Reserve Bank of New Zealand Amendment Act 2008

1: Title
This Act is the Reserve Bank of New Zealand Amendment Act 2008.
2: Commencement
1: Sections 157M to 157O section 17
2: Section 157I section 17
3: Section 157L section 17
4: The rest of this Act comes into force on the day after the date on which it receives the Royal assent. Section 2(3) brought into force 1 December 2010 Reserve Bank of New Zealand Amendment Act 2008 Commencement Order 2010
3: Principal Act amended
This Act amends the Reserve Bank of New Zealand Act 1989 2008-09-10 Reserve Bank of New Zealand Act 1989 2009-09-01 Reserve Bank of New Zealand Act 1989 2010-03-01 Reserve Bank of New Zealand Act 1989 OIC SR 2010/168 2010-12-01 Reserve Bank of New Zealand Act 1989
1: Amendments outside Part 6 of principal Act
4: Long Title repealed
The Long Title
5: New section 1A inserted
The following section is inserted after section 1
1A: Purpose
1: The purpose of this Act is to provide for the Reserve Bank of New Zealand, as the central bank, to be responsible for—
a: formulating and implementing monetary policy designed to promote stability in the general level of prices, while recognising the Crown’s right to determine economic policy; and
b: promoting the maintenance of a sound and efficient financial system; and
c: carrying out other functions, and exercising powers, specified in this Act.
2: This section does not limit the functions or powers given to the Bank by any other enactment.
6: Interpretation
The definition of operating expenses section 2(1) ; or
iii: any expenses agreed by the Minister and the Bank not to be operating expenses .
7: New section 16 substituted
Section 16
16: Dealing in foreign exchange by Bank
For the purposes of performing its functions and fulfilling its obligations under this Act or any other enactment, the Bank may deal in foreign exchange, on such terms and conditions as it thinks fit,—
a: with any person, including the Crown; and
b: on behalf of any person, including the Crown.
8: Foreign reserves
Section 24
2: The Bank must hold and maintain foreign reserves at that level or within those levels.
9: New section 33 substituted
Section 33
33: Policy advice
1: On request by the Minister, the Bank must provide advice to the Minister on any matter specified in the request that is connected with the functions of the Bank.
2: A request may not be made under subsection (1)
3: The Bank may also provide advice to the Minister, at any time, on any matters or subjects within the responsibility of the Bank.
10: Bank may require financial institution to supply information
Section 36
6: Sections 156G to 156I and 156J(2)﻿(c) and (d) (which relate to the publication or disclosure of information or data supplied to the Bank) apply with all necessary modifications in respect of information and data supplied to the Bank under this section as if for each reference to section 156C in sections 156G(1) and (3) and 156J(2)﻿(c) there were substituted a reference to section 36.
11: Disqualification of Governor and Deputy Governor
Section 46(1)﻿(b) or of a deposit taker as defined in section 157C a registered bank
12: Removal of Governor from office
Section 49(2)﻿(h)﻿(iii) or a deposit taker as defined in section 157C a registered bank
13: Removal of Deputy Governor from office by Order in Council
Section 50(2)﻿(d)﻿(iii) or a deposit taker as defined in section 157C a registered bank
14: Duties of Board
1: Section 53(1)
a: keep under constant review the performance of the Bank in carrying out—
i: its primary function; and
ii: its functions relating to promoting the maintenance of a sound and efficient financial system; and
iii: its other functions under this Act or any other enactment: .
2: Section 53(3)﻿(f)﻿(iii) or a deposit taker as defined in section 157C a registered bank
15: New section 68B inserted
The following section is inserted after section 68A
68B: Bank to have regard to directions about government policy objectives
1: The Minister may direct the Bank to have regard to a government policy that relates to the Bank’s functions under this Part 5D
2: The Bank must have regard to every direction given by the Minister under this section.
3: The Minister must consult with the Bank before giving a direction.
4: A direction must—
a: be set out in a written statement signed by the Minister; and
b: as soon as practicable after it is given, be—
i: presented to the House of Representatives by the Minister; and
ii: published in the Gazette
5: The Minister may not give a direction that requires the performance or non-performance of a particular act by the Bank, or any employee or office holder of the Bank, or the bringing about of a particular result, in respect of a particular person.
