointly exercise a power, each of those persons is taken to have the power. 1988 No 234 s 5
236: Extension of basic rule to powers or controls exercisable through trust, agreement, etc
1: A person has a power or control referred to in section 235
2: Subsection (1) applies regardless of whether or not the trust or agreement is legally enforceable or whether or not the person is a party to it. 1988 No 234 s 5A
237: Extension of basic rule to interests held by other persons under control or acting jointly
A person ( A B
a: B or B's directors are accustomed or under an obligation (whether legally enforceable or not) to act in accordance with A's directions, instructions, or wishes in relation to a power or control referred to in section 235
b: A has the power to exercise, or control the exercise of, the right to vote attached to 20% or more of the voting products of B; or
c: A has the power to acquire or dispose of, or to control the acquisition or disposal of, 20% or more of the voting products of B; or
d: A and B are related bodies corporate; or
e: A and B have an agreement to act in concert in relation to a power or control referred to in section 235 1988 No 234 s 5B(1)
238: Situations not giving rise to relevant interests
1: A person ( A sections 235 to 237
a: the ordinary business of A consists of, or includes, the lending of money or the provision of financial services, or both, and A has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of A; or
b: A is authorised to undertake trading activities on a licensed market and A acts for another person to acquire or dispose of the product on behalf of that person in the ordinary course of A's business of carrying out those trading activities; or
c: A has been authorised by resolution of the directors of a body corporate to act as its representative at a particular meeting of product holders, or a class of product holders, of a listed issuer, and a copy of the resolution is deposited with the listed issuer before the meeting; or
d: A is appointed as a proxy to vote at a particular meeting of product holders, or of a class of product holders, of the listed issuer and the instrument of A's appointment is deposited with the listed issuer before the meeting; or
e: A is a bare trustee of a trust to which the product is subject; or
f: A is a director of a body corporate and the body corporate has a relevant interest in the product; or
g: A is a product holder of a body corporate and the body corporate's constitution gives the product holder pre-emptive rights on the transfer of the product, if all product holders of the products have pre-emptive rights on the same terms; or
h: A is an operator of a designated settlement system (as defined in section 156M(1) Banking (Prudential Supervision) Act 1989
2: Subsection (1)﻿(a) to (h) do not apply to a person if the person is currently declared by the FMA, by notice under section 562(1)﻿(i)
3: For the purposes of subsection (1)﻿(e), a trustee may be a bare trustee even if he or she is entitled as a trustee to be remunerated out of the income or property of the trust. 1988 No 234 s 6 Section 238(1)﻿(h) amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021 Territorial scope
239: Territorial scope
1: Subparts 2 to 6
2: See sections 310 313
2: Insider trading
Insider conduct prohibited
240: Prohibition on insider conduct
1: A person must not do any of the things set out in any of sections 241(1) 242(1) 243(1)
2: A person must not do any of the things set out in any of sections 241(2) 242(2) 243(2) 1988 No 234 s 8
241: Information insider must not trade
1: An information insider of a listed issuer must not trade quoted financial products of the listed issuer.
2: An information insider in relation to quoted derivatives must not trade the derivatives.
3: In this subpart and subpart 3 trade
a: means acquire or dispose of; but
b: does not include acquire, or dispose of, by inheritance or gift. 1988 No 234 s 8C
242: Information insider must not disclose inside information
1: An information insider ( A B
a: trade quoted financial products of the listed issuer; or
b: advise or encourage another person ( C
2: An information insider ( A B
a: trade the derivatives; or
b: advise or encourage another person ( C 1988 No 234 s 8D
243: Information insider must not advise or encourage trading
1: An information insider ( A
a: advise or encourage another person ( B
b: advise or encourage B to advise or encourage another person ( C
2: An information insider ( A
a: advise or encourage another person ( B
b: advise or encourage B to advise or encourage another person ( C 1988 No 234 s 8E
244: Criminal liability for insider conduct
1: A person who contravenes any of sections 241 to 243
a: that the information is material information; and
b: that the information is not generally available to the market; and
c: in the case of a contravention of section 242 section 242(1)﻿(a) or (b) or (2)﻿(a) or (b)
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. 1988 No 234 s 8F When prohibition on insider conduct does not apply
245: Exception for trading required by enactment or rule of law
Section 241 1988 No 234 s 9
246: Exception for disclosure required by enactment or rule of law or by FMA
Section 242
a: an enactment or any rule of law; or
b: the FMA when exercising a power under this Act or any other enactment. 1988 No 234 s 9A
247: Exception for disclosure in connection with preparing PDS or
limited disclosure document Section 242 limited disclosure document Section 247 heading amended 9 August 2017 section 66(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 247 amended 9 August 2017 section 66(2) Regulatory Systems (Commercial Matters) Amendment Act 2017
248: Exceptions in respect of underwriting agreements
1: Section 241
2: Section 242
3: Section 243 1988 No 234 s 9B
249: Exceptions in case of knowledge of person's own intentions or activities
1: A person ( A section 241(1)
2: A person ( B section 243(1) A 1988 No 234 s 9C
250: Exceptions in case of knowledge in relation to derivatives
1: A person ( A section 241(2)
a: transactions or agreements concerning those or any other derivatives; or
b: business activities, transactions, or agreements concerning the underlying.
2: If a person ( B A section 243(2)
a: transactions or agreements concerning derivatives; or
b: business activities, transactions, or agreements concerning the underlying. SR 2010/354 r 3
251: Exception for agent executing trading instruction only
Section 241 A
a: in trading the financial products, A was acting on behalf of another person ( B
b: A traded the financial products on B's specific instruction; and
c: before trading, A did not disclose inside information to B; and
d: A did not advise or encourage B to instruct A to trade. 1988 No 234 s 9D
252: Exceptions from section 241 for takeovers
1: Section 241
a: trading that results from a takeover offer under the Takeovers Code
b: entering into an agreement to acquire or dispose of financial products at a fixed price under a future takeover offer that complies with the Takeovers Code
c: the acquisition or disposal of financial products in performance of an agreement to acquire or dispose of those financial products at a fixed price under a future takeover offer that complies with the Takeovers Code
2: For the purposes of this section and section 253 section 45 Takeovers Code
a: be a takeover offer under the Takeovers Code
b: comply with the Takeovers Code 1988 No 234 s 9E(1)
253: Exceptions from sections 242 and 243 for takeovers
1: Section 242
a: disclosure of inside information to a prospective offeror or its advisers under a prospective takeover offer under the Takeovers Code
b: disclosure of inside information to encourage competing bona fide offers to be made in competition with a takeover offer under the Takeovers Code
c: disclosure of inside information by a prospective offeror or its advisers under a prospective takeover offer under the Takeovers Code
d: disclosure of inside information to an independent adviser to enable that adviser to make a report required by the Takeovers Code
2: A person's reliance on subsection (1)﻿(a) to (c) is subject to the conditions that—
a: the recipient of the information is bound by an obligation of confidentiality in respect of the information; and
b: the purpose of the conduct is to enable or encourage the recipient to make a takeover offer or to participate in a takeover offer.
3: Section 243
a: by the directors of a company that is the target company under a takeover offer under the Takeovers Code
b: by a prospective offeror under a prospective takeover offer under the Takeovers Code
4: A person ( A section 242 243 Takeovers Code B 1988 No 234 s 9E(2)–(5)
254: Exceptions for schemes of arrangement approved under Companies Act 1993
1: Section 241 Part 15
2: Section 243 Part 15
255: Exception for redemption of managed investment products
Section 241 1988 No 234 s 9F
256: Exception for Reserve Bank
Section 241 1988 No 234 s 9G Defences
257: Absence of knowledge of trading
In any proceeding against a person ( A section 241 1988 No 234 s 10
258: Inside information obtained by independent research and analysis
1: In any proceeding against a person ( A section 241 242
2: In any proceeding against a person ( A section 243
3: In subsections (1) and (2), research 1988 No 234 s 10A
259: Equal information
1: In any proceeding against a person ( A section 241
2: In any proceeding against a person ( A section 242
3: In any proceeding against a person ( A section 242 243 B 1988 No 234 s 10B
260: Options and trading plans
1: In any proceeding against a person ( A section 241
a: A traded the financial products under a fixed trading plan or under options with a fixed exercise price; and
b: A entered into the trading plan, or acquired the options, as the case may be,—
i: before A obtained the inside information; and
ii: without any intent to evade section 241
2: A fixed trading plan
a: that—
i: is fixed for a period of time; and
ii: gives the investor no right to withdraw before the end of that period; and
iii: is not subject to any influence by the investor as to trading decisions after the plan has begun; or
b: that is an employee share purchase scheme that comes within paragraph (a) except that the plan may be earlier terminated, and the investor may withdraw, on the termination of the investor's employment or appointment. 1988 No 234 s 10C
261: Chinese wall defence
1: In any proceeding against a person ( A section 241 243
a: A had in place arrangements that could reasonably be expected to ensure that no individual who took part in the decision to trade the financial products or to advise or encourage (as the case may be) received, or had access to, the inside information or was influenced, in relation to that decision, by an individual who had the information; and
b: no individual who took part in that decision received, or had access to, the inside information or was influenced, in relation to that decision, by an individual who had the information; and
c: every individual who had the information and every individual who took part in that decision acted in accordance with the arrangements referred to in paragraph (a).
2: In any proceeding against a person ( A B section 242
3: Market manipulation
262: False or misleading statement or information
A person must not make a statement or disseminate information if—
a: a material aspect of the statement or information is false or the statement or information is materially misleading; and
b: the person knows or ought reasonably to know that a material aspect of the statement or information is false or that the statement or information is materially misleading; and
c: the statement or information is likely to—
i: induce a person to trade in quoted financial products; or
ii: have the effect of increasing, reducing, maintaining, or stabilising the price for trading in those financial products; or
iii: induce a person to exercise a voting right attached to a quoted financial product in a particular way, or to abstain from exercising such a right. 1988 No 234 s 11
263: Exception for takeovers
Section 262 Takeovers Code Takeovers Act 1993 1988 No 234 s 14
264: Criminal liability for false or misleading statement or information
1: A person who contravenes section 262
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. 1988 No 234 s 11A
265: False or misleading appearance of trading
A person must not do, or omit to do, anything if—
a: the act or omission will have, or is likely to have, the effect of creating, or causing the creation of, a false or misleading appearance—
i: with respect to the extent of active trading in quoted financial products; or
ii: with respect to the supply of, demand for, price for trading in, or value of those financial products; and
b: the person knows or ought reasonably to know that the person's act or omission will, or is likely to have, that effect. 1988 No 234 s 11B
266: Exception for short selling and crossings
1: Short selling and crossings under the business rules of a licensed market do not contravene section 262 265
2: In this section,— crossing
a: buyer and seller for that transaction in an agency capacity; or
b: buyer or seller on one side of that transaction in an agency capacity and as a principal on the other side short selling
a: the seller does not have a presently exercisable and unconditional right to vest the financial product in the buyer except where the seller has an unconditional agreement to acquire that right before the date required to settle the sale; or
b: the financial product being sold has been borrowed and the seller has a presently exercisable and unconditional right to vest the product in the buyer. SR 2007/373 rr 19 20
267: Persons treated as contravening false or misleading appearance of trading prohibition
1: A person ( A section 265
2: Subsection (1) does not apply if,—
a: in trading the financial products, A was acting on behalf of another person; and
b: A did not know, and ought not reasonably to have known, when trading the financial products that no change in beneficial ownership would result.
3: A person ( A section 265
a: A has made an offer to trade the financial products of a listed issuer; and
b: either A or, to A's knowledge, an associated person of A has made or proposes to make an opposite offer (the opposite offer
c: the opposite offer substantially matches A's offer as to the number and price of the financial products.
4: This section is subject to section 268 1988 No 234 s 11C(1)
268: Defence
In any proceeding against a person ( A section 265 Example
The trustees of the ABC Family Trust hold financial products on trust. New trustees have been appointed to replace the original trustees. The financial products are transferred to the new trustees in connection with the appointment. No change in the beneficial ownership results ( see section 267(1) section 265 1988 No 234 s 11C(3)
269: Criminal liability for false or misleading appearance of trading
1: A person who contravenes section 265
a: with respect to the extent of active trading in quoted financial products; or
b: with respect to the supply of, demand for, price for trading in, or value of those products.
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. 1988 No 234 s 11D
4: Continuous disclosure
270: Listed issuers must disclose in accordance with listing rules if continuous disclosure listing rules apply
1: A listed issuer must notify information in accordance with the continuous disclosure provisions of the listing rules for the licensed market if—
a: the listed issuer is a party to a listing agreement with the licensed market operator; and
b: the listed issuer has information that those continuous disclosure provisions require it to notify; and
c: the information is material information that is not generally available to the market.
2: Subsection (1) does not affect or limit the situations in which action can be taken (other than under this Act) for a failure to comply with provisions of the listing rules for a licensed market. 1988 No 234 s 19B
271: What are continuous disclosure provisions
In this Act, continuous disclosure provisions 1988 No 234 s 19D
272: No contravention of continuous disclosure provisions by person who takes reasonable steps to ensure listed issuer complies
A person ( A
a: A took all steps (if any) that were reasonable in the circumstances to ensure that the listed issuer complied with the obligation or term or condition; and
b: after doing so, A believed on reasonable grounds that the listed issuer was complying with the obligation or term or condition. 1988 No 234 s 19PA
5: Disclosure of interests of substantial product holders in listed issuers
Substantial holding disclosure obligations
273: Purposes of subpart
1: The purposes of this subpart are to promote an informed market, and to deter insider conduct, market manipulation, and secret dealings in potential takeover bids, by ensuring that participants in financial product markets have access to information concerning the identity and trading activities of persons who are, or may at any time be, entitled to control or influence the exercise of significant voting rights in a listed issuer.
2: This section does not limit—
a: any of section 3 4 229
b: the purpose of section 290
274: Meaning of substantial product holder, substantial holding, and percentage
1: A person is a substantial product holder
2: A person has a substantial holding
3: A person has a separate substantial holding for the purposes of this Act for each class in respect of which the person has a substantial holding under subsection (2).
4: The percentage of financial products that a person has in a class, for the purposes of this subpart, is calculated as follows: ( number held ) × 100 total where— number held total 1988 No 234 s 21
275: Person may be treated as holding financial products where person has relevant interest in certain derivatives
1: This section applies in relation to a derivative if the underlying of the derivative is a quoted voting product of a listed issuer.
2: For the purposes of this subpart, if a person has a relevant interest in the derivative, the person must be treated as having a relevant interest in a number of the underlying quoted voting products that is determined in the prescribed manner.
3: The number of quoted voting products in which a person is treated as having a relevant interest under subsection (2) is in addition to any other relevant interest that the person has in products of that class.
276: Persons must disclose if begin to have substantial holding
1: A person who begins to have a substantial holding (or another substantial holding for another class) in a listed issuer must disclose that fact in accordance with sections 280 281
2: The disclosure must be given as soon as the person knows, or ought reasonably to know, that the person has the substantial holding. 1988 No 234 s 22
277: Substantial product holders must disclose if subsequent movement of 1% or more in holdings
1: A substantial product holder in a listed issuer must disclose, in accordance with sections 280 281
2: There is a movement of 1% or more in a substantial holding if—
a: there is a change in the number of financial products held by the substantial product holder (where number held section 274(4)
b: the percentage worked out using the formula in section 274(4)
3: The disclosure must be given as soon as the person knows, or ought reasonably to know, that that movement has occurred. 1988 No 234 s 23
278: Substantial product holders must disclose if subsequent changes in nature of relevant interests
1: A substantial product holder in a listed issuer must disclose, in accordance with sections 280 281
2: The disclosure must be given as soon as the person knows, or ought reasonably to know, of the change. 1988 No 234 s 24
279: Persons must disclose if cease to have substantial holding
1: A person who ceases to have a substantial holding (or any of the person's substantial holdings) in a listed issuer must disclose that fact in accordance with sections 280 281
2: The disclosure must be given as soon as the person knows, or ought reasonably to know, that the person has ceased to have a substantial holding. 1988 No 234 s 25
280: What disclosure required
1: A person must disclose the matters required to be disclosed under any of sections 276 to 279 section 289
a: the listed issuer; and
b: every operator of a licensed market by which the financial products of the listed issuer are quoted.
2: The person must also disclose, in the prescribed manner, any further matters relating to those matters, the relevant event, or the substantial holding that are required by the regulations.
3: The disclosure must also be accompanied by, or have annexed, any prescribed information. 1988 No 234 s 26
281: Form and method of disclosure
A person must give the disclosure in the prescribed manner. 1988 No 234 s 27
282: Listed issuer must give acknowledgement of disclosure
Every listed issuer must, at the request of a person by whom disclosure is given to it under this subpart, give to the person an acknowledgement of the disclosure in the prescribed manner. 1988 No 234 s 28
283: How to ascertain total financial products in class for purposes of disclosure
1: For the purposes of this subpart, a person may assume that the total number of financial products of a listed issuer in a class most recently published by the following methods is correct:
a: in a document published by a listed issuer and distributed to the holders of that class of products; or
b: on an Internet site maintained by the relevant licensed market operator.
2: Subsection (1) does not apply if that person knows that number is not correct. 1988 No 234 s 29 Exemptions
284: Exemption for persons with interest in other substantial product holders who comply
A person ( A sections 276 to 279
a: another person ( B
b: A has that substantial holding merely for 1 or more of the following reasons:
i: A has a power to exercise, or control the exercise of, the right to vote attached to 20% or more of the voting products of B ( see section 237(b)
ii: A has a power to acquire or dispose of, or control the acquisition or disposition of, 20% or more of the voting products of B ( see section 237(c)
iii: A and B are related bodies corporate ( see section 237(d) 1988 No 234 s 30
285: Exemption for corporate trustees and nominee companies
1: A person ( A sections 276 to 279
a: A has that substantial holding merely because A acts for another person in the ordinary course of business as a corporate trustee or a nominee company; and
b: A has opted in to this exemption by written notice to the FMA (and not withdrawn the notice by further written notice to the FMA).
2: Subsection (1) does not apply if A is currently declared by the FMA, by notice under section 562(1)﻿(i) 1988 No 234 s 31
286: Conditions of exemption for corporate trustees and nominee companies
A person ( A section 285(1)
a: keep under continuing review the transactions of all persons for whom A holds, in A's name, quoted voting products; and
b: inform the listed issuer of the financial products and the operator of the licensed market by which those products are quoted if section 276 279
c: inform that operator if A exercises, or proposes to exercise, in A's own right any voting rights in respect of 5% or more of a class of quoted voting products of a listed issuer. 1988 No 234 s 32
287: Exemption for persons under control or acting jointly with corporate trustees and nominee companies
1: A person ( A sections 276 to 279 section 237 section 285
2: Subsection (1) does not apply if A is currently declared by the FMA, by notice under section 562(1)﻿(i) 1988 No 234 s 32A
288: Extended time for disclosure for trustees, executors, and administrators
If a person is required to comply with section 276 277 279
a: the time limit for disclosure in that section does not apply; and
b: the disclosure must instead be given before the expiry of 14 days after the grant of administration under the Administration Act 1969. 1988 No 234 s 33 Tracing and disclosure of interests in listed issuers
289: FMA may require persons to disclose to market relevant interests and powers to acquire relevant interests
1: The FMA may, by written notice given after having regard to the purpose of this subpart in section 273(1)
a: relevant interests that the person has in financial products of a listed issuer; or
b: powers that the person has or may at any time have to acquire a relevant interest in financial products of a listed issuer.
2: Subsection (1) applies regardless of whether the financial products referred to in subsection (1)﻿(a) and (b) are voting products or not, are quoted or non-quoted, or are issued or yet to be issued.
3: The person must disclose the information required under subsection (1) in accordance with sections 280 281
4: Sections 235 to 238 1988 No 234 s 34
290: Listed issuer may require registered holder or relevant interest holder to disclose relevant interests to it
1: The purpose of this section is to enable a listed issuer to ascertain who has a relevant interest in quoted voting products of the listed issuer and the nature of that interest (regardless of whether those persons are substantial product holders).
2: A listed issuer may, by written notice, require a relevant person to disclose—
a: the name and address of every person who has a relevant interest in quoted voting products of the listed issuer and the nature of that interest; and
b: to the extent that that relevant person is unable to supply any of that information in relation to a person having a relevant interest in those financial products, other particulars that will, or are likely to, assist in identifying that person and the nature of the interest.
3: The relevant person must disclose the information required under subsection (2) in writing to the listed issuer as soon as practicable after the person receives the notice.
4: In this section, relevant person
a: is registered as the holder of quoted voting products of the listed issuer; or
b: was named in a previous disclosure under this section as having a relevant interest in quoted voting products of the listed issuer. 1988 No 234 s 35
291: Listed issuer may require person who has relevant interest to disclose information to it
1: A listed issuer may, by written notice, require a person who the listed issuer believes has, or may have, a relevant interest in quoted voting products of the listed issuer to disclose the information the listed issuer specifies for the purpose of assisting the listed issuer to ascertain who is, or may be, a substantial product holder in the listed issuer.
2: The relevant interest holder must disclose the information required under subsection (1) in writing to the listed issuer as soon as practicable after the holder receives the notice. 1988 No 234 s 35A
292: Form and method of notice requiring disclosure
The notice requiring disclosure under section 289 290 291 1988 No 234 s 35B
293: Listed issuers must make available information on substantial holdings
1: Every listed issuer must, in accordance with this section, make available the following information:
a: the names of all persons who, according to the issuer's records and disclosures made under section 280(1)﻿(b)
b: the number and class of quoted voting products of the listed issuer that, according to the issuer's records and disclosures made under section 280(1)﻿(b)
c: the total number of voting products in each of those classes as at each balance date.
2: The information must be made available,—
a: for listed issuers that are required to prepare an annual report under the Companies Act 1993
b: for every other listed issuer, in a notice sent to every holder of its quoted voting products not later than 3 months after the balance date.
3: A listed issuer that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5 1988 No 234 ss 35F 35H
294: No liability for publication of substantial holdings
No listed issuer is liable for any false or misleading information made available under section 293 1988 No 234 s 35I
295: Notice under this subpart not to affect incorporation of listed issuer or constitute notice of trust
1: Nothing in, or done under, this subpart—
a: affects the incorporation of a listed issuer; or
b: limits section 92 93 94
2: A listed issuer is not, because of anything done for the purposes of this subpart, affected with notice of, or put on inquiry as to, the rights of any person in relation to any financial products. 1988 No 234 s 35J
6: Disclosure of relevant interests in quoted financial products by directors and senior managers of listed issuers
296: Purposes of subpart
1: The purposes of this subpart are to promote good corporate governance, and to deter, and to assist in the monitoring of, insider conduct and market manipulation, by—
a: ensuring that information about directors' and senior managers' trading activities in listed issuers is available to participants in financial product markets; and
b: enabling the dates of trades to be checked against the dates at which material information became generally available to the market.
2: This section does not limit any of section 3 4 229
297: Directors and senior managers of listed issuers must disclose relevant interests and dealings in relevant interests
1: A director or senior manager of a listed issuer who has a relevant interest in a quoted financial product of the listed issuer or a related body corporate must disclose that fact, in accordance with sections 299 300
a: the listing of the listed issuer; or
b: the person's appointment as a director or senior manager.
2: A director or senior manager of a listed issuer who acquires or disposes of a relevant interest in a quoted financial product of the listed issuer or a related body corporate must disclose that fact, in accordance with sections 299 300
a: in the case of any of the following acquisitions or disposals, 20 working days after the acquisition or disposal:
i: an acquisition under an employee share purchase scheme:
ii: an acquisition under a dividend reinvestment plan:
iii: an acquisition under a share top-up plan:
iv: an acquisition or a disposal that results from an amalgamation under Part 13
v: an acquisition or a disposal that results from an arrangement approved under Part 15
vi: a prescribed acquisition or disposal; or
b: in any other case, 5 trading days after the acquisition or disposal.
3: This section does not apply to specified derivatives.
4: This section is subject to sections 299 to 303A
5: In this section,— dividend reinvestment plan clause 10 share top-up plan 1988 No 234 s 19T Section 297(4) amended 9 August 2017 section 67 Regulatory Systems (Commercial Matters) Amendment Act 2017
298: Disclosure of relevant interests and dealings in relevant interests in relation to specified derivatives
1: A director or senior manager of a listed issuer who has a relevant interest in a specified derivative must disclose that fact, in accordance with sections 299 300
a: the listing of the listed issuer; or
b: the person's appointment as a director or senior manager.
2: A director or senior manager of a listed issuer who acquires or disposes of a relevant interest in a specified derivative must disclose that fact, in accordance with sections 299 300
3: In this subpart, specified derivative
a: a quoted derivative where the underlying is a financial product of the listed issuer or a related body corporate; or
b: a derivative that is treated as being a quoted financial product of the listed issuer under section 233
4: This section is subject to sections 299 to 303A Section 298(4) amended 9 August 2017 section 68 Regulatory Systems (Commercial Matters) Amendment Act 2017
299: What disclosure required
1: The director or senior manager must disclose the relevant interest, acquisition, or disposal—
a: to the licensed market operator with which the listed issuer is a party to a listing agreement; and
b: in the interests register of the listed issuer kept under this subpart.
2: The director or senior manager must also disclose, in the prescribed manner, any further matters relating to the relevant interest, acquisition, or disposal that are required by the regulations. 1988 No 234 s 19U
300: Form and method of disclosure
The director or senior manager must disclose the relevant interest, acquisition, or disposal in the prescribed manner. 1988 No 234 s 19V
301: Disclosure obligation applies for 6 months after ceasing to hold office
A person is treated as being a director or senior manager for the purposes of this subpart for 6 months after that person ceases to be a director or senior manager, and must continue to comply with this subpart for that period. 1988 No 234 s 19W
302: Exemption for directors or senior managers who disclose substantial holdings
A director or senior manager who has, or who acquires or disposes of, a relevant interest in a quoted financial product does not have to disclose that fact under section 297
a: the director or senior manager must make a disclosure under section 276 277 279
b: the disclosure under that section concerns the same relevant interest; and
c: the director or senior manager discloses in accordance with that section; and
d: it is stated in the disclosure made in accordance with that section that the director or senior manager is a director or senior manager of the listed issuer. SR 2003/382 r 21
303: Exemption for overseas listed issuers
1: A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a quoted financial product of that overseas listed issuer does not have to disclose that fact under section 297
2: A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a specified derivative does not have to disclose that fact under section 298
3: A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a quoted financial product of a related body corporate of that overseas listed issuer does not have to disclose that fact under section 297
a: the director or senior manager is also a director or senior manager of the related body corporate; and
b: the related body corporate is a listed issuer, but not an overseas listed issuer.
4: A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a specified derivative does not have to disclose that fact under section 298
a: the director or senior manager is also a director or senior manager of the related body corporate; and
b: the related body corporate is a listed issuer, but not an overseas listed issuer.
5: In this section, overseas listed issuer
a: whose financial products are also approved for trading on a securities exchange that—
i: is not a licensed market; and
ii: has primary jurisdiction for the listing requirements for the listed issuer and the quotation of its financial products; and
b: in relation to which no licensed market has primary jurisdiction for the listing requirements for the listed issuer and the quotation of its financial products. SR 2004/105 cl 12
303A: Extended time for disclosure for trustees, executors, and administrators
1: This section applies if—
a: a person ( A
b: A acquires a relevant interest in—
i: a quoted financial product of the listed issuer or a related body corporate; or
ii: a specified derivative; and
c: the relevant interest is acquired merely because A is the trustee of a testamentary trust or the executor or administrator of the estate of a deceased person.
2: The time limit for disclosure in section 297 298 Administration Act 1969 Section 303A inserted 9 August 2017 section 69 Regulatory Systems (Commercial Matters) Amendment Act 2017
304: Listed issuer must keep interests register
1: A listed issuer must keep an interests register for disclosures made to it under this subpart.
2: The interests register must be kept at—
a: the registered office of the listed issuer; or
b: any other place in New Zealand of which notice is given in accordance with subsection (3).
3: If the interests register is not kept at the listed issuer's registered office, or the place at which it is kept is changed, the listed issuer must give written notice to the FMA of the place at which it is kept within 10 working days after it is first kept elsewhere or is moved.
4: The interests register may be the same interests register as that kept under section 189(1)﻿(c)
5: This section and sections 305 306 Companies Act 1993 1988 No 234 s 19Z
305: Public inspection of interests register
An interests register must—
a: be available for inspection, by a person who serves on the listed issuer a written notice of an intention to inspect, at the place at which the register is kept between the hours of 9 am and 5 pm on each working day during the inspection period; and
b: otherwise be available for inspection in the prescribed manner (if any).
306: Copies of documents
A person may require a copy of, or an extract from, an interests register to be sent to the person—
a: within 5 working days after the person has made a request in writing for the copy or extract; and
b: if the person has paid a prescribed fee.
307: Offences relating to interests register
1: A listed issuer that contravenes section 304(1) to (3) 305
2: If a listed issuer fails to provide a copy of, or an extract from, an interests register in accordance with a request under section 306
3: The offences in this section are infringement offences ( see subpart 5 1988 No 234 s 19ZF
7: Licensing of markets for trading financial products
308: Principles guiding exercise of powers under this subpart
The Minister and the FMA must (without limitation) have regard to the following matters in the exercise of powers under this subpart:
a: the purposes of this Part (in addition to the main and additional purposes of this Act set out in sections 3 4
b: the following matters (if relevant):
i: the nature of the activities conducted, or proposed to be conducted, on the market; and
ii: the size, or proposed size, of the market; and
iii: the nature of the financial products dealt with, or proposed to be dealt with, on the market; and
iv: the persons who participate in, or are likely to participate in, the market (either directly or by using the services of participants); and
v: the technology used, or proposed to be used, in the operation of the market:
c: in relation to an application for a licence issued under section 317 Need for financial product market licence
309: What is a financial product market
1: For the purposes of this Act, a financial product market
a: offers to acquire or dispose of financial products are made or accepted; or
b: offers or invitations are made to acquire or dispose of financial products that are intended to result or may reasonably be expected to result, directly or indirectly, in—
i: the making of offers to acquire or dispose of financial products; or
ii: the acceptance of offers of that kind.
2: However, subsection (1) does not apply to the extent that the facility constitutes—
a: a person making or accepting offers or invitations to acquire or dispose of financial products on the person's own behalf or on behalf of 1 party to the transaction only (for example, a continuous issuer of financial products):
b: an issuer or a related body corporate of an issuer matching persons who wish to acquire financial products of that issuer with persons who wish to dispose of financial products of that issuer (whether at a specified price or otherwise):
c: a service that is covered by a market services licence:
d: any other conduct of a kind prescribed by the regulations.
3: Subsection (2)﻿(a) does not apply if the conduct of a person is declared by the FMA, by notice under section 562(1)﻿(i) Corporations Act 2001 s 767A (Aust)
310: Need for financial product market licence
A person must not operate, or hold out that the person operates, a financial product market in New Zealand, unless—
a: the person has a licence to operate that market under this Part; or
b: the market is exempt from the licensing requirement under this subpart under section 312 Corporations Act 2001 s 791A (Aust)
311: Prohibitions on holding out
A person must not, if it is not the case, hold out that—
a: the person has a financial product market licence; or
b: the operation of a financial product market in New Zealand is authorised by a financial product market licence; or
c: a financial product market is exempt from this Part; or
d: the person is a participant in a licensed market. Corporations Act 2001 s 791B (Aust)
312: Exemptions
1: A financial product market is exempt from the licensing requirement under this subpart if—
a: the market satisfies either of the following criteria (assessed in accordance with the frameworks or methodologies specified in notices issued by the FMA under subpart 4
i: the number of relevant transactions on the market does not exceed 100 transactions; or
ii: the aggregate value of the financial products acquired under the relevant transactions on the market is less than $2 million; or
b: it is a prescribed wholesale market; or
c: it is a prescribed exempt market.
2: The relevant transactions on the market
a: if the market has been in operation for a full financial year of the market operator, the transactions entered into on the market during that financial year:
b: if paragraph (a) does not apply, all of the transactions entered into on the market in the previous 12 months.
313: When financial product market taken to be operated in New Zealand
1: For the purposes of this subpart, a financial product market is taken to be operated in New Zealand if—
a: it is operated by an entity that is incorporated or registered in New Zealand or by an individual who is ordinarily resident in New Zealand; or
b: all, or a significant part of, the facility for the financial product market is located in New Zealand; or
c: the financial product market is promoted to investors in New Zealand by or on behalf of the operator of that market or by or on behalf of an associated person of that operator.
2: For the purposes of subsection (1)﻿(c), a financial product market is not promoted to investors in New Zealand merely because it is accessible by those investors.
3: Subsection (1) does not limit the circumstances in which a financial product market is operated in New Zealand for the purposes of this subpart. Corporations Act 2001 s 791D (Aust) General obligations of licensed market operator
314: General obligations in respect of licensed markets
1: A licensed market operator must,—
a: to the extent that is reasonably practicable, do all things necessary to ensure that each of its licensed markets is a fair, orderly, and transparent market; and
b: have adequate arrangements for operating its licensed markets, including arrangements—
i: for notifying disclosures made to it under a disclosure obligation and for continuing to make those disclosures available; and
ii: for handling conflicts between the commercial interests of the licensed market operator and the need for the licensed market operator to ensure that the markets operate in the way referred to in paragraph (a); and
iii: for monitoring the conduct of participants on or in relation to the markets; and
iv: for enforcing compliance with the relevant market rules (for example, by having a sufficiently independent adjudicative body to adjudicate on contraventions of market rules that are referred to it); and
c: have sufficient resources (including financial, technological, and human resources) to operate its licensed markets properly; and
d: have adequate arrangements for ensuring that the criteria specified in section 316(c) 317(1)﻿(d)
2: In subsection (1)﻿(b)﻿(i), disclosure obligation
a: any provision of subpart 4 5 6
b: an alternative disclosure obligation:
c: a provision of this Act, the regulations, or another enactment that requires information to be notified or disclosed to a licensed market operator for the purpose of the information being made available to participants in a licensed market. 1988 No 234 s 36Y Section 314(1)﻿(b)﻿(i) replaced 9 August 2017 section 70(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 314(2) inserted 9 August 2017 section 70(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Issue of licence
315: Application for licence
1: A person may apply for a licence to operate a financial product market in the manner that is specified by the FMA.
2: The applicant must provide to the FMA or the Minister the information that is required by the FMA or the Minister to assist in determining the application (for example, the draft market rules).
3: The FMA must, within a reasonable time, give the application to the Minister with advice about the application.
316: When licence may be issued
The Minister, after receiving an application under section 315
a: the applicant is capable of operating a financial product market in accordance with the general obligations under section 314
b: there is no reason to believe that the applicant will not comply with the market operator obligations that will apply if the licence is granted; and
c: the applicant is a body corporate and is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 Corporations Act 2001 s 795B(1) (Aust)
317: When licence may be issued for overseas-regulated market
1: If an applicant is authorised to operate a financial product market in an overseas jurisdiction in which its principal place of business is located, the Minister, after receiving an application under section 315
a: there is no reason to believe that the applicant will not comply with the market operator obligations that will apply if the licence is granted; and
b: the operation of the market in that jurisdiction is subject to requirements and supervision that are sufficiently equivalent, in relation to the degree of investor protection and market integrity they achieve, to the requirements and supervision to which financial product markets are subject under this Act in relation to those matters; and
c: the applicant undertakes to co-operate with the FMA by sharing information and in other appropriate ways; and
d: no director, senior manager, or controlling owner of the applicant—
i: would be disqualified under section 14(2)
ii: has been disqualified from managing a body corporate under the laws of any other jurisdiction.
2: In considering an application for a licence under this section or exercising another power under this subpart in relation to a market licensed under this section, the Minister must have regard to the following matters (in addition to the matters in section 308
a: the criteria that the licensed market operator or applicant satisfied to obtain an authorisation to operate the same market in the overseas jurisdiction in which its principal place of business is located; and
b: the obligations the licensed market operator or applicant must continue to satisfy to keep the authorisation; and
c: the level of supervision to which the operation of the market in that jurisdiction is subject; and
d: whether adequate arrangements exist for co-operation between the FMA and the authority that is responsible for that supervision.