6: A direction may be amended, revoked, or replaced in the same way as it may be given. 2004 No 115 ss 104(1), 113(1)﻿(b), 114, 115(2) .
16: Further matters that may be prescribed
1: Section 81AA(2)
g: incorporate by reference a framework, standard, specification, or requirement that is published by, or on behalf of, any body or person in any country—
i: in whole or in part; and
ii: with any modifications, additions, or variations specified in the Order in Council.
2: Section 81AA
3: Schedule 3
17: New Part 5D inserted
The following Part is inserted after section 156ZE
5D: Deposit takers
Preliminary provisions
157A: Exercise of powers under this Part
The powers conferred on the Governor-General, the Minister, and the Bank by this Part
a: promoting the maintenance of a sound and efficient financial system; or
b: avoiding significant damage to the financial system that could result from the failure of a deposit taker.
157B: Interpretation
1: In this Part approved rating agency section 157J borrowing group capital ratio collective investment scheme
a: an arrangement or scheme to which a participatory security (within the meaning of section 2(1) of the Securities Act 1978) relates; and
b: a superannuation scheme (within the meaning of section 2A(1) of the Superannuation Schemes Act 1989); and
c: a unit trust (within the meaning of section 2(1) of the Unit Trusts Act 1960) debt security governing body
a: in relation to a body corporate, the board of directors (or other persons or body exercising powers of management, however described) of the body corporate:
b: in relation to a trust, the trustees:
c: in relation to a unit trust, the manager and trustee:
d: in relation to a partnership, unincorporated joint venture, or other unincorporated body of persons, either—
i: the board of directors (or other persons or body exercising powers of management, however described) of the partnership, unincorporated joint venture, or other unincorporated body of persons; or
ii: if there is no board or other persons or body as described in subparagraph (i) governing document guaranteeing subsidiary
a: is unconditionally liable (whether or not jointly or severally with the deposit taker or any other person) to repay some or all debt securities issued by the deposit taker; or
b: is liable to repay some or all debt securities issued by the deposit taker subject only to the condition that the deposit taker or any other person has failed to do so related party
a: the directors of the deposit taker; and
b: the senior office holders of the deposit taker; and
c: the relatives of persons referred to in paragraphs (a) and (b)
d: subsidiaries; and
e: in the case of a deposit taker that is a company, any person who—
i: owns, or in any way has the power to control (whether directly or indirectly), or has the right to acquire, 10% or more of the ordinary shares of the company; or
ii: owns, or in any way has the power to control (whether directly or indirectly), or has the right to acquire, 10% or more of the voting rights of the company; or
iii: has, by any other means, 10% or more of the control of the company; and
f: in the case of a deposit taker that is an entity other than a company, any person who—
i: is in a position to control (whether directly or indirectly) 10% or more of the voting rights in relation to that entity; or
ii: has, by any other means, 10% or more of the control of that entity; and
g: any person who has control (whether directly or indirectly) or significant influence over 25% or more of the composition of the governing body of the deposit taker; and
h: any person or class of persons declared by regulations to be a related party for the purposes of this Part relative
a: that person’s spouse, civil union partner, or de facto partner; and
b: any parent (including step-parent), brother, sister, or child (including stepchild) of that person; and
c: any parent (including step-parent), brother, sister, or child (including stepchild) of that person’s spouse, civil union partner, or de facto partner senior office holder
a: in relation to a deposit taker, means a person occupying a position that allows the person to exercise significant influence over the management or administration of the deposit holder (for example, a chief executive or a chief financial officer); and
b: includes any class or classes of persons declared by regulations to be senior office holders for the purposes of this Part
c: does not include any class or classes of persons declared by regulations not to be senior office holders for the purposes of this Part subsidiary trust deed trustee
2: The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for either or both of the following purposes:
a: declaring a person or class of persons to be a related party for the purposes of this Part
b: declaring a class of persons to be, or not to be, senior office holders for the purposes of this Part
157C: Deposit taker defined
1: For the purposes of this Part deposit taker
a: means a person who—
i: offers debt securities to the public in New Zealand; and
ii: carries on the business of borrowing and lending money, or providing financial services, or both; and
b: includes—
i: a building society as defined in section 2(1) of the Building Societies Act 1965, unless the building society is a registered bank; and
ii: a credit union as defined in section 2 of the Friendly Societies and Credit Unions Act 1982; and
iii: a person or class of persons that is declared by regulations to be a deposit taker for the purposes of this Part
c: does not include—
i: an issuer of a collective investment scheme:
ii: a registered bank:
iii: a local authority:
iv: the Crown (as defined in section 2(1) of the Public Finance Act 1989):
v: a person or class of persons that is declared by regulations not to be a deposit taker for the purposes of this Part
2: For the purposes of this Part
3: If a person has, before this section comes into force, offered debt securities to the public in New Zealand and any of those securities remain unpaid, the person must be treated as satisfying the requirement in subsection (1)﻿(a)﻿(i)
4: A person remains a deposit taker until all debt securities offered to the public in New Zealand by the person are repaid.