3: Nothing in this section prevents the Minister from issuing a licence under section 316 Corporations Act 2001 s 795B(2) (Aust)
318: Conditions of licence
1: A financial product market licence is subject to the following conditions:
a: a condition that the licensed market operator may, under the licence, operate only the financial product market covered by the licence (as described in the licence); and
b: a condition that specifies the clearing and settlement arrangements that must be followed or the type of settlement arrangements that may be used for the financial product markets covered by the licence; and
c: a condition that specifies the arrangements for enforcing breaches of the market rules; and
d: any other conditions imposed by the Minister that the Minister thinks fit.
2: The Minister may only impose those conditions on issue of the licence or by varying the conditions under section 322
3: The licensed market operator must comply with the conditions of the licence. Corporations Act 2001 s 796A (Aust)
319: Procedural requirements
1: The Minister must not refuse to issue a licence, or include conditions that are materially more restrictive than those requested in the application, unless—
a: the Minister gives the applicant no less than 10 working days' written notice of the following matters before he or she exercises the power:
i: that the Minister may refuse to issue the licence or may include conditions that are materially more restrictive than those requested in the application; and
ii: the reasons why he or she may do so; and
b: the Minister gives the applicant or the applicant's representative an opportunity to make written submissions on the matter within that notice period.
2: The FMA must give written notice of the Minister's decision under section 316 317
320: Licence may cover more than 1 financial product market
1: The same financial product market licence may cover 2 or more financial product markets.
2: In that case,—
a: a reference in this Act to the financial product market to which a licence covers is taken instead to be a reference to each of those financial product markets severally; and
b: the decision to add another financial product market to a licence must be made on the same basis as a decision to issue a licence; and
c: a financial product market licence may be varied, suspended, or cancelled in respect of 1 of those markets only, as if each of those markets were separately licensed.
321: FMA must maintain list of licensed markets on Internet site
1: The FMA must maintain a list of licensed markets on its Internet site.
2: The list must include, for each licensed market,—
a: the financial product market that the licence covers; and
b: the name of the licensed market operator; and
c: when the licence was issued; and
d: the conditions of the licence; and
e: a reference to the market rules for the financial product market that have been approved under this subpart (but the list need not incorporate them); and
f: if it is a market to which regulations apply under section 351
g: if the licence is issued under section 317
h: if the licence has been suspended or cancelled, that fact and the date on which that action took effect.
3: The FMA must update the list if it becomes aware that there is a change, or error, in the information on the list (for example, the approval of the market rules or a change in the name of the licensed market operator). Changes to licences
322: Variation of conditions
1: The Minister may, on his or her own initiative under subsection (2) or on the application of a licensed market operator, vary the conditions of the licence at any time after the licence is issued by written notice to the licensed market operator.
2: The Minister may vary the conditions of the licence on his or her own initiative only—
a: in 1 of the following circumstances:
i: if there is a significant change in market circumstances that the Minister is satisfied makes it necessary to vary the conditions, having regard to the market operator obligations and the matters referred to in section 308
ii: in accordance with section 343
b: after following the procedure set out in section 324(1)
3: A licensed market operator may apply, in the manner that is specified by the FMA, for the Minister to vary the conditions of the licence.
4: A licensed market operator must provide to the FMA or the Minister the information that is required by the FMA or the Minister to assist it in determining the application.
5: For the purposes of this subpart, vary
323: Minister may suspend or cancel licence
The Minister may, by written notice to the licensed market operator, suspend (for a specified period or until a specified requirement is met) or cancel a licence—
a: if the licensed market operator, by written notice, requests the Minister to do so; or
b: if the Minister is satisfied that the licensed market operator has ceased to carry on the business of operating the financial product market; or
c: if—
i: the licensed market operator has ceased to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 section 316
ii: the Minister is satisfied that the licensed market operator has ceased to meet the requirement in section 317(1)﻿(d) section 317
d: if the licensed market operator has become subject to an insolvency event; or
e: in accordance with section 343
f: in the case of a licence issued under section 317
i: the licensed market operator ceases to be authorised to operate a financial product market in the overseas jurisdiction in which the licensed market operator's principal place of business is located; or
ii: there is a change to the regulatory regime applying in relation to the market to which the licence relates in the jurisdiction in which the licensed market operator's principal place of business is located and, because of that change, the Minister is not satisfied as to the matters in section 317(1)﻿(b) Corporations Act 2001 s 797B (Aust)
324: Procedure for varying of conditions or suspension or cancellation of licence
1: The Minister must not vary the conditions of a licence on his or her own initiative under section 322(1) section 322 section 323
a: the Minister gives the licensed market operator no less than 10 working days' written notice of the following matters before he or she exercises the power:
i: that the Minister may exercise the power; and
ii: the reasons why he or she may exercise the power; and
b: the Minister gives the licensed market operator or the licensed market operator's representative an opportunity to make written submissions on the matter within that notice period.
2: The FMA must give written notice of the Minister's decision under section 322 323
325: Effect of suspension
1: A person whose financial product market licence is suspended is taken not to hold that licence while it is suspended.
2: However, the Minister may specify in the written notice to the licensed market operator that subsection (1) does not apply for specified purposes. Corporations Act 2001 s 797D (Aust)
326: Variation or revocation of suspension
The Minister may at any time vary or revoke a suspension of a financial product market licence by giving written notice to the licensed market operator. Corporations Act 2001 s 797E (Aust) Approval of contractual market rules
327: Licensed markets must be operated under market rules that comply with this subpart
1: A licensed market operator must not operate a licensed market except in accordance with market rules for that market that—
a: include the required matters set out in section 328
b: have effect under section 329
2: This section and sections 328 to 332 section 317 1988 No 234 s 36G
328: Required matters for market rules
1: Market rules for a financial product market for trading equity securities, debt securities, or managed investment products must include listing rules and business rules (by whatever name called and however they are imposed).
2: Market rules for a financial product market for trading derivatives must include business rules (by whatever name called and however they are imposed).
3: Listing rules must include rules that—
a: relate to the approval of persons for the purpose of enabling financial products issued by those persons to be traded on the market; and
b: require those persons to be party to a listing agreement with the licensed market operator and that relate to the entry into, and revocation of, listing agreements; and
c: relate to the governance of those persons; and
d: relate to the conduct or activities of those persons in relation to that market or to financial products traded on that market; and
e: relate to the monitoring and enforcement of those rules.
4: Business rules must include rules that—
a: relate to the authorisation of persons to undertake trading activities on, or otherwise participate in, the market; and
b: relate to the conduct or activities of those persons in relation to the market; and
c: govern the conduct of business on the market; and
d: relate to the monitoring and enforcement of those rules. 1988 No 234 s 36H
329: When market rules have effect
A market rule, or change to a market rule, for a licensed market has no effect, either in contract or for the purposes of section 327 section 331
330: Approval process for proposed market rules and rule changes
1: If a person applies for the approval of any proposed market rules or proposed rule change by the FMA, the FMA must, within the approval period,—
a: approve the market rules or rule change; or
b: extend the approval period; or
c: decline to approve the market rules or rule change.
2: An application under this section must be made in the manner specified by the FMA.
3: The approval period is 40 working days, or (if extended under subsection (1)﻿(b)) 60 working days, after the FMA receives the application.
4: If, during the approval period, the applicant revises and resubmits the proposed market rules or rule change, then this does not result in the commencement of a new approval period under this section if the revision—
a: is made in response to comments by the FMA; or
b: consists of immaterial changes (for example, typographical changes). 1988 No 234 s 36K
331: Approval of proposed market rules and changes
1: The FMA must approve the proposed market rules or rule change provided to it under section 330
a: it is not in the public interest to do so after having had regard to—
i: the purposes of this Part (and the main and additional purposes of the Act stated in sections 3 4
ii: the consistency of the rules or the rule change with the obligations under section 314
b: (if subpart 4
i: the purposes of this Part (and the main and additional purposes of the Act stated in sections 3 4
ii: any other matters that the FMA considers relevant.
2: The FMA must, in considering whether to approve proposed market rules for a new market, take into account any previously approved market rules that the applicant proposes to also apply to the relevant market.
3: An approval under this section is secondary legislation ( see Part 3
4: However, the approval does not need to incorporate the market rules or rule change that have been approved. 1988 No 234 s 36L The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication The maker must comply with section 332(3) LA19 ss 73 74(1)﻿(a) cl 14 The Ministry of Foreign Affairs and Trade considers that the secondary legislation may have international transparency obligations under the CPTPP s 75 LA19 ss 74(2) 75 Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 331(3) inserted 28 October 2021 section 3 Secondary Legislation Act 2021 Section 331(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
332: Notice of decision on rules
1: The FMA must give written notice of its decision under section 331
a: the applicant for approval; and
b: every other prescribed person.
2: If the FMA extends the approval period under section 330
3: If the FMA approves the proposed market rules or rule change, the FMA must also publish a notice section 331
4: Section 332(3) amended 28 October 2021 section 3 Secondary Legislation Act 2021 Section 332(4) repealed 28 October 2021 section 3 Secondary Legislation Act 2021
333: Power of FMA to request changes to market rules on certain matters
1: The FMA may, if it considers it necessary or desirable to promote any of the purposes of this Part or the meeting of any of the market operator obligations, request a licensed market operator to prepare a draft change to the market rules for any of its licensed markets on a specified matter.
2: The FMA may make a request under subsection (1) by written notice to the licensed market operator only—
a: after carrying out a review under section 338(1) or (2)
b: if it believes on reasonable grounds that it is urgent to do so at any other time.
3: The licensed market operator must, as soon as practicable but, in any case, before the expiry of 60 working days after receiving the written notice (or any further time allowed by the FMA), do either or both of the following things:
a: provide a proposed rule change to the FMA under section 330
b: provide the FMA with a written report that—
i: identifies any requested matter or matters that have not been addressed by a proposed rule change; and
ii: explains why the licensed market operator has not done so; and
iii: suggests alternative ways (if any) by which the matter or matters are being or may be dealt with; and
iv: sets out if, when, and how the licensed market operator proposes to provide for the matter or matters (if at all).
4: This section does not allow the FMA to request a draft market rule or change on a matter that is not within the matters set out in section 328 1988 No 234 s 36M
334: Overseas-regulated markets must give notice of market rules and rule changes to FMA
1: A licensed market operator of a market licensed under section 317
a: provide the market rules of the licensed market to the FMA at the time of the application under section 315
b: as soon as practicable after any changes are made to those rules, provide the rule change to the FMA together with the date of the change and an explanation of its purpose.
2: The FMA may, by written notice to the licensed market operator (or applicant for a licence under section 317 section 328 Corporations Act 2001 s 793D (Aust)
335: Market rules must be available for public inspection
1: A licensed market operator must ensure that a copy of the market rules for each of its licensed markets—
a: is available for public inspection, free of charge and during normal office hours, at the head office of that licensed market operator; and
b: is published on an Internet site maintained by, or on behalf of, the licensed market operator at all reasonable times.
2: A licensed market operator that fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 1988 No 234 s 36Q
336: Application of Acts relating to regulations to contractual market rules
To avoid doubt, market rules are not—
a: regulations for any purpose; or
b: secondary legislation. 1988 No 234 s 36R Section 336(b) replaced 28 October 2021 section 3 Secondary Legislation Act 2021 Monitoring of market operator obligations
337: Licensed market operator must give report on compliance with market operator obligations to FMA
1: A licensed market operator must, within 3 months after the end of its reporting period, give a report to the FMA and the Minister on the extent to which it has complied with its market operator obligations in the preceding reporting period.
2: The report must contain, or be accompanied by, the information (if any) in relation to the licensed market operator's performance against its market operator obligations specified by the FMA before the commencement of the relevant reporting period.
3: The reporting period 1988 No 234 s 36YA
338: FMA to carry out market operator obligations reviews
1: The FMA may, at any time, carry out a review of how well a licensed market operator is meeting any or all of its market operator obligations.
2: The FMA must carry out a review of how well a licensed market operator is meeting all of its market operator obligations at least once in respect of each reporting period of the licensed market operator.
3: The FMA—
a: may, in carrying out the review, take into account the most recent report and other information provided under section 337
b: must, after carrying out the review, provide a draft written report on its review to the licensed market operator and take into account any submissions made by the licensed market operator within the reasonable period for submissions specified by the FMA.
4: The FMA must not carry out a review of a designated settlement system (within the meaning of section 156M(1) Banking (Prudential Supervision) Act 1989 1988 No 234 s 36YB Section 338(4) amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021
339: FMA must make written report on market operator obligations review
1: The FMA must give a written report on a review under section 338
a: as soon as practicable after carrying out the review; and
b: in any case, within 3 months after the licensed market operator has provided its report to the FMA under section 337
2: The FMA must also publish the written report on the review on an Internet site maintained by or on behalf of the FMA.
3: However, the FMA may, in publishing the written report of its review, omit from the published report any information for which it considers there would be a good reason for withholding under the Official Information Act 1982 1988 No 234 s 36YC
340: FMA may require licensed market operator to submit action plan on failure to meet market operator obligations
1: If the FMA considers, after carrying out a review under section 338(1) or (2)
2: The notice must—
a: set out the details of the failure; and
b: specify the date by which the action plan must be submitted to the FMA.
3: The licensed market operator must, as soon as practicable but in any case before the date specified by the FMA, do either or both of the following things:
a: provide an action plan that addresses the failure and specifies—
i: the actions that the licensed market operator proposes to take to remedy the failure or to avoid any further failure; and
ii: the timetable for taking those actions:
b: provide the FMA with a written report that—
i: identifies any matter that has not been addressed by an action plan; and
ii: explains why the licensed market operator does not consider that matter to be a failure or gives any other reasons why the licensed market operator has not provided an action plan on the matter. 1988 No 234 s 36YD
341: Approval, amendment, or rejection of action plan
1: If a licensed market operator submits an action plan, the FMA may—
a: approve the action plan; or
b: require the licensed market operator to amend the action plan and resubmit it to the FMA by a specified date for approval or rejection; or
c: reject the action plan.
2: If the FMA requires the licensed market operator to amend an action plan provided to the FMA, the licensed market operator must do either or both of the following things:
a: provide an amended action plan that addresses the matter required to be amended:
b: provide the FMA with a written report that—
i: identifies any matter that has not been addressed by an amendment to the action plan first provided; and
ii: explains why the licensed market operator does not consider that the matter needs amending or gives any other reasons why the licensed market operator has not provided an amendment addressing the matter.
3: If the FMA approves the action plan (whether as first provided or after amendment), the licensed market operator must comply with the action plan.
4: An action plan that has been approved by the FMA may be varied at any time by agreement between the licensed market operator and the FMA. 1988 No 234 s 36YE
342: Minister may give market operator obligations direction to licensed market operator
1: The Minister may, after having regard to any advice of the FMA, give a written direction to a licensed market operator if—
a: the Minister considers that the licensed market operator has failed or is failing to meet any 1 or more of its market operator obligations; and
b: any of the following has occurred:
i: the licensed market operator has not provided an action plan when required under section 340
ii: the licensed market operator has not provided an amended action plan when required under section 341
iii: the FMA has rejected a licensed market operator's action plan; or
iv: the licensed market operator has not complied with an approved action plan.
2: The direction may specify—
a: the actions that the licensed market operator must take to remedy any failure or to avoid any further failure to meet any 1 or more of its market operator obligations; and
b: the timetable for taking those actions.
3: The licensed market operator must comply with the direction. 1988 No 234 s 36YF
343: Minister may vary, suspend, or cancel licence
1: If the Minister could give a direction under section 342 section 324
2: If the Minister could give a direction under section 342 section 316 317 section 324 Control limits on licensed market operators
344: Power to impose control limits on licensed market operators
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations imposing, altering, or revoking a control limit (which is the highest percentage of voting rights in the body corporate that may be held or controlled by any person) for a body corporate that—
a: is, or may be, a licensed market operator; or
b: is a holding company of a body corporate referred to in paragraph (a).
2: A control limit does not apply to a body corporate before its licence as a licensed market operator takes effect.
3: The Minister must not make a recommendation for the purposes of subsection (1) unless he or she has consulted the body corporate and is satisfied that it is in the public interest to make the recommendation.
4: For the purposes of this section and the rest of this subpart,— control voting right
a: 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:
b: on a proposal that affects rights attached to the financial product that confers the voting right:
c: during the liquidation of the body corporate:
d: in respect of a special, immaterial, or remote matter that is inconsequential to control of the body corporate.
5: Regulations under this section are secondary legislation ( see Part 3 1988 No 234 s 36S The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 344(5) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
345: Control limit not to be exceeded
1: No person may hold or control voting rights in a body corporate that exceed any control limit for that body corporate that applies under regulations made under section 344 section 347
2: For the purposes of this section, voting rights held or controlled by an associated person of a person must be treated as voting rights held or controlled by that person.
3: Subsection (1) does not apply to any voting rights in a body corporate held or controlled by a person to the extent that those rights were held or controlled by that person before the control limit was imposed or decreased, as the case may be. 1988 No 234 s 36T
346: Effect of exceeding control limit
1: Every person who contravenes section 345
a: must take the steps that are necessary to ensure that the person is no longer in contravention of that section at the end of 60 working days after the date of first contravention; and
b: must not exercise or control the exercise of any voting rights that exceed the control limit while the person contravenes that section.
2: An exercise of voting rights in a body corporate by or under the control of a person in contravention of subsection (1)﻿(b) is of no effect, and must be disregarded in counting the votes concerned.
3: However, subsections (1)﻿(b) and (2) do not invalidate a resolution if the votes concerned were counted by the body corporate in good faith and without knowledge that the voting rights were exercised in contravention of subsection (1)﻿(b). 1988 No 234 s 36U
347: Application for approval to exceed control limit
1: A person may apply to the FMA for approval for any person or class of persons to exceed a control limit for a body corporate that applies under regulations made under section 344
2: The FMA must, within a reasonable time, give the application to the Minister with advice about the application.
3: The Governor-General may, by Order in Council made on the recommendation of the Minister, approve an application under subsection (1) and specify the terms and conditions (if any) applying to the approval.
4: The Minister may not make a recommendation for the purposes of subsection (3) unless,—
a: if the body corporate is not the applicant or 1 of the applicants for the approval, he or she has consulted the body corporate on the application; and
b: he or she is satisfied that it is in the public interest to make the recommendation.
5: An approval granted under subsection (3)—
a: may have retrospective effect; but
b: is of no effect if any term or condition of the approval has not been complied with.
6: An approval granted under subsection (3) is for the purposes of the control limit only, and not for the purposes of any other enactment.
7: An order under this section—
a: is secondary legislation ( see Part 3
b: may commence in accordance with subsection (5)﻿(a), even if it is not yet published. 1988 No 234 s 36V The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives, unless it relates exclusively to an individual (in which case a transitional exemption applies under Schedule 1 LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 347(7) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
348: Revocation or amendment of approval
1: The Governor-General may, by Order in Council made on the recommendation of the Minister,—
a: revoke an approval granted under section 347
b: vary, revoke, or suspend any term or condition of such an approval.
2: The Minister may not make a recommendation for the purposes of subsection (1) unless—
a: he or she has consulted the person to whom the approval was granted and the body corporate concerned; and
b: he or she is satisfied that it is in the public interest to make the recommendation.
3: An order under this section is secondary legislation ( see Part 3 1988 No 234 s 36W The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives, unless it relates exclusively to an individual (in which case a transitional exemption applies under Schedule 1 LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 348(3) inserted 28 October 2021 section 3 Secondary Legislation Act 2021 Other provisions relating to licensing of financial product markets
349: FMA may give advice to Minister
1: The FMA may give advice to the Minister in relation to any matter in respect of which the Minister has a discretion under this subpart or any other matter concerning financial product markets.
2: If the Minister has delegated a function or power to the FMA under this subpart, any obligation under this subpart for the FMA to give advice to the Minister, or for the Minister to have regard to the advice of the FMA, in connection with that matter does not apply.
350: Delegation of Minister's licensing functions and powers to FMA
1: The Minister may, either generally or particularly, delegate to the FMA all or any of the Minister's functions or powers under this subpart in connection with the licensing of financial product markets.
2: A delegation under this section must be in writing.
3: The FMA must not delegate any functions or powers delegated to it under this section except in accordance with the terms of the delegation.
4: The power of the Minister to delegate under this section—
a: is subject to any prohibitions, restrictions, or conditions contained in any other Act in relation to the delegation of the Minister's functions or powers; but
b: does not limit any power of delegation conferred on the Minister by any other Act.
5: The FMA may perform or exercise any functions or powers delegated to it under this section in the same manner and with the same effect as if they had been conferred on the FMA directly (subject to any restrictions or conditions imposed under the delegation).
6: If the FMA purports to act under a delegation under this section, the FMA must, in the absence of proof to the contrary, be presumed to be acting in accordance with the terms of the delegation.
7: No delegation affects or prevents the performance or exercise of any function or power by the Minister or affects the responsibility of the Minister for the actions of a person acting under the delegation.
351: Regulations modifying
this Part or Part 7 or 7A
1: The Governor-General may, on the recommendation of the Minister in accordance with subsection (3), make regulations for any 1 or more of the following purposes:
a: providing that any 1 or more of the provisions in subparts 2 to 8 section 314
ab: providing that section 451(1)﻿(d)
i: accounting records and financial reporting:
ii: CRD records and climate-related disclosures (for those listed issuers that would otherwise be climate reporting entities under section 461O(1)﻿(a)
b: providing for replacement or modified provisions to apply in respect of the licensed market or class of licensed markets (for example, instead of having continuous disclosure provisions in the listing rules and requiring listed issuers to comply with those provisions, having periodic or event-based disclosure or some other way of dealing with any information asymmetries in the market):
c: stating which provisions of the regulations (if any) are Part 5 section 385(3) or (4) see Part 8 Part 5 section 314
d: providing that a financial product market must not be treated as a licensed market for the purposes of any provision or provisions of this Act or any other specified enactment:
e: providing that issuers of a specified class must not be treated as listed issuers for the purposes of any provision or provisions of this Act or any other specified enactment:
f: providing that, in specified circumstances, financial products must not be treated as quoted financial products for the purposes of any provision or provisions of this Act or any other specified enactment.
2: Any regulations made under subsection (1) must specify the licensed market or class of licensed market to which they apply.
3: The Minister must, in relation to a recommendation under this section,—
a: have regard to the matters set out in section 308
b: be satisfied, in relation to any recommendation relating to subsection (1)﻿(a) or (d), that the extent to which the regulations disapply any enactment to a licensed market is not broader than is reasonably necessary to address the matters that gave rise to the regulations ; and
c: be satisfied, in relation to any recommendation relating to subsection (1)﻿(e) or (f), that the extent to which the regulations disapply any enactment to issuers or financial products is not broader than is reasonably necessary to address the matters that gave rise to the regulations.
4: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 351 heading amended 27 October 2022 section 6(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 351 heading amended 1 April 2014 section 47(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 351(1)﻿(ab) replaced 27 October 2022 section 6(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 351(1)﻿(e) inserted 9 August 2017 section 71(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 351(1)﻿(f) inserted 9 August 2017 section 71(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 351(3)﻿(b) amended 9 August 2017 section 71(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 351(3)﻿(c) inserted 9 August 2017 section 71(3) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 351(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
8: Operation of licensed markets
352: Licensed market operator must notify FMA of disciplinary actions and suspected contraventions
1: A licensed market operator must notify the FMA, in accordance with sections 353 354
a: the operator takes any disciplinary action against a participant in the licensed market:
b: the operator knows or suspects that a person has committed, is committing, or is likely to commit a significant contravention of—
i: the market rules; or
ii: this Act, the Takeovers Act 1993
2: The FMA must notify the licensed market operator of its decision to take, or not to take, any action in relation to a notification under subsection (1)﻿(b)﻿(ii). 1988 No 234 s 36ZD
353: When notification required
The licensed market operator must give the notice under section 352 1988 No 234 s 36ZE
354: Details and method of notification
1: The notice under section 352
a: the person's name and contact details; and
b: if it relates to a disciplinary action, the grounds for, nature of, and reasons for the action taken; and
c: if it relates to a known or suspected contravention, the facts supporting the licensed market operator's view and the obligation to which the known or suspected contravention relates; and
d: any other information required by the regulations or by the FMA under section 357
2: The licensed market operator must give the notice in the form and by the method required by the regulations (if any). 1988 No 234 s 36ZF
355: Licensed market operator must ensure FMA has access to real-time trading and other information
1: A licensed market operator must, if requested by the FMA, give to the FMA the information that is necessary to enable the FMA to carry out real-time surveillance of the operation of the licensed market.
2: The FMA must pay all reasonable costs of the licensed market operator in providing the information under this section. 1988 No 234 s 36ZFA
356: Waiver of notification and disclosure obligations
1: Sections 352 to 355
a: waives its entitlement to any notice or information or class or classes of notices or information; or
b: agrees with the licensed market operator a different time, form, or method of notification or disclosure.
2: A waiver or an agreement under this section must be in writing. 1988 No 234 s 36ZJ
357: Licensed market operator must give FMA or Takeovers Panel other information and assistance on request
1: A licensed market operator must give to the FMA or the Takeovers Panel (or any person authorised by the FMA or the Takeovers Panel) information, assistance, and access to the licensed market operator's facilities if the FMA or the Takeovers Panel reasonably requests it in order to carry out its functions.
2: The FMA or the Takeovers Panel must require that information, assistance, or access by notice in writing to the licensed market operator. 1988 No 234 s 36ZK
358: Power to disclose further information
1: A licensed market operator may provide to the FMA any information that the licensed market operator considers may assist the FMA in the performance of the FMA's functions.
2: A licensed market operator may provide to the Takeovers Panel any information that the licensed market operator considers may assist the Takeovers Panel in the performance of its functions. 1988 No 234 s 36ZL
359: Licensed market operator must give notice and have regard to submissions on continuous disclosure determinations
1: This section and section 360
a: the determination exempts from, waives, or determines the meaning of a continuous disclosure provision of its listing rules for a licensed market (or varies or revokes a determination of that kind); and
b: that continuous disclosure provision relates to material information that is not generally available to the market.
2: The licensed market operator must—
a: give the FMA no less than 2 trading days' written notice, before making the determination, of—
i: the proposed terms of the determination; and
ii: the reasons for the proposed determination; and
b: have regard to any written submissions made to it by the FMA within that notice period; and
c: must, as soon as is reasonably practicable after making the determination, give written notice to the FMA of—
i: the terms of the determination; and
ii: the reasons for the determination.
3: A failure to comply with this section or section 360 1988 No 234 s 36ZM
360: Limited notice and submissions for urgent determinations
If a licensed market operator thinks it is necessary or desirable in the public interest for a determination to be made more urgently than section 359(2)
a: it may give less than 2 trading days' notice before it makes the determination, and the notice and submissions may be oral rather than written; but
b: it must include in that notice the reasons for acting urgently and must otherwise comply with that subsection. 1988 No 234 s 36ZN
361: FMA may give directions to licensed market operators
1: The FMA may give a direction under subsection (2) in accordance with sections 362 to 366
2: The FMA may, for up to 15 trading days,—
a: direct a licensed market operator to suspend trading of quoted financial products or a class of quoted financial products; or
b: give the licensed market operator any other direction in relation to that trading; or
c: direct a licensed market operator to suspend participation by a participant or class of participants in the licensed market.
3: To avoid doubt, the FMA may not use its power to direct the licensed market operator to amend the market rules or to direct the licensed market operator on the making of a determination on the market rules.
4: The direction is subject to appeal only in accordance with section 532 1988 No 234 s 36ZO
362: Grounds for continuous disclosure direction
1: A direction on the grounds in this section is a continuous disclosure direction.
2: A direction may be given under section 361 sections 364 to 366
a: has regard to the purpose of this Part (and the main and additional purposes of the Act stated in sections 3 4
b: is satisfied that 1 of the following grounds applies:
i: a listed issuer has contravened a continuous disclosure obligation or a term or condition of a continuous disclosure exemption; or
ii: a determination by a licensed market operator to which section 359
iii: the licensed market operator's administration of the continuous disclosure provisions of its listing rules does not achieve appropriate continuous disclosure by a listed issuer of material information that is not generally available to the market; and
c: is also satisfied that the direction is necessary or desirable to protect people who are trading the quoted financial products or the class of quoted financial products and that there is no more appropriate course of action to address the situation. 1988 No 234 s 36ZP
363: Grounds for other directions
A direction may also be given under section 361 sections 364 to 366
a: the direction is necessary or desirable to protect people who are trading the quoted financial products, or the class of quoted financial products, of 1 or more listed issuers; but
b: it is not a matter relating to continuous disclosure. 1988 No 234 s 36ZQ
364: Notice, opportunity for licensed market operator to act, and submissions before FMA gives directions
1: A direction may be given under section 361
a: the FMA has given written notice to the licensed market operator and listed issuer or issuers concerned of—
i: its opinion that the requirements of section 362 363
ii: the proposed terms of the direction; and
iii: the reasons for its opinion; and
b: after receiving the FMA's notice, the licensed market operator does not take, within the reasonable period stated in the notice,—
i: in the case of a proposed direction to suspend trading of the quoted financial products, action to prevent that trading; or
ii: in any other case, any other action that, in the FMA's view, is adequate to address the situation raised in the notice; and
c: the FMA has had regard to any written submissions made to it by the licensed market operator and the listed issuer or issuers concerned within that notice period; and
d: the FMA still considers that it is appropriate to give the direction to the licensed market operator.
2: A reasonable period in subsection (1)﻿(b) is, in the case of a continuous disclosure direction, 2 trading days (or any longer time the FMA wishes to allow) and, in the case of any other direction, any longer time that is reasonable in the circumstances. 1988 No 234 s 36ZR
365: Limited notice and submissions for urgent continuous disclosure directions
If the FMA thinks it is necessary or desirable in the public interest for a continuous disclosure direction to be made more urgently than section 364
a: it may give less than 2 trading days' notice before it gives the direction, and the notice and submissions may be oral rather than written; but
b: it must include in that notice the reasons for acting urgently and must otherwise comply with that section. 1988 No 234 s 36ZS
366: Notice and opportunity to be heard and represented after FMA gives direction
If a direction is given under section 361
a: must, as soon as is reasonably practicable, give written notice to the licensed market operator and listed issuer or issuers (if any) concerned of—
i: its opinion that the requirements of section 362 363
ii: the terms of the direction; and
iii: the reasons for its opinion; and
b: must, after the direction is given, give each of those persons or the person's representative an opportunity to make written submissions and to be heard on the matter; and
c: may also give notice to any other person of the matters in paragraph (a). 1988 No 234 s 36ZT
367: Effect of directions to licensed market operator
1: A direction under section 361
2: If the FMA considers that the direction should have effect for a period longer than 15 working days, it may apply to the court for, and the court may make, an order that the licensed market operator comply with the direction for the period that the court thinks fit. 1988 No 234 s 36ZU
368: Provisions as to directions
1: The FMA may vary a direction under section 361
2: The FMA may revoke a direction under section 361 1988 No 234 s 36ZV
369: Contracting out of or modification of continuous disclosure process requirements
1: The FMA and a licensed market operator may, by agreement in writing, contract out of, or modify, any of the requirements of sections 359 360 364 to 366
2: For that purpose, the licensed market operator may agree to waive or modify obligations under those sections that are owed to listed issuers listed on the relevant licensed market. 1988 No 234 s 36ZW
370: Offence for failing to comply with direction
A licensed market operator that refuses or fails, without reasonable excuse, to comply with a direction under section 361 1988 No 234 s 36ZX
9: Transfer of transferable financial products
371: Financial products to which this subpart applies
1: This subpart applies to financial products if—
a: the financial products are transferable; and
b: the names of the holders of the products are entered in a register kept under this Act or otherwise kept in New Zealand.
2: However, this subpart does not apply to—
a: interests in a superannuation scheme or KiwiSaver scheme:
b: derivatives:
c: financial products of a prescribed kind.
3: In this subpart, specified financial product Transfer of specified financial products using transfers in prescribed form or containing prescribed information
372: Transfer of specified financial products by products transfer
1: Specified financial products disposed of in an authorised transaction may be transferred by means of a products transfer that—
a: either—
i: is in the form prescribed for the purposes of this section; or
ii: contains the prescribed information; and
b: is duly completed; and
c: is executed, in New Zealand, by the transferor (whether or not it is also executed by the transferee).
2: However, subsection (1) does not apply if the specified financial products impose a liability to the issuer on the transferee.
2A: An indemnity given by the product holder of a financial product to the issuer in respect of any liability of the issuer for the acts, omissions, or obligations of the holder is not a liability for the purpose of subsection (2).
3: In this subpart, authorised transaction
a: a person authorised to undertake trading activities on a licensed market:
b: a lawyer in practice on his or her own account:
c: a qualified statutory accountant
d: a trustee corporation (as defined in section 2
e: a registered bank:
f: a person prescribed for the purposes of this definition. 1991 No 119 s 3 Section 372(2A) inserted 9 August 2017 section 72 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 372(3)﻿(c) amended 1 July 2015 section 17 Financial Reporting Amendment Act 2014 Section 372(3)﻿(d) amended 30 January 2021 section 161 Trusts Act 2019
373: Transfer of specified financial products by products transfer and brokers transfer
1: Specified financial products sold in a licensed market transaction may be transferred by means of—
a: a products transfer that—
i: either is in the form prescribed for the purposes of this paragraph or contains the prescribed information; and
ii: is duly completed; and
iii: is executed, in New Zealand, by the transferor (whether or not it is also executed by the transferee); and
iv: specifies financial products that include the financial products sold; and
b: a brokers transfer that—
i: either is in the form prescribed for the purposes of this paragraph or contains the prescribed information; and
ii: is duly completed; and
iii: specifies the financial products sold.
2: Subsection (1) applies whether or not the specified financial products impose a liability to the issuer on the transferee.
3: In this subpart, licensed market transaction 1991 No 119 s 4
374: Products transfer does not need to be witnessed
1: The execution of a products transfer for the purposes of section 372 373(1)﻿(a)
2: Subsection (1) does not affect any enactment, rule of law, constitution, deed, or agreement regulating the execution of documents by companies or other bodies corporate or by any particular company or body corporate. 1991 No 119 s 5
375: Transfers to be instruments of transfer for purposes of other enactments and instruments
For the purposes of any enactment, rule of law, constitution, deed, or agreement that relates to the transfer of financial products or to instruments of transfer of financial products,—
a: a products transfer to which section 372
b: a products transfer to which section 373 1991 No 119 s 6(1) Transfer of specified financial products by electronic means
376: Approval of electronic transfer system
1: The Governor-General may, on the advice of the Minister given in accordance with a recommendation of the FMA, by Order in Council, approve a system or systems that is or that are wholly or partly electronic for the transfer of specified financial products.
2: A system of transfer may be approved under this section by reference to the name of the system or any name by which it is commonly known.
3: A system of transfer may be approved under this section whether or not it also involves the use of a procedure or part of a procedure for the transfer of financial products that is authorised under this Act or otherwise.
4: The FMA must not make a recommendation under subsection (1) unless the FMA has consulted the persons or representatives of the persons that the FMA considers will be substantially affected by the Order in Council.
5: A failure to comply with subsection (4) does not affect the validity of an Order in Council made under this section.
6: An order under this section is secondary legislation ( see Part 3 1991 No 119 s 7(1)–(3), (6)–(8) The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 376(6) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
377: Specified financial products may be transferred under approved system
1: Specified financial products disposed of, whether in an authorised transaction or licensed market transaction or otherwise, may be transferred in accordance with a system of transfer that is approved under section 376
2: Subsection (1) applies whether or not the specified financial products impose a liability to the issuer on the transferee. 1991 No 119 s 7(5)
378: Minor technical modifications to system
Modifications of a minor technical nature may, from time to time, be made to a system of transfer approved by an Order in Council made under section 376 1991 No 119 s 7(4) Registration may not be refused
379: Registration may not be refused on ground that financial products have been transferred under this subpart
1: If financial products have been transferred in accordance with section 372 373 377
2: Nothing in this section affects any right a person has to refuse to register a transfer of securities on any other ground. 1991 No 119 s 8
380: Effect of this Act on other enactments
1: This subpart has effect despite anything to the contrary in any enactment, rule of law, constitution, deed, or agreement (but subject to any order made under this Act).
2: Nothing in this subpart affects the validity of any means of transferring financial products other than under this subpart.
3: Sections 35 39(1) 84 1991 No 119 s 9
10: Unsolicited offers to purchase financial products off-market
381: Definitions relating to unsolicited offer regulations and related provisions
1: For the purposes of this Act, an unsolicited offer
a: the offer is to acquire a financial product, to acquire a power to dispose of a financial product, or to acquire another interest in or right attaching to a financial product, made by a person ( A B
b: the offer is unsolicited by B:
c: the offer is not made on a licensed market:
d: the offer is within the class or classes of unsolicited offers to which the regulations apply:
e: the offer is not a takeover offer for a financial product under the Takeovers Code Companies Act 1993
2: For the purposes of this subpart, and any regulations made under this subpart, an offer 1988 No 234 s 48DA
382: Regulations concerning unsolicited offers
1: The Governor-General may, on the recommendation of the Minister in accordance with subsection (3), make regulations setting out the rules applying to unsolicited offers for any or all of the purposes set out in subsection (2).
2: The purposes are—
a: ensuring offerees are fully informed of—
i: the current market price of a quoted financial product or, for a non-quoted financial product, a fair estimate of the value of the non-quoted financial product and the basis for making that estimate; and
ii: the material terms of the offer and their effect; and
iii: any warnings issued by the FMA (if ordered by the FMA to be contained in or to accompany offer documents); and
iv: their rights and remedies under the regulations:
b: ensuring that notice of an unsolicited offer to product holders is given to the relevant listed issuer or issuer and the FMA:
c: ensuring that no agreement to transfer may bind offerees for a minimum period for the purpose of enabling offerees to consider, and reconsider, any decision to accept an offer:
d: requiring a minimum or maximum offer period, or both:
e: setting out any other rules applying to unsolicited offers.
3: In formulating recommendations to make regulations under this section, the Minister must—
a: have regard to the objective of preventing unfair practices in the making of unsolicited offers; and
b: consult the FMA.
4: Regulations under this section are secondary legislation ( see Part 3 1988 No 234 s 48DB The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 382(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
383: Specific provisions for regulations concerning unsolicited offers
The regulations made under section 382
a: define the class or classes of unsolicited offers and financial products to which the regulations apply:
b: define or clarify the meaning of unsolicited for the purposes of this subpart:
c: prescribe requirements in relation to unsolicited offers and the making of those offers, including requirements as to the form and content of those offers, variations of those offers, the updating and resending of offer documents or other corrective statements, and the implication of terms into the offer or any resulting agreement:
d: prescribe the information, statements, certificates, or other documents that must be supplied to offerees, the relevant listed issuer or issuer, and the FMA:
e: provide for any duties or functions of the FMA in connection with the rules applying to unsolicited offers:
f: state which provisions are unsolicited offer provisions for the purposes of this Act:
g: provide for the exercise of a right to withdraw a notification of a decision to accept an unsolicited offer, a right to refuse to complete a transfer, or any other right or remedy of offerees, and any consequences and obligations that apply in those cases:
h: provide for any powers of, and requirements on, listed issuers, issuers, or their agents in connection with transfers under an unsolicited offer and provide for protections from liability for those persons, persons administering a register of financial products, and other persons for the purposes of section 384
i: provide for the regulations to—
i: extend to or apply in respect of any conduct of an associated person of an offeror and any conduct that, in substance or effect, constitutes an unsolicited offer:
ii: prohibit contracting out of the regulations and include any other provision or provisions designed to prevent avoidance of the regulations (for example, prohibiting persons from inviting others to make an offer to sell a financial product in circumstances in which, if the invitation were an offer to acquire the financial product, it would be an unsolicited offer to which the regulations applied):
j: provide for transitional matters. 1988 No 234 s 48DC
384: Protection from liability in connection with unsolicited offer provisions
1: This section applies to any person who—
a: is stated by regulations made under section 382
b: is not in contravention of an unsolicited offer provision or exemption.
2: A person to whom this section applies is not liable for any act done or omitted to be done by that person in good faith if the act or omission is stated by regulations made under section 382 1988 No 234 s 47AA
11: Civil liability for certain contraventions of this Part
385: Part 5 market provisions
1: All of the provisions specified in subsections (3) and (4) are Part 5 market provisions.
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: The provisions are the following:
a: sections 241 to 243
b: sections 262 265
c: section 270
d: section 310
e: section 311
f: any provision of regulations made under section 351
4: A contravention of any of the following may give rise to civil liability ( see subpart 3
a: sections 276 to 279 sections 289 to 291
b: section 286
c: sections 297 298
d: section 327
e: section 334
f: section 342
g: section 346(1)﻿(a)
h: any provision of regulations made under section 351
i: sections 352 355 357 359 367
j: unsolicited offer provisions imposed under section 382
6: Licensing and other regulation of market services
386: Overview
1: This Part provides for the licensing of market services and regulates the provision of market services by licensees and other persons as follows:
a: subpart 1
b: the issue of those licences, their conditions, and their expiry or cancellation are dealt with in subpart 2
c: subpart 3
d: subpart 4
e: subpart 5
ea: subpart 5A
eb: subpart 5B
f: subpart 6
g: subpart 7
ga: subpart 7A
h: subpart 8
2: This section is a guide only to the general scheme and effect of this Part. Section 386(1)﻿(ea) inserted 15 March 2021 section 13 Financial Services Legislation Amendment Act 2019 Section 386(1)﻿(eb) inserted 15 March 2021 section 13 Financial Services Legislation Amendment Act 2019 Section 386(1)﻿(ga) inserted 14 March 2021 section 36 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
387: Territorial scope for licensing
and other regulation
1: This Part applies to the following services received by a client or an investor in New Zealand, regardless of where the person providing the service is resident, is incorporated, or carries on business:
a: a financial advice service:
b: a discretionary investment management service:
c: a prescribed intermediary service:
d: a client money or property service.
2: For other licensed market services that relate to regulated offers, see section 47 Part 3 Section 387 heading amended 15 March 2021 section 14(1) Financial Services Legislation Amendment Act 2019 Section 387(1) replaced 15 March 2021 section 14(2) Financial Services Legislation Amendment Act 2019
387A: Other provisions relating to financial advice services and client money or property services
The provisions set out in Schedule 5 Section 387A inserted 15 March 2021 section 15 Financial Services Legislation Amendment Act 2019
1: Key provisions
388: When provider of market services needs to be licensed
A person must not provide any of the following market services without holding, or being authorised to provide the service under, a market services licence that covers that service (unless an exemption applies under section 389
a: acting as a manager of a registered scheme (other than a restricted scheme):
b: acting as an independent trustee of a restricted scheme:
ba: acting as a provider of a financial advice service ( see section 431D
c: acting as a provider of a discretionary investment management service ( see subparts 4 to 6
d: acting as a derivatives issuer in respect of a regulated offer of derivatives that is made by the derivatives issuer ( see subpart 5 Section 388(ba) inserted 15 March 2021 section 16 Financial Services Legislation Amendment Act 2019
389: Exemptions from need for market services licence
General exemptions
1: A person is exempt from the licensing requirement under section 388
a: carries out activities that are covered by a financial product market licence:
b: acts as the operator of a designated settlement system (within the meaning of Part 5C Banking (Prudential Supervision) Act 1989
c: carries out activities as a participant in a licensed market, or in another prescribed overseas market, in the prescribed circumstances. Exemptions for financial advice service
2: A person is exempt from the licensing requirement under section 388(ba) subpart 3
a: the service is not provided to any retail clients; or Example
A service provider may provide a financial advice service to a number of clients. As long as the service provider has no retail clients for that service, the provider need not be licensed as a financial advice provider.
b: the service is a prescribed exempt service. Exemptions for DIMS
3: A person is exempt from the licensing requirement under section 388(c) subpart 3
a: the service is not a retail service ( see clause 35 Example
A service provider may provide a discretionary investment management service to a number of investors using a model portfolio. As long as no retail investor is within the relevant class of investors, the provider need not be a DIMS licensee.
b: the service is a prescribed exempt service. Section 389(1) heading inserted 15 March 2021 section 17(1) Financial Services Legislation Amendment Act 2019 Section 389(1)﻿(b) amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021 Section 389(2) heading inserted 15 March 2021 section 17(2) Financial Services Legislation Amendment Act 2019 Section 389(2) replaced 15 March 2021 section 17(2) Financial Services Legislation Amendment Act 2019 Section 389(3) heading inserted 15 March 2021 section 17(2) Financial Services Legislation Amendment Act 2019 Section 389(3) inserted 15 March 2021 section 17(2) Financial Services Legislation Amendment Act 2019
390: When providers of other market services may be licensed
1: In addition, a person may hold a market services licence—
a: to act as a provider of prescribed intermediary services (for example, a person-to-person lending intermediary or a crowd funding intermediary if prescribed by regulations); or
b: to act as an administrator of a financial benchmark.
2: See clause 6 subparts 4 5 Section 390(1) replaced 14 March 2021 section 37 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
391: Prohibitions on holding out
1: A person must not hold out that the person holds a market services licence if that is not the case.
2: A person must not hold out that the person holds a market services licence that covers a service if that is not the case.
392: Meaning of discretionary investment management service and related terms
Section 392 repealed 15 March 2021 section 18 Financial Services Legislation Amendment Act 2019
2: Issue of licences, conditions, and duration
393: Principles guiding the exercise of FMA powers
In exercising a power under this subpart, the FMA must be guided by the following principles:
a: exercising the power must be necessary or desirable in order to promote 1 or more of the following:
i: either or both of the main purposes specified in section 3
ii: any of the additional purposes specified in section 4
iii: in the case of a market services licence to act as an administrator of a financial benchmark, either or both of the additional purposes specified in section 448B
iv: in the case of financial advice services, the additional purpose in section 431B
b: in exercising the power, the FMA should not unnecessarily restrict the licensing of persons. Section 393(a) replaced 14 March 2021 section 38 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 393(a)﻿(iv) inserted 15 March 2021 section 19 Financial Services Legislation Amendment Act 2019 Issue of licences
394: FMA may issue licence
The FMA may issue a licence in accordance with this subpart.
395: Application for licence
1: A person may apply for a licence in the manner that is specified by the FMA.
1A: The FMA may—
a: specify any of the matters referred to in section 548(1)﻿(p)﻿(i) to (iv)
b: specify different matters for different classes of applicant or other circumstances (including specifying time frames within which different classes of applicant must make an application for a licence); and
c: refuse to consider the application if the person does not apply for the licence in the specified manner. Example
In order to facilitate the orderly and efficient processing of applications, the FMA specifies that if a particular type of provider wants a licence by a particular date or for a particular purpose, the provider must apply by some other date. A different date may apply to different classes of provider.
2: The application may be for a licence to cover 1 or more market services (or 1 or more classes of services, if the FMA specifies, on its Internet site, classes into which a market service is divided).
3: An applicant must provide to the FMA the information that is required by the FMA to assist it in determining the application. Section 395(1A) inserted 9 April 2019 section 20 Financial Services Legislation Amendment Act 2019
396: When licence must be issued
The FMA must, after receiving an application under section 395
a: the eligibility criteria (if any) that are prescribed by the regulations for licences for that service are satisfied; and
b: the applicant's directors, senior managers, and proposed directors and senior managers are fit and proper persons to hold their respective positions and otherwise satisfy the requirements that are prescribed by the regulations for licences for that service (if any); and
c: the applicant is capable of effectively performing that service (having regard to the proposed conditions of licence); and
d: there is no reason to believe that the applicant is likely to contravene the market services licensee obligations; and
e: the applicant is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008
f: in the case of an applicant for a licence to act as a manager of a registered scheme or to be a DIMS licensee, the applicant or any authorised body under section 400
g: in the case of an application for a licence to act as an administrator of a financial benchmark, the issue of a licence is necessary or desirable in order to promote either or both of the additional purposes set out in section 448B Section 396(g) inserted 14 March 2021 section 39 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
397: Procedural requirements
1: The FMA must, before making a decision under section 396
a: have regard to the prescribed matters; and
b: have regard to whether the applicant, or 1 or more of the applicant's directors or senior managers, is a licensed provider (within the meaning of section 4
c: have regard to whether the provision of the market service to which the application relates is merely incidental to the provision of another market service that is or will be covered by a licence; and
d: consult all prescribed persons or classes of prescribed persons (if any).
1A: The FMA must make a decision under section 396
2: The FMA must not refuse to issue a licence, or include limits, restrictions, or other conditions under section 403(3)﻿(a) or (4)
a: the FMA gives the applicant no less than 10 working days' written notice of the following matters before it exercises the power:
i: that the FMA may refuse to issue the licence or impose the limits, restrictions, or other conditions
ii: the reasons why it may exercise that power; and
b: the FMA gives the applicant or the applicant's representative an opportunity to make written submissions on the matter within that notice period.
3: Section 397(1)﻿(b) amended 15 March 2021 section 21(1) Financial Services Legislation Amendment Act 2019 Section 397(1A) inserted 9 August 2017 section 73 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 397(2) amended 15 March 2021 section 21(2) Financial Services Legislation Amendment Act 2019 Section 397(2)﻿(a)﻿(i) amended 15 March 2021 section 21(3) Financial Services Legislation Amendment Act 2019 Section 397(3) repealed 15 March 2021 section 21(4) Financial Services Legislation Amendment Act 2019
398: Notice of decision
1: The FMA must give written notice of its decision under section 396
a: the applicant; and
b: every other prescribed person.
2: If the FMA refuses to issue a licence or includes limits, restrictions, or other conditions under section 403(3)﻿(a) or (4) Section 398(2) amended 15 March 2021 section 22 Financial Services Legislation Amendment Act 2019
399: Licence must be issued for particular market services
1: If the FMA decides to issue a licence, it must ensure that it specifies the particular market services, or class of market services, that it covers.
2: The same licence may cover more than 1 type of market services.
3: In that case,—
a: a reference in this Act to the market services that a licence covers is taken instead to be a reference to each of those market services severally; and
b: the decision to add another market service or class of market services to a licence must be made on the same basis as a decision to issue a licence; and
c: a licence may be varied, suspended, or cancelled in respect of 1 of those market services or classes only, as if each were separately licensed.
400: Licence may cover
1: A licence may, in its conditions, authorise 1 or more named related bodies corporate of the licensee to provide a market service covered by the licence if the FMA is satisfied that—
a: arrangements are or will be in place to ensure that the licensee will maintain appropriate control or supervision over the provision of that service by the related body corporate under the licence; and
b: the related body corporate is capable of effectively performing that service (having regard to the proposed conditions of licence); and
c: there is no reason to believe that the related body corporate is likely to contravene the market services licensee obligations; and
d: the related body corporate is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008
e: the related body corporate meets the eligibility criteria and other requirements prescribed by the regulations for the purposes of this section (if any).
1A: A licence may also, in its conditions, authorise 1 or more named entities to provide a financial advice service covered by the licence if the FMA is satisfied that—
a: arrangements are or will be in place to ensure that the licensee will maintain appropriate control or supervision over the provision of that service by the entity under the licence; and
b: the entity is capable of effectively providing that service (having regard to the proposed conditions of the licence); and
c: there is no reason to believe that the entity is likely to contravene the market services licensee obligations; and
d: the entity is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008
e: the entity meets the eligibility criteria and other requirements prescribed by the regulations for the purposes of this section (if any).
1B: However, subsections (1) and (1A) do not apply if the licensee is an individual.
2: The licence may also, in its conditions, determine that, for the purposes of 1 or more provisions of this Part, notices or reports need to be given to or by, or powers or duties may be exercised or performed by, only—
a: the licensee (and in this case the relevant action must be treated, for that purpose, as being given to or by, or exercised or performed by, the 1 or more bodies authorised under subsection (1) or (1A)
b: 1 or more bodies authorised under subsection (1) or (1A)
3: If an authorised body contravenes any market services licensee obligation, the licensee must be treated as also having contravened that market services licensee obligation. Section 400 heading amended 15 March 2021 section 23(1) Financial Services Legislation Amendment Act 2019 Section 400(1)﻿(c) replaced 9 August 2017 section 74 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 400(1A) inserted 15 March 2021 section 23(2) Financial Services Legislation Amendment Act 2019 Section 400(1B) inserted 15 March 2021 section 23(2) Financial Services Legislation Amendment Act 2019 Section 400(2)﻿(a) amended 15 March 2021 section 23(3) Financial Services Legislation Amendment Act 2019 Section 400(2)﻿(b) amended 15 March 2021 section 23(3) Financial Services Legislation Amendment Act 2019
401: FMA must send licence details to Registrar
1: The FMA must send the details specified in subsection (2) to the Registrar.
2: The details, for each licence, are—
a: the name of the licensee; and
b: the market services or class of market services covered by the licence; and
c: the conditions of the licence imposed by the FMA (including whether an associated custodian is permitted for the purposes of a discretionary investment management service); and
d: the authorised bodies (if any); and
e: any other prescribed information.
3: The FMA may publicly notify any details about a licence as it thinks fit. Conditions of licence
402: Conditions of licence
1: The licence is subject to—
a: a condition that the licensee or authorised body may, under the licence, provide only the market services or class of market services to which the licence relates and for which each person is authorised under the licence; and
b: the conditions imposed by the FMA under section 403
c: the conditions imposed by regulations (if any).
2: The condition in subsection (1)﻿(a) is subject to the limits and restrictions imposed under section 403(3)﻿(a)
3: The licensee and every authorised body must comply with the conditions imposed on the licensee's licence.
403: When FMA may impose permitted conditions
1: The FMA may, by written notice to the applicant or licensee,—
a: impose conditions on a licence when the licence is issued; and
b: vary, revoke, add to, or substitute any conditions of licence imposed under this section at any time after the licence is issued.
2: A condition referred to in subsection (1) may only be of a prescribed kind or relate to a prescribed matter (except as set out in subsections (3) to (5)
3: A condition referred to in subsection (1) may—
a: impose limits or restrictions on the services that are covered by the licence (for example, by reference to particular financial products or other financial advice products, issuers, investors, or clients, or classes of financial products or other financial advice products, issuers, investors, or clients,
b: impose conditions relating to the requirements referred to in section 396 400
c: specify the date of expiry of the licence (the expiry date
4: In the case of a licence relating to a financial advice service, a condition referred to in subsection (1) may also—
a: state which types of financial advice may, or may not, be given by the following on behalf of the licensee or an authorised body:
i: financial advisers in general, a class or classes of financial advisers, or 1 or more particular financial advisers:
ii: nominated representatives in general, a class or classes of nominated representatives, or 1 or more particular nominated representatives:
b: authorise the licensee or an authorised body ( P
i: engage an entity to give regulated financial advice to P’s retail clients on P’s behalf:
ii: engage an individual through 1 or more interposed persons (as described in section 431E(b)
c: if the licence includes an authorisation under paragraph (b), impose limits or restrictions on that authorisation (including, for example, by requiring the entity or an interposed person to be authorised by a licence (whether as licensee or an authorised body) to provide a financial advice service, or to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008
d: prohibit (whether absolutely, in specified circumstances, or unless specified requirements are met) P from engaging a financial adviser to give regulated financial advice on P’s behalf if P knows or ought to know that the financial adviser is also engaged by another financial advice provider to give regulated financial advice on that other provider’s behalf.
5: In the case of a licence to act as an administrator of a financial benchmark, a condition referred to in subsection (1) may also impose conditions to achieve the purposes set out in section 448B Section 403(2) amended 14 March 2021 section 40(1) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 403(3)﻿(a) amended 15 March 2021 section 24(2) Financial Services Legislation Amendment Act 2019 Section 403(4) inserted 15 March 2021 section 24(3) Financial Services Legislation Amendment Act 2019 Section 403(5) inserted 14 March 2021 section 40(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
404: Licensee may apply for variation of conditions
1: A licensee may apply, in the manner that is specified by the FMA, for the FMA to exercise a power under section 403(1)﻿(b)
2: A licensee must provide to the FMA the information that is required by the FMA to assist it in determining the application.
405: Procedure for variation of conditions
The FMA must not exercise a power under section 403(1)﻿(b) section 404 section 404
a: the FMA gives the licensee no less than 10 working days' written notice of the following matters before it exercises the power:
i: that the FMA may exercise the power; and
ii: the reasons why it may exercise the power; and
b: the FMA gives the licensee or the licensee's representative an opportunity to make written submissions on the matter within that notice period.
406: Consequences of contravening conditions
1: If a licensee or an authorised body contravenes a condition of a licence, the FMA may exercise a power under subpart 3
2: Subsection (1) does not limit subpart 3
406A: Effect of condition requiring giver of advice or interposed person to be authorised by licence or registered
1: This section applies if, under section 403(4)﻿(b) and (c)
a: authorises the licensee or an authorised body ( P
i: engage an entity ( E
ii: engage an individual through 1 or more interposed persons ( F
b: includes either or both of the following conditions:
i: a condition requiring E or F to be authorised by a licence to provide a financial advice service (a licensing condition
ii: a condition requiring E or F to be registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 FSP Act registration condition
2: If the licence includes a licensing condition, for the purpose of enabling compliance with that condition, this Part applies,—
a: in relation to E, as if E, in giving regulated financial advice on behalf of P, were providing a financial advice service; and
b: in relation to F, as if F, in engaging individuals to give regulated financial advice on behalf of P, were providing a financial advice service.
3: If the licence includes a registration condition, for the purpose of enabling compliance with that condition, the FSP Act applies,—
a: in relation to E, as if E, in giving regulated financial advice on behalf of P, were providing a financial advice service; and
b: in relation to F, as if F, in engaging individuals to give regulated financial advice on behalf of P, were providing a financial advice service.
4: This section does not affect the application of this Part or the FSP Act to P. Section 406A inserted 15 March 2021 section 25 Financial Services Legislation Amendment Act 2019 Expiry, suspension, or cancellation of licences
407: Duration of licence
1: A licence continues in force until the close of its expiry date unless sooner cancelled.
2: If a licensee applies for a new licence no later than 2 months before the expiry date of an existing licence that the new licence is intended to supersede, and the application is not disposed of before the expiry date, the existing licence continues in force until the application is disposed of.
408: When FMA may suspend or cancel licence
The FMA may suspend (for a specified period or until a specified requirement is met and in relation to the licensee, any authorised body or bodies, or all of them) or cancel a licence—
a: if the licensee, by written notice, requests the FMA to do so; or
b: if the FMA is satisfied that the licensee or an authorised body has died, is incapacitated, has ceased to exist, or has become subject to an insolvency event; or
c: in accordance with subpart 3
409: Effect of expiry, suspension, or cancellation of licence on appointments
1: The expiry or cancellation of a licence does not, of itself, terminate an appointment held by the licensee or any authorised body (but, if the person continues to hold the appointment and does not obtain a licence, or authorisation under a licence, that covers the appointment, the person may contravene section 388
2: If a licence is suspended, the person or persons to whom the suspension relates are taken not to hold, or be authorised by, that licence while the suspension is in effect.
3: Monitoring and enforcement of licences
410: Meaning of material change of circumstances
In this subpart, material change of circumstances
a: a change that adversely affects the licensee’s or an authorised body's capacity to perform the market services covered by the licence in an effective manner; or
b: a change that means that the requirements referred to in section 396(a) to (g) 400(1)﻿(a) to (e) or (1A)﻿(a) to (e) Section 410(b) replaced 15 March 2021 section 26 Financial Services Legislation Amendment Act 2019 Reports
411: Licensee must deliver reports to FMA
Every licensee must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, send to the FMA reports that contain the prescribed information.
412: Licensee must report certain matters
1: Every licensee must ensure that there are in place effective methods for—
a: monitoring the licensee's and every authorised body's compliance with the market services licensee obligations; and
b: identifying material changes in circumstances.
2: Subsection (3) applies if a licensee believes that—
a: the licensee or an authorised body has contravened, may have contravened, or is likely to contravene a market services licensee obligation in a material respect; or
b: a material change of circumstances has occurred, may have occurred, or is likely to occur in relation to the licence; or
c: the information provided under section 395 404
3: The licensee must, as soon as practicable after the licensee forms the belief referred to in subsection (2), send a report containing details of the belief, the licensee's grounds for the belief, and all other prescribed information—
a: to the FMA; or
b: if the licensee is a manager of a registered scheme (other than a restricted scheme),—
i: to the FMA and the supervisor, if the report is of a contravention or possible contravention of a market services licensee obligation imposed by a condition of the licence; or
ii: to the supervisor, if the report is of a contravention or possible contravention of any other market services licensee obligation.
413: Restriction on use of report
A report provided by a licensee under section 412 FMA's powers in case of contravention of market services licensee obligation, material change, etc
414: FMA's powers in case of contravention of market services licensee obligation, material change, etc
1: The FMA may exercise a power under subsection (2) if it is satisfied that—
a: a licensee or an authorised body has materially contravened a market services licensee obligation; or
b: a material change of circumstances has occurred in relation to a licence; or
c: the information provided under section 395 404
d: a licensee or an authorised body is likely to materially contravene a market services licensee obligation or a material change of circumstances is likely to occur in relation to a licence.
2: The FMA may, by written notice to the licensee or an authorised body and otherwise in the prescribed manner, do 1 or more of the following:
a: censure the licensee or authorised body (or both):
b: require the licensee or authorised body (or both) to submit an action plan to the FMA within the time and in the manner specified by the FMA:
c: give a direction to the licensee or authorised body (or both).
3: The FMA may also, by written notice to the licensee and otherwise in the prescribed manner, suspend (for a specified period or until a specified requirement is met and in relation to the licensee, any authorised body or bodies, or all of them) or cancel the licence of the licensee if it is satisfied that—
a: subsection (1)﻿(a), (b), or (c) applies; and
b: the licensee or an authorised body does not meet, or no longer meets, the requirements referred to in section 396(a) to (g) 400(1)﻿(a) to (e) or (1A)﻿(a) to (e)
4: Section 403 Section 414(3)﻿(b) replaced 15 March 2021 section 27 Financial Services Legislation Amendment Act 2019
415: Procedure for exercising powers
1: The FMA must not exercise a power under section 414
a: the FMA gives the licensee or an authorised body no less than 10 working days' written notice of the following matters before it exercises the power:
i: that the FMA may exercise the power; and
ii: the reasons why it may exercise the power; and
b: the FMA gives the licensee or authorised body or the licensee's or authorised body's representative an opportunity to make written submissions on the matter within that notice period.
2: The FMA must, before exercising a power under section 414(3) section 414(2)
416: Notice requirements
1: A notice under section 414(2) or (3)
a: state the FMA's reasons for giving the notice; and
b: in the case of section 414(3)
2: The FMA must give a copy of the notice to every prescribed person (if any). Action plan
417: Action plan
If a notice under section 414
a: the actions, as the case may be, that the person proposes to take to—
i: remedy or avoid the contravention or likely contravention of the market services licensee obligation; or
ii: avoid any further contravention of the market services licensee obligation; or
iii: mitigate or avoid any adverse effects or changes arising, or likely to arise, from the material change of circumstances; or
iv: correct the false or misleading information or mitigate the adverse consequences of providing the false or misleading information (or both); and
b: the date by which each step will be taken.
418: Approval, amendment, or rejection of action plan
1: If a person submits an action plan, the FMA may—
a: approve the action plan; or
b: require the person to amend the action plan and resubmit it to the FMA by a specified date for approval or rejection; or
c: reject the action plan.
2: If the FMA requires the person to amend an action plan provided to the FMA, the person must, within the time specified by the FMA, provide an amended action plan that addresses the matter required to be amended.
3: If the FMA approves the action plan (whether as first provided or after amendment), the person must comply with the action plan.
4: An action plan that has been approved by the FMA may be varied at any time by agreement between the person and the FMA.
419: Consequences of failure to submit action plan, rejection of action plan, or failure to comply with action plan
1: The FMA may exercise a power under section 414(2)﻿(a) or (c) or (3)
a: a person fails to submit an action plan or amended action plan within the time and in the manner specified by the FMA; or
b: the FMA rejects an action plan; or
c: the FMA is satisfied that an action plan has not been complied with.
2: A contravention of section 417 418 see subpart 3 Directions
420: Directions
1: If a notice under section 414
a: the actions, as the case may be, that the person must take to—
i: remedy or avoid the contravention or likely contravention of the market services licensee obligation; or
ii: avoid any further contravention of the market services licensee obligation; or
iii: mitigate or avoid any adverse effects or changes arising, or likely to arise, from the material change of circumstances; or
iv: correct the false or misleading information or mitigate the adverse consequences of providing the false or misleading information (or both); and
b: the date by which each step must be taken.
2: The person to whom the direction is given must comply with the direction.
421: Consequences of failure to comply with directions
1: A person that refuses or fails, without reasonable excuse, to comply with a direction under section 414(2)﻿(c)
2: If the FMA is satisfied that a direction under section 414(2)﻿(c) section 414(2)﻿(a) or (3)
3: A contravention of section 420 see subpart 3
4: Disclosure obligations for certain services provided to retail investors
422: Application of subpart
This subpart applies to a licensee or an authorised body in respect of any of the following services provided under a licence:
a: the provision of a discretionary investment management service that is a retail service:
b: the provision of a prescribed intermediary service (but only if the regulations state that this subpart applies).
423: Disclosure must be made to retail investor
A licensee or an authorised body that provides a service to which this subpart applies must ensure that a disclosure statement relating to the service is provided to each retail investor who receives the service, in accordance with this Act and the regulations.
424: Timing and method of disclosure
1: The disclosure statement required by section 423
a: in the case of a discretionary investment management service, before the investment authority is granted by the retail investor; or
b: in the case of a prescribed intermediary service, at the prescribed time.
2: The disclosure statement must be given to the retail investor or delivered or sent to the retail investor's last known address or an address (including an electronic address) specified by the investor for that purpose.
3: If it is not practicable to comply with subsection (1) or (2) by reason of any prescribed circumstance, the licensee or authorised body must, under section 423
a: give the minimum prescribed disclosure statement in accordance with the regulations; and
b: provide the disclosure statement that would otherwise be required under that section to the retail investor as soon as practicable afterwards.
425: Purpose of disclosure statement
The purpose of a disclosure statement under section 423
a: whether or not to proceed, or continue to proceed, with the service by the licensee or authorised body in question; or
b: to change any instruction in relation to the provision of that service by the licensee or authorised body.
426: Disclosure statement
1: A disclosure statement may be combined with other disclosure statements under section 423 Banking (Prudential Supervision) Act 1989
2: A disclosure statement must—
a: be in writing; and
b: state the date as at which the disclosure statement is prepared; and
c: state the name and contact details of the licensee or authorised body providing the service; and
d: contain all of the information that it is required to contain by the regulations; and
e: be accompanied by all the documents that the regulations require it to be accompanied by; and
f: comply with all other requirements of the regulations relating to the content of the disclosure statement.
3: The disclosure statement must comply with all requirements of the regulations relating to the form and presentation of the statement.
4: Subsection (2) does not apply to the minimum prescribed disclosure statement referred to in section 424(3)﻿(a) Section 426(1) amended 1 July 2022 section 300(1) Reserve Bank of New Zealand Act 2021 Section 426(1) amended 15 March 2021 section 28 Financial Services Legislation Amendment Act 2019
426A: Further prescribed information to be made available
1: A licensee or an authorised body that provides the service must,—
a: at the request of a prescribed person or at the prescribed times or on the occurrence of the prescribed events, make available to the prescribed person the information that is required to be made available under this section by the regulations; and
b: at the prescribed times or on the occurrence of the prescribed events, make publicly available the information that is required to be made publicly available by the regulations.
2: The information must be made available in the prescribed manner. Section 426A inserted 30 March 2018 section 75 Regulatory Systems (Commercial Matters) Amendment Act 2017
427: False or misleading statements and omissions
1: Subsections (2) to (5) apply if—
a: there is—
i: a statement in a disclosure statement that is false or misleading or is likely to mislead; or
ii: an omission from a disclosure statement of information that is required to be contained in the disclosure statement by the regulations; and
b: the statement or omission is materially adverse from the point of view of a retail investor.
2: The licensee or authorised body must not provide the disclosure statement to a person under section 423
3: If the disclosure statement has already been provided to a person ( A
a: in the prescribed circumstances (if any); or
b: if the licensee or authorised body fails to comply with any prescribed conditions.
4: If the licensee or authorised body continues to provide the service to A, the licensee or authorised body must provide to A a new disclosure statement that is not defective in terms of subsection (1)﻿(a) and (b).
5: The new disclosure statement under subsection (4) must be provided in the prescribed manner (if any).
6: A person must not make available to any person or the public any information under section 426A further disclosure
a: there is—
i: a statement in the further disclosure that is false or misleading or is likely to mislead; or
ii: an omission from the further disclosure of information that is required to be contained in the further disclosure by this Act or the regulations; and
b: the statement or omission is materially adverse from the point of view of a retail investor.
7: See section 511 Section 427 replaced 30 March 2018 section 76 Regulatory Systems (Commercial Matters) Amendment Act 2017
428: Miscellaneous provisions relating to false or misleading statements and omissions
1: For the purposes of section 427
2: Subsection (1) does not limit the meaning of a reference to a misleading statement.
3: Section 427 sections 423 to 426A Section 428 replaced 30 March 2018 section 77 Regulatory Systems (Commercial Matters) Amendment Act 2017
5: Requirement for certain services to be provided under client agreements
429: Application of subpart
This subpart applies to a licensee or an authorised body in respect of any of the following services provided under the licence:
a: the provision of a discretionary investment management service that is a retail service:
b: acting as a derivatives issuer in respect of a derivative offered under a regulated offer:
c: the provision of a prescribed intermediary service (but only if the regulations state that this subpart applies).
430: Need for client agreement
1: The licensee or authorised body that provides the service to an investor must ensure that there is a client agreement governing that service.
2: The client agreement must be entered into,—
a: in the case of a discretionary investment management service, at the same time as or before the investment authority is granted by the investor; and
b: in the case of a derivative offered under a regulated offer, before the derivative is issued to the investor; and
c: in the case of a prescribed intermediary service, at the prescribed time.
431: Contents, form, and effect of client agreement
1: A client agreement required by this subpart must provide adequately for the matters prescribed by the regulations.
2: The client agreement is treated as containing any provision that is implied into it by or under this Act.
3: The client agreement must be in writing and be contained in 1 or more documents that are legally enforceable as between the retail investor and the licensee or authorised body.
4: The client agreement has no effect to the extent that it contravenes, or is inconsistent with, this Act or any term implied into it by or under this Act.
5A: Additional regulation of financial advice and financial advice services
Subpart 5A inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Preliminary matters Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431A: Overview of financial advice and financial advice services regime
1: This subpart and other parts of this Act regulate financial advice and financial advice services as follows:
a: a person gives financial advice if the person makes a recommendation, gives an opinion, or provides financial planning of a kind described in section 431C(1) clauses 8 to 18 see section 431C(3)
b: a person must not carry on a business of giving regulated financial advice unless the person is authorised by a market services licence or exempt from the licensing requirement ( see sections 388(ba) 389(2) 431D see section 400
c: there are limitations on who can give regulated financial advice on behalf of a financial advice provider to a retail client ( see section 431F see section 449
d: conditions of the provider’s licence may also limit the types of advice that may be given by financial advisers or nominated representatives ( see sections 403(4)﻿(a) 546(1)﻿(d)﻿(iv)
e: people who give financial advice, financial advice providers, and any interposed persons are subject to the duties set out in sections 431I to 431R
f: section 431H Sections 431I to 431R section 449
2: This section is a guide only to the general scheme and effect of this Act in relation to financial advice and financial advice services. Section 431A inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431B: Additional purpose of subpart
1: This subpart has the additional purpose (in addition to those set out in sections 3 4
a: the availability of financial advice for persons seeking that advice; and
b: the quality of financial advice and financial advice services.
2: This section does not limit section 3 4 Section 431B inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Interpretation Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431C: Meaning of financial advice and regulated financial advice
1: A person gives financial advice
a: makes a recommendation or gives an opinion about acquiring or disposing of (or not acquiring or disposing of) a financial advice product; or
b: makes a recommendation or gives an opinion about switching funds within a managed investment scheme; or
c: designs an investment plan for a person that—
i: purports to be based on—
A: an analysis of the person’s current and future overall financial situation (including investment needs); and
B: the identification of the person’s investment goals; and
ii: includes 1 or more recommendations or opinions on how to realise 1 or more of those goals; or
d: provides financial planning of a kind prescribed by the regulations.