5: The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for the purpose of declaring a person or class of persons to be, or not to be, a deposit taker for the purposes of this Part
6: In considering whether to advise and recommend the making of regulations under subsection (5)
a: the purposes of this Part
b: the nature of the business activities carried on by the person or class of persons and the extent to which those activities—
i: are similar in substance to the activities of a deposit taker (as defined in subsection (1)
ii: involve activities as a deposit taker; and
c: the public interest; and
d: any other matters the Minister or the Bank considers relevant.
157D: Application of Part
This Part this Part
157E: Bank to consult before recommending making of regulations under this Part
1: The Bank must consult with the following before making a recommendation for the making of any regulations under this Part
a: the Securities Commission; and
b: if reasonably practicable, other persons, or the representatives of those persons, who the Bank considers will be substantially affected by any regulations made in accordance with the recommendation.
2: Failure to comply with subsection (1) this Part
157F: Principles to be taken into account under this Part
1: The Bank must take into account the principles in subsection (2) this Part
a: granting exemptions:
b: imposing terms and conditions in relation to exemptions:
c: making recommendations to the Minister for the making of regulations under this Part
2: The principles are the following:
a: the desirability of consistency in the treatment of similar institutions, regardless of matters such as their corporate form:
b: the importance of recognising—
i: that it is not the purpose of this Part
ii: that depositors are responsible for assessing risk in relation to potential investments and for their own investment choices:
c: the desirability of providing to depositors adequate information to enable them to assess risk in relation to potential investments and to distinguish between high-risk and low-risk deposit takers:
d: the desirability of sound governance of deposit takers:
e: the desirability of effective risk management by deposit takers:
f: the need to avoid unnecessary compliance costs:
g: the need to maintain competition within the deposit taking sector.
157G: Exemptions from Part
1: The Bank may, by notice in the Gazette
a: this Part
b: any regulations made under this Part
2: The Bank must not grant an exemption under this section unless it is satisfied that—
a: the exemption will be consistent with the maintenance of a sound and efficient financial system; and
b: compliance with the relevant provision or provisions would, in the circumstances, require the deposit taker, class of deposit takers, or trustee to comply with requirements that are unduly onerous or burdensome; and
c: the extent of the exemption is not broader than what is reasonably necessary to address the matters that gave rise to the exemption.
3: An exemption may be granted on any terms and conditions that the Bank thinks fit, including, in relation to a deposit taker,—
a: a requirement that the deposit taker have a minimum capital ratio:
b: a requirement that the deposit taker have a specified minimum level of capital:
c: a requirement that the deposit taker comply with specified liquidity requirements:
d: a requirement that the deposit taker disclose that it does not have a rating of its creditworthiness under section 157I
e: a prohibition or restriction on disclosure by the deposit taker of any rating of creditworthiness or financial condition that is not from an approved rating agency:
f: a maximum limit on exposures to related parties:
g: a requirement that the deposit taker comply with specified requirements in relation to the governance of the deposit taker:
h: a requirement that the deposit taker comply with specified requirements in relation to systems, policies, and standards to be adopted and complied with by the deposit taker for the purpose of managing credit risk, liquidity risk, market risk, and operational risk:
i: any other prudential requirements the Bank considers necessary or desirable to achieve the purposes of this Part
4: The Bank may amend or revoke an exemption in the same way as an exemption may be granted under this section.