2: However, a person does not give financial advice merely by doing 1 or more of the things set out in clause 7
3: Financial advice is regulated financial advice
a: it is given in the ordinary course of a business; and
b: it is not excluded under any of clauses 8 to 18
4: Subsections (1) and (3) are subject to a declaration under section 562(1)﻿(gb) Section 431C inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431D: When financial advice service is provided
1: A person ( P financial advice service
a: P engages 1 or more other persons to give regulated financial advice to P’s clients on P’s behalf; or
b: P gives regulated financial advice to P’s clients on P’s own account.
2: Subsection (1) is subject to a declaration under section 562(1)﻿(gc) Example
ABC Limited ( ABC see FSP Act As part of ABC’s business, Susan is employed by ABC to give financial advice to ABC’s clients on its behalf. Although Susan is giving advice, she is not giving it on her own account, so she is not providing a financial advice service (and does not need to hold a licence). Under the conditions of ABC’s licence, the type of service that Susan gives may not be given by a nominated representative. The type of service can be given only by a financial adviser (that is, a person who is registered under the FSP Act in relation to a financial advice service). See If Susan were to leave ABC and set up business giving financial advice on her own account, she would be providing a financial advice service and would therefore be a financial advice provider (who must, therefore, hold a licence). Section 431D inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431E: Meaning of engaged
A person ( A engaged P
a: A is engaged directly by P (for example, if A is an employee or a contractor of P); or
b: A is engaged indirectly through 1 or more interposed persons (for example, if A is an employee of another person who is a contractor of P). Section 431E inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Limitations on giving regulated financial advice and holding out Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431F: Limitation on who can give regulated financial advice to retail clients on behalf of financial advice provider
1: A person ( A P
a: both of the following apply:
i: A is a financial adviser or a nominated representative nominated under section 431T
ii: A is engaged directly by P (as described in section 431E(a)
b: all of the following apply:
i: A is a financial adviser or a nominated representative nominated under section 431T
ii: A is engaged by P indirectly through 1 or more interposed persons (as described in section 431E(b)
iii: the conditions on P’s licence authorise P to engage A through those interposed persons to give the advice; or
c: both of the following apply:
i: A is an entity:
ii: the conditions on P’s licence authorise P to engage A to give the advice.
2: A financial advice provider or an interposed person must not allow a person engaged by the provider or person to give advice in contravention of subsection (1).
3: In this section, P’s licence Section 431F inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431G: Prohibitions on holding out in relation to giving financial advice
A person must not hold out that the person, or another person,—
a: is a financial advice provider, a financial adviser, or a nominated representative if that is not the case; or
b: is lawfully able to do any of the following if that is not the case:
i: provide a financial advice service:
ii: provide a particular kind of financial advice service:
iii: give regulated financial advice:
iv: give a particular kind of regulated financial advice:
v: give regulated financial advice about a particular financial advice product or a particular kind of financial advice product:
vi: give regulated financial advice to retail clients, to wholesale clients, or to retail and wholesale clients:
vii: provide a financial advice service, or give regulated financial advice, in particular circumstances. Section 431G inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Duties on persons giving regulated financial advice Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431H: Liability for duties
1: Sections 431I to 431P duty provisions
2: Sections 431Q 431R
3: If a financial advice provider contravenes a duty provision or section 431Q 431R
a: may be civilly liable for the contravention:
b: is not liable to disciplinary action or a deregistration or suspension order:
c: may face consequences under subpart 3
4: If a person ( A P
a: if A is a financial adviser, A—
i: is not civilly liable for the contravention; but
ii: may be subject to either or both of the following:
A: disciplinary action:
B: a deregistration or suspension order:
b: if A is an individual but not a financial adviser, A is not civilly liable for the contravention:
c: if A is an entity, A may be civilly liable for the contravention:
d: P—
i: may be civilly liable for contravening the duty provision as a result of the operation of sections 535 536 see also section 431U
ii: may be liable for contravening section 431Q
e: if A was engaged by P indirectly through 1 or more interposed persons (as described in section 431E(b)
i: may be civilly liable for contravening the duty provision as a result of the operation of sections 535 536
ii: may be liable for contravening section 431Q
5: If an interposed person (as described in section 431E(b) section 431Q 431R
a: may be civilly liable for the contravention:
b: is not liable to disciplinary action or a deregistration or suspension order:
c: if they are a licensee or an authorised body, may face consequences under subpart 3
6: The fact that an interposed person may be liable under subsection (4)﻿(e) or (5) does not affect the liability of any other interposed person or of the provider.
7: This section—
a: does not affect any liability that a person may have for a contravention as a person who is involved in the contravention ( see section 533
b: does not affect any criminal liability that a person may have for a contravention (for example, under section 511 section 431P
c: does not limit the exercise by the FMA or a court of any of its powers under Part 8 subpart 3
8: In this section,— civil liability see section 449 subpart 3 deregistration or suspension order section 469(2) Financial Service Providers (Registration and Dispute Resolution) Act 2008 disciplinary action Part 5 Section 431H inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431I: Duty to meet standards of competence, knowledge, and skill
A person must not give regulated financial advice to a retail client unless the person meets—
a: the standards of competence, knowledge, and skill (including any continuing professional development requirements) provided in the code of conduct for giving the advice; and
b: any prescribed eligibility criteria in relation to the giving of the advice. Section 431I inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431J: Duty to ensure client understands nature and scope of advice
A person must not give regulated financial advice to a retail client unless the person has taken reasonable steps to ensure that the client understands the nature and scope of the advice being given, including any limitations on the nature and scope of the advice. Section 431J inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431K: Duty to give priority to client’s interests
1: This section applies if—
a: a person ( A C
b: A knows, or ought reasonably to know, that there is a conflict between—
i: C’s interests; and
ii: A’s own interests or the interests of a person connected with the giving of the advice.
2: In giving the advice, A must give priority to C’s interests by taking all reasonable steps to ensure that the advice is not materially influenced by any of the following:
a: A’s own interests:
b: the interests of a person connected with the giving of the advice.
3: In this section, each of the following is a person connected with the giving of the advice
a: a person associated with A:
b: if A gives the advice on behalf of a financial advice provider,—
i: the financial advice provider:
ii: a person associated with the financial advice provider:
iii: if A is engaged by the provider through 1 or more interposed persons,—
A: an interposed person:
B: a person associated with an interposed person. Section 431K inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431L: Duty to exercise care, diligence, and skill
A person who gives regulated financial advice to a client must exercise the care, diligence, and skill that a prudent person engaged in the occupation of giving regulated financial advice would exercise in the same circumstances. 2008 No 91 s 33 Section 431L inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431M: Duty to comply with code of conduct
A person who gives regulated financial advice to a retail client must comply with the standards of ethical behaviour, conduct, and client care required by the code of conduct. 2008 No 91 s 37 Section 431M inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431N: Duty relating to offer that contravenes Act or regulations
1: A person ( A C
a: the product is a contravening product; and
b: A knows, or ought reasonably to know, that the product is a contravening product.
2: A financial product is a contravening product
a: if the product is being offered under a regulated offer and that offer contravenes this Act or the regulations; or
b: if,—
i: when the product was offered, the offer was a regulated offer and contravened this Act or the regulations; and
ii: the contravention has not been remedied. Section 431N inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431O: Duty to make prescribed information available
1: A person who gives regulated financial advice to a client must make the prescribed information available in the prescribed manner when required to do so by the regulations.
2: The regulations may (without limitation) require information to be made available—
a: at the request of a prescribed person, at prescribed times, or when a prescribed event occurs:
b: to a particular person or persons or to the public. Examples
ABC Limited ( ABC C ABC must (if required by the regulations) provide information to C when the service is first provided (for example, about fees, material interests, relationships and associations, the type of advice, dispute resolution arrangements, and other matters relevant to the performance of the service). ABC must also (if required by the regulations) provide ongoing information to C. 2008 No 91 ss 21–31 Section 431O inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431P: False or misleading statements and omissions
1: A person must not make information available under section 431O
a: there is—
i: a statement in the information that is false or misleading or is likely to mislead; or
ii: an omission from the information that is required by the regulations; and
b: the statement or omission is materially adverse from the point of view of the client.
2: For the purposes of this section, information about a future matter (including the doing, or not doing, of an act) is misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2) does not limit the meaning of a reference to a misleading statement.
4: This section does not limit section 431O
5: See section 511 2008 No 91 s 34 Section 431P inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Additional duties on financial advice providers and interposed persons that engage others to give advice Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431Q: Persons engaging others to give advice must ensure compliance with duties
1: A financial advice provider that engages another person ( A sections 431I to 431P
2: If A is engaged by the provider indirectly through 1 or more interposed persons (as described in section 431E(b) sections 431I to 431P Section 431Q inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431R: Duties of persons who engage nominated representatives
1: A financial advice provider ( P
a: limit the nature and scope of the advice that the nominated representatives give; and
b: allow P to regulate what advice is given and the circumstances in which it is given.
2: The processes and controls must ensure that the advice given by a nominated representative is commensurate with their competence, knowledge, and skill.
3: P and any interposed person through whom any of the nominated representatives are engaged must—
a: ensure that the nominated representatives comply with P’s processes and controls; and
b: monitor the nominated representatives and the advice they give to ensure that—
i: those processes and controls are effective and are complied with; and
ii: the nominated representatives comply with their duties under this subpart.
4: Neither the provider nor any interposed person may give, or offer to give, to any of its nominated representatives any kind of payment or other incentive that is intended to encourage, or is likely to have the effect of encouraging, a nominated representative to engage in conduct that contravenes any duty under sections 431I to 431P Section 431R inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Miscellaneous provisions Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431S: Protection of individual who reports breach
1: This section applies if an individual who gives regulated financial advice ( A
a: reasonably believes that a person has contravened a provision of this Act that relates to the giving of financial advice or the provision of a financial advice service; and
b: reports that belief to the FMA.
2: If A makes the report in good faith,—
a: no civil, criminal, or disciplinary proceedings may be brought against A as a result of A having made the report; and
b: no person may terminate A’s employment or appointment as a result of A having made the report; and
c: no tribunal, body, or authority that has jurisdiction in respect of A’s professional conduct may make an order against, or do any act in relation to, A as a result of A having made the report. Section 431S inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431T: Nomination of nominated representatives
1: A financial advice provider ( P A
a: P holds, or is authorised to provide a service under, a licence that covers financial advice services; and
b: A—
i: is engaged by P to give financial advice on P’s behalf; and
ii: is not a financial adviser or a financial advice provider; and
iii: is not a nominated representative of any other financial advice provider.
2: However, subsection (1)﻿(b)﻿(iii) does not prevent an individual being nominated as a nominated representative of 2 or more financial advice providers if—
a: the providers are authorised to provide a financial advice service under the same licence; or
b: the nomination of the same individual as a nominated representative of 2 or more providers is authorised by conditions on the providers’ licences and those conditions are related to an arrangement referred to in section 403(4)﻿(b)﻿(ii)
3: A nomination must be made in the manner (if any) specified by the FMA.
4: A nomination—
a: takes effect on the date it is made or any later date specified in it; and
b: remains in force until the first to occur of the following:
i: P revokes the nomination by giving written notice to A:
ii: P ceases to comply with subsection (1)﻿(a):
iii: A ceases to comply with subsection (1)﻿(b).
5: A financial advice provider must keep an up-to-date record of its nominated representatives in the prescribed manner. Section 431T inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431U: Limitation on pecuniary penalty orders against financial advice providers
1: This section applies if—
a: a financial adviser contravenes a duty provision (as defined in section 431H(1)
b: the financial advice provider on whose behalf the financial adviser was acting is civilly liable for the contravention of a duty provision (as described in section 431H(4)﻿(d)﻿(i)
c: the financial advice provider took all reasonable steps to ensure that the financial adviser did not contravene the duty provision.
2: A pecuniary penalty order may not be made under section 489 Section 431U inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
5B: Regulation of client money or property services
Subpart 5B inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431V: Overview of client money or property services regime
1: This subpart and other legislation regulate client money or property services as follows:
a: the Financial Service Providers (Registration and Dispute Resolution) Act 2008
b: a person who provides the service must—
i: disclose information to retail clients under section 431X
ii: exercise care, diligence, and skill under section 431ZA
iii: handle client money and property in accordance with sections 431ZC to 431ZH section 431Z(2)
c: section 431ZI
2: This section is a guide only to the general scheme and effect of this subpart and other legislation in relation to client money or property services. Section 431V inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Interpretation Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431W: Meaning of client money or property service and certain other terms
1: A client money or property service
a: is the receipt of client money or client property by a person and the holding, payment, or transfer of that client money or client property; and
b: includes a custodial service.
2: A custodial service A C
3: The mere transmission of a non-transferable instrument payable to another person is not a client money or property service.
4: A client money or property service is a regulated client money or property service clauses 19 to 23
5: In this subpart,— client money
a: received in connection with acquiring, holding, or disposing of a financial advice product or otherwise in connection with a financial advice product; and
b: received from, or on account of, a client by a person ( A client property
a: the property is a financial advice product, is a beneficial interest in a financial advice product, or is received in connection with a financial advice product; and
b: the property is received from, or on account of, the client by a person ( A provider 2008 No 91 s 77B Section 431W inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Disclosure obligations for services for retail clients Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431X: Provider must make disclosure before receiving client money or client property from retail client
A person who provides a regulated client money or property service to a retail client must, in the prescribed manner, disclose the prescribed information to the retail client—
a: before receiving client money or client property from or on behalf of the client; or
b: if not practicable before, as soon as practicable after receiving client money or client property from or on behalf of the client. 2008 No 91 s 77E Section 431X inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431Y: False or misleading statements and omissions
1: A person must not provide information under section 431X
a: there is—
i: a statement in the information that is false or misleading or is likely to mislead; or
ii: an omission from the information that is required by the regulations; and
b: the statement or omission is materially adverse from the point of view of a client.
2: For the purposes of this section, information about a future matter (including the doing, or not doing, of an act) is misleading if the person making the statement does not have reasonable grounds for making it.
3: Subsection (2) does not limit the meaning of a reference to a misleading statement.
4: This section does not limit section 431X
5: See section 511 Section 431Y inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Conduct obligations Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431Z: Application of conduct obligations
1: Sections 431ZA 431ZB
2: Sections 431ZC to 431ZH
a: apply to regulated client money or property services provided to a retail client; and
b: apply to custodial and other regulated client money or property services provided to every investor under a retail service of a DIMS licensee (as provided by section 446
c: otherwise apply to client money or property services provided to a wholesale client only if provided by the regulations; and
d: do not apply to a broker within the meaning of the Insurance Intermediaries Act 1994 section 14 15 2008 No 91 s 77J Section 431Z inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZA: Provider must exercise care, diligence, and skill
A provider must, when providing a regulated client money or property service, exercise the care, diligence, and skill that a prudent person engaged in the business of providing the service would exercise in the same circumstances. 2008 No 91 s 77K Section 431ZA inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZB: Provider must not receive client money if offer contravenes Act or regulations
1: A provider must not receive client money or client property from a person for the acquisition of a financial product if—
a: the product is a contravening product; and
b: the provider knows, or ought reasonably to know, that the product is a contravening product.
2: A financial product is a contravening product
a: if the product is being offered under a regulated offer and that offer contravenes this Act or the regulations; or
b: if,—
i: when the product was offered, the offer was a regulated offer and contravened this Act or the regulations; and
ii: the contravention has not been remedied. 2008 No 91 s 77O Section 431ZB inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Obligations for handling client money and client property Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZC: Provider must pay client money into separate trust account and hold client property on trust
1: A provider who receives client money or client property, as part of a client money or property service,—
a: must hold the client money or client property, or ensure the client money or client property is held, on trust for the client; and
b: must ensure that the client money is paid promptly into a bank in New Zealand (or into any other prescribed entity) to—
i: a trust account of the provider or of a related body corporate specified in the regulations; or
ii: if section 445
2: A provider must ensure that the client money and client property are held separate from money or property held by or for the provider, or other person referred to in subsection (1)﻿(b)﻿(i) or (ii), on its own account.
3: However,—
a: subsection (2) does not apply in the prescribed circumstances; and
b: money or property that is not held separate from client money or client property—
i: must be treated as client money or client property for all or any purposes if the regulations so provide:
ii: must be separated from client money or client property if required by the regulations or may be so separated if permitted by the regulations.
4: A provider must comply with any prescribed duties and other requirements in relation to the client money and client property held on trust under this section. 2008 No 91 s 77P Section 431ZC inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZD: Provider must account for client money and client property
A provider who receives or holds client money or client property on trust for a client must account properly, or ensure that account is properly made, to the client for that client money or client property. 2008 No 91 s 77Q Section 431ZD inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZE: Provider must keep records of client money and client property
1: A provider who receives or holds client money on trust for a client must keep, or ensure that there are kept, trust account records that disclose clearly the position of the client money in the trust account.
2: A provider who receives or holds client property on trust for a client must keep, or ensure that there are kept, records that—
a: identify the client property; and
b: show the date when the client property was received; and
c: if the client property has been disposed of, show when the client property was disposed of and to whom.
3: A provider must also keep all other prescribed records.
4: A provider must—
a: keep the records required by this section, or ensure that they are kept, in a manner that enables those records to be conveniently and properly audited, reviewed, or inspected; and
b: comply with the prescribed requirements (if any) relating to those records and their audit, review, or inspection. 2008 No 91 s 77R Section 431ZE inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZF: Provider must report on client money and client property
1: A provider must, in the prescribed circumstances, provide confirmation information to a client or other prescribed persons in respect of client money or client property received or held on behalf of the client.
2: The confirmation information must be provided in the prescribed manner.
3: In this section, confirmation information 2008 No 91 s 77RA Section 431ZF inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZG: Restrictions on use of client money and client property
A person must not use or apply client money or client property received or held on trust for a client by a provider in any way except—
a: as expressly directed by the client (either generally or specifically); or
b: in accordance with section 431ZC 2008 No 91 s 77S Section 431ZG inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZH: Protection of client money and client property held on trust
1: The client money or client property that is received or held by a provider on trust for a client—
a: is not available for the payment of the debts owing to any other creditor of the provider; and
b: is not liable to be attached or taken in execution under the order or process of any court at the instance of another creditor of the provider.
2: Nothing in section 431ZG 2008 No 91 s 77T Section 431ZH inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Persons acting in course of business of employers or principals Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZI: Who is responsible for obligations
1: If a client money or property service is provided by a person ( A B
2: This section does not affect the liability of A or B under any other Act or rule of law for A’s actions. 2008 No 91 s 77U Section 431ZI inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019 Application of Trusts Act 2019 Heading inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
431ZJ: Application of Trusts Act 2019
1: This section applies to a trust constituted (or to be constituted) for the purposes of section 431ZC
2: The following provisions of the Trusts Act 2019
a: section 29
b: section 39
c: sections 45 to 48
d: sections 49 to 55
e: section 56
f: section 72
g: sections 81 to 85
h: sections 142 to 148
i: sections 153 to 158
3: If this section commences before the commencement of the Trusts Act 2019 section 2(1) Section 431ZJ inserted 15 March 2021 section 29 Financial Services Legislation Amendment Act 2019
6: Additional regulation of discretionary investment management services
432: Application of subpart
This subpart applies to—
a: a DIMS licensee in respect of the provision of a discretionary investment management service that is a retail service under a licence:
b: a person who acts as a custodian of investor money or investor property under a discretionary investment management service of that kind.
432A: Meaning of discretionary investment management service and related terms
1: In this Act, a person ( A discretionary investment management service DIMS
a: A—
i: decides which financial products to acquire or dispose of on behalf of an investor ( B
ii: in doing so, is acting under an authority granted to A to manage some or all of B's holdings of financial products; or
b: A gives financial advice in the ordinary course of, and incidentally to, providing a discretionary investment management service under paragraph (a)
2: In determining whether A has an authority under subsection (1)﻿(a)﻿(ii)
3: In this Act,— DIMS licensee investment authority provider of a discretionary investment management service Section 432A inserted 15 March 2021 section 30 Financial Services Legislation Amendment Act 2019 Duties of DIMS licensee
433: DIMS licensee's duties
1: A DIMS licensee must—
a: act honestly in providing the service; and
b: in exercising any powers or performing any duties as a DIMS licensee under the client agreement or investment authority for the service,—
i: act in the best interests of the investors using the service and treat those investors equitably (if the service is provided to a class of investors); and
ii: act in the best interests of the particular investor using the service (if the service is provided to only that investor); and
c: not make use of information acquired through being the DIMS licensee in order to—
i: gain an improper advantage for itself or any other person; or
ii: cause detriment to the investors using the service.
2: A DIMS licensee must provide the service in accordance with a client agreement that complies with subpart 5 section 437
434: Duties of directors and senior managers of DIMS licensee
A director or senior manager of a DIMS licensee—
a: must not make use of information acquired through being the director or senior manager of the DIMS licensee in order to—
i: gain an improper advantage for itself or any other person; or
ii: cause detriment to the investors using the service; and
b: must not make improper use of the position as a director or senior manager of the DIMS licensee to gain, directly or indirectly, an advantage for himself or herself or any other person or to cause detriment to the investors using the service. Corporations Act 2001 s 601FE (Aust)
435: Duty of DIMS licensee to comply with professional standard of care
A DIMS licensee must, in exercising any power of investment or performing any duties in that capacity in relation to the service, exercise the care, diligence, and skill that a prudent person engaged in that profession would exercise in the same circumstances.
436: Limits on permitted indemnities
1: If a DIMS licensee has any rights to be indemnified by an investor for liabilities incurred in relation to the performance of the service, those rights—
a: must be set out in the client agreement; and
b: must be available only in relation to the proper performance of the duties under sections 433(1) 435
2: No other agreement has any effect to the extent that it purports to confer a right of a kind set out in subsection (1). Corporations Act 2001 s 601GA(2) (Aust)
437: Requirement for agreed investment authority
1: A DIMS licensee must ensure that there is a written investment authority granted by the investor for the service.
2: The DIMS licensee must ensure that the investment authority provides adequately for the investment objectives and the scope of the investment authority, including the following matters:
a: the nature or type of investments that may be made, and any limits on those; and
b: any limits on the proportion of each type of asset invested in; and
c: the methodology used for developing and amending the investment strategy and for measuring performance against the investment objectives.
3: However, if there are no limits on the investment authority on a matter referred to in subsection (2)﻿(a) or (b) or if the matter is capable of change without the prior written consent of the investor, the investment authority must clearly disclose that fact.
4: The investment authority must provide for the matters set out in this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4
438: Action that must be taken on limit breaks
1: This section applies to a DIMS licensee if there is a material breach of any limits under an investment authority referred to in section 437 limit break
a: the nature or type of investments that may be made:
b: the proportion of each type of assets that may be invested in.
2: If this section applies, the DIMS licensee must report the limit break to the FMA in the prescribed circumstances and in the prescribed manner.
3: Whether or not a limit break is material must be determined in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 Related party transactions
439: Definition of related party benefits
1: In sections 440 441 related party benefit
a: is either given out of investor property or creates an exposure to loss for investor property; and
b: is given to, or received by, a related party of the service; but
c: does not include fees or expenses that are paid or reimbursed to the DIMS licensee in accordance with the client agreement for that service.
2: A related party
3: A person is also a related party of the service at a particular time if—
a: the person was a related party of the service under subsection (2) at any time within the previous 6 months:
b: the person believes or has reasonable grounds to believe that the person is likely to become a related party of the service under subsection (2) within the next 12 months. Corporations Act 2001 ss 601LA–601LE (Aust)
440: General prohibition on transactions giving related party benefits
1: A DIMS licensee (or any person acting on behalf of the DIMS licensee) must not enter into a transaction that provides for a related party benefit to be given.
2: However, subsection (1) does not apply to a transaction or series of transactions if one of the following applies and the DIMS licensee certifies to that effect:
a: the transaction or transactions are,—
i: if the service is provided to a class of investors, in the best interests of the investors using the service; or
ii: if the service is provided to only 1 investor, in the best interests of the particular investor affected; or
b: section 441
3: A failure to comply with this section does not affect the validity of any transaction (subject to any court order under Part 8 Corporations Act 2001 ss 601LA–601LE (Aust)
441: Certain related party benefits permitted
This section applies to— Arm's-length terms
a: a benefit that is given on terms that—
i: would be reasonable in the circumstances if the parties were connected or related only by the transaction in question, each acting independently, and each acting in its own best interests; or
ii: are less favourable to the DIMS licensee or the associated person of the DIMS licensee than the terms referred to in subparagraph (i): Transactions in registered schemes
b: an acquisition or a disposal of a managed investment product in a registered scheme or of a prescribed interest in a prescribed overseas scheme: Certain registered bank investments
c: investments made in the ordinary course of business in products referred to in clause 21(a) to (c) Schedule 1 Other prescribed benefits or transactions
d: a prescribed benefit or transaction. Corporations Act 2001 ss 601LA–601LE (Aust)
442: Requirements for certificates as to related party benefits
1: A certificate under section 440
a: states the specific grounds on which it is given under section 440 section 441
b: complies with the prescribed requirements (if any) as to its form, content, or the manner in which it is given.
2: Nothing in that section requires a new certificate if there is an existing certificate that applies (whether specifically or in general terms) to the transaction or transactions.
443: General duties still apply
The fact that a transaction is permitted under section 440 441 Corporations Act 2001 s 230 (Aust) Broking and custodial service performed as part of discretionary investment management service
444: Meaning of investor money and investor property
In this Act,— investor money
a: the money is received under that service; and
b: the money is received from, or on account of, the investor by a person ( A investor property
a: the property is a financial product, is a beneficial interest in a financial product, or is received under that service; and
b: the property is received from, or on account of, the investor by a person ( A
445: Requirements for custodian
1: A DIMS licensee must ensure that the investor money and investor property that is held under the service is held on behalf of the investor by 1 or more persons that meet the custodianship requirements set out in subsection (2).
2: A custodian of the investor money and investor property—
a: must be a body corporate (other than the DIMS licensee) that the DIMS licensee believes, on reasonable grounds, to be appropriate to hold, and safeguard, the money or property; and
b: may be an associated person of the DIMS licensee (other than by virtue of the custodianship) only if—
i: that is permitted by conditions imposed under section 402
ii: those conditions are observed.
3: The DIMS licensee is jointly and severally liable with any custodian for ensuring that investor money and investor property is held in accordance with this subpart.
4: This section does not apply—
a: to the extent that money or property is held directly by the investor; or
b: in the prescribed circumstances.
446: Certain client money or property service obligations under subpart 5B apply
1: A DIMS licensee, and a custodian of investor money or investor property under the service, must provide the custodial and other client money or property services under the service to every investor in accordance with sections 431ZC to 431ZH
2: Those sections apply as if every reference to a client were to the investor and every reference to client money or client property were to investor money or investor property.
3: This section does not limit the application of those sections to a DIMS licensee or a custodian as a provider of a client money or property service. Section 446 replaced 15 March 2021 section 31 Financial Services Legislation Amendment Act 2019
7: Holding and application of investor funds and property by derivatives issuers
447: Application of regulations made under this subpart
Regulations made under this subpart may apply to a derivatives issuer (whether or not it is licensed and whether or not it makes any regulated offer).
448: Regulations regulating holding and application of investor funds and property by derivatives issuers
1: The Governor-General may, by Order in Council made on the recommendation of the Minister in accordance with subsection (2), make regulations for the purposes of—
a: regulating the receipt of money and property from , or on account of,
b: prescribing requirements relating to the deposit of that money and property in separate investors' funds accounts or safe custody:
c: specifying the duties and obligations of derivatives issuers in relation to investors' funds accounts, including obligations to make payments into those accounts:
d: providing for the protection of money deposited into investors' funds accounts and property deposited in safe custody from claims against derivatives issuers:
e: providing for the investment of money referred to in paragraph (d):
f: providing for the FMA to carry out functions under the regulations, and its powers and procedures in doing so:
g: stating which provisions are Part 6 services provisions for the purposes of this Act.
2: The Minister must consult the FMA before making a recommendation under this section.
3: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 448(1)﻿(a) amended 9 August 2017 section 78 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 448(3) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
7A: Additional regulation of licences relating to financial benchmarks
Subpart 7A inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448A: Application of subpart
This subpart applies to market services licences to act as an administrator of a financial benchmark. Section 448A inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448B: Additional purposes for licences relating to financial benchmarks
1: In relation to market services licences to act as an administrator of a financial benchmark, this Part has the purposes (in addition to those set out in sections 3 4
a: ensuring the accuracy, integrity, and reliability of financial benchmarks, and providing for their continued availability, to support the purposes set out in sections 3 4
b: promoting the recognition of New Zealand financial benchmarks in overseas jurisdictions by ensuring that—
i: those benchmarks comply with applicable international requirements; and
ii: an administrator of a financial benchmark is subject to effective regulation when generating and operating those benchmarks; and
iii: those benchmarks may be referenced or otherwise used in international instruments.
2: This section does not limit section 3 4 Section 448B inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448C: FMA’s powers to direct contributor to provide information or data
1: The FMA may exercise a power under subsection (2) if it is satisfied that—
a: a contributor has ceased or is likely to cease providing or making available information or data relevant to the generation or operation of the financial benchmark specified in a licence; and
b: it is necessary or desirable in order to promote any of the purposes set out in section 448B
2: The FMA may, by written notice and otherwise in the prescribed manner, give a direction to a contributor requiring the contributor to provide information or data to a licensee, an authorised body, or another entity, where the provision of that information or data is necessary or desirable for the generation or operation of the financial benchmark specified in a licence.
3: A direction may (without limitation) specify either or both of the following:
a: requirements relating to the manner and form in which the information or data must be provided:
b: the entity to which the information or data must be provided.
4: In this subpart, contributor
5: Subsection (4) applies regardless of where a contributor is resident, is incorporated, or carries on business.
6: The contributor must comply with the direction ( see subpart 3 Section 448C inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448D: FMA’s powers to direct administration of financial benchmark
1: The FMA may exercise a power under subsection (2) if it is satisfied that—
a: a licensee or an authorised body has ceased or is likely to cease generating or operating a financial benchmark specified in a licence; and
b: it is necessary or desirable in order to promote any of the purposes set out in section 448B
2: The FMA may, by written notice and otherwise in the prescribed manner, give a direction to a licensee or an authorised body—
a: to continue to generate or operate the financial benchmark in a particular way; or
b: to transfer or cease the generation or operation of the financial benchmark in a particular way.
3: A direction may (without limitation) specify 1 or more requirements relating to the following:
a: changes to the rules or procedures by which the financial benchmark is generated:
b: changes to the documents under which the financial benchmark is generated or operated (for example, any compliance documents required by a condition of the licence):
c: the orderly transfer of the generation or operation of the financial benchmark to another person:
d: the orderly cessation of the generation or operation of the financial benchmark:
e: the provision of material (including information, data, computer software, instructions, methodologies, formulas, or algorithms) to another person, where the provision of that material is necessary or desirable for the generation, operation, or transfer of that financial benchmark.
4: The licensee or authorised body must—
a: give the FMA all reasonable assistance to facilitate the continued generation and operation of the financial benchmark (or the orderly cessation of the financial benchmark); and
b: comply with the direction.
5: See subpart 3 Section 448D inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448E: Duration of direction
1: A direction under section 448C 448D
2: The FMA may, by written notice, extend the period referred to in subsection (1) by a further period of not more than 12 months. Section 448E inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448F: FMA must follow steps for giving direction
Sections 475 to 477 section 448C 448D Part 8 Section 448F inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448G: FMA may give interim direction pending exercise of power
1: The FMA may give an interim direction (an interim direction section 448C 448D
a: the FMA is considering, at any time, whether it may exercise a power under section 448C 448D
b: the FMA considers that making an interim direction is necessary or desirable in the public interest.
2: An interim direction is in force from the time at which it is given until the close of—
a: the date that is 15 working days after the day on which it is given; or
b: a later date specified by the FMA by notice to the person to whom the interim direction relates.
3: For the purposes of subsection (2)﻿(b),—
a: the FMA may specify a later date if the FMA is of the opinion that it is not reasonably practicable for it to complete its consideration as referred to in subsection (1)﻿(a) within the 15-working-day period referred to in subsection (2)﻿(a); and
b: the later date must be a date that is no more than 30 working days after the day on which the interim direction is given.
4: The FMA—
a: may act under subsection (1) or (2)﻿(b) without giving the person to whom the interim direction relates an opportunity to make submissions to, or be heard before, the FMA in respect of the matter; but
b: must, after acting under subsection (1) or (2)﻿(b), give that person or that person’s representative an opportunity to make written submissions and to be heard on the matter.
5: The person to whom the interim direction relates must comply with the direction ( see subpart 3 Section 448G inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448H: FMA must give notice after giving interim direction
If the FMA gives an interim direction, the FMA—
a: must, as soon as is reasonably practicable, give written notice to the person to whom the interim direction relates of—
i: the terms and conditions of the interim direction; and
ii: the reasons for the interim direction; and
iii: any other information the FMA thinks relevant in the circumstances; and
b: in the case of an interim direction to a contributor, must also give the written notice referred to in paragraph (a) to the relevant licensee in respect of the financial benchmark; and
c: may also make the direction available on its Internet site; and
d: may also give notice to any other person of those matters. Section 448H inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448I: General provisions on FMA’s directions
1: The FMA may give a direction under this subpart on the terms and conditions that the FMA thinks fit.
2: The FMA may vary a direction in the same way as it may give the direction under this subpart.
3: The FMA may revoke a direction or suspend a direction on the terms and conditions it thinks fit. Section 448I inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
448J: Protection for persons in respect of provision of material, information, or data under this subpart
No civil or criminal proceedings may be brought against a person by reason of the person having provided material, information, or data in good faith and in accordance with a direction under this subpart. Section 448J inserted 14 March 2021 section 43 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
8: Miscellaneous provisions
Civil liability
449: Part 6 services provisions
1: All of the provisions specified in subsections (3) and (4) are Part 6 services provisions.
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: The provisions are the following:
a: section 388
b: section 391
c: section 427(2), (3), and (6)
d: section 430
e: section 431
ea: section 431P section 431H
eb: section 431Y
f: section 445
g: section 446 subpart 5B
4: A contravention of any of the following may give rise to civil liability ( see subpart 3
a: section 411
b: section 412
c: section 417
d: section 418
e: section 420
f: section 423
g: section 426A
ga: section 427(4) or (5)
gb: section 431F
gc: section 431G
gd: sections 431I to 431O section 431H
ge: sections 431Q 431R 431T(5)
gf: section 431X
gg: sections 431ZA 431ZB
gh: sections 431ZC to 431ZH
h: sections 433 to 435
i: section 437
j: section 438
k: section 440
ka: section 448C 448D 448G
l: those conditions imposed on a market services licence by the regulations that are stated by those regulations to be Part 6 services provisions:
m: those provisions of the regulations made under subpart 7 Section 449(3)﻿(c) amended 30 March 2018 section 79(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 449(3)﻿(ea) inserted 15 March 2021 section 32(1) Financial Services Legislation Amendment Act 2019 Section 449(3)﻿(eb) inserted 15 March 2021 section 32(1) Financial Services Legislation Amendment Act 2019 Section 449(3)﻿(g) replaced 15 March 2021 section 32(2) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(g) amended 30 March 2018 section 79(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 449(4)﻿(ga) inserted 30 March 2018 section 79(3) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 449(4)﻿(gb) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(gc) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(gd) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(ge) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(gf) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(gg) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(gh) inserted 15 March 2021 section 32(3) Financial Services Legislation Amendment Act 2019 Section 449(4)﻿(ka) inserted 14 March 2021 section 44 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
7: Financial reporting
Part 7 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
1: Overview, application, and interpretation
Subpart 1 heading replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
450: Overview
1: This Part provides for FMC reporting entities to—
a: keep proper accounting records; and
b: prepare financial statements, to have those financial statements audited, and to lodge those financial statements.