5: The Bank’s reasons for granting an exemption (including why an exemption is appropriate) must be notified in the Gazette
6: However, the Bank may defer notifying or not notify the reasons for granting an exemption if the Bank is satisfied on reasonable grounds that it is proper to do so on the ground of commercial confidentiality.
7: An exemption under this section is a regulation for the purposes of the Acts and Regulations Publication Act 1989 and the Regulations (Disallowance) Act 1989.
157H: Effect of exemption
A person does not breach a requirement of this Part
a: an exemption from the requirement applies to that person; and
b: the person complies with the terms and conditions of the exemption. Credit ratings
157I: Deposit taker must have current credit rating
A deposit taker must have a current rating of its creditworthiness, or, if required by regulations made under section 157K
a: complies with the requirements prescribed by regulations made under section 157K
b: is given by an approved rating agency.
157J: Bank may approve rating agencies
1: The Bank may approve a person as a rating agency for the purposes of this Part
2: In deciding whether to approve a person as a rating agency, the Bank must have regard to the following:
a: the independence of the rating agency:
b: the adequacy of resources available to the rating agency:
c: the credibility and objectivity of the rating agency's methodology:
d: the consistency and comparability of the rating agency's ratings when assessed against ratings industry practice:
e: the adequacy of the rating agency's disclosure of information, including information about its processes, experience, and ownership:
f: relevant international standards, codes, and recommended practices relating to the ratings industry.
3: The Bank may, at any time, review the approval of a person as a rating agency, and in conducting the review the Bank must have regard to the matters in subsection (2)
4: If, after conducting the review, the Bank considers that the person should no longer be an approved rating agency, it may revoke the approval.
5: The Bank must publish and keep up to date a list of approved rating agencies on an Internet site maintained by, or on behalf of, the Bank that is publicly accessible at all reasonable times.
157K: Regulations relating to credit ratings
The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for either or both of the following purposes:
a: providing for the following matters in relation to ratings of creditworthiness required to be held by deposit takers:
i: the type of rating (for example, whether it is a short-term or long-term rating):
ii: what the rating relates to (for example, whether it indicates the creditworthiness of a deposit taker with respect to a specific financial obligation or applies to the deposit taker’s overall creditworthiness):
b: requiring a deposit taker to have a rating of creditworthiness of the borrowing group of which the deposit taker is part. Governance requirements
157L: Governance requirements
1: If a deposit taker is a company or a building society,—
a: the governing body of the deposit taker must include at least 2 independent directors; and
b: the chairperson of the governing body of the deposit taker may not be an employee of either the deposit taker or a related party.
2: If a deposit taker is a subsidiary, the constitution of the deposit taker must not include any provision under which directors of the deposit taker may act otherwise than in the best interests of the deposit taker.
3: For the purposes of this section, independent director
a: is not an employee of either the deposit taker or a related party; and
b: is not a director of a related party; and
c: does not, directly or indirectly, have a qualifying interest in more than 10% of the voting securities of the deposit taker or a related party. Risk management
157M: Deposit taker must have and comply with risk management programme
1: Every deposit taker must have a risk management programme and take all practicable steps to comply with that programme.
2: The risk management programme must—
a: be in writing; and
b: set out the procedures that the deposit taker will use for the effective identification and management of the following risks:
i: credit risk:
ii: liquidity risk:
iii: market risk:
iv: operational risk; and
c: set out appropriate and auditable documentation and record keeping requirements; and
d: describe the steps that the deposit taker will take to ensure that the programme remains current, which must include procedures for—
i: regular review of the programme to systematically identify deficiencies in the effectiveness of the programme; and
ii: obtaining the approval of the trustee to amendments to the programme that are necessary to address such deficiencies; and
e: be appropriate to the operations of the deposit taker, having regard to the factors relevant to the risks referred to in paragraph (b)
3: The Bank may issue, in the manner that the Governor thinks fit, guidelines for the purpose of interpreting the risk categories referred to in subsection (2)﻿(b)
157N: Risk management programme must be provided to trustee and must be amended if required by trustee
1: The deposit taker must give a copy of its risk management programme to the trustee.