2: This section is only a guide to the general scheme and effect of this Part. Section 450 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
451: Meaning of FMC reporting entity
1: In this Act, FMC reporting entity
a: every person who is an issuer of a regulated product (but see section 452
b: every person who holds a licence under Part 6 or a person referred to in subsection (2)
c: every licensed supervisor:
d: every listed issuer (but see section 351(1)﻿(ab)
e: every operator of a licensed market (other than a market licensed under section 317
f: every recipient of money from a conduit issuer ( see section 453
g: every registered bank:
h: every licensed insurer:
i: every credit union:
j: every building society:
k: every person that is an FMC reporting entity under clause 27A
2: Despite subsection (1)﻿(b), a person who holds a licence under Part 6
a: the licence only covers acting as an administrator of a financial benchmark or a financial advice service (or both)
b: the person is not a person referred to in subsection (1)﻿(a) or (c) to (k). Section 451 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 451(1)﻿(b) amended 14 March 2021 section 45(1) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 451(2) inserted 14 March 2021 section 45(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 451(2)﻿(a) amended 15 March 2021 section 33(2) Financial Services Legislation Amendment Act 2019
452: Company that issues equity securities not FMC reporting entity if fewer than 50 shareholders
1: A company within the meaning of section 2(1) section 451(1)﻿(a)
a: has fewer than 50 shareholders or fewer than 50 parcels of shares that are voting products; and
b: would, but for this section, be an FMC reporting entity by reason only of being an issuer of equity securities that are both voting products and regulated products.
2: In this section, shareholder 1993 No 106 s 6(g) s 2A Section 452 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 452(1) amended 14 March 2021 section 46 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
453: Recipients of money from conduit issuers
In section 451 A recipient of money from a conduit issuer
a: A is an associated person of another person (the conduit issuer
b: the conduit issuer raises an amount of money by the issue of financial products under—
i: a regulated offer; or
ii: an offer made, in the prescribed circumstances, in reliance upon an exclusion in Schedule 1
c: 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 transaction 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
d: the money that is provided to A under paragraph (c) is 10% or more of the money that is raised under paragraph (b); and
e: all or part of the money that is provided under paragraph (c) has not yet been repaid or returned to the conduit issuer. 1993 No 106 s 4A Section 453 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
454: Miscellaneous provisions relating to application
1: If a person ceases to be an FMC reporting entity during an accounting period, that person must be treated as continuing to be an FMC reporting entity in relation to that accounting period for the purposes of this Act and every other enactment.
2: Nothing in this Part or clause 20 1993 No 106 ss 5 21 Section 454 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
2: Accounting records
Subpart 2 heading replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
455: FMC reporting entities must keep proper accounting records
1: Every FMC reporting entity must ensure that there are kept at all times accounting records that—
a: correctly record the transactions of the FMC reporting entity; and
b: in the case of a manager of a registered scheme, correctly record the transactions of the scheme; and
c: will enable the FMC reporting entity to ensure that the financial statements of the FMC reporting entity and of any such scheme comply with generally accepted accounting practice and any prescribed requirements; and
d: will enable the financial statements of the FMC reporting entity and of any such scheme to be readily and properly audited.
2: Every FMC reporting entity must establish and maintain a satisfactory system of control of its accounting records.
3: In this subpart, financial statements 1978 No 103 s 53 Section 455 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
456: Place where accounting records to be kept
1: Accounting records required to be kept by this subpart must be kept—
a: at the registered office of the FMC reporting entity (if any); or
b: at another place that the directors of the FMC reporting entity think fit.
2: The accounting records may be kept at a place outside New Zealand only if there are sent to, and kept at a place in, New Zealand documents in respect of the business dealt with in those accounting records that will enable the preparation in accordance with this Act of—
a: the financial statements of the FMC reporting entity and any registered scheme referred to in section 455
b: any other document annexed to any of those statements that gives information that is required by any enactment. 1978 No 103 s 53A Section 456 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
457: Accounting records to be in English
1: Accounting records required to be kept by this subpart and the documents referred to in section 456(2)
a: in written form and in English; or
b: in a form or manner in which they are easily accessible and convertible into written form in English.
2: An FMC reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 53B Section 457 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
458: Period for which accounting records to be kept
Accounting records kept under this subpart, or copies of them, must be retained by the FMC reporting entity for a period of at least 7 years after the later of—
a: the date the records are made; and
b: the date of completion of the transaction to which the records relate. 1978 No 103 s 53C Section 458 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
459: Inspection of accounting records
1: Every FMC reporting entity must make the accounting records required to be kept under this subpart and the documents referred to in section 456(2)
a: the directors of the FMC reporting entity; and
b: any supervisor (if the FMC reporting entity is an issuer of debt securities or the manager of a registered scheme); and
c: the FMA; and
d: any other persons authorised or permitted by an enactment to inspect the accounting records of the FMC reporting entity or scheme.
2: An FMC reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 1978 No 103 s 53D Section 459 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
3: Preparation, audit, and lodgement of financial statements
Subpart 3 heading replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Preparation of financial statements Heading inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
460: Financial statements must be prepared
1: Every FMC reporting entity must ensure that, within 4 months after the balance date of the entity, financial statements that comply with generally accepted accounting practice are—
a: completed in relation to the entity and that balance date; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
2: Subsection (1) is subject to sections 461(2) 461A(4) 1993 No 106 ss 10(1) 11(1) Section 460 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461: Group financial statements must be prepared
1: Every FMC reporting entity that has, on the balance date of the entity, 1 or more subsidiaries must ensure that, within 4 months after that balance date, group financial statements that comply with generally accepted accounting practice are—
a: completed in relation to the group and that balance date; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
2: Section 460
3: The board of an FMC reporting entity must ensure that the balance date of the FMC reporting entity is the same as the balance date of its subsidiaries.
4: This section is subject to section 461A(4) 1993 No 106 ss 7(8) 13(1) Section 461 replaced 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461A: Financial statements for registered schemes and funds
1: This section applies to every manager of a registered scheme.
2: If the liabilities of the manager and the scheme are not limited to a particular group of assets (a separate fund balance date of the scheme
a: completed in relation to the scheme and that balance date; and
b: dated and signed on behalf of the manager by 2 directors of the manager or, if the manager has only 1 director, by that director.
3: If the liabilities of the manager or the scheme are limited to a separate fund, the manager must ensure that, within 4 months after the balance date of the scheme
a: completed in relation to the scheme and that balance date; and
b: completed in relation to the separate fund and that balance date; and
c: dated and signed on behalf of the manager by 2 directors of the manager or, if the manager has only 1 director, by that director.
4: If the manager is an FMC reporting entity by reason only of being a manager of a restricted scheme, the manager—
a: is required to comply with this section; but
b: is not required to comply with sections 460 461 1993 No 106 s 9A(1), (2) Section 461A inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 461A(2) amended 9 August 2017 section 80 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 461A(3) amended 9 August 2017 section 80 Regulatory Systems (Commercial Matters) Amendment Act 2017
461B: Financial statements for overseas FMC reporting entity to include financial statements for New Zealand business
1: If an FMC reporting entity that is an overseas company is required to prepare financial statements under section 460
2: If an FMC reporting entity that is an overseas company is required to prepare group financial statements under section 461
3: In this section, overseas company 1993 No 106 ss 8(2) 9(2) Section 461B inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461C: Failure to comply with authoritative notice does not give rise to pecuniary penalty
1: This section applies if financial statements or group financial statements referred to in this subpart fail to comply with generally accepted accounting practice as a result of a failure to comply with an authoritative notice.
2: A pecuniary penalty order may not be made under section 489
3: Section 461C inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 461C(3) repealed 27 October 2022 section 7 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Audit of financial statements Heading inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461D: Financial statements must be audited
Every FMC reporting entity must ensure that the financial statements or group financial statements that are required to be prepared under this subpart are audited by a qualified auditor. 1978 No 103 s 53E Section 461D inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461E: Meaning of qualified auditor
1: For the purposes of this Act, qualified auditor
a: a licensed auditor; or
b: a registered audit firm; or
c: in the case of an FMC reporting entity that is a public entity under the Public Audit Act 2001
2: In this section, licensed auditor registered audit firm section 6(1)
3: The appointment of a registered audit firm that is a partnership
4: None of the following persons is qualified for appointment as the qualified auditor of an FMC reporting entity:
a: the FMC reporting entity, or a director, an officer, or an employee of the FMC reporting entity:
b: a person who is a partner, or in the employment, of a person specified in paragraph (a):
c: a body corporate that is not a registered audit firm
5: A person is not qualified for appointment as the qualified auditor of an FMC reporting entity if the person is, by virtue of subsection (4), disqualified for appointment as auditor of a related body corporate. 1978 No 103 s 2C Section 461E inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 461E(3) amended 1 July 2015 section 17 Financial Reporting Amendment Act 2014 Section 461E(4)﻿(c) amended 1 July 2015 section 17 Financial Reporting Amendment Act 2014
461F: Audit must be carried out in accordance with auditing and assurance standards
An auditor must, in carrying out an audit for the purposes of section 461D Section 461F inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461G: Auditor's report
1: The auditor's report on the financial statements or group financial statements that are required to be audited under this subpart must comply with the requirements of all applicable auditing and assurance standards.
2: If the auditor's report indicates that the requirements of this Part have not been complied with, the auditor must, within 7 working days after signing the report, send a copy of the report, and a copy of the financial statements or group financial statements to which it relates, to—
a: the FMA; and
b: the External Reporting Board; and
c: in the case of an issuer of debt securities or a manager of a registered scheme, the supervisor. 1993 No 106 s 16(1), (2) Section 461G inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Lodgement of financial statements Heading inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461H: Lodgement of financial statements
1: Every FMC reporting entity must ensure that, within 4 months after the balance date of the entity, copies of the financial statements or group financial statements that are required to be prepared under any of sections 460 461 461B
1A: Every manager of a registered scheme must ensure that, within 4 months after the balance date of the scheme, copies of the financial statements that are required to be prepared under section 461A
2: An FMC reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 1993 No 106 s 18(1)–(2) Section 461H inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 461H(1) amended 9 August 2017 section 81(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 461H(1A) inserted 9 August 2017 section 81(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Offences Heading inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461I: Offence to knowingly fail to comply with financial reporting standards
1: An FMC reporting entity and every director of the entity commit an offence if—
a: any of the following fail to comply with an applicable financial reporting standard:
i: the financial statements of the entity prepared under section 460:
ii: group financial statements in relation to a group comprising the entity and its subsidiaries prepared under section 461
iii: in the case of a manager of a registered scheme, financial statements for the scheme or a fund referred to in section 461A
iv: the financial statements prepared by the entity under section 461B
b: the entity or the director (as the case may be) knows that the financial statements or group financial statements (as the case may be) fail to so comply when those statements are lodged.
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. Section 461I inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 FMC reporting entities with higher level of public accountability Heading inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461J: External Reporting Board must have regard to indication of level of public accountability
1: Subsection (2) applies when the External Reporting Board is preparing a proposal to vary or replace the strategy for establishing different tiers of financial reporting ( see sections 29 to 33
2: The External Reporting Board must have regard to which FMC reporting entities are considered to have a higher level of public accountability under section 461K
3: Nothing in this section or section 461K Section 461J inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461K: FMC
1: The following FMC reporting entities are considered to have a higher level of public accountability than other FMC reporting entities:
a: issuers of equity securities or debt securities under a regulated offer:
b: managers of registered schemes, but only in respect of financial statements of a scheme or fund prepared under section 461A
c: listed issuers:
d: registered banks:
e: licensed insurers:
f: credit unions:
g: building societies:
h: an FMC reporting entity, or a class of FMC reporting entities, specified for the purposes of this paragraph by a notice issued under section 461L(1)﻿(a)
2: However, an FMC reporting entity, or a class of FMC reporting entities, is not considered to have a higher level of public accountability than other FMC reporting entities if the entity or class is specified for the purposes of this subsection by a notice issued under section 461L(1)﻿(b)
3: Subsection (1)﻿(b) does not limit subsection (1)﻿(h). Section 461K inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 461K heading amended 9 August 2017 section 82 Regulatory Systems (Commercial Matters) Amendment Act 2017
461L: FMA may issue notice relating to level of public accountability
1: The FMA may issue a notice that specifies an FMC reporting entity, or a class of FMC reporting entities, for the purposes of—
a: section 461K(1)﻿(h)
b: section 461K(2)
2: The FMA must, before issuing a notice under subsection (1), be satisfied that the notice is necessary or desirable in order to promote the main purposes of this Act as specified in section 3 section 4
3: Subpart 5 Section 461L inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
4: Civil liability for certain contraventions of this Part
Subpart 4 inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
461M: Part 7 financial reporting provisions
1: All of the provisions specified in subsections (3) and (4) are Part 7 financial reporting provisions.
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: The provisions are the following:
a: section 455
b: sections 460 461 461A 461B
c: section 461D
d: section 461H (financial statements must be lodged).
4: A contravention of section 456 458 see subpart 3 Section 461M inserted 1 April 2014 section 48 Financial Reporting (Amendments to Other Enactments) Act 2013
7A: Climate-related disclosures for certain FMC reporting entities with higher level of public accountability
Part 7A inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
1: Overview, application, and interpretation
Subpart 1 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461N: Overview
1: This Part provides for climate reporting entities to—
a: keep proper records relating to their obligations to make climate-related disclosures; and
b: prepare climate statements; and
c: lodge those statements.
2: This section is only a guide to the general scheme and effect of this Part. Section 461N inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461O: Meaning of climate reporting entity
1: In this Act, a person who is an FMC reporting entity that, under section 461K climate reporting entity
a: a listed issuer that—
i: is a large listed issuer; and
ii: is not an excluded listed issuer:
b: a registered bank that is large:
c: a licensed insurer that is large:
d: a credit union that is large:
e: a building society that is large.
2: In this Act, a manager of a registered scheme (other than a restricted scheme) is a climate reporting entity
a: the manager is a large manager; and
b: section 461K(1)﻿(b)
3: In this section,— excluded listed issuer section 461P large section 461Q large listed issuer section 461P large manager section 461S Section 461O inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461P: Definitions relating to listed issuers
1: For the purposes of this Part, a listed issuer is a large listed issuer
a: the listed issuer,—
i: at any time in the accounting period, has quoted equity securities; and
ii: as at the balance date of each of the 2 preceding accounting periods, has equity securities (whether quoted or unquoted) that have a total value, as implied by the market price or fair value of those equity securities, that exceeds $60 million:
b: the listed issuer,—
i: at any time in the accounting period, has quoted debt securities; and
ii: at any time in the 2 preceding accounting periods, has quoted debt securities with a total face value that exceeds $60 million:
c: the listed issuer is large after amalgamation (within the meaning of section 461R
2: For the purposes of this Part, a listed issuer is an excluded listed issuer
a: any equity securities of the issuer and any debt securities of the issuer that are quoted are quoted only on a growth market; or
b: the issuer has no quoted equity securities and no quoted debt securities.
3: And see section 351(1)﻿(ab) section 461O(1)﻿(a)
4: For the purposes of subsection (1)﻿(a)﻿(ii)﻿, fair value must be determined in accordance with generally accepted accounting practice.
5: In this section, growth market
a: the operator has a licence to operate the market issued under section 316; and
b: either or both of the following apply:
i: the licence is subject to a condition that limits the size of issuers that are eligible to become, or to remain, listed issuers on the financial product market (for example, a limit based on the issuer’s market capitalisation):
ii: the market is otherwise designed for, and clearly targeted at, small- and medium-sized entities. Section 461P inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461Q: Meaning of large (in relation to registered banks, licensed insurers, credit unions, and building societies)
1: For the purposes of this Part, a registered bank, credit union, or building society ( A large
a: as at the balance date of each of the 2 preceding accounting periods, the total assets of A and A’s subsidiaries (if any) exceed $1 billion:
b: A is large after amalgamation (within the meaning of section 461R
2: For the purposes of this Part, a licensed insurer is large
a: as at the balance date of each of the 2 preceding accounting periods, the total assets of the licensed insurer and its subsidiaries (if any) exceed $1 billion:
b: in each of the 2 preceding accounting periods, the annual gross premium revenue of the licensed insurer and its subsidiaries (if any) exceeds $250 million:
c: the licensed insurer is large after amalgamation (within the meaning of section 461R
3: However, if a registered bank, credit union, building society, or licensed insurer is an overseas company,—
a: subsections (1) and (2) do not apply; and
b: the overseas company is large for the purposes of section 461O(1)﻿(b) to (e)
4: The New Zealand business of an overseas company or its group is large
a: as at the balance date of each of the 2 preceding accounting periods, the total assets of the New Zealand business exceed $1 billion:
b: the overseas company is a licensed insurer and, in each of the 2 preceding accounting periods, the annual gross premium revenue of the New Zealand business exceeds $250 million.
5: A financial reporting standard (or a part of a standard) issued by the External Reporting Board that is expressed as applying for the purposes of subsection (4) must be applied in determining whether that provision applies.
6: In this section, overseas company Section 461Q inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461R: Meaning of large after amalgamation
1: For the purposes of this Part, a person ( A large after amalgamation
a: A amalgamated with a large entity during the accounting period; or
b: A is a new entity formed on the amalgamation of 2 or more entities during the accounting period, and at least 1 of those entities was a large entity.
2: If A is large after amalgamation under subsection (1) in respect of an accounting period, A continues to be large after amalgamation
3: In this section, large entity
a: a large listed issuer under section 461P(1) section 461P(2)﻿(a) or (b)
b: a registered bank, licensed insurer, credit union, or building society that is large under section 461Q Section 461R inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461S: Meaning of large manager
1: For the purposes of this Part, a manager ( A large manager
a: all schemes for which A is manager; and
b: all schemes for which the manager is an authorised body that provides the service of acting as a manager of a registered scheme under A’s market services licence.
2: If A is a large manager, every manager described in subsection (1)﻿(b) is also a large manager Example
Company A holds a licence that covers acting as a manager of registered schemes. A’s subsidiaries, B and C, also provide this service under A’s licence (as authorised bodies). The assets of the schemes for which A is manager total $700 million on the balance date of each of A’s 2 preceding accounting periods (the relevant balance dates The assets of the schemes managed by B total a further $300 million, and the assets of the schemes managed by C total $200 million, on each of the relevant balance dates. The total assets therefore exceed $1 billion. A is a large manager. B and C are also large managers.
3: Subsections (4) and (5) apply if—
a: a manager and a scheme managed by the manager have different balance dates; and
b: the manager becomes, or ceases to be, a large manager.
4: If the manager was not a large manager in respect of an accounting period ( AP1 AP2
a: is not treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 unless paragraph (b) applies:
b: must be treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 if—
i: the manager was not the manager of the scheme at the start of that accounting period of the scheme; and
ii: the manager at the start of that accounting period of the scheme was a climate reporting entity in respect of the scheme.
5: If the manager was a large manager in respect of an accounting period ( AP3 AP4
6: In this section, the total assets
a: as reported in the most recent audited financial statements, prepared in accordance with generally accepted accounting practice, for the scheme; or
b: if there are no such statements, as calculated—
i: for a date as near as possible to the balance date of the manager; and
ii: as if for the purpose of preparing financial statements for the scheme in accordance with generally accepted accounting practice.
7: In this section, scheme Section 461S inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461T: Application if person’s status changes during accounting period
1: If a person ceases to be a climate reporting entity during an accounting period, that person is treated as continuing to be a climate reporting entity in relation to that accounting period for the purposes of this Act and every other enactment.
2: However, subsection (3) applies if the person ( A
a: ceased to be a climate reporting entity under section 461O(1)
b: on the balance date, is not a climate reporting entity under section 461O(1)
3: If this subsection applies,—
a: A is not required to ensure the completion of climate statements or group climate statements under any of sections 461Z to 461ZB
b: records required to be kept by A up to the date that A ceased to be a climate reporting entity under section 461O(1) sections 461W to 461Y
4: In any case where a person is, or was, the manager of a registered scheme (and a climate reporting entity under section 461O(2)
a: section 461S(5)
b: section 461ZD Section 461T inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461U: Miscellaneous provision relating to application
Nothing in this Part requires a climate reporting entity to ensure the completion of climate statements or group climate statements and the lodgement of those climate statements in relation to an accounting period that ended before the accounting period in which that person became a climate reporting entity. Section 461U inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
2: CRD records
Subpart 2 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461V: Climate reporting entities must keep proper CRD records
1: Every climate reporting entity under section 461O(1)
2: Every manager that is a climate reporting entity in respect of a registered scheme must ensure that there are kept at all times records that will enable the manager to ensure that the climate statements relating to the registered scheme comply with the climate-related disclosure framework.
3: Every climate reporting entity must establish and maintain a satisfactory system of control of the records that it is required to keep under this section.
4: In this section,— climate statements of the climate reporting entity sections 461Z to 461ZB climate statements relating to the registered scheme section 461ZC Section 461V inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461W: Manner in which CRD records to be kept
1: Every climate reporting entity must keep the CRD records in the prescribed manner (if any).
2: A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Section 461W inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461X: Period for which CRD records to be kept
CRD records, or copies of them, must be retained by the climate reporting entity for a period of at least 7 years after the date the records are made. Section 461X inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461Y: Inspection of CRD records
1: Every climate reporting entity must make the CRD records available, in the prescribed manner at all reasonable times for inspection without charge, to—
a: the directors of the climate reporting entity; and
b: any supervisor (if the climate reporting entity is an issuer of debt securities or the manager of a registered scheme); and
c: the FMA; and
d: any other persons authorised or permitted by an enactment to inspect the CRD records of the climate reporting entity or scheme.
2: A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
3: The offence in this section is an infringement offence ( see subpart 5 Section 461Y inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
3: Preparation of climate statements
Subpart 3 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Climate statements of climate reporting entities Heading inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461Z: Climate statements must be prepared
1: Every climate reporting entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
a: completed in relation to the entity and that balance date; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
2: However, subsection (1) does not apply to—
a: a climate reporting entity that, on the balance date referred to in subsection (1), has 1 or more subsidiaries; or
b: an overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)﻿(a)
c: a person that is a climate reporting entity only under section 461O(2) Example
A company (incorporated in New Zealand and with no subsidiaries) is a large manager of 2 registered schemes. The company is also a large registered bank, so subsection (2)﻿(c) Subsection (1) see section 461ZC Section 461Z inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZA: Group climate statements must be prepared
1: Subsection (2) applies to every climate reporting entity in relation to a balance date of the entity if the entity has, on that balance date, 1 or more subsidiaries.
2: The climate reporting entity must ensure that, within 4 months after that balance date, group climate statements that comply with the climate-related disclosure framework are—
a: completed in relation to the group and that balance date; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
3: However, subsection (2) does not apply to—
a: an overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)﻿(a)
b: a person that is a climate reporting entity only under section 461O(2) Section 461ZA inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZB: Climate statements for overseas climate reporting entities
1: This section applies to every overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)﻿(a)
2: The climate reporting entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
a: prepared for its New Zealand business as if that business were conducted by a company formed and registered in New Zealand; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
3: However, if the climate reporting entity has, on that balance date, 1 or more subsidiaries, subsection (2) does not apply and instead the entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
a: prepared for the group’s New Zealand business as if the members of the group were companies formed and registered in New Zealand; and
b: dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
4: Subsection (3) does not limit any obligation under this subpart of a subsidiary of the climate reporting entity. Section 461ZB inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Climate statements relating to registered schemes Heading inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZC: Climate statements for separate funds of registered schemes, etc
1: This section applies to every manager of a registered scheme that is a climate reporting entity in respect of the scheme.
2: The manager must ensure that, within 4 months after the balance date of the scheme, climate statements that comply with the climate-related disclosure framework are—
a: completed in relation to each separate fund of the scheme and that balance date; and
b: if any liabilities of the manager and the scheme are not limited to a separate fund, completed in relation to the scheme and that balance date; and
c: dated and signed on behalf of the manager by 2 directors of the manager or, if the manager has only 1 director, by that director.
3: However, if the manager was not the manager of the scheme at the start of the scheme’s accounting period, subsection (2) applies to the manager only if the manager of the scheme at the start of the scheme’s accounting period was a climate reporting entity in respect of the scheme. Section 461ZC inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZD: Application if manager of registered scheme changes and new manager is not large manager
1: This section applies if—
a: the manager of a registered scheme changes during an accounting period of the scheme; and
b: the person who was the manager of the scheme at the start of the accounting period (the old manager
c: the person who is the manager of the scheme at the end of the accounting period (the new manager section 461S
2: If this section applies, the new manager is not required to ensure the completion of climate statements under section 461ZC(2)
3: Records kept by the old manager up to the date that the old manager ceased to hold office as manager of the scheme are CRD records for the purposes of sections 461W to 461Y Section 461ZD inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Miscellaneous Heading inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZE: Climate statements may be combined in single document
Nothing in this Part prevents any of the following from being combined in a single document:
a: climate statements and group climate statements that are required to be prepared under any of sections 461Z to 461ZB
b: climate statements that are required to be prepared under section 461ZC Section 461ZE inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZF: Failure to comply with authoritative notice does not give rise to pecuniary penalty
1: This section applies if climate statements or group climate statements referred to in this subpart fail to comply with the climate-related disclosure framework as a result of a failure to comply with an authoritative notice.
2: A pecuniary penalty order may not be made under section 489 s 461C Section 461ZF inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Offences Heading inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZG: Offence to knowingly fail to comply with climate standards
1: A climate reporting entity and every director of the entity commit an offence if—
a: any of the following fail to comply with an applicable climate standard:
i: the climate statements of the entity prepared under section 461Z
ii: group climate statements in relation to a group comprising the entity and its subsidiaries prepared under section 461ZA
iii: the climate statements or group climate statements prepared by the entity under section 461ZB
iv: in the case of a manager of a registered scheme, the climate statements for any separate fund or for the scheme prepared under section 461ZC
b: the entity or the director (as the case may be) knows that the climate statements or group climate statements fail to so comply when those statements are lodged.
2: A person who commits an offence under subsection (1) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million. s 461I Section 461ZG inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
4: Assurance engagements
Subpart 4 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZH: No requirement for assurance of climate statements on commencement of Part
1: A climate reporting entity is not required to obtain an assurance engagement in relation to the climate statements or group climate statements that are required to be prepared under any of sections 461Z to 461ZC
2: See Part 2 Section 461ZH inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
5: Lodgement of climate statements
Subpart 5 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZI: Lodgement of climate statements
1: Every climate reporting entity that is required to prepare climate statements or group climate statements under any of sections 461Z to 461ZB
2: Every manager that is a climate reporting entity in respect of a registered scheme must ensure that, within 4 months after the balance date of the scheme, copies of the climate statements that are required to be prepared under section 461ZC
3: A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5 Section 461ZI inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZJ: Information about climate statements of climate reporting entities to be made available in annual report
1: This section applies to every climate reporting entity that is required to prepare—
a: climate statements or group climate statements under any of sections 461Z to 461ZB
b: an annual report under the Companies Act 1993
2: The climate reporting entity must include, in its annual report for the period ending on the balance date,—
a: a statement that the entity is a climate reporting entity for the purposes of this Act; and
b: a copy of the climate statements or group climate statements prepared by the entity under any of sections 461Z to 461ZB
3: A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
4: The offence in this section is an infringement offence ( see subpart 5
5: In this section, annual report Section 461ZJ inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
6: Civil liability for certain contraventions of this Part
Subpart 6 inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
461ZK: Part 7A climate-related disclosure provisions
1: All of the provisions specified in subsections (3) and (4) are Part 7A
2: A contravention of any of the provisions listed in subsection (3) may give rise to civil liability ( see subpart 3
3: For the purposes of subsection (2), the provisions are the following:
a: section 461V
b: sections 461Z to 461ZC
c: section 461ZI
4: A contravention of section 461X see subpart 3 Section 461ZK inserted 27 October 2022 section 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
8: Enforcement, liability, and appeals
1: FMA's enforcement powers
Stop orders
462: When FMA may make stop orders
1: The FMA may make a stop order if it is satisfied that—
a: a PDS, a register entry, or a limited disclosure document
i: is false or misleading, or is likely to mislead or confuse, in a material particular; or
ii: contains any material misdescription or material error or any material matter that is not clearly legible; or
iii: does not comply with this Act or the regulations; or
b: any provision of Part 3 clause 13 17 26 27 28 clause 25
c: section 103
d: section 125
e: a registered scheme no longer meets the registration requirements in section 127 sections 128 to 132
f: a restricted communication relating to an offer, or intended offer, of financial products, or the supply, or possible supply, of financial services,—
i: is false or misleading, or is likely to mislead or confuse, in a material particular; or
ii: is materially inconsistent with any disclosure document referred to in it; or
iii: contains any material misdescription or material error or any material matter that is not clearly legible; or
iv: does not comply with this Act or the regulations; or
g: disclosure relating to financial products under subpart 4 subpart 4 5A 5B
i: is false or misleading, or is likely to mislead or confuse, in a material particular; or
ii: contains any material misdescription or material error or any material matter that is not clearly legible; or
iii: does not comply with this Act or the regulations; or
ga: an issuer of financial products, or a person that provides a licensed market service, has contravened any provision of Part 7 or 7A
h: any provision of section 388 391 423 431G 431O 431X
2: If the FMA is satisfied that a provision referred to in subsection (1)﻿(b) to (d) or (h) is likely to be contravened by a person ( A
a: whether or not A has previously contravened the provision; and
b: whether or not there is an imminent danger of substantial damage to any person if the provision is contravened. Section 462(1)﻿(a) amended 9 August 2017 section 83 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 462(1)﻿(g) replaced 15 March 2021 section 35(1) Financial Services Legislation Amendment Act 2019 Section 462(1)﻿(ga) inserted 1 April 2014 section 49 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 462(1)﻿(ga) amended 27 October 2022 section 9 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 462(1)﻿(h) amended 15 March 2021 section 35(2) Financial Services Legislation Amendment Act 2019
463: Terms of stop order
A stop order may, in relation to the offer, financial products, registered scheme, or market or other financial services referred to in section 462(1)
a: prohibit offers, issues, sales, or other acquisitions or disposals of financial products specified in the order from being made while the order is in force:
b: prohibit an offeror from accepting applications for financial products specified in the order while the order is in force:
c: prohibit the distribution of 1 or more of the following while the order is in force:
i: a PDS or any other disclosure document:
ii: a restricted communication referred to in section 462(1)﻿(f)
iii: any restricted communication that relates to the offer of financial products, or supply of financial services, specified in the order:
d: prohibit a person from accepting further contributions, investments, or deposits in respect of financial products specified in the order while the order is in force:
e: prohibit the supply of financial services specified in the order from being made while the order is in force.
464: Meaning of restricted communication
1: In this Act, restricted communication
a: that—
i: directly or indirectly refers to an offer, or intended offer, of financial products or the supply, or possible supply, of a financial service; or
ii: is reasonably likely to induce persons to apply for financial products or request the supply of a financial service; or
iii: is reasonably likely to induce persons to make further contributions, investments, or deposits referred to in section 11(2)﻿(c)
b: that is authorised or instigated by, or on behalf of, the offeror, the issuer, the service provider, or an associated person of the offeror or issuer or service provider or that is prepared with the co-operation of, or by arrangement with, any of those persons; and
c: that is to be, or has been, distributed to a person.
2: In this Act, references to a financial product in relation to a restricted communication must be treated as a reference to a financial product as defined in section 18
3: In this Act, restricted communication
465: FMA may make interim stop order pending exercise of powers
1: The FMA may make an interim order (an interim stop order section 463
a: the FMA is considering, at any time, whether it may exercise a power under section 462
b: the FMA considers that making an interim stop order is desirable in the public interest.
2: An interim stop order is in force from the time at which it is made until the close of—
a: the date that is 15 working days after the day on which it is made; or
b: a later date specified by the FMA by notice to the issuer, offeror, or service provider to which the order relates.
3: For the purposes of subsection (2)﻿(b),—
a: the FMA may specify a later date if the FMA is of the opinion that it is not reasonably practicable for it to complete its consideration as referred to in subsection (1)﻿(a) within the 15-working-day period referred to in subsection (2)﻿(a); and
b: the later date must be a date that is no more than 30 working days after the day on which the interim stop order is made.
4: The FMA—
a: may act under subsection (1) or (2)﻿(b) without giving the issuer, offeror, or service provider to which the order relates an opportunity to make submissions to, or be heard before, the FMA in respect of the matter (and, accordingly, section 475
b: must, after acting under subsection (1) or (2)﻿(b), give that issuer, offeror, or service provider or that person's representative an opportunity to make written submissions and to be heard on the matter. 1978 No 103 s 43K
466: Persons to whom stop orders and interim stop orders may apply
1: A stop order or an interim stop order of the kind referred to in—
a: section 463(a), (b), (d), or (e)
b: section 463(c)
2: If a stop order or an interim stop order of the kind referred to in section 463(c)
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
b: the issuer, offeror, or service provider 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.
467: Extended application of subpart
1: The FMA may make a stop order or an interim stop order in respect of a restricted communication that is distributed or to be distributed to a person outside New Zealand by a person resident, incorporated, registered, or carrying on business in New Zealand.
2: In this section, registered Financial Service Providers (Registration and Dispute Resolution) Act 2008 Direction orders
468: When FMA may make direction orders
1: The FMA may make a direction order if it is satisfied that, by engaging in any conduct, a person ( the relevant person
a: a Part 2
b: a Part 3
c: a Part 4
d: a Part 5
e: a Part 6
f: a Part 7
fa: a Part 7A
g: an infringement offence provision:
h: an obligation under Schedule 3
i: clause 21 22(1)﻿(b) or (c) 25 39
j: a term or condition of an exemption granted under subpart 2
2: If the FMA is satisfied that, by engaging in any conduct, the relevant person is likely to contravene a provision referred to in subsection (1) in the future, the FMA may make a direction order—
a: whether or not the relevant person has previously contravened the provision; and
b: whether or not there is an imminent danger of substantial damage to any person if the provision is contravened.
3: In this section, an infringement offence provision Section 468(1)﻿(fa) inserted 27 October 2022 section 10 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
469: Terms of direction orders
1: A direction order may—
a: direct the relevant person to comply with the relevant provision referred to in section 468 provision
b: stipulate any reasonable steps that the relevant person must take in order to comply with the provision or to avoid or mitigate any actual or potential adverse effects of a contravention, including (without limitation)—
i: disclosing, in accordance with the order, information for the purpose of securing compliance with the provision:
ii: publishing, at the relevant person's own expense and in the manner and at the times specified in the order, corrective statements that are specified in, or are to be determined in accordance with, the order:
iii: complying in accordance with the order with a prohibition or restriction on the making of any statement or the distribution of any document by, or on behalf of, the relevant person for the purpose of preventing a contravention or further contravention of the provision:
c: in the case of section 468(1)﻿(j)
d: require the relevant person to report to the FMA within the time specified in the order stating how and when the order has been or will be implemented.
2: If the FMA is satisfied that the relevant person ( A sections 431I to 431P
a: direct the Registrar to deregister A under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 FSP Act
b: direct the Registrar to—
i: deregister A under the FSP Act; and
ii: prevent A for a specified period from being reregistered for a financial advice service under the FSP Act:
c: direct the Registrar to suspend A's registration under the FSP Act for a period of no more than 12 months or until A meets specified conditions relating to the registration (but, in any case, not for a period of more than 12 months). Section 469(2) inserted 15 March 2021 section 36 Financial Services Legislation Amendment Act 2019 Order to prohibit use of simplified disclosure PDS
470: FMA may order that simplified disclosure PDS may not be used
1: The FMA may make an order prohibiting an offeror from distributing a simplified disclosure PDS, or otherwise making an offer under a simplified disclosure PDS, if the FMA is satisfied that the offeror (or the issuer of the relevant financial products) has failed to comply with any of the following at any time during the previous 12 months before the order is made:
a: a continuous disclosure obligation:
b: any provision under Part 7
ba: any provision under Part 7A
c: any prescribed provision.
2: In this section, simplified disclosure PDS
3: Subsection (1) does not limit any other power of the FMA by or under this Act. Section 470(1)﻿(ba) inserted 27 October 2022 section 11 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Order to prohibit offer under recognition regime
471: FMA may order that offer may not be made under recognition regime
1: The FMA may make an order prohibiting a person ( A section 576
a: 1 or more of the requirements of those regulations have been contravened in relation to a previous offer by A or an associated person of A; and
b: the contravention was not minor or technical only.
2: The order must specify the period during which the prohibition applies (which must be no longer than 5 years from the day on which the order is made).
3: Subsection (1) does not limit any other power of the FMA by or under this Act. Corporations Act 2001 s 1200P(1) (Aust); SR 2008/153 r 13(4) Unsolicited offer orders
472: When FMA may make unsolicited offer orders
1: The FMA may make an unsolicited offer order if the FMA is satisfied that a person has acted, is acting, or is likely to act in contravention of an unsolicited offer provision.
2: If the FMA is satisfied that an unsolicited offer provision is likely to be contravened by a person ( A
a: whether or not A has previously contravened the provision; and
b: whether or not there is an imminent danger of substantial damage to any person if the provision is contravened. 1988 No 234 s 42EA
473: Terms of unsolicited offer orders
1: An unsolicited offer order may—
a: restrain a person from acquiring a financial product, a power to dispose of a financial product, or an interest in or a right attaching to a financial product, as a result of the unsolicited offer:
b: restrain a person from taking any action that is, or that may reasonably be expected to constitute, a contravention of an unsolicited offer provision:
c: restrain a person from taking specified steps to complete or perform a contract that has been, or may reasonably be expected to be, entered into in contravention of an unsolicited offer provision:
d: direct a person not to register the transfer of a financial product:
e: direct a person to disclose information, make corrective statements, or take any other specified steps, at the person's own expense and in the manner and at the times specified in the order, for the purpose of securing compliance with an unsolicited offer provision.
2: An unsolicited offer order may be directed at any person. 1988 No 234 s 42EB Orders that exclusion does not apply
474: FMA may order that exclusion for offers of products of same class as quoted products does not apply
1: The FMA may make an order that clause 19
a: a continuous disclosure obligation:
b: any provision under Part 7
ba: any provision under Part 7A
c: any prescribed provision.
2: Subsection (1) does not limit any other power of the FMA by or under this Act. Section 474(1)﻿(ba) inserted 27 October 2022 section 12 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Process for FMA's orders
475: FMA must follow steps before making orders
1: The FMA may make an order under this Part only if it first takes the following steps:
a: gives the person to whom the order is proposed to be directed written notice—
i: that the FMA may make an order under this Part; and
ii: of the reasons why it is considering exercising that power; and
b: also gives that written notice to the relevant licensed market operator, in the case of a direction order for a contravention of a continuous disclosure obligation or exemption or an order under section 470 474
c: gives the notice referred to in paragraph (a) or (b) at least 5 working days before the FMA makes the order; and
d: gives each person to whom notice of the order must be given or the person's representative an opportunity to make written submissions and to be heard on the matter within that notice period.
2: However,—
a: the FMA may shorten these steps in accordance with section 476
b: in the case of a stop order under section 463(c)
3: In the case of a direction order under section 469(2) section 477(1)﻿(a) 1988 No 234 s 42F Section 475(3) inserted 15 March 2021 section 37 Financial Services Legislation Amendment Act 2019
476: FMA may shorten steps for specified orders
If the FMA thinks it necessary or desirable in the public interest for any order to be made more urgently than section 475
a: it may give less than 5 working days' notice before it makes the order, and the submissions may be oral rather than written; but
b: it must include in that notice the reasons for acting urgently and must otherwise comply with that section. 1988 No 234 s 42G
477: FMA must give notice after making orders
1: If the FMA makes an order under this Part, the FMA—
a: must, as soon as is reasonably practicable, give written notice to the person to whom the order is directed of—
i: the terms and conditions of the order; and
ii: the reasons for the order; and
iii: any other information the FMA thinks relevant in the circumstances; and
b: must also give the written notice referred to in paragraph (a) to the Registrar and make the notice available on its Internet site, in the case of a stop order, an interim stop order, or an order under section 470
c: in the case of an order other than a stop order or an interim stop order, may also give the written notice referred to in paragraph (a) to the Registrar and make the notice available on its Internet site; and
d: must also give the written notice referred to in paragraph (a) to the relevant licensed market operator, in the case of a direction order for a contravention of a continuous disclosure obligation or exemption or an order under section 470 474
e: may also give notice to any other person of those matters.
2: In the case of a stop order of the kind referred to in section 463(c) 1988 No 234 s 42H General provisions
478: General provisions on FMA's orders
1: The FMA may make an order under this Act on the terms and conditions that the FMA thinks fit.
2: The FMA may vary an order in the same way as it may make the order under this Act.
3: The FMA may revoke an order or suspend an order on the terms and conditions it thinks fit. 1988 No 234 s 42I
479: Consequences of failing to comply with FMA's orders
1: If an order made by the FMA under this Act applies to a person, the person must comply with the order ( see subpart 3
2: A person who refuses or fails, without reasonable excuse, to comply with an order made by the FMA under this Act commits an offence and is liable on conviction to a fine not exceeding $300,000. 1988 No 234 s 42J
2: High Court's enforcement powers
Injunctions
480: Court may grant injunctions
The court may, on application by the FMA or any other person, grant an injunction restraining a person from engaging in conduct that constitutes or would constitute a contravention, or involvement in a contravention, of a provision of this Act or the regulations. 1988 No 234 s 42K
481: When court may grant injunctions and interim injunctions
1: The court may grant an injunction restraining a person from engaging in conduct of a particular kind if—
a: it is satisfied that the person has engaged in conduct of that kind; or
b: it appears to the court that, if an injunction is not granted, it is likely that the person will engage in conduct of that kind.
2: The court may grant an interim injunction restraining a person from engaging in conduct of a particular kind if in its opinion it is desirable to do so.
3: Subsections (1)﻿(a) and (2) apply whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind.
4: Subsections (1)﻿(b) and (2) apply whether or not the person has previously engaged in conduct of that kind or there is an imminent danger of substantial damage to any other person if that person engages in conduct of that kind. 1988 No 234 s 42L
482: Undertaking as to damages not required by FMA
1: If the FMA applies to the court for the grant of an interim injunction under this subpart, the court must not, as a condition of granting an interim injunction, require the FMA to give an undertaking as to damages.
2: In determining the FMA's application for the grant of an interim injunction, the court must not take into account that the FMA is not required to give an undertaking as to damages. 1988 No 234 s 42M Court may make FMA orders under this Part
483: Court may make FMA orders under this Part
The court may, on application by any person, make any order that the FMA may make under this Part if the court is satisfied of the same matters that the FMA would need to be satisfied of if the FMA were to exercise that power.
3: Civil liability
Overview of civil liability
484: Overview of civil liability
1: The following orders ( civil liability orders
a: a declaration of contravention:
b: a pecuniary penalty order (on application by the FMA only):
c: a compensatory order:
d: other civil liability orders under section 497
2: This section is a guide only to the general scheme and effect of this subpart. 1988 No 234 s 42R
485: What are civil liability provisions
In this subpart, a civil liability provision
a: a Part 2 fair dealing provision:
b: a Part 3 offer provision:
c: a Part 4 governance provision:
d: a Part 5 market provision:
e: an unsolicited offer provision:
f: a Part 6 services provision:
g: a Part 7 financial reporting provision:
ga: a Part 7A climate-related disclosure provision:
h: section 479(1)
i: clause 21 22(1)﻿(b) or (c) 25 39 1988 No 234 s 42S Section 485(ga) inserted 27 October 2022 section 13 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Declarations of contravention and pecuniary penalty orders
486: When court may make declarations of contravention
1: The court may, on the application of the FMA or any other person, make a declaration of contravention if it is satisfied that a person has—
a: contravened a civil liability provision; or
b: been involved in a contravention of a civil liability provision.
2: The court may also make a declaration of contravention under section 489(2)﻿(b)
487: Purpose and effect of declarations of contravention
1: The purpose of a declaration of contravention is to enable an applicant for a compensatory order or other civil liability order under section 497
2: Accordingly, a declaration of contravention is conclusive evidence of the matters that must be stated in it under section 488 1988 No 234 s 42U
488: What declarations of contravention must state
A declaration of contravention must state the following:
a: the civil liability provision to which the contravention or involvement in the contravention relates; and
b: the person who engaged in the contravention or was involved in the contravention; and
c: the conduct that constituted the contravention or the involvement in the contravention and, if a transaction constituted the contravention, the transaction; and
d: the issuer, offeror, or service provider to which the conduct relates (if relevant). 1988 No 234 s 42V
489: When court may make pecuniary penalty orders
1: The FMA may apply for a pecuniary penalty order against a person under this Act.
2: If the FMA applies for a pecuniary penalty order against a person under this Act, the court—
a: must determine whether the person has contravened, or been involved in a contravention of, a civil liability provision; and
b: must make a declaration of contravention if it is satisfied that the person has contravened, or been involved in a contravention of, a civil liability provision; and
c: may order the person to pay to the Crown a pecuniary penalty that the court considers appropriate if it is satisfied that the person has contravened, or been involved in a contravention of, a civil liability provision.
3: However, a pecuniary penalty order may not be made—
a: for a contravention, or involvement in a contravention, of section 19
b: in the circumstances referred to in section 431U , 461C 461ZF
4: The court may make a pecuniary penalty order against a director who is treated as contravening a civil liability provision under section 534 1988 No 234 s 42T Section 489(3) replaced 1 April 2014 section 50 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 489(3)﻿(b) amended 27 October 2022 section 14 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 489(3)﻿(b) amended 15 March 2021 section 38 Financial Services Legislation Amendment Act 2019
490: Maximum amount of pecuniary penalty
1: The maximum amount of a pecuniary penalty for a contravention, or involvement in a contravention, of a civil liability provision referred to in subsection (2) is the greatest of—
a: the consideration for the transaction that constituted the contravention (if any); and
b: if it can be readily ascertained, 3 times the amount of the gain made, or the loss avoided, by the person who contravened the civil liability provision; and
c: $1 million in the case of a contravention, or involvement in a contravention, by an individual or $5 million in any other case.
2: The civil liability provisions to which subsection (1) applies are—
a: a Part 2 fair dealing provision (other than a provision specified in section 38(3)
b: a Part 3 offer provision (other than a provision specified in section 101(4)
c: a Part 4 governance provision (other than a provision specified in section 228(4)
d: a Part 5 market provision (other than a provision specified in section 385(4)
e: a Part 6 services provision (other than a provision specified in section 449(4)
f: a Part 7 section 461M(4)
fa: a Part 7A section 461X
g: an unsolicited offer provision:
h: clause 21 22(1)﻿(b) or (c) 25
3: The maximum amount of a pecuniary penalty for a contravention, or involvement in a contravention, of any other civil liability provision is—
a: $200,000 in the case of a contravention, or involvement in a contravention, by an individual; or
b: $600,000 in any other case. 1988 No 234 s 42W Section 490(2)﻿(f) amended 1 April 2014 section 51 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 490(2)﻿(fa) inserted 27 October 2022 section 15 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
491: Guidance for court on how to determine gains made or losses avoided for purposes of maximum amount
1: For the purposes of section 490(1)﻿(b)
a: making a gain if the person acquires a financial product for less than its value:
b: avoiding a loss if the person disposes of a financial product for more than its value.
2: In this case, the gain made or loss avoided is the difference between the consideration paid or received (as the case may be) and the value the financial product would have had at the time of the issue or sale if,—
a: in the case of a contravention of any of sections 241 to 243
b: in the case of a contravention of section 262 265
c: in any other case, the contravention had not occurred.
3: This section does not—
a: limit the circumstances in which the court may find that a person has made a gain or avoided a loss; or
b: prevent the court from finding that the amount of the gain made, or the loss avoided, by a person exceeds an amount calculated under this section. 1988 No 234 s 42X
492: Considerations for court in determining pecuniary penalty
In determining an appropriate pecuniary penalty, the court must have regard to all relevant matters, including—
a: the purposes stated in sections 3 4
b: the nature and extent of the contravention or involvement in the contravention; and
c: the nature and extent of any loss or damage suffered by any person, or gains made or losses avoided by the person in contravention or who was involved in the contravention, because of the contravention or involvement in the contravention; and
d: whether or not a person has paid an amount of compensation, reparation, or restitution, or taken other steps to avoid or mitigate any actual or potential adverse effects of the contravention; and
e: the circumstances in which the contravention, or involvement in the contravention, took place; and
f: whether or not the person in contravention, or who was involved in the contravention, has previously been found by the court in proceedings under this Act, or any other enactment, to have engaged in any similar conduct; and
g: in the case of section 534
h: the relationship of the parties to the transaction constituting the contravention. 1988 No 234 s 42Y
493: Court must order that recovery from pecuniary penalty be applied to FMA's actual costs
If the court orders that a person pay a pecuniary penalty, the court must also order that the penalty must be applied first to pay the FMA's actual costs in bringing the proceedings. 1988 No 234 s 42Z Compensatory orders
494: When court may make compensatory orders
1: The court may make a compensatory order, on application by the FMA or any other person, if the court is satisfied that—
a: there is a contravention of a civil liability provision; and
b: a person (the aggrieved person
2: The court may make a compensatory order whether or not the aggrieved person is a party to the proceedings. 1988 No 234 s 42ZA
495: Terms of compensatory orders
1: If section 494
2: An order under this section may include an order to direct a relevant person to pay to the aggrieved person the amount of the loss or damage (in whole or in part).
3: Subsection (2) does not limit subsection (1).
4: In this section, relevant person
a: any person in contravention (including any director who is treated as contravening the civil liability provision under section 534
b: any person involved in the contravention. 1988 No 234 s 42ZB
496: Person treated as suffering loss or damage in case of defective disclosure
1: The purpose of this section is to provide that certain contraventions must be treated as causing a person to suffer loss or damage unless the contrary is proved.
2: This section applies if—
a: a person ( A
i: acquires financial products under an offer that contravenes section 82
ii: acquires financial products, or makes further contributions, investments, or deposits in respect of financial products, after the issuer of the financial products contravenes section 99
iii: acquires financial products under an offer where a person contravenes clause 27
b: the financial products, contributions, investments, or deposits referred to in paragraph (a) have declined in value after the contravention referred to in paragraph (a).
3: A must be treated as having suffered loss or damage because of the contravention unless it is proved that the decline in value was caused by a matter other than the relevant statement, omission, or circumstance.
4: In this section, the relevant statement, omission, or circumstance
a: the statement that is false or misleading or is likely to be misleading referred to in section 82(1)﻿(a)﻿(i) 99(1)﻿(a)﻿(i) clause 27(1)﻿(a)﻿(i)
b: the omission referred to in section 82(1)﻿(a)﻿(ii) 99(1)﻿(a)﻿(ii) clause 27(1)﻿(a)﻿(ii)
c: the circumstance referred to in section 82(1)﻿(a)﻿(iii)
5: This section does not limit section 495 Other civil liability orders
497: When court may make other civil liability orders
The court may, on application by the FMA or any other person, make a civil liability order described in section 498 1988 No 234 s 42ZE
498: Terms of other civil liability orders
A civil liability order under section 497
a: direct the person in contravention, or the person involved in the contravention, to refund money or return property to a person who has suffered, or is likely to suffer, loss or damage because of the contravention (the aggrieved person
b: if an agreement has been entered into between the person in contravention, a person involved in the contravention, or an associated person of either of those persons ( A
i: vary the agreement or any collateral arrangement as specified in the order and, if the court thinks fit, declare the agreement or arrangement to have had effect as so varied on and after a date before the order was made, as specified in the order:
ii: cancel the agreement and, if the court thinks fit, declare the cancellation to have had effect on and after a date before the order was made, as specified in the order:
iii: require A to take any action the court thinks fit to reinstate the parties as near as may be possible to their former positions:
c: restrain the exercise of rights attaching to financial products, or the exercise of relevant interests, or declare an exercise of those rights or relevant interests to be void and of no effect:
d: restrain the issue or transfer of financial products or restrain any distribution due in relation to financial products:
e: restrain the acquisition or disposal of financial products or of relevant interests, or restrain the registration of any transfer of that kind:
f: direct the disposal of financial products or of relevant interests (including the person or class of persons to which the products or interests must, or must not, be disposed of) and direct the payment of the proceeds of any disposal:
g: require financial products to be forfeited and require the issuer to cancel the forfeited financial products:
h: cancel an agreement for the acquisition or disposal of financial products or relevant interests. 1988 No 234 s 42ZF Defences for person in contravention of civil liability provisions
499: General defences for person in contravention
1: In any proceeding under this subpart against a person ( A
a: A's contravention was due to reasonable reliance on information supplied by another person; or
b: both of the following apply:
i: A's contravention was due to the act or default of another person, or to an accident or to some other cause beyond A's control; and
ii: A took reasonable precautions and exercised due diligence to avoid the contravention.
2: For the purposes of subsection (1)﻿(a) and (b), another person
3: Subsection (1)﻿(b) does not apply to a contravention of section 82 99 427(2) or (6) 431P 431Y clause 27 see sections 500 501 1986 No 121 s 44(1) and (2) Section 499(3) amended 15 March 2021 section 39 Financial Services Legislation Amendment Act 2019
500: Disclosure defences for person in contravention
1: In any proceeding under this subpart against a person ( A section 82 99 427(2) or (6) 431P 431Y clause 27
a: made all inquiries (if any) that were reasonable in the circumstances; and
b: after doing so, believed on reasonable grounds that the statement was not false or misleading.
2: In any proceeding under this subpart against a person ( A section 82 99 427(2) or (6) 431P 431Y clause 27
a: made all inquiries (if any) that were reasonable in the circumstances; and
b: after doing so, believed on reasonable grounds that there was no omission from the disclosure document or register entry in relation to that matter.
3: In any proceeding under this subpart against a person ( A section 82 section 82(1)﻿(a)﻿(iii) Corporations Act 2001 ss 731, 733(4) (Aust) Section 500(1) amended 15 March 2021 section 40 Financial Services Legislation Amendment Act 2019 Section 500(2) amended 15 March 2021 section 40 Financial Services Legislation Amendment Act 2019
501: Additional disclosure
or financial reporting or climate-related disclosure
1: This section applies if—
a: a person ( A any of sections 82 99 427 460 to 461B 461D 461H 461Z to 461ZC 461ZI clause 27
b: a person ( B section 534
2: In any proceeding under this subpart against B, it is a defence if B proves that B took all reasonable
3: Subsection (2) does not limit any defence that B may have under section 499 500 Section 501 heading amended 27 October 2022 section 16(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 501 heading amended 1 April 2014 section 52(1) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 501(1)﻿(a) amended 27 October 2022 section 16(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 501(1)﻿(a) amended 1 April 2014 section 52(2) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 501(2) amended 15 March 2021 section 41 Financial Services Legislation Amendment Act 2019 Section 501(3) amended 9 August 2017 section 86 Regulatory Systems (Commercial Matters) Amendment Act 2017
501A: Additional defence for licensees who are treated as contravening
1: This section applies if—
a: an authorised body ( A
b: a person ( B section 400(3)
2: In any proceeding under this subpart against B, it is a defence if B proves that B took all reasonable and proper steps to ensure that A complied with the market services licensee obligation.
3: Subsection (2) does not limit any defence that B may have under section 499 500 Section 501A inserted 9 August 2017 section 87 Regulatory Systems (Commercial Matters) Amendment Act 2017
502: Conduct still contravenes even if defence is available
In this Act, conduct must still be treated as contravening a civil liability provision even if the conduct does not lead to any liability under this subpart because of the availability of a defence. Defences for person involved in contravention of civil liability provisions
503: General defences for person involved in contravention
1: This section applies if—
a: a person ( A
b: another person ( B
2: In any proceeding under this subpart against B for involvement in the contravention of a civil liability provision, it is a defence if B proves that—
a: B's involvement in the contravention was due to reasonable reliance on information supplied by another person; or
b: B took all reasonable
3: For the purposes of subsection (2)﻿(a), another person
4: To avoid doubt, this section applies to an involvement in the contravention of any civil liability provision, including sections 82 99 427 431P 431Y clause 27 Section 503(2)﻿(b) amended 15 March 2021 section 42(1) Financial Services Legislation Amendment Act 2019 Section 503(4) amended 15 March 2021 section 42(2) Financial Services Legislation Amendment Act 2019 Miscellaneous provisions relating to defences
504: Defendant must identify other person
A person ( A section 499(1)﻿(a) 503(2)﻿(a) section 499(1)﻿(b) 1986 No 121 s 44(3) Interrelationship of civil liability orders
505: More than 1 civil liability order may be made for same conduct
The court may make a civil liability order of one kind against a person even though the court has made another civil liability order of a different kind against the person for the same conduct. Examples
The court may make a compensatory order and a pecuniary penalty order for the same conduct. The court may make a civil liability order requiring forfeiture of financial products and declaring a previous exercise of voting rights attaching to those products to be void. 1988 No 234 s 42ZG
506: Only 1 pecuniary penalty order may be made for same conduct
If conduct by a person constitutes a contravention, or the involvement in the contravention, of 2 or more civil liability provisions, proceedings may be brought against that person for the contravention, or involvement in the contravention, of any 1 or more of the provisions, but no person is liable to more than 1 pecuniary penalty order for the same conduct. 1988 No 234 s 42ZH
507: No pecuniary penalty and fine for same conduct
A person cannot be ordered to pay a pecuniary penalty and be liable for a fine under this Act, the Fair Trading Act 1986 Financial Service Providers (Registration and Dispute Resolution) Act 2008 1978 No 103 s 65F s 43ZC Section 507 amended 15 March 2021 section 43 Financial Services Legislation Amendment Act 2019 Limitation defences
508: Limitation defences
1: The Limitation Act 2010
2: Subsections (3) to (5) apply to a claim for relief (other than any form of monetary relief or declaratory relief) under this subpart.
3: It is a defence to the claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the claim is based.
4: The claim has both a late knowledge period and a longstop period, and sections 11(3)﻿(a) and (b) 14
a: as if it were a money claim; and
b: as if the period in subsection (3) were its primary period.
5: Every defence prescribed by this section is subject to the exceptions and modifications set out in the Limitation Act 2010
6: Any term or expression that is defined in the Limitation Act 2010 and used in this section has the same meaning as in the Limitation Act 2010 2010 No 110 s 37 General
509: Rules of civil procedure and civil standard of proof apply to civil liability
The proceedings under this subpart are civil proceedings and the usual rules of court and rules of evidence and procedure for civil proceedings apply (including the standard of proof). 1988 No 234 s 42ZI
4: Offences relating to defective disclosure and false statements
510: Offence of knowingly or recklessly contravening prohibition on offers where defective disclosure in PDS or register entry
1: An offeror that contravenes section 82
a: knows that, or is reckless as to whether, the statement referred to in section 82(1)﻿(a)﻿(i)
b: knows that, or is reckless as to whether, there is an omission as referred to in section 82(1)﻿(a)﻿(ii)
c: knows of, or is reckless as to whether there is, a circumstance of a kind referred to in section 82(1)﻿(a)﻿(iii)
2: If an offeror contravenes section 82
a: the offer, or the continuing of the offer, of the financial products under the regulated offer takes place with the director's authority, permission, or consent; and
b: the director—
i: knows that, or is reckless as to whether, the statement referred to in section 82(1)﻿(a)﻿(i)
ii: knows that, or is reckless as to whether, there is an omission as referred to in section 82(1)﻿(a)﻿(ii)
iii: knows of, or is reckless as to whether there is, a circumstance of a kind referred to in section 82(1)﻿(a)﻿(iii)
3: A person who commits an offence under subsection (1) or (2) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 10 years, a fine not exceeding $1 million, or both; and
b: in any other case, to a fine not exceeding $5 million.
511: Offence of knowingly or recklessly contravening other provisions relating to defective disclosure
1: A person who contravenes a disclosure provision
a: knows that, or is reckless as to whether, the relevant statement
b: knows that, or is reckless as to whether, there is a relevant omission
2: If an entity contravenes a disclosure provision
a: the relevant act takes place with the director's authority, permission, or consent; and
b: the director—
i: knows that, or is reckless as to whether, the relevant statement
ii: knows that, or is reckless as to whether, there is a relevant omission
3: A person who commits an offence under subsection (1) or (2) is liable on conviction,—
a: in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
b: in any other case, to a fine not exceeding $2.5 million.
4: In this section,— disclosure provision section 99 427(2) or (6) 431P 431Y clause 27 relevant act
a: in relation to section 99
b: in relation to section 427(2)
c: in relation to section 427(6)
d: in relation to section 431P 431Y
e: in relation to clause 27 relevant omission section 99(1)﻿(a)﻿(ii) 427(1)﻿(a)﻿(ii) or (6)﻿(a)﻿(ii) 431P(1)﻿(a)﻿(ii) 431Y(1)﻿(a)﻿(ii) clause 27(1)﻿(a)﻿(ii) relevant statement section 99(1)﻿(a)﻿(i) 427(1)﻿(a)﻿(i) or (6)﻿(a)﻿(i) 431P(1)﻿(a)﻿(i) 431Y(1)﻿(a)﻿(i) clause 27(1)﻿(a)﻿(i) Section 511(1) amended 15 March 2021 section 44(1) Financial Services Legislation Amendment Act 2019 Section 511(1)﻿(a) amended 15 March 2021 section 44(2) Financial Services Legislation Amendment Act 2019 Section 511(1)﻿(b) amended 15 March 2021 section 44(3) Financial Services Legislation Amendment Act 2019 Section 511(2) amended 15 March 2021 section 44(1) Financial Services Legislation Amendment Act 2019 Section 511(2)﻿(b)﻿(i) amended 15 March 2021 section 44(2) Financial Services Legislation Amendment Act 2019 Section 511(2)﻿(b)﻿(ii) amended 15 March 2021 section 44(3) Financial Services Legislation Amendment Act 2019 Section 511(4) replaced 15 March 2021 section 44(4) Financial Services Legislation Amendment Act 2019
512: General offence for false or misleading statements
1: Every person commits an offence who, with respect to a document required by or for the purposes of this Act, makes, or authorises the making of, a statement in it that is false or misleading in a material particular knowing it to be false or misleading.
2: A person who commits an offence under subsection (1) is liable on conviction to imprisonment for a term not exceeding 5 years, a fine not exceeding $200,000, or both. 1993 No 105 s 377(1)
5: Infringement offences
513: Infringement offences
1: If a person is alleged to have committed an infringement offence, that person may—
a: be proceeded against by filing a charging document under section 14
b: be served with an infringement notice as provided in section 514
2: Proceedings commenced in the way described in subsection (1)﻿(a) do not require leave of a District Court Judge or Registrar under section 21(1)﻿(a)
514: Infringement notices
1: The FMA may issue an infringement notice to a person if the FMA believes on reasonable grounds that the person is committing, or has committed, an infringement offence.
2: The FMA may revoke an infringement notice before 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
3: An infringement notice is revoked by giving written notice to the person to whom it was issued that the notice is revoked.
515: Procedural requirements for infringement notices
1: An infringement notice may be served on a person—
a: by delivering it, or a copy of it, personally to the person who the FMA believes has committed the infringement offence; or
b: by sending it, or a copy of it, by post, addressed to the person at the person's last known place of residence or business.
2: An infringement notice sent under subsection (1)﻿(b) must be treated as having been served on the person on the date it was posted.
3: An infringement notice must be in the prescribed form and must contain—
a: details of the alleged infringement offence that are sufficient to fairly inform a person of the time, place, and nature of the alleged offence; and
b: the amount of the infringement fee; and
c: an address at which the infringement fee may be paid; and
d: the time within which the infringement fee must be paid; and
e: a summary of the provisions of section 21(10)
f: a statement that the person served with the notice has a right to request a hearing; and
g: a statement of what will happen if the person served with the notice does not pay the fee and does not request a hearing; and
h: any other prescribed matters.
4: If an infringement notice has been issued, proceedings in respect of the infringement offence to which the notice relates may be commenced in accordance with section 21
a: reminder notices may be prescribed; and
b: in all other respects, section 21
5: Reminder notices must contain the prescribed information.
516: Payment of infringement fee
The FMA must pay all infringement fees received into a Crown Bank Account.
6: Banning orders
517: When court may make banning orders
1: The court may, on application by an entitled person, make a banning order against a person ( A
a: a pecuniary penalty order has been made against A under this Act; or
b: A has been convicted of an offence under any Act referred to in Part 1 of Schedule 1
c: A has been convicted of an offence under any Act referred to in Part 2 of Schedule 1
d: A has, while a director of an entity,—
i: persistently contravened, or been involved in the contravention of, any Act specified in Part 1 of Schedule 1
ii: persistently contravened, or been involved in the contravention of, any Act specified in Part 2 of Schedule 1
iii: if the entity has persistently contravened any of the Acts referred to in subparagraph (i) or (ii), persistently failed to take all reasonable steps to obtain compliance with those Acts; or
e: A has been convicted of a crime involving dishonesty as defined in section 2(1)
f: A has been prohibited in an overseas jurisdiction from carrying on activities that the court is satisfied are substantially similar to any of the activities referred to in section 518
2: Subsection (1)﻿(d)﻿(iii) applies in respect of the Acts specified in Part 2 of Schedule 1
3: An entitled person
a: the FMA:
b: an entity that—
i: A is a director of at the time of the application; or
ii: A was a director of at the time of the ground that triggers the making of the order under subsection (1):
c: the liquidator of an entity referred to in paragraph (b):
d: a person who is, or has been, a product holder or creditor of an entity referred to in paragraph (b).
4: An application under this section may be made in the course of any civil or criminal proceedings or at any other time.
5: In this section, a reference to any Act referred to in Schedule 1
6: In this subpart, director
a: has the same meaning as in section 6(1)
b: includes, in relation to an entity,—
i: a person in accordance with whose directions or instructions a person referred to in paragraph (a) may be required or is accustomed to act; and
ii: a person in accordance with whose directions or instructions the board or other governing body of the entity may be required or is accustomed to act; and
iii: a person who exercises or who is entitled to exercise or who controls or is entitled to control the exercise of powers that, apart from the constitution of the entity, would fall to be exercised by the board or other governing body of the entity; and
iv: a person to whom a power or duty of the board or governing body of the entity has been directly delegated by the board or governing body with that person's consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the board or governing body. 1978 No 103 s 60A s 43F
518: Terms of banning orders
1: A banning order may, permanently or for a period specified in the order, prohibit or restrict the person, without the leave of the court, from doing either or both of the following things:
a: being a director or promoter of, or in any way (whether directly or indirectly) being concerned or taking part in the management of, an entity (other than an overseas company, or other entity, that does not carry on business in New Zealand):
b: providing financial advice services or client money or property services, or contributing, as employee or agent, to the provision of those services.
2: The court may make a banning order permanent or for a period longer than 10 years only in the most serious of cases for which a banning order may be made. 1978 No 103 s 60B s 43G Section 518(1)﻿(b) replaced 15 March 2021 section 45 Financial Services Legislation Amendment Act 2019
519: Offence of contravening banning order
An individual who contravenes a banning order under this subpart commits an offence and is liable on conviction to imprisonment for a term not exceeding 3 years, a fine not exceeding $200,000, or both. 1978 No 103 s 60C s 43H
520: Only 1 banning order may be made for same conduct
If conduct by a person constitutes grounds for making an order under any 1 or more of this subpart, section 44F section 383 1978 No 103 s 60D s 43J
521: General provisions for banning orders
1: A Registrar of the court must, as soon as practicable after the making of a banning order by the court under this subpart,—
a: give notice to the Registrar of Companies, the Registrar of Financial Service Providers, and the FMA that the order has been made; and
b: give notice in the Gazette
2: A person intending to apply for the leave of the court as referred to in section 518
3: The FMA, and any other persons that the court thinks fit, may attend and be heard at the hearing of the application. 1978 No 103 s 60F s 43O
7: Orders to protect interests of aggrieved persons in case of financial markets investigations or proceedings
522: When court may make order to protect interests of aggrieved persons
1: This section applies if—
a: an investigation is being carried out under the Financial Markets Authority Act 2011
i: constitutes or may constitute a contravention, or involvement in a contravention, of any Act specified in Part 1 of Schedule 1
ii: constitutes or may constitute a contravention, or involvement in a contravention, of any Act specified in Part 2 of Schedule 1
iii: may result in a prosecution or civil proceedings of the kind referred to in any of paragraphs (b) to (d) being begun against the person; or
b: a prosecution has begun against a person for an offence under—
i: any Act specified in Part 1 of Schedule 1
ii: any Act specified in Part 2 of Schedule 1
c: civil proceedings have begun against a person under, or in respect of,—
i: any Act specified in Part 1 of Schedule 1
ii: any Act specified in Part 2 of Schedule 1
d: civil proceedings have begun against a person that, in connection with the offer, issue, transfer, supply, or use of financial products or financial services, seek damages or other relief for a contravention, involvement in a contravention, fraud, negligence, breach of duty, or other misconduct.
2: The court may, on application by the FMA or by an aggrieved person, make 1 or more of the orders listed in section 523
3: In this section, a reference to any Act referred to in Schedule 1
4: In this section and section 523 aggrieved person associate civil proceedings liable relevant person 1978 No 103 s 60G s 43P
523: What orders may be made
1: The orders that may be made under this subpart are—
a: an order prohibiting the relevant person from transferring, charging, or otherwise dealing with money, financial products, or other property held or controlled by the relevant person:
b: an order prohibiting a person who is indebted to the relevant person, or to an associate, from making a payment in total or partial discharge of the debt to, or to another person at the direction or request of, the relevant person or associate:
c: an order prohibiting a person who holds money on behalf of the relevant person, or on behalf of an associate, from paying all or any of the money to the person, or to another person at the direction or request of that person, on whose behalf the money is held:
d: an order prohibiting a person who holds financial products or other property on behalf of the relevant person, or on behalf of an associate, from transferring or otherwise parting with possession of the financial products or property to the person, or to another person at the direction or request of that person, on whose behalf the financial products or other property is held:
e: an order prohibiting the taking or sending out of New Zealand by a person of money of the relevant person or of an associate:
f: an order prohibiting the taking, sending, or transfer by a person of financial products or other property of the relevant person or of an associate from a place in New Zealand to a place outside New Zealand (including the transfer of financial products from a register in New Zealand to a register outside New Zealand):
g: an order requiring the relevant person, an associate, or any person holding money, financial products, or other property on behalf of the relevant person or an associate, to pay or transfer money, financial products, or other property to a specified person to be held on trust pending determination of the investigation, prosecution, or civil proceedings referred to in section 522(1)
h: an order appointing,—
i: if the relevant person is an individual, a receiver or trustee, having any powers that the court orders, of the property or of part of the property of that person; or
ii: if the relevant person is a body corporate, a receiver or receiver and manager, having any powers that the court orders, of the property or of part of the property of that person:
i: an order removing a person from being a manager of a managed investment scheme to which the investigation, prosecution, or civil proceedings referred to in section 522(1)
j: an order appointing a person as the manager of a managed investment scheme to which the investigation, prosecution, or civil proceedings referred to in section 522(1)
k: if the relevant person is an individual, an order requiring that person to deliver up to the court his or her passport and any other documents that the court thinks fit:
l: if the relevant person is an individual, an order prohibiting that person from leaving New Zealand without the consent of the court.
2: A reference in subsection (1)﻿(f) or (h) to property of a person includes a reference to property that the person holds otherwise than as sole beneficial owner, for example,—
a: as trustee for, as nominee for, or otherwise on behalf of or on account of, another person; or
b: in a fiduciary capacity.
3: An order may be expressed to operate for a specified period or until the order is discharged by a further order under this section. 1978 No 103 s 60H s 43Q
524: Interim orders
1: If an application is made to the court for an order under section 522
2: The court must not require the FMA, as a condition of making an interim order, to give an undertaking as to damages.
3: In determining the FMA's application for the grant of an interim order, the court must not take into account that the FMA is not required to give an undertaking as to damages. 1978 No 103 s 60I s 43R
525: Relationship with other law
Nothing in this subpart affects the powers that the court has apart from this subpart. 1978 No 103 s 60J s 43S
8: Indemnities or insurance for directors, employees, and auditors of issuers, offerors, and licensees
526: Prohibition on indemnities or insurance for directors or employees of issuers, offerors, or licensees that are not New Zealand companies
1: A specified person, or a related body corporate, must not indemnify, or directly or indirectly effect insurance for, a director or an employee of the specified person in respect of—
a: liability, in connection with conduct regulated by the financial markets legislation, for any contravention, involvement in a contravention, negligence, breach of duty, or breach of trust in his or her capacity as a director or an employee; or
b: costs incurred by that director or employee in defending or settling any claim or proceeding relating to that liability.