2: The trustee must, as soon as practicable after receiving the copy of the risk management programme, inform the deposit taker whether the trustee is satisfied that the risk management programme meets the requirements in section 157M(2)
3: If the trustee is not satisfied that the risk management programme meets the requirements in section 157M(2)
a: the trustee may require the deposit taker to amend the programme and to resubmit the programme to the trustee for approval within any reasonable time that the trustee may specify; and
b: the deposit taker must comply with those requirements.
157O: Trustee may require deposit taker to have risk management programme audited
1: The trustee may require the deposit taker to have the risk management programme audited in a specified manner, at the cost of the deposit taker, within any reasonable time that the trustee may specify.
2: The deposit taker must comply with a requirement of the trustee under subsection (1) Minimum capital requirement
157P: Regulations may impose requirement that trust deed sets out minimum capital that deposit taker is required to maintain
1: The Governor General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for the purpose of imposing a requirement that deposit takers and trustees ensure that the trust deed sets out the minimum capital that the deposit taker is required to maintain.
2: Regulations made under this section may—
a: require the trust deed to set out—
i: the amount of the minimum capital that the deposit taker is required to maintain; and
ii: the form of that capital (for example, the financial instruments that may be taken into account in calculating capital); and
b: provide that the amount of the minimum capital set out in the trust deed must be not less than an amount prescribed in the regulations; and
c: provide that the form of the capital set out in the trust deed must be a form prescribed by the regulations.
157Q: Deposit takers and trustees must ensure trust deed sets out minimum capital deposit taker is required to maintain
A deposit taker and the trustee must comply with any requirement imposed by regulations made under section 157P
157R: Deposit taker must maintain not less than minimum capital prescribed
A deposit taker must maintain minimum capital of not less than the amount prescribed by regulations for the purposes of section 157P Capital ratio requirement
157S: Regulations may impose requirement that trust deed includes capital ratio
1: The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for the purpose of imposing a requirement that deposit takers and trustees ensure that trust deeds include a capital ratio, calculated in accordance with a prescribed framework, that the deposit taker must maintain.
2: Regulations made under this section may do 1 or more of the following:
a: provide for the capital ratio to be calculated in respect of—
i: the deposit taker; or
ii: a borrowing group of which the deposit taker is part:
b: provide for the capital ratio to be set at a specified minimum level for a particular deposit taker or a class of deposit takers:
c: prescribe the framework in accordance with which the capital ratio must be calculated:
d: provide for variation (whether as to content or otherwise) of the framework to apply to particular deposit takers or classes of deposit takers:
e: incorporate by reference a framework published by, or on behalf of, any body or person in any country—
i: in whole or in part; and
ii: with modifications, additions, or variations specified in the regulations.
3: The provisions of Schedule 3
157T: Deposit takers and trustees must ensure capital ratio included in trust deed
A deposit taker and the trustee must comply with any requirement imposed by regulations made under section 157S
157U: Deposit taker must maintain capital ratio required to be included in trust deed
A deposit taker must maintain any capital ratio that is required to be included in the trust deed by regulations made under section 157S Restrictions on related party exposures
157V: Regulations may impose requirement that trust deed includes maximum limit on exposures to related parties
1: The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for the purpose of imposing a requirement that deposit takers and trustees ensure that trust deeds include a maximum limit on exposures to related parties.
2: Regulations made under this section may—
a: provide that the maximum limit on exposures to related parties is relative to—
i: the capital of the deposit taker; or
ii: the capital of the borrowing group of which the deposit taker is part:
b: provide that the maximum limit on exposures to related parties applies in respect of exposures of the deposit taker or exposures calculated across the borrowing group of which the deposit taker is part:
c: require every deposit taker and trustee to ensure that the trust deed includes a specified maximum limit on exposures to related parties:
d: require every deposit taker and trustee to ensure that the trust deed includes a maximum limit on exposures to related parties that is fixed by agreement between the deposit taker and the trustee ( see section 157ZD
3: If subsection (2)﻿(d)
157W: Regulations may incorporate by reference framework for calculation of maximum limit on exposures to related parties
1: Regulations made under section 157V
2: A framework incorporated by reference in the regulations—
a: may be incorporated in whole or in part; and
b: with modifications, additions, or variations specified in the regulations.