2: An indemnity given in breach of this section is void.
3: This section does not apply to a specified person or related body corporate that is a company within the meaning of section 2(1) see section 162
4: This section is subject to sections 527 528 1978 No 103 s 61
527: Permitted indemnities for certain liabilities or costs
1: A specified person, or a related body corporate, may, if expressly authorised by its constitution, indemnify a director or an employee of the specified person for any costs incurred by him or her in defending or settling a proceeding that relates to liability of a kind referred to in section 526(1)﻿(a)
a: judgment is given in his or her favour or if he or she is acquitted; or
b: the proceeding is discontinued.
2: A specified person or a related body corporate may, if expressly authorised by its constitution, indemnify a director or an employee of the specified person in respect of—
a: liability to any person other than the specified person for any act or omission in his or her capacity as a director or an employee (not being a liability specified in subsection (3)); or
b: costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability.
3: The liability specified in this subsection is—
a: criminal liability; or
b: a liability that arises out of a failure to act in good faith when acting in the capacity as a director or an employee. 1978 No 103 s 61A
528: Permitted insurance for certain liability or costs
1: A specified person, or a related body corporate, may, if expressly authorised by its constitution and with the prior approval of its board of directors, effect insurance for a director or an employee of the specified person in respect of—
a: liability (other than criminal liability) of a kind referred to in section 526(1)﻿(a)
b: costs incurred by that director or employee in defending or settling any claim or proceeding relating to that liability; or
c: costs incurred by that director or employee in defending any criminal proceedings—
i: that have been brought against the director or employee in relation to any alleged act or omission in his or her capacity as a director or employee; and
ii: in which he or she is acquitted.
2: The directors of the specified person, or of the related body corporate, who vote in favour of authorising the insurance under subsection (1) must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the specified person or related body corporate (as the case may be).
3: The director or employee who is insured is personally liable to the specified person or related body corporate for the cost of effecting insurance if—
a: subsection (2) has not been complied with in effecting the insurance; or
b: 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 specified person or related body corporate at the time the insurance was effected. 1978 No 103 s 61B
529: Prohibition on indemnity or insurance for auditors of issuers, offerors, or licensees
1: A specified person, or a related body corporate, must not indemnify, or directly or indirectly effect insurance for, an auditor of the specified person, or an auditor engaged by the specified person, in respect of—
a: liability, in connection with conduct regulated by the financial markets legislation, for any contravention, involvement in a contravention, negligence, breach of duty, or breach of trust in his or her capacity as an auditor; or
b: costs incurred by that auditor in defending or settling any claim or proceeding relating to that liability.
2: However, a specified person, or a related body corporate, may indemnify an auditor referred to in subsection (1) for any costs incurred by him or her in defending or settling a proceeding that relates to liability of a kind referred to in subsection (1)﻿(a) if—
a: judgment is given in his or her favour or if he or she is acquitted; or
b: the proceeding is discontinued.
3: An indemnity given in breach of this section is void.
530: Interpretation for this subpart
In this subpart,— director effect insurance employee specified person
a: an issuer of financial products offered under a regulated offer; or
b: an offeror of financial products offered under a regulated offer; or
c: a person that holds a market services licence or is an authorised body; or
d: a licensed market operator; or
e: a licensed supervisor. 1978 No 103 s 61C
9: Appeals
531: Appeals against market services licence decisions
A person may appeal to the court against a decision of the FMA under Part 6
a: decline to issue a licence to the person or to authorise the person to provide a service under the licence; or
b: impose conditions on the person's licence or proposed licence or to vary, revoke, add to, or substitute any conditions on the person's licence; or
c: decline an application to vary the conditions of the person's licence; or
d: exercise a power in respect of the person under section 414 418
532: Appeals against other decisions of FMA on questions of law only
An aggrieved person that considers that any of the following decisions of the FMA is wrong in law may appeal to the court against the decision on a question of law only:
a: a refusal to give a certificate under section 126(2)﻿(e)﻿(iii)
b: a decision under section 134
c: a decision under section 193(1)﻿(a)
d: a decision under section 195
e: a decision under section 205
f: a decision under section 361
fa: a decision under section 448C 448D 448G
g: a decision under subpart 1 1988 No 234 s 47A Section 532(fa) inserted 14 March 2021 section 47 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019
532A: Appeals against decisions of disciplinary committee
1: A person may appeal to the District Court against a decision of the disciplinary committee to take any action referred to in clause 46
2: The decision of the District Court on an appeal under this section is final, except as provided in section 532C Section 532A inserted 15 March 2021 section 46 Financial Services Legislation Amendment Act 2019
532B: Orders as to publication of names
1: On an appeal under section 532A
2: In deciding whether to make an order, the court must have regard to—
a: the interests of any person (including, without limitation, the privacy of any complainant); and
b: the public interest. 2008 No 91 s 145 Section 532B inserted 15 March 2021 section 46 Financial Services Legislation Amendment Act 2019
532C: Appeal on question of law
A party to an appeal under section 532A 2008 No 91 s 146 Section 532C inserted 15 March 2021 section 46 Financial Services Legislation Amendment Act 2019
10: Miscellaneous
Accessories and attribution of liability
533: Involvement in contraventions
1: In this Act, a person is involved in a contravention
a: has aided, abetted, counselled, or procured the contravention; or
b: has induced, whether by threats or promises or otherwise, the contravention; or
c: has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
d: has conspired with others to effect the contravention.
2: Subsection (1) does not apply to proceedings for offences (but see Part 4 Corporations Act 2001 s 79 (Aust)
534: Directors treated as having contravened in case of defective disclosure
, financial reporting contravention, or climate-related disclosure contravention
1: This section applies if, in a proceeding under subpart 3
a: an offeror has contravened section 82
b: an issuer has contravened section 99
c: a licensee or an authorised body has contravened section 427
ca: an FMC reporting entity has contravened any of sections 460 to 461B 461D 461H
cb: a climate reporting entity has contravened any of sections 461Z to 461ZC 461ZI
d: an entity that provided a limited disclosure document under clause 26 clause 27
2: However, this section does not apply in the prescribed circumstances.
3: For the purposes of subpart 3 FMC reporting entity, climate reporting entity, (ca), (cb),
4: Every director that is treated as contravening a provision under this section may, under subpart 3 section 495 subpart 3
5: Nothing in this section limits the liability of the offeror, issuer, licensee, authorised body, FMC reporting entity, climate reporting entity,
6: See sections 499(1)﻿(a) 500 501 Section 534 heading amended 27 October 2022 section 17(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 534(1)﻿(ca) inserted 1 April 2014 section 53(2) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 534(1)﻿(cb) inserted 27 October 2022 section 17(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 534(1)﻿(d) replaced 9 August 2017 section 89 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 534(3) amended 27 October 2022 section 17(3)﻿(a) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 534(3) amended 27 October 2022 section 17(3)﻿(b) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 534(3) amended 1 April 2014 section 53(3) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 534(3) amended 1 April 2014 section 53(4) Financial Reporting (Amendments to Other Enactments) Act 2013 Section 534(5) amended 27 October 2022 section 17(4) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 534(5) amended 1 April 2014 section 53(3) Financial Reporting (Amendments to Other Enactments) Act 2013
535: State of mind of directors, employees, or agents attributed to body corporate or other principal
1: If, in a proceeding under this Act in respect of any conduct engaged in by a body corporate, being conduct in relation to which any provision of this Act applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, employee, or agent of the body corporate, acting within the scope of his or her actual or apparent authority, had that state of mind.
2: If, in a proceeding (other than a proceeding for an offence) under this Act in respect of any conduct engaged in by a person other than a body corporate, being conduct in relation to which any provision of this Act applies, 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 his or her actual or apparent authority, had that state of mind.
3: In this Act, state of mind 1986 No 5 s 90(1), (3), (5)
536: Conduct of directors, employees, or agents attributed to body corporate or 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: a director, employee, or agent of the body corporate, acting within the scope of his, her, or its actual or apparent authority:
b: any other person at the direction or with the consent or agreement (whether express or implied) of a director, employee, or agent of the body corporate, given within the scope of the actual or apparent authority of the director, employee, or agent.
2: Conduct engaged in on behalf of a person other than a body corporate ( A
a: an employee or agent of A acting within the scope of his, her, or its actual or apparent authority:
b: 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. 1986 No 5 s 90(2), (4) Miscellaneous
537: Time for filing charging document for certain offences
1: Despite anything to the contrary in section 25
2: Nothing in subsection (1) affects the application of section 25
3: In this section, category 1 offence category 2 offence section 6(1)
538: Jurisdiction of courts in New Zealand
The High Court has exclusive jurisdiction to hear and determine proceedings in New Zealand under this Act, other than proceedings for offences. 1978 No 103 s 65A
539: Orders to secure compliance
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. 1978 No 103 s 65C s 43X
540: General provisions as to court's orders
1: A court order under this Act may be made on the terms and conditions the 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. 1978 No 103 s 65E s 43Z
541: Persons entitled to appear before court
The following persons are entitled to appear and be heard at the hearing of an application to the court taken under this Act:
a: the applicant:
b: a relevant issuer, offeror, or service provider:
c: a person who is alleged to have suffered, or to be likely to suffer, loss or damage because of an alleged contravention (whether that person or another person makes the allegation):
d: the FMA:
e: any relevant licensed market operator:
f: a person directed to be given notice of the application:
g: with the leave of the court, any other person. 1988 No 234 s 43ZA
542: Saving of liability under Crimes Act 1961 and general law
Nothing in this Act limits or diminishes any liability that any person may incur under any rule of law or the Crimes Act 1961 see sections 220 242 1978 No 103 s 65
9: Regulations, transitional provisions, and miscellaneous provisions
1: Regulations
543: Regulations for purposes of Part 3 (Disclosure of offers of financial products)
1: The Governor-General may, by Order in Council, on the recommendation of the Minister in accordance with section 549 Product disclosure statements, register entries, and other matters relating to disclosure
a: regulating product disclosure statements and register entries, including—
i: prescribing the information that must, or must not, be contained in product disclosure statements or register entries; and
ii: prohibiting or restricting the use in product disclosure statements or register entries of prescribed words, information, sounds, images, graphics, or other matters; and
iii: prescribing requirements as to the layout or method of presentation of product disclosure statements (including the length of a PDS and of parts of a PDS, the size of type used, and when information may be incorporated by reference); and
iv: prescribing the documents that must, or must not, accompany a PDS; and
v: prescribing circumstances for the purposes of sections 51(1)﻿(c) 57(3)
vi: prescribing information for the purposes of section 63
vii: prescribing circumstances and requirements for the purposes of sections 71(2) 80(4) 85(6)
viii: prescribing circumstances in which an offeror is permitted to act under section 80(1)﻿(d)
ix: prescribing matters for the purposes of section 84
x: prescribing circumstances in which a register entry is not required for a regulated offer; and
xi: declaring classes of PDSs to be simplified disclosure PDSs for the purposes of section 470 section 470(1)﻿(c)
xii: prescribing provisions for the purposes of section 474(1)﻿(c)
b: amending any of the dollar amounts specified in Schedule 1 clause 12
c: providing for the matters referred to in clause 26
i: the circumstances in which a limited disclosure document
ii: the information to be contained in, or to accompany, a limited disclosure document
iii: the period within which the limited disclosure document
iiia: requirements relating to an entry for the offer in the register of offers of financial products:
iiib: information that must be provided, the person or persons to whom it must be provided, and other matters relating to the manner in which it is provided:
iiic: limits or restrictions that apply in connection with an offer, financial products, or investors:
iv: requirements and other matters relating to certificates, acknowledgements, consents, approvals, and governance:
v: other conditions that must be complied with:
vi: the circumstances in which the requirements, conditions, and other matters referred to in subparagraphs (iiia) to (v)
vii: matters for the purposes of clause 26(6)
viii: which provisions of the regulations made for the purposes of clause 26 section 101(3) or (4) see Part 8 Ongoing disclosure and updating of registers
d: prescribing changes that must be notified under section 95 and a period or periods within which those changes must be notified
e: prescribing the information that must be made available under section 96 97
ea: prescribing the persons who may make a request under section 96
f: prescribing circumstances for the purposes of section 98(2)﻿(b)
g: prescribing matters for the purposes of section 100 Miscellaneous
h: prescribing matters in connection with money relating to financial products that is held in trust (including prescribing, for the purposes of section 87(3)﻿(a)
i: prescribing financial products for the purposes of the definition of specified financial products in clause 8(2)
j: prescribing schemes for the purposes of clause 11(3)﻿(a)
k: prescribing markets and persons for the purposes of clause 20(4)
l: prescribing kinds of financial products or currency forwards for the purposes of clause 21(a), (c), or (d) 38(4)﻿(a)
la: prescribing circumstances for the purposes of section 453(b)﻿(ii)
lb: prescribing circumstances for the purposes of clause 27A
m: prescribing circumstances for the purposes of clause 31(1)﻿(c)﻿(ii) or (2)﻿(d)﻿(ii) 34(1)﻿(d)﻿(ii)
n: prescribing matters for the purposes of the definitions of relevant person, relevant time, and prescribed transaction in clause 49
o: prescribing forms and information for the purposes of clause 46
2: Subsection (1)﻿(a)﻿(v) and (x) and (f) are subject to section 550
3: A time or an event prescribed under subsection (1)﻿(e) in respect of regulated products may be any time, or any event that occurs, on or after the time at which the products are first offered under a regulated offer or otherwise become regulated products (regardless of whether or not the products have been issued).
4: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 543(1)﻿(c)﻿(i) amended 9 August 2017 section 90(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(ii) amended 9 August 2017 section 90(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(iii) amended 9 August 2017 section 90(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(iiia) inserted 9 August 2017 section 90(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(iiib) inserted 9 August 2017 section 90(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(iiic) inserted 9 August 2017 section 90(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(vi) amended 9 August 2017 section 90(3) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(vii) inserted 9 August 2017 section 90(4) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(c)﻿(viii) inserted 9 August 2017 section 90(4) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(d) amended 9 August 2017 section 90(5) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(e) amended 9 August 2017 section 90(6) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(ea) inserted 9 August 2017 section 90(7) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(1)﻿(l) replaced 9 April 2019 section 47 Financial Services Legislation Amendment Act 2019 Section 543(1)﻿(la) inserted 1 April 2014 section 54 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 543(1)﻿(lb) inserted 1 April 2014 section 54 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 543(3) inserted 9 August 2017 section 90(8) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 543(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
544: Regulations for purposes of Part 4 (governance of financial products)
1: The Governor-General may, by Order in Council, on the recommendation of the Minister in accordance with section 549 Reporting to supervisor
a: prescribing the information that must be made available under subpart 1 2 Particular types of schemes
b: prescribing, for registrations as particular types of schemes, additional application requirements:
c: prescribing other types of registered schemes, and any additional registration requirements applying to those types of schemes:
d: prescribing, as the superannuation scheme rules for the purposes of section 129 see
e: prescribing application and registration requirements for superannuation schemes and workplace savings schemes:
f: providing for the FMA to carry out any function of determining whether a scheme is or is not employer-related or has, or does not have, any other status under this Act or the regulations, and the criteria it must apply and its powers and procedures in doing so: Contents of governing documents
g: prescribing the matters that must be contained in a governing document required for the purposes of Part 4
h: prescribing provisions to be implied in a governing document ( see Meetings of product holders
i: authorising a person to call meetings of product holders (whether in general, or at specified times or in relation to events or in connection with specified matters):
j: prescribing the frequency of meetings of product holders, the methods of holding meetings, the quorum, and the other procedures to be followed in calling and conducting meetings of product holders (including providing for electronic voting by product holders and for product holder proposals) and providing for the making of written resolutions in lieu of meetings:
k: prescribing circumstances for the purposes of section 163 Custodians
l: prescribing the duties and obligations of custodians in relation to scheme property:
m: prescribing provisions regulating the keeping, retention, reconciliation, inspection, and audit or review of records or procedures of a custodian:
n: prescribing matters for the purposes of section 159 Management of registered schemes
o: prescribing circumstances for the purposes of section 166
p: prescribing matters relating to the reporting of limit breaks and pricing errors and non-compliance with pricing methodologies:
q: prescribing any steps that must be taken for the purposes of section 168
r: prescribing overseas schemes, interests, benefits, or transactions for the purposes of section 174(b) and (d)
s: prescribing circumstances for the purposes of section 176(5)
t: prescribing requirements for the purposes of section 189
u: prescribing circumstances for the purposes of section 190(2)﻿(b) Registers and keeping copies of documents
v: prescribing matters for the purposes of subpart 4
i: matters for the purposes of section 215(1)﻿(b)
ii: types of derivatives for the purposes of section 215(2)﻿(a)
iii: financial products for the purposes of section 215(2)﻿(b)
iv: circumstances for the purposes of section 215(2)﻿(c)
v: requirements for the purposes of section 215(3)
vi: particulars for the purposes of section 217(1)﻿(f)
via: circumstances in which information specified in a paragraph in section 217(1)
vii: circumstances for the purposes of section 217(2)
viii: requirements for the purposes of section 218
ix: circumstances for the purposes of section 221(2)﻿(c)
x: purposes for the purposes of section 225(3)﻿(a)
xi: requirements for the purposes of section 227(1)﻿(b) Miscellaneous
w: prescribing the form of, or information that must or must not be contained in or attached to, any information required to be provided or made available by or under Part 4
2: A provision prescribed for the purposes of subsection (1)﻿(d) or (h) may, without limitation, do any of the following (including to supplement, or to add to, duties and powers prescribed by this Act, the Financial Markets Supervisors Act 2011 KiwiSaver Act 2006
a: specify the duties and powers of the supervisor of the debt security or the scheme:
b: specify the duties of the issuer of the debt security or the manager of the scheme.
3: Subsection (1)﻿(k), (o), (r), (s), and (v)﻿(iii), (iv), (via), section 550
4: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 544(1)﻿(v)﻿(via) inserted 9 August 2017 section 91(1) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 544(3) amended 9 August 2017 section 91(2) Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 544(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
545: Regulations for purposes of Part 5 (dealing in financial products on markets)
1: The Governor-General may, by Order in Council, on the recommendation of the Minister in accordance with section 549 Insider conduct and market manipulation
a: exempting (on terms and conditions, if any) conduct from being—
i: insider conduct that is conduct that would otherwise fall within section 241 242 243
ii: market manipulation that is conduct that would otherwise fall within section 262 265 Substantial holding disclosure
b: prescribing further matters relating to a matter, a relevant event, or a substantial holding, that must be disclosed under subpart 5
i: the nature of the relevant interests in the substantial holding (including before and after the relevant event in the case of sections 277 278
ii: the number, nominal value (if any), and class of financial products in which the person has or had the substantial holding (including before and after the relevant event in the case of sections 277 278
iii: the date of the relevant event:
iv: the terms and conditions (including consideration) of the transaction giving rise to the relevant event:
v: details as to the circumstances in which the relevant event occurred:
vi: the date of the last disclosure by the person under that subpart in respect of the substantial holding:
vii: information relating to the relevant event or substantial holding and concerning other persons who have made disclosures under that subpart:
c: prescribing the documents, certificates, and statements that must accompany or be annexed to those disclosures:
d: determining when disclosure of the further matters referred to in paragraph (b) is required (including by requiring disclosure only on request):
e: prescribing the form of or for, and the method of, disclosure under that subpart (and of any other acknowledgments or notices required by the subpart) or providing for the relevant licensed market operator to determine that form or method and providing for the way in which it must do so:
f: prescribing the manner referred to in section 275
g: exempting (on terms and conditions, if any) classes of persons, classes of transactions, or classes of relevant interests, substantial holdings, or relevant events from compliance with any provisions of that subpart or regulations made under any of paragraphs (b) to (e): Directors' and senior managers' disclosure obligations
h: prescribing further matters relating to a relevant interest, or acquisition or disposal of a relevant interest, that must be disclosed by directors and senior managers under subpart 6
i: the nature of the relevant interest:
ii: the number and class of financial products to which the relevant interest relates or related:
iii: the date of the disclosure obligation becoming applicable, or the date of the acquisition or disposal:
iv: the consideration paid or received for the acquisition or disposal:
v: details as to the circumstances in which the acquisition or disposal occurred:
vi: the date of the last disclosure by the director or senior manager:
i: determining when the disclosure in paragraph (h) is required (including by requiring disclosure only on request) and prescribing the form of or for, and the method of, disclosure or providing for the relevant licensed market operator to determine that form or method and for the way in which it must do so:
j: exempting (on terms and conditions, if any) classes of persons, classes of transactions, or classes of relevant interests, acquisitions, or disposals from compliance with any provisions of that subpart or regulations made under paragraph (h) or (i):
k: prescribing acquisitions or disposals for the purposes of section 297(2)﻿(a)﻿(vi) Licensed markets
l: prescribing conduct that does not constitute a financial product market for the purposes of this Act:
m: exempting (on terms and conditions, if any) wholesale markets or other financial product markets from the operation of subpart 7
n: prescribing information and the form and method referred to in section 354 Transfer of transferable financial products
o: prescribing matters for the purposes of subpart 9
i: financial products to which that subpart does not apply:
ii: forms for the purposes of that subpart:
iii: information to be included in products transfers or brokers transfers:
iv: persons for the purposes of paragraph (f) of the definition of authorised transaction in section 372(3)
2: Subsection (1)﻿(a), (g), (j), and (m) are subject to section 550
3: Before making a recommendation in relation to subsection (1)﻿(l) or (m), the Minister must have regard to the matters set out in section 308
4: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 545(4) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
546: Regulations for purposes of Part 6 (market services)
1: The Governor-General may, by Order in Council, on the recommendation of the Minister in accordance with section 549 Issue of licences
a: prescribing matters relating to the issue of market services licences, including—
i: eligibility criteria for licences and for the purposes of section 400 section 400 or an entity referred to in section 400(1A)
ii: requirements that the applicant's directors, senior managers, and proposed directors and senior managers must satisfy:
iii: matters that the FMA must have regard to:
iv: persons or classes of persons whom the FMA must consult:
v: information for the purposes of section 401(2)﻿(e)
vi: eligibility criteria to be met by a DIMS licensee before a custodian of investor money or investor property is, subject to conditions imposed, under paragraph (d)﻿(iii), permitted to be an associated person of the DIMS licensee:
b: prescribing overseas markets and circumstances for the purposes of section 389(1)﻿(c)
c: exempting (on terms and conditions, if any) services from the licensing requirement for providers of financial advice services for the purposes of section 389(2)﻿(b)
ca: exempting (on terms and conditions, if any) services from the licensing requirement for providers of discretionary investment management services for the purposes of section 389(3)﻿(b)
cb: prescribing terms and conditions of the exemption for Lloyd’s underwriters under section 389(4)﻿(a) see section 449A
cc: exempting (on terms and conditions, if any) services from the licensing requirement for providers of the service of acting as a financial institution for the purposes of section 389(4)﻿(b) Conditions of licences
d: prescribing conditions that market services licences are subject to, the kinds of conditions that the FMA may impose on those licences, or matters to which conditions imposed by the FMA may relate, including (without limitation) providing for—
i: conditions that regulate the manner in which licensed market services must be carried out under the licence:
ii: conditions that impose prudential requirements on licensees or authorised bodies or otherwise regulate the business, operation, or management of licensees or authorised bodies (for example, requirements to have a credit rating or to maintain a minimum amount of capital, requirements relating to margins, or requirements relating to the receipt of money and property from clients):
iii: in the case of a DIMS licensee, the conditions subject to which a custodian of investor money or investor property is permitted to be an associated person of the DIMS licensee:
iv: in the case of a licence relating to a financial advice service, conditions of a kind described in section 403(4)
v: in the case of a licence to act as an administrator of a financial benchmark, conditions of a kind described in section 403(5)
vi: in relation to a licence relating to acting as a financial institution, conditions that prohibit or regulate incentives, or the offer or giving of incentives to any person, in connection with a relevant service or an associated product:
e: stating whether a condition imposed on a market services licence by the regulations is a Part 6 services provision that gives rise to civil liability under section 449(4) Reporting
f: prescribing matters relating to reports or other disclosure under subpart 3 Disclosure obligations
g: prescribing the information that must, or must not, be contained in disclosure statements for the purposes of subpart 4
h: prohibiting or restricting the use in those disclosure statements of prescribed words, information, sounds, images, graphics, or other matters:
i: prescribing requirements as to the form, layout, or method of presentation of those disclosure statements (including the length of the whole or any part of the statement, the size of type used, and when information may be incorporated by reference):
j: determining when disclosure is required, and when minimum disclosure may be given, under that subpart (including by requiring disclosure only on request) and what minimum disclosure must be given:
k: prohibiting or restricting the combining of disclosure statements:
ka: prescribing the information that must be made available under section 426A
kb: prescribing circumstances for the purposes of section 427(3)﻿(a)
kc: prescribing conditions for the purposes of section 427(3)﻿(b) Client agreements
l: prescribing the matters that must be contained in a client agreement required for the purposes of subpart 5
m: prescribing provisions to be implied in a client agreement ( see Financial advice services and client money or property services
ma: prescribing kinds of financial planning for the purposes of section 431C(1)﻿(d)
mb: prescribing eligibility criteria for the purposes of section 431I
mc: prescribing the information that must be made available under section 431O
md: prescribing the information that must be disclosed under section 431X
me: prescribing documents or information the giving of which does not constitute the giving of financial advice under clause 7(f)
mf: prescribing activities for the purposes of clause 7(g)
mg: prescribing occupations for the purposes of clause 8(2) 19(1)
mh: prescribing circumstances in which financial advice is not regulated financial advice for the purposes of clause 17
mi: prescribing circumstances in which a client money or property service is not a regulated client money or property service for the purposes of clause 22
mj: providing for any or all of sections 431ZC to 431ZH
mk: prescribing the duties and obligations of providers of client money or property services in relation to client money and client property:
ml: prescribing entities for the purposes of section 431ZC
mm: specifying who may be a related body corporate for the purposes of section 431ZC
mn: prescribing circumstances for the purposes of section 431ZC(3)﻿(a)
mo: providing for the matters referred to in section 431ZC(3)﻿(b)
mp: regulating the establishment and operation of a trust account under subpart 5B
mq: regulating the keeping, retention, reconciliation, inspection, and audit or review of trust account records and other records and procedures of providers of client money or property services:
mr: prescribing any other requirements necessary or desirable to ensure that trust accounts are duly kept and that persons on whose behalf client money and client property are held by providers are informed of the client money and client property held and of the transactions made in connection with it (including prescribing what confirmation information must be made available and any other matters for the purposes of section 431ZF
ms: prescribing matters to regulate the delivery of client money or client property to the person on whose behalf they are held, and other steps to be taken or provisions to apply, in connection with the termination of any client money or property service: Discretionary investment management services
n: prescribing matters relating to the reporting of limit breaks:
o: prescribing circumstances for the purposes of section 445 Regulating conduct of financial institutions
oa: prescribing requirements for fair conduct programmes, including (without limitation) additional, or more detailed, requirements relating to the matters set out in section 446J(1)﻿(a) to (l)
i: governance and management of conduct and risks associated with that conduct:
ii: monitoring outcomes for consumers, including whether consumers’ interests are being had regard to:
iii: how the services or products are designed and managed:
iv: dealing with consumer complaints:
v: dealing with insurance claims:
vi: communicating with consumers, including particular disclosure requirements and requirements for warnings:
vii: procedures or processes that intermediaries or agents must follow to support the financial institution’s compliance with the fair conduct principle:
viii: the design and management of incentives:
ob: prescribing classes of service for the purposes of section 446F(1)﻿(b)
oc: prescribing matters for the purposes of section 446H
od: prescribing factors for the purposes of section 446J(2)﻿(g)
oe: prescribing requirements for the purposes of section 446J(4)﻿(a) or (b)
of: prescribing matters for the purposes of section 446Q(4)﻿(b) and (c)
og: prohibiting or regulating any incentive, or any practice, activity, or other conduct in connection with offering or giving any incentive to any person, in connection with a relevant service or an associated product, including prescribing the manner in which an incentive may be offered or given:
oh: prescribing classes of contract for the purposes of paragraph (b)﻿(i) of the definition of consumer credit contract in section 446P
oi: prescribing matters for the purposes of section 446V(3)﻿(b) Miscellaneous
oj: prescribing the procedure of the code committee:
ok: prescribing the procedure of the disciplinary committee:
p: prescribing persons or classes of persons to whom notices under Part 6
q: prescribing the circumstances referred to in section 424(3) 426(1)
r: prescribing overseas schemes, benefits, interests, or transactions for the purposes of section 441(b) and (d)
s: prescribing the form or contents of any certificate or other document referred to in Part 6
2: Subsection (1)﻿(b), (c), (ca), (cc), (o), (ob), (oe), and (of) section 550
3: A provision prescribed for the purposes of subsection (1)﻿(m) may, without limitation, specify the duties of the licensee or authorised body under the client agreement (including to supplement, or to add to, any duties prescribed by this Act).
4: The Minister may make a recommendation for regulations under subsection (1)﻿(og) (which relates to prohibiting or regulating incentives) only if the Minister—
a: has had regard to the purposes of this Act and the fair conduct principle; and
b: has had regard to whether the regulations are likely to—
i: appropriately reduce or manage conflicts or potential conflicts between the interests of consumers and the interests of persons who would otherwise be entitled to receive incentives; or
ii: otherwise mitigate or avoid the actual or potential adverse effects of incentives on the interests of consumers; and
c: has had regard to the likely effect of the regulations—
i: on the availability of financial advice and the availability of financial services and financial advice products; and
ii: on the financial services industry generally; and
d: is satisfied that the matters to which the regulations relate are not more appropriately dealt with in an Act.
5: The breach of a term or condition prescribed under subsection (1)﻿(c), (ca), (cb), or (cc) is a breach of section 388
7: Regulations under this section are secondary legislation ( see Part 3 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 546(1)﻿(a)﻿(i) amended 9 April 2019 section 48(1) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(c) replaced 9 April 2019 section 48(2) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(ca) inserted 9 April 2019 section 48(2) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(cb) inserted 30 June 2022 section 21(1) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(cc) inserted 30 June 2022 section 21(1) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(d)﻿(iv) inserted 9 April 2019 section 48(3) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(d)﻿(v) inserted 14 March 2021 section 48 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 546(1)﻿(d)﻿(vi) inserted 30 June 2022 section 21(2) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(ka) inserted 9 August 2017 section 92 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 546(1)﻿(kb) inserted 9 August 2017 section 92 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 546(1)﻿(kc) inserted 9 August 2017 section 92 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 546(1)﻿(ma) heading inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(ma) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mb) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mc) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(md) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(me) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mf) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mg) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mh) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mi) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mj) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mk) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(ml) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mm) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mn) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mo) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mp) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mq) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(mr) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(ms) inserted 9 April 2019 section 48(4) Financial Services Legislation Amendment Act 2019 Section 546(1)﻿(oa) heading replaced 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oa) replaced 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(ob) replaced 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oc) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(od) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oe) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(of) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(og) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oh) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oi) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oj) heading inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(oj) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(1)﻿(ok) inserted 30 June 2022 section 21(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(2) amended 30 June 2022 section 21(4) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(2) amended 30 June 2022 section 21(5) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(2) amended 9 April 2019 section 48(6) Financial Services Legislation Amendment Act 2019 Section 546(4) inserted 30 June 2022 section 21(6) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(5) inserted 30 June 2022 section 21(6) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 546(7) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
547: Transitionals, savings, and orderly implementation of Act and related enactments
2018-09-15 Financial Markets Conduct Act 2013 This section repealed on close of 14 September 2018. See s 547(3) 2018-09-15 Financial Markets Conduct Regulations 2014 See s. 547(4): Any regulations made under this section that are in force on the 5-year date are revoked on the close of that day. Scott M’s advice: revoke cls 2–30 of Schedule 1. Also cl 30A of Sch 1, inserted by the 2016 amendment regs. 2018-09-15 Financial Markets Conduct (KiwiSaver) Amendment Regulations 2015 See s547(4). 2018-09-15 Financial Markets Conduct Amendment Regulations 2016 See s. 547(4): Any regulations made under this section that are in force on the 5-year date are revoked on the close of that day. Scott M’s advice: There is one provision in that camp - new clause 30A of Schedule 1 ("Certain superannuation schemes may elect to be treated as registered"). This is inserted by reg 8 of the Amendment Regs. – i.e. revoke r. 8. 2018-09-15 Financial Markets Conduct Amendment Regulations (No 2) 2016 See s547(4). Section 547 repealed 15 September 2018
548: Other regulations
1: The Governor-General may, by Order in Council, on the recommendation of the Minister in accordance with section 549 Part 2 fair dealing
a: declaring financial advice products Part 2 section 464
b: prescribing circumstances for the purposes of section 34(2)﻿(e)
c: prescribing kinds of entities for the purposes of the definition of co-operative in section 34(4) Definitions
d: providing for matters relating to terms defined in this Act and related matters, including the following:
i: excluding dealing from being dealing in financial products for the purposes of this Act:
ia: declaring products to be financial advice products:
ii: declaring classes of services not to be financial services for the purposes of any provision of this Act:
iii:
iv: prescribing services for the purposes of the definition of prescribed intermediary services and applying subpart 4 5
iva: specifying persons as product providers for the purposes of the definition of product provider in section 6(1)
v: declaring interests or rights not to be securities for the purposes of this Act:
vi: prescribing circumstances for the purposes of section 6(3)
vii: prescribing matters for the purposes of section 8(4)﻿(a)﻿(ii)
viii: excluding (whether by class or in a particular case) a price, estimate, rate, index, or value from being a financial benchmark for the purposes of section 6(7)
e: prescribing kinds of schemes and deposit products for the purposes of section 11(2) section 11(2)﻿(c)﻿(iv)
f: prescribing circumstances for the purposes of section 13(3)
g: prescribing matters relating to when information may be incorporated by reference for the purposes of section 13(4) Excluded circumstances relating to when directors are treated as having contravened provisions
h: prescribing circumstances for the purposes of section 534(2) Trusts Act 2019 disapplied
ha: providing that specified provisions of the Trusts Act 2019
i: that is or will be regulated by or under this Act:
ii: that would be regulated by or under this Act except for the fact that an exclusion under Schedule 1 Schedule 3 schemes
i: prescribing the information that must be prepared and provided under clause 6
j: prescribing provisions to be implied in a trust deed of a Schedule 3 scheme (which may, without limitation, specify duties under the trust deed, including by supplementing, or adding to, any duties prescribed by this Act):
ja: prescribing criteria, requirements, or both for the purposes of clause 2(1)﻿(b)﻿(iv) Registers
k: prescribing procedures, requirements, and other matters, not inconsistent with this Act, for any register kept under this Act, including matters that relate to—
i: the operation of the register:
ii: the form of the register:
iii: the information to be contained in the register:
iv: access to the register:
v: search criteria for the register:
vi: circumstances in which amendments must be made to the register: Giving of information and other service requirements
l: prescribing how information may or must be given to, provided to, or served on any person under this Act and other matters relating to that procedure (including when the information is treated as received, or as having been given, provided, or served, for the purposes of this Act and the regulations): Enforcement
m: setting the infringement fee for each infringement offence, which must not exceed $20,000:
n: prescribing information to be included in infringement notices and reminder notices and the form of notices: Fees and charges
o: prescribing fees and charges payable in respect of any matter under this Act or the manner in which fees and charges may be calculated: Prescribed manner
p: prescribing, for the purposes of any provision of this Act that requires a thing to be done in a prescribed manner (or for the purposes of any other regulations empowered to prescribe the manner in which something must be done), the manner in which the thing must be done, including prescribing—
i: by whom, when, where, and how the thing must be done:
ii: the form that must be used in connection with doing the thing:
iii: what information or other evidence or documents must be provided in connection with the thing:
iv: requirements with which information, evidence, or documents that are provided in connection with the thing must comply:
v: that fees or charges must be paid in connection with doing the thing:
vi: that the FMA may determine or prescribe any of the matters under subparagraphs (i) to (iv): General
q: prescribing, for the purposes of provisions of this Act that require money to be repaid with interest, the rate of interest or method for determining the rate of interest:
r: prescribing kinds of schemes for the purposes of paragraph (b) of the definition of special resolution in section 6(1) section 161(1)﻿(c)
s: prescribing a date or dates for the purposes of clause 57(1)﻿(a)
t: prescribing clauses of Schedule 1 clause 59(1)
u: providing for any other matters contemplated by this Act, necessary for its administration, or necessary for giving it full effect.