3: The provisions of Schedule 3 section 157V
157X: Deposit takers and trustees must ensure maximum limit on exposures to related parties is included in trust deed
A deposit taker and the trustee must comply with any requirement imposed by regulations made under section 157V
157Y: Deposit taker must not exceed maximum limit on related party exposures
A deposit taker must not exceed any maximum limit on exposures to related parties required by regulations made under section 157V Liquidity requirements
157Z: Regulations may impose requirement that liquidity requirements be included in trust deed
1: The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations for the purpose of imposing a requirement that deposit takers and trustees ensure that trust deeds include liquidity requirements.
2: Regulations made under this section may, in relation to the liquidity requirements to be included in the trust deed, prescribe 1 or more of the following:
a: assets that qualify as liquid assets for the purposes of the regulations:
b: minimum amounts of liquid assets relative to liabilities that must be maintained by deposit takers:
c: requirements concerning matching maturity of assets and liabilities:
d: requirements in respect of a deposit taker that require the liquidity of the borrowing group of which the deposit taker is part to be taken into account:
e: other measures to better ensure that a deposit taker maintains prudent cash flows and a level of liquid assets sufficient to enable it to withstand a plausible range of liquidity shocks (for example, events that result in it experiencing a significantly reduced inflow of liquid assets).
157ZA: Deposit takers and trustees must ensure liquidity requirements are included in trust deeds
A deposit taker and the trustee must comply with any requirement prescribed by regulations made under section 157Z
157ZB: Deposit takers must comply with liquidity requirements in trust deeds
A deposit taker must comply with the liquidity requirements required to be included in the trust deed by regulations made under section 157Z Other matters relating to trust deeds
157ZC: Amendment to trust deed must be treated as if authorised to be made
1: If this Part this Part
a: must be treated for all purposes as if it were authorised to be made and were made in accordance with the provisions of the trust deed before the amendment was made; and
b: applies despite any defect in the form or mode of execution of the amendment.
2: Subsection (1)
157ZD: Trustee may execute amendment to trust deed
1: This section applies if—
a: this Part this Part
b: it is necessary to amend the trust deed within a certain time in order to comply with that requirement; and
c: the trustee has made reasonable efforts, in good faith, to negotiate with the deposit taker for the purpose of agreeing to an amendment to the trust deed to ensure compliance with the requirement; and
d: the trustee has not, within a reasonable period before the expiry of the time allowed for amending the trust deed, been able to reach an agreement with the deposit taker about the amendment to be made to the trust deed.
2: If this section applies, the trustee may execute a deed amending the trust deed without the consent or agreement of the deposit taker or any other person in order to ensure that the trust deed complies with the requirement of this Part
3: The deed amending the trust deed—
a: has effect despite there being no consent or agreement of the deposit taker or any other person; and
b: must be treated for all purposes as if it were authorised to be made and were made in accordance with the provisions of the trust deed before the amendment was made; and
c: applies despite any defect in its form or mode of execution.
4: Subsection (3) Obligations of trustees to Bank
157ZE: Bank may require trustee to attest as to deposit taker’s compliance with requirements
1: The Bank may require a trustee to attest to the Bank, at a time and in a manner specified by the Bank, as to whether the trustee is satisfied that the deposit taker is complying with the requirements of this Part this Part
2: If the Bank requires a trustee to attest to the Bank under this section, the trustee must either—
a: provide that attestation; or
b: if the trustee is not able to attest to the Bank as required, the trustee must report the reason, including the details of any non-compliance or suspected non-compliance by the deposit taker.
157ZF: Trustee must report to Bank non-compliance or likely non-compliance by deposit taker
If a trustee has reasonable grounds to believe that a failure on the part of the deposit taker to comply in a material respect with this Part this Part
157ZG: Obligation on trustees to disclose information to Bank in certain circumstances
1: This section applies if a trustee, in the course of or in connection with the performance of functions as trustee, becomes aware of information on the basis of which he or she could reasonably form an opinion that—
a: the deposit taker is unable to pay the deposit taker’s debts as they become due in the normal course of business; or
b: the value of the deposit taker’s assets is less than the value of the deposit taker’s liabilities, including contingent liabilities; or
c: it is likely that—
i: the deposit taker will be unlikely to be able to pay the deposit taker’s debts as they become due in the normal course of business; or
ii: the value of the deposit taker’s assets will be less than the value of the deposit taker’s liabilities, including contingent liabilities; or
d: the deposit taker has breached, or is likely to breach, in a material respect,—
i: the terms of the trust deed; or
ii: the terms of any offer of debt securities to which the trust deed relates.