2: Subsection (1)﻿(b), (d)﻿(i), (ii), (iii), (v), and (viii) (h), and (ha) section 550
3: Subsection (1)﻿(d)﻿(iii) is repealed on 1 April 2017 (but any regulations made under that subparagraph continue in force despite that repeal).
4: Nothing in sections 543 to 547
5: Regulations under this section are secondary legislation ( see Part 3 2017-04-01 Financial Markets Conduct Act 2013 s 548(1)﻿(d)﻿(iii) repealed on 1 April 2017. See s 548(3). The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 548(1)﻿(a) amended 9 April 2019 section 49(1) Financial Services Legislation Amendment Act 2019 Section 548(1)﻿(d)﻿(ia) inserted 9 April 2019 section 49(2) Financial Services Legislation Amendment Act 2019 Section 548(1)﻿(d)﻿(iii) repealed 1 April 2017 Section 548(1)﻿(d)﻿(iva) inserted 9 April 2019 section 49(3) Financial Services Legislation Amendment Act 2019 Section 548(1)﻿(d)﻿(viii) inserted 14 March 2021 section 49(1) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 548(1)﻿(ha) heading inserted 30 January 2021 section 171(1) Trusts Act 2019 Section 548(1)﻿(ha) inserted 30 January 2021 section 171(1) Trusts Act 2019 Section 548(1)﻿(ja) inserted 9 April 2019 section 49(4) Financial Services Legislation Amendment Act 2019 Section 548(2) amended 14 March 2021 section 49(2) Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 548(2) amended 30 January 2021 section 171(2) Trusts Act 2019 Section 548(5) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
549: Minister must consult FMA about regulations
The Minister must consult the FMA before making a recommendation under this subpart.
550: Procedural requirements for regulations relating to exemptions, exclusions, and definitions
1: The Minister must, before making a recommendation in relation to a provision referred to in—
a: subsection (2), have regard to the main and additional purposes of this Act set out in sections 3 4
b: subsection (2)﻿(a), (b), or (e), be satisfied that the extent to which requirements are disapplied is not broader than is reasonably necessary to address the matters that gave rise to the regulations; and
c: subsection (2)﻿(c), (d), (da), (db), (ea), (eb),
d: subsection (2)﻿(g), be satisfied that the extent to which the application of section 534 regulations; and
e: subsection (2)﻿(h), have regard to the purpose and principles of the Trusts Act 2019
2: The provisions are—
a: sections 543(1)﻿(a)﻿(v) and (x), and (f) 548(1)﻿(b)
b: section 544(1)﻿(k), (o), (r), (s), and (v)﻿(iii), (iv), (via),
c: section 545(1)﻿(a), (g), (j), and (m)
d: section 546(1)﻿(b) , (c), (ca), and (cc)
da: section 546(1)﻿(me), (mf), (mg), (mh), and (mi)
db: section 546(1)﻿(mn)
e: section 546(1)﻿(o) and (oe)
ea: section 546(1)﻿(ob) Part 6
eb: section 546(1)﻿(of)
f: section 548(1)﻿(d)﻿(i), (ii), (v), and (viii)
g: section 548(1)﻿(h) section 534
h: section 548(1)﻿(ha) Trusts Act 2019
3: The Minister must, before making a recommendation in relation to section 548(1)﻿(d)﻿(iii) Section 550(1)﻿(c) amended 30 June 2022 section 22(1) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 550(1)﻿(c) amended 9 April 2019 section 50(1) Financial Services Legislation Amendment Act 2019 Section 550(1)﻿(d) amended 30 January 2021 section 172(1) Trusts Act 2019 Section 550(1)﻿(e) inserted 30 January 2021 section 172(2) Trusts Act 2019 Section 550(2)﻿(b) amended 9 August 2017 section 93 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 550(2)﻿(d) amended 30 June 2022 section 22(2) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 550(2)﻿(d) amended 9 April 2019 section 50(2) Financial Services Legislation Amendment Act 2019 Section 550(2)﻿(da) inserted 9 April 2019 section 50(3) Financial Services Legislation Amendment Act 2019 Section 550(2)﻿(db) inserted 9 April 2019 section 50(3) Financial Services Legislation Amendment Act 2019 Section 550(2)﻿(e) replaced 30 June 2022 section 22(3) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 550(2)﻿(ea) inserted 30 June 2022 section 22(4) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 550(2)﻿(eb) inserted 30 June 2022 section 22(4) Financial Markets (Conduct of Institutions) Amendment Act 2022 Section 550(2)﻿(f) amended 14 March 2021 section 50 Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Act 2019 Section 550(2)﻿(h) inserted 30 January 2021 section 172(3) Trusts Act 2019
551: Miscellaneous provisions relating to exemptions
1: The breach of a term or condition of an exemption provided by regulations is a breach of the obligation for which the exemption applies (unless the regulations otherwise provide).
2: Exemptions made under regulations may extend to all, or classes of, persons, transactions, or other matters in relation to specified overseas jurisdictions.
3: Subsection (2) does not limit this subpart. 1988 No 234 ss 49E 49F
552: Miscellaneous provisions relating to fees and charges
1: Regulations may authorise a person to whom a fee or charge is payable to refund or waive, in whole or in part and on any conditions that may be prescribed, payment of the fee or charge in relation to any person or class of persons.
2: A person to whom a prescribed fee or charge is payable may refuse to perform a function or exercise a power until the prescribed fee or charge is paid.
3: Any fee, charge, or other amount payable to a person under this Act is recoverable by the person in any court of competent jurisdiction as a debt due to the person.
4: This subpart does not limit section 67
5: If regulations authorise a person to grant a refund or waiver to a class of persons,—
a: the instrument granting the refund or waiver is secondary legislation ( see Part 3
b: the regulations must contain a statement to that effect. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation referred to in subsection (5). Legislation Act 2019 requirements for secondary legislation referred to in subsection (5) Publication See the relevant publication, presentation, and disallowance table in the regulations under which it is made LA19 ss 73 74 cl 14 Presentation The Minister must present it to the House of Representatives, unless a transitional exemption applies under Schedule 1 LA19 s 114 cl 32 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 552(5) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
552A: Validation of fees used to recover costs of other Companies Office registers, etc
1: This section applies to a fee—
a: that—
i: is or was payable or purportedly payable on or before 30 June 2022 under any of the Acts listed in subsection (4) or any regulations made under any of those Acts; and
ii: was (or is or will be) used in whole or in part to recover the costs or a share of the costs of the Registrar in operating 1 or more registers under this Act or in exercising or performing any other powers, functions, and duties of the Registrar under this Act or any regulations made under this Act; or
b: that—
i: is or was payable or purportedly payable on or before 30 June 2022 under this Act or any regulations made under this Act; and
ii: was (or is or will be) used in whole or in part to recover the costs or a share of the costs of 1 or more registers operated under any of the Acts listed in subsection (5) or in exercising or performing the powers, functions, and duties of a Registrar under any of those Acts or any regulations made under any of those Acts.
2: The fee is and always has been validly imposed.
3: Money received by the Registrar of any register maintained by the Companies Office in payment of the fee—
a: is and always has been lawfully collected and applied; and
b: may continue to be applied on and after 1 July 2022 to recover costs referred to in subsection (1)﻿(a)﻿(ii) and (b)﻿(ii).
4: The Acts are—
a: the Auditor Regulation Act 2011
b: the Building Societies Act 1965
c: the Companies Act 1993
d: the Financial Reporting Act 1993
e: the Financial Service Providers (Registration and Dispute Resolution) Act 2008
f: the Friendly Societies and Credit Unions Act 1982
g: the Incorporated Societies Act 1908
h: the Insolvency Practitioners Regulation Act 2019
i: the Limited Partnerships Act 2008
j: the Personal Property Securities Act 1999
k: the Retirement Villages Act 2003
l: the Securities Act 1978
5: The Acts are—
a: the Auditor Regulation Act 2011
b: the Building Societies Act 1965
c: the Charitable Trusts Act 1957
d: the Companies Act 1993
e: the Financial Reporting Act 1993
f: the Financial Reporting Act 2013
g: the Financial Service Providers (Registration and Dispute Resolution) Act 2008
h: the Friendly Societies and Credit Unions Act 1982
i: the Incorporated Societies Act 1908
j: the Incorporated Societies Act 2022
k: the Industrial and Provident Societies Act 1908
l: the Insolvency Practitioners Regulation Act 2019
m: the Limited Partnerships Act 2008
n: the New Zealand Business Number Act 2016
o: the Personal Property Securities Act 1999
p: the Retirement Villages Act 2003
q: the Securities Act 1978
6: In this section,— Companies Office
a: the former Department of Justice:
b: the former Ministry of Commerce:
c: the former Ministry of Economic Development:
d: the Ministry of Business, Innovation, and Employment fee
a: includes any penalty or overdue fee imposed, or interest charged, in respect of an unpaid or overdue fee; and
b: in relation to the Insolvency Practitioners Regulation Act 2019 section 81 Section 552A inserted 25 May 2022 section 11 Companies Office Registers Funding Validation Act 2022
553: Miscellaneous provisions relating to implied provisions
Any provision that is implied into a deed or an agreement by or under this Act—
a: applies despite anything to the contrary in the deed or agreement; and
b: is enforceable by the parties to the deed or agreement and by any person on whom the provision confers, or purports to confer, a benefit; but
c: applies subject to any exemption from compliance with that provision by the FMA under subpart 2
554: Regulations or exemptions may require compliance with generally accepted accounting practice, standards,
frameworks, or FMA methodologies
1: Regulations, notices issued under subpart 4
a: generally accepted accounting practice, either generally or in specified circumstances:
b: a financial reporting standard:
baaa: the climate-related disclosure framework, either generally or in specified circumstances:
ba: a climate standard:
c: an auditing and assurance standard:
d: a notice issued under subpart 4
2: Regulations, a notice issued under subpart 4 the climate-related disclosure framework, a climate standard, subpart 4
a: in whole or in part; and
b: with modifications, additions, or variations specified in the regulations, notice, or exemption.
3: In this section,— auditing and assurance standard section 5(1) Financial Reporting Act 2013 climate standard section 5(1) financial reporting standard section 5(1) Financial Reporting Act 2013 Section 554 heading amended 27 October 2022 section 18(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 554(1)﻿(baaa) inserted 27 October 2022 section 18(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 554(1)﻿(ba) inserted 27 October 2022 section 18(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 554(2) amended 27 October 2022 section 18(3) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 554(3) replaced 1 April 2014 section 56 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 554(3) climate standard inserted 27 October 2022 section 18(4) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
555: Different matters may be prescribed in respect of different circumstances
Different matters may be prescribed, prohibited, restricted, specified, or required under the regulations in respect of different kinds or classes of financial products, services, persons, or other circumstances.
2: Exemptions
556: FMA may grant exemptions
1: The FMA may, on the terms and conditions (if any) that it thinks fit, exempt any person or class of persons or any transaction or class of transactions from compliance with any provision or provisions of—
a: Parts 2 to 7A , subpart 8
b: any regulations.
2: To avoid doubt, an exemption may extend to exempt from compliance with any provision that is implied into a deed or an agreement by or under any other provision referred to in subsection (1).
3: Nothing in subpart 6 7
3A: The FMA may, on the terms and conditions (if any) that it thinks fit, exempt any trust or class of trusts (or any person or class of persons in respect of a trust or class of trusts) from any provision or provisions of the Trusts Act 2019
a: the trust or that class of trusts is constituted (or is to be constituted) under a trust deed or trust deeds that would be required to be lodged under section 103
b: both of the following apply:
i: a managed investment scheme is constituted (or is to be constituted) as 1 or more trusts or as including 1 or more trusts (or both):
ii: the scheme would be required to be registered under subpart 2
4: Subpart 5 Section 556(1)﻿(a) amended 27 October 2022 section 19 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 556(1)﻿(a) amended 9 August 2017 section 94 Regulatory Systems (Commercial Matters) Amendment Act 2017 Section 556(3A) inserted 30 January 2021 section 173 Trusts Act 2019
557: Restriction on FMA's exemption power
1: The FMA must not grant an exemption under this subpart unless it is satisfied that—
a: granting the exemption is necessary or desirable in order to promote either or both of the main purposes of this Act as specified in section 3 section 4
b: the extent of the exemption is not broader than is reasonably necessary to address the matters that gave rise to the exemption.
2: In the case of section 556(3A) Trusts Act 2019 Section 557(2) inserted 30 January 2021 section 174 Trusts Act 2019
558: Exemption in force for not more than 5 years
An exemption granted under this subpart may continue in force for not more than 5 years (and at the close of the date that is 5 years after the exemption first comes into force, the exemption must be treated as having been revoked unless it is sooner revoked or expires).
559: Breach of exemption conditions
The breach of a term or condition of an exemption granted under this subpart is a breach of the provision to which the exemption relates (unless the terms of the exemption otherwise provide). 1988 No 234 s 49E
560: Exemptions in respect of specified overseas jurisdictions
1: Exemptions granted under this subpart may extend to all, or classes of, persons, transactions, or other matters in relation to specified overseas jurisdictions.
2: Subsection (1) does not limit this subpart. 1988 No 234 s 49F
561: Effect of exemptions on regulated offers
1: If the FMA grants an exemption under this subpart from any provision of subpart 1 2 Schedule 1
2: An offer of financial products that would, but for this subsection, be a regulated offer is not a regulated offer if the terms of an exemption granted under this subpart state that the offer is not a regulated offer.
3: A statement under subsection (2) may be in respect of an offer or a class of offers.
561A: Financial reporting and climate-related disclosure exemptions
1: An exemption granted under this subpart in relation to any provision of Part 7
1A: An exemption granted under this subpart in relation to any provision of Part 7A
2: In deciding whether to grant, amend, or revoke an exemption under this subpart in relation to any provision of Part 7 or 7A
a: a registered bank:
b: a licensed insurer:
c: an NBDT. Section 561A inserted 1 April 2014 section 57 Financial Reporting (Amendments to Other Enactments) Act 2013 Section 561A heading replaced 27 October 2022 section 20(1) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 561A(1A) inserted 27 October 2022 section 20(2) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 Section 561A(2) amended 27 October 2022 section 20(3) Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
3: FMA's designation power
562: FMA's designation power
1: The FMA may—
a: declare that a security that would not otherwise be a financial product is a financial product of a particular kind:
b: declare that a financial product is, or is to become, a financial product of a particular kind (whether or not it was previously a financial product of a different kind): Example
A share is normally an equity security. However, a particular type of share may have terms that mean that, in substance, the share is similar to a debt security. The FMA may declare that a share of that kind is a debt security.
c: declare that a security that would otherwise be a financial product of a particular kind is not a financial product:
d: declare that an offer of financial products that would not otherwise require disclosure under Part 3 Part 1 Part 3 Example
A small offer is generally excluded from requiring disclosure ( see clause 12 of Schedule 1 However, an offer of a particular kind may involve significant risks for investors that may otherwise be undisclosed to investors. The FMA may declare that disclosure under Part 3
e: declare that an offer of financial products for sale that would not otherwise require disclosure under Part 3 Part 3 see section 563(1)﻿(c) Example
Offers of financial products for sale generally require disclosure only in limited circumstances ( see However, an issuer could structure an offer with a view to circumventing, evading, or defeating the disclosure provisions of this Act. The FMA may declare that disclosure of the offer under Part 3 is required despite the fact that the provisions in Part 2 of Schedule 1 do not apply.
f: declare, in relation to a managed investment product or if a declaration is made under paragraph (a) or (b) declaring that a security or financial product is a managed investment product, that a scheme is, or is to become, a managed investment scheme in relation to that managed investment product:
g: if a declaration is made under paragraph (a), (b), or (f), declare that a person or class
ga: declare that a person or class of person that would otherwise be a wholesale investor or a wholesale client is, or is to become, a retail investor or a retail client:
gb: declare that advice—
i: that would not otherwise be financial advice is financial advice; or
ii: that would otherwise be financial advice is not financial advice; or
iii: that would not otherwise be regulated financial advice is regulated financial advice; or
iv: that would otherwise be regulated financial advice is not regulated financial advice:
gc: declare that a service—
i: that would not otherwise be a financial advice service is a financial advice service; or
ii: that would otherwise be a financial advice service is not a financial advice service:
h: declare a person, service, or conduct to be not exempt under any exemption that would otherwise apply under any of the following provisions (and accordingly the licensing requirement under this Act applies):
i: section 389(2)
ii: section 389(3)
i: declare a person, service, or conduct to be not exempt under any exemption or exclusion that would otherwise apply under section 238(1)﻿(a) to (h) subpart 5 6 section 285 287 309
2: A declaration may specify terms and conditions relating to—
a: the circumstances in which the declaration applies, including (without limitation) by reference to any person or class of persons or any transaction or class of transactions:
b: transitional matters.
3: Nothing in this section prevents the FMA from granting an exemption under subpart 2 Example
The FMA declares that a particular type of share (which would otherwise be an equity security) is a debt security. However, some of the regulatory requirements that relate to debt securities are inappropriate in respect of these shares. Accordingly, the FMA grants an exemption (on terms and conditions) from those requirements in order to customise the regulatory requirements that will apply.
4: The provisions of this Act apply subject to a declaration under this subpart.
5: Subpart 5 Section 562(1)﻿(g) amended 9 April 2019 section 51(1) Financial Services Legislation Amendment Act 2019 Section 562(1)﻿(ga) inserted 9 April 2019 section 51(2) Financial Services Legislation Amendment Act 2019 Section 562(1)﻿(gb) inserted 9 April 2019 section 51(2) Financial Services Legislation Amendment Act 2019 Section 562(1)﻿(gc) inserted 9 April 2019 section 51(2) Financial Services Legislation Amendment Act 2019 Section 562(1)﻿(h) replaced 9 April 2019 section 51(2) Financial Services Legislation Amendment Act 2019
563: Procedural requirements
1: The FMA must not make a declaration under this subpart unless—
a: it is satisfied that the declaration is necessary or desirable in order to promote either or both of the main purposes of this Act specified in section 3 section 4
b: in the case of section 562(1)﻿(a) to (d)
c: in the case of section 562(1)﻿(e)
ca: in the case of section 562(1)﻿(gb), (gc), or (h)﻿(i) section 431B
d: it has consulted the persons or representatives of the persons that the FMA considers will be substantially affected by the declaration.
2: A failure to comply with subsection (1)﻿(d) does not affect the validity of the declaration. Section 563(1)﻿(ca) inserted 9 April 2019 section 52 Financial Services Legislation Amendment Act 2019
564: Transitional matters
A declaration under this subpart—
a: does not apply to financial products issued or transferred before the commencement of the declaration; and
b: applies subject to any terms and conditions of the declaration relating to transitional matters.
565: FMA may make interim orders pending exercise of powers
1: The FMA may make an interim order that no offers, issues, sales, or other acquisitions or disposals of securities specified in the order may be made, or services specified in the order may be supplied, while the interim order is in force if—
a: the FMA is considering, at any time, whether it may exercise a power under this subpart in respect of those securities or services; and
b: the FMA considers that making an interim order is desirable in the public interest.
2: An order under subsection (1)—
a: must specify the offeror or offerors or service provider or providers to which the order applies; and
b: may require—
i: all, or any specified class or classes, of the associated persons of the offeror or offerors or service provider or providers to comply with the order (including associated persons that may be incorporated or formed after the date of the order); and
ii: an offeror or service provider 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.
4: The FMA—
a: may act under subsection (1) or section 566(1)﻿(b)
b: must, after acting under subsection (1) or section 566(1)﻿(b)
5: The FMA must, immediately after making the order, notify each of the following that the order has been made and the reasons for the order:
a: each offeror or service provider to which the order relates:
b: the Registrar, if the order relates to a regulated offer.
566: Period in which interim order is in force
1: An interim order under section 565
a: the date that is 15 working days after the day on which it is made; or
b: a later date specified by the FMA by notice to the offeror or service provider to which the order relates.
2: For the purposes of subsection (1)﻿(b),—
a: the FMA may specify a later date if the FMA is of the opinion that it is not reasonably practicable for it to complete its consideration as referred to in section 565(1)﻿(a)
b: the later date must be a date that is no more than 30 working days after the day on which the interim order is made.
4: Frameworks or methodologies
567: Purpose
1: The purpose of this subpart is to provide for the FMA to issue frameworks or methodologies relating to detailed or technical matters (rather than matters of general principle).
2: A notice issued under this subpart applies only to the extent provided for in this Act or the regulations ( see section 554
568: FMA may specify frameworks or methodologies
1: The FMA may issue a notice that specifies frameworks or methodologies relating to how matters are required or permitted to be determined, calculated, valued, presented, or prepared for the purposes of—
a: information that is to be made available under subpart 4
b: the governing documents for debt securities and registered schemes, statements of investment policy and objectives, and determining the materiality of limit breaks or pricing errors under Part 4
c: the eligibility criteria for the issue of market services licences:
d: the conditions that may be imposed on market services licences:
e: any other matter that, by this Act or any other enactment, is required or permitted to be done in accordance with those frameworks or methodologies or the notices issued under this subpart.
2: The frameworks or methodologies may (without limitation)—
a: include requirements relating to how income, values, assets, revenue, liabilities, financial products, transactions, amounts payable, or other matters are to be determined, calculated, valued, presented, or prepared:
b: provide for income, values, assets, revenue, liabilities, financial products, transactions, amounts payable, or other matters to be included or disregarded (in whole or in part) for the purposes of paragraph (a).
3: A notice issued by the FMA—
a: may specify different matters and requirements in respect of different kinds or classes of financial products, services, persons, or other circumstances:
b: must not specify matters and requirements that are inconsistent with this Act or any regulations.
4: Subpart 5 1978 No 103 s 54D
569: Consultation
1: The FMA must not issue a notice under this subpart unless the FMA has consulted the persons or representatives of the persons that the FMA considers will be substantially affected by the issue of the notice.
2: A failure to comply with subsection (1) does not affect the validity of the notice. 1978 No 103 s 54E
5: General provisions relating to certain FMA instruments
570: Application of subpart
This subpart applies to the following instruments:
a: notices issued under section 69
ab: notices issued under section 461L
b: exemptions granted under subpart 2
c: declarations made under subpart 3
d: notices issued under subpart 4 Section 570(ab) inserted 1 April 2014 section 58 Financial Reporting (Amendments to Other Enactments) Act 2013
571: Status and publication of instruments
1: An instrument to which this subpart applies is secondary legislation ( see Part 3
2:
3:
4:
5: The FMA's reasons for making an instrument (including why the instrument is appropriate) must be published together with the instrument.
6: The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under section 69, or under section 461L in respect of a class of FMC reporting entities. Legislation Act 2019 requirements for secondary legislation made under section 69 section 461L Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under section 461L in respect of a specified FMC reporting entity, or under subpart 4. Legislation Act 2019 requirements for secondary legislation made under section 461L subpart 4 Publication The maker must: LA19 ss 73 74(1)﻿(a) cl 14 •	notify it in the Gazette •	publish it on a website maintained by, or on behalf of, the maker •	make it available in printed form for purchase on request by members of the public Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under subpart 2 that is of general application and applies to a class of persons or transactions, but not including secondary legislation granted in relation to a particular person or transaction or persons associated with, or transactions involving, a particular person. Legislation Act 2019 requirements for secondary legislation made under subpart 2 Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives, unless the exemption in Schedule 3 LA19 s 114 Sch 3 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for all other secondary legislation made under subpart 2. Legislation Act 2019 requirements for all other secondary legislation made under subpart 2 Publication The maker must: LA19 ss 73 74(1)﻿(a) cl 14 •	notify it in the Gazette •	publish it on a website maintained by, or on behalf of, the maker •	make it available in printed form for purchase on request by members of the public However, that requirement does not apply if the presentation exemption in Schedule 3 The Ministry of Foreign Affairs and Trade considers that the secondary legislation may have international transparency obligations under the CPTPP s 75 LA19 ss 74(2) 75 Presentation The Minister must present it to the House of Representatives, unless the exemption in Schedule 3 LA19 s 114 Sch 3 Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under subpart 3 that is of general application and applies to a class of persons or transactions, but not including secondary legislation granted in relation to a particular person or transaction or persons associated with, or transactions involving, a particular person. Legislation Act 2019 requirements for secondary legislation made under subpart 3 Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for all other secondary legislation made under subpart 3. Legislation Act 2019 requirements for all other secondary legislation made under subpart 3 Publication The maker must: LA19 ss 73 74(1)﻿(a) cl 14 •	notify it in the Gazette •	publish it on a website maintained by, or on behalf of, the maker •	make it available in printed form for purchase on request by members of the public The Ministry of Foreign Affairs and Trade considers that the secondary legislation may have international transparency obligations under the CPTPP s 75 LA19 ss 74(2) 75 Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 571(1) replaced 28 October 2021 section 3 Secondary Legislation Act 2021 Section 571(2) repealed 28 October 2021 section 3 Secondary Legislation Act 2021 Section 571(3) repealed 28 October 2021 section 3 Secondary Legislation Act 2021 Section 571(4) repealed 28 October 2021 section 3 Secondary Legislation Act 2021 Section 571(6) repealed 28 October 2021 section 3 Secondary Legislation Act 2021
571A: Deferral of obligations to publish, notify, and make available non-class exemptions
Section 571A repealed 28 October 2021 section 3 Secondary Legislation Act 2021
572: Variation and revocation
The FMA may vary or revoke an instrument to which this subpart applies in the same way as it may make the instrument (with the provisions relating to the making of the instrument applying with all necessary modifications).
6: Recognition and application regimes
573: Purpose of this subpart
The purpose of this subpart is to enable recognition and application regimes to be implemented that—
a: provide for exemptions from this Act and the regulations so that offerors may offer financial products in New Zealand in accordance with the securities laws of designated countries:
b: extend the territorial scope of this Act and the regulations so that offerors may offer financial products in designated countries in accordance with New Zealand laws, and investors in those countries may rely on and enforce those laws. 1978 No 103 s 71
574: Definition of country in this subpart
In this subpart and subpart 7 country 1978 No 103 s 72 Exemption from Act and regulations for New Zealand offers under recognition regime
575: Exemption from Act and regulations for New Zealand offers under recognition regime
1: A provision of this Act or the regulations does not apply to a financial product offered to a person in New Zealand if—
a: a recognition regime set out in regulations made under section 576
b: the recognition regime provides an exemption from that provision for the product; and
c: the offeror of the product has opted into the recognition regime; and
d: any other preconditions of the recognition regime are met.
2: For the purposes of subsection (1), an offeror opts into a recognition regime in respect of a product by notifying the Registrar—
a: that an offer of the financial product is to be made under the recognition regime; and
b: of the full name and address in New Zealand of 1 or more persons resident or incorporated in New Zealand who are authorised to accept service in New Zealand at that address of documents on behalf of the offeror.
3: The Registrar must send a copy of the notification to the FMA. 1978 No 103 s 73
576: Power to exempt from Act and regulations under recognition regime
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations, for the purpose of implementing a recognition regime for a designated country, that provide for—
a: exemptions from provisions of this Act and the regulations; and
b: the other matters set out in section 577
2: The Minister may recommend making an Order in Council under this section only—
a: if he or she is satisfied that it is in the public interest after having regard to—
i: the securities laws of the designated country; and
ii: the interests of New Zealand investors; and
b: after consulting with the FMA.
3: Regulations under this section are secondary legislation ( see Part 3 1978 No 103 s 74 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 576(3) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
577: Matters that must be stated in regulations implementing recognition regime
1: The regulations made under section 576
a: the country to which the recognition regime applies; and
b: the classes of financial products to which the recognition regime applies (whether by reference to type of issuer, offeror, offer, or any other matter); and
c: the exemptions from provisions of this Act and the regulations for those products; and
d: the preconditions that must be met for the recognition regime to apply, for example (without limitation), requiring specified information relating to the offer or financial products to be provided to the FMA or Registrar; and
e: the terms and conditions that must be complied with under the recognition regime, for example (without limitation), requiring—
i: the offer of the financial products to be made in accordance with specified provisions of the designated country's laws:
ii: warnings to be given to investors so as to inform them that the offer of the financial products is regulated under the designated country's laws and that New Zealand laws relating to the offer of financial products do not apply to the offer:
iii: specified information relating to the offer or financial products to be provided to the FMA or Registrar.
2: Regulations may provide different exemptions, preconditions, and terms and conditions for different classes of financial products, offers, persons, or circumstances. 1978 No 103 s 75
578: FMA may declare failure to meet preconditions of recognition regime to be non-material
1: If the FMA is satisfied, in relation to an offer, that a failure to meet a precondition referred to in section 577(1)﻿(d)
2: If the FMA makes a declaration, the precondition must be treated as having been met at the time it was required to be met by the regulations made under section 576 Corporations Act 2001 s 1200B(3), (4) (Aust); SR 2008/153 r 8(3), (4)
579: Offence for breach of regulations implementing recognition regime
If there is a contravention, in respect of a financial product, of a term or condition that must be complied with under a recognition regime, each of the following persons commits an offence and is liable on conviction to a fine not exceeding $50,000:
a: the offeror of the financial product; and
b: every person who is a director of the offeror at the time of the contravention; and
c: every person who has authorised himself or herself to be named, and is named, in any advertisement relating to the financial product as a director of the offeror or as having agreed to become a director either immediately or after an interval of time. 1978 No 103 s 76 Extension of Act and regulations to overseas offers under application regime
580: Extension of Act and regulations to overseas offers under application regime
A provision of this Act or the regulations applies to a financial product that is offered to a person outside New Zealand if—
a: an application regime set out in regulations made under section 581
b: the application regime applies that provision to the financial product; and
c: any other preconditions of the application regime are met. 1978 No 103 s 77
581: Power to extend Act and regulations under application regime
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations, for the purpose of implementing an application regime for a designated country, that provide for—
a: the application of provisions of this Act and the regulations to financial products offered to persons in that country; and
b: the other matters set out in section 582
2: The Minister may recommend making an Order in Council under this section only—
a: if he or she is satisfied that it is appropriate for New Zealand laws to apply to financial products offered to persons in the designated country as set out in the proposed application regime; and
b: after consulting with the FMA.
3: Regulations under this section are secondary legislation ( see Part 3 1978 No 103 s 78 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 581(3) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
582: Matters that must be stated in regulations implementing application regime
1: The regulations made under section 581
a: the country to which the application regime applies; and
b: the classes of financial products to which the application regime applies (whether by reference to type of issuer, offeror, offer, or any other matter); and
c: the provisions of this Act and the regulations that apply to those financial products; and
d: whether or not, or the extent to which, exemptions from those provisions granted by the FMA under this Act may also apply to those financial products; and
e: the preconditions (if any) that must be met for the application regime to apply; and
f: the terms and conditions (if any) that must be complied with under the application regime.
2: The regulations may provide different applications of provisions, preconditions, and terms and conditions for different classes of financial products, offers, persons, or circumstances. 1978 No 103 s 79
7: Enforcement of overseas pecuniary penalties under application regime
583: Purpose of this subpart
The purpose of this subpart is to enable application regimes to be implemented that provide for enforcement in New Zealand of fines and pecuniary penalties imposed for breaches of securities laws of designated countries. 1978 No 103 s 71
584: Enforcement of overseas pecuniary penalties under application regime
This subpart applies to a judgment given by a court under a provision of the law of another country if—
a: an application regime set out in regulations made under section 585
b: the judgment requires payment of a penalty; and
c: any other preconditions of the application regime are met. 1978 No 103 s 80
585: Power to enforce overseas penalties under application regime
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, for the purpose of implementing an application regime for a designated country, make regulations that provide for—
a: the application of this subpart to provisions of the securities laws of that country under or in respect of which a penalty may be imposed; and
b: the preconditions of the application regime (if any).
2: Regulations under this section are secondary legislation ( see Part 3 1978 No 103 s 81 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 585(2) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
586: Interpretation
In this subpart,— court of rendition enforcement judgment penalty place of rendition registered judgment section 587 1978 No 103 s 82
587: Registration of judgment
The High Court must register a judgment to which this subpart applies under section 584 section 585 1978 No 103 s 83
588: Effect of registration
1: A registered judgment has the same force and effect, and may give rise to the same proceedings by way of enforcement, as if the judgment had been given by the High Court.
2: Subsection (1) is subject to sections 589 590 1978 No 103 s 84
589: Enforceability of registered judgment
A registered judgment is capable of being enforced in or by the High Court only if, and to the extent that, at the time when the proceeding for enforcement is or is to be taken, the judgment is capable of being enforced in or by—
a: the court of rendition; or
b: a court in the place of rendition. 1978 No 103 s 85
590: Stay may be granted
1: The High Court may, on application by a person against whom the registered judgment has been given, order that proceedings in the High Court to enforce the judgment—
a: not be commenced until a specified time; or
b: be stayed for a specified period.
2: The order—
a: must be made subject to conditions that,—
i: within the period specified in the order, the person make and prosecute an appropriate application for relief in respect of the registered judgment; and
ii: the application be prosecuted in an expeditious manner; and
b: may be made subject to other conditions, including as to the giving of security, that the High Court thinks fit.
3: For the purposes of subsection (2)﻿(a)﻿(i), an appropriate application for relief 1978 No 103 s 86
591: Costs
1: The following are recoverable in proceedings by way of enforcement of a registered judgment:
a: the reasonable costs and expenses of, and incidental to, obtaining and lodging the copy of the judgment; and
b: the costs and expenses reasonably incurred in attempting to execute the judgment in the court of rendition.
2: The entitlement of a person to, and the liability of a person for, the costs or expenses of, and incidental to, those proceedings are the same as they are in proceedings by way of enforcement of—
a: a similar judgment given by the High Court; or
b: if there is no such similar judgment, the most closely analogous judgment given by the High Court. 1978 No 103 s 87
592: Interest
Interest on the amount of a registered judgment—
a: is payable at the same rate or rates and in respect of the same period or periods as would be applicable in the court of rendition; and
b: is recoverable to the extent that the judgment creditor satisfies the High Court as to the amount of the interest. 1978 No 103 s 88
593: Rules of private international law not to apply
If a judgment is registered in the High Court under this subpart, the courts of New Zealand must not, merely because of the operation of a rule of private international law, refuse to permit proceedings by way of enforcement of the registered judgment to be taken or continued. 1978 No 103 s 89
594: Other regulations for registration of judgments under application regime
1: The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations providing for the registration of judgments under this subpart, including (without limitation) providing for—
a: the verification requirements for those judgments:
b: the registration and service of facsimiles of those judgments:
c: the service of notice of registration of those judgments:
d: other requirements for the way in which those judgments may be registered (for example, the currency of registrations and the registration of partly satisfied judgments).
2: Regulations under this section are secondary legislation ( see Part 3 1978 No 103 s 90 The following table is small in size and has 3 columns that are grouped under the heading Legislation Act 2019 requirements for secondary legislation made under this section. Legislation Act 2019 requirements for secondary legislation made under this section Publication PCO must publish it on the legislation website and notify it in the Gazette LA19 s 69(1)﻿(c) Presentation The Minister must present it to the House of Representatives LA19 s 114 cl 32(1)﻿(a) Disallowance It may be disallowed by the House of Representatives LA19 ss 115 116 This note is not part of the Act. Section 594(2) inserted 28 October 2021 section 3 Secondary Legislation Act 2021
8: Miscellaneous Subpart 8 heading amended 9 April 2019 section 54 Financial Services Legislation Amendment Act 2019
595: Registers
The provisions in Schedule 2
596: Schedule 3 schemes
The FMA may approve, or withdraw an approval of, a scheme as a Schedule 3 scheme under Schedule 3
597: Transitional provisions
Section 597 repealed 9 April 2019 section 55 Financial Services Legislation Amendment Act 2019