2: This section also applies if the Bank, by notice in writing to the trustee, requires the trustee to provide the Bank with information relating to the business, operation, or management of a deposit taker.
3: If this section applies, the trustee must, as soon as practicable, disclose to the Bank all information held by the trustee that is relevant to the matter referred to in subsection (1) subsection (2)
157ZH: Protection of trustees
1: No civil, criminal, or disciplinary proceedings lie against a trustee arising from the disclosure in good faith of information to the Bank under section 157ZE to 157ZG
2: No person may terminate the appointment of a trustee by reason of the trustee disclosing information to the Bank in good faith under section 157ZE to 157ZG
3: No tribunal, body, or authority, having jurisdiction in respect of the professional conduct of a trustee, may make an order against, or do any act in relation to, that person in respect of the fact of that disclosure. Investigation and enforcement powers of Bank
157ZI: Bank may require report relating to deposit taker
1: For the purpose of investigating whether a deposit taker is complying with the requirements of this Part this Part
2: The deposit taker must provide the approved or appointed person with access to the accounting and other records of the deposit taker and must provide information relating to those records if the person preparing the report requests the deposit taker to do so for the purposes of the report.
3: Subsection (2) section 157ZK
4: To avoid doubt, the deposit taker is liable for the cost of every report that it is required to supply to the Bank under this section.
157ZJ: Power to obtain information and documents
1: This section applies if the Bank has reasonable cause to believe that a deposit taker has committed an offence against this Part
2: If this section applies, the Bank may,—
a: by notice in writing to the deposit taker, require the deposit taker to supply to the Bank, within the time specified in the notice, the information, papers, documents, records, or things specified in the notice; or
b: appoint in writing a suitably qualified person to enter and search any place and inspect, remove, and take copies of any information, papers, documents, records, or things in the possession, custody, or control of any person.
157ZK: Limitation on information to be provided
Nothing in section 157ZI(2) or 157ZJ(2)
157ZL: Limitations on entering and searching place
A person appointed under section 157ZJ(2)﻿(b) section 157ZM
157ZM: Search warrant may be issued
1: A Judge of the High Court or a District Court Judge may issue a search warrant in terms of clause 5 Schedule 4 section 157ZJ(2)﻿(b) this Part
2: The provisions of Schedule 4
157ZN: Privileges
1: If a person could, in a criminal proceeding, assert a privilege under sections 54 to 57 of the Evidence Act 2006 in respect of any communication or information, the person is taken to have the same privilege for the purposes of—
a: a request to supply access to accounting and other records of the deposit taker or provide information relating to those records under section 157ZI(2)
b: a notice under section 157ZJ(2)﻿(a)
c: a search warrant issued under section 157ZM
2: Subsection (3)
3: The application by subsection (1)
a: the issue of, or the obligation to comply with, a notice under section 157ZJ(2)﻿(a)
b: the issue or execution of a search warrant under section 157ZM
c: the admissibility, in a criminal proceeding under this Part section 157ZJ(2)﻿(a) section 157ZM
4: A person who has a privilege under this section has the right—
a: to refuse to disclose a communication or information to which the privilege would apply if it were sought to be disclosed in a criminal proceeding; and
b: to prevent the search of any such communication or information; and
c: to require the return of such communication or information if it is seized by a person exercising a power of search pending determination of the claim to privilege.
5: If a person refuses to disclose a communication or information on the ground that it is privileged under this section, the Governor may apply to a District Court Judge for an order determining whether the claim of privilege is valid; and, for the purpose of determining any such application, the District Court Judge may require the communication or information to be produced to him or her.
6: A District Court Judge may, on the application of the Governor, disallow a privilege claimed under this section if the Judge is satisfied that the claim to privilege would, under section 67(1) of the Evidence Act 2006, be disallowed in a proceeding.
7: Section 65 of the Evidence Act 2006 (which relates to waiver of privilege) applies in respect of any privilege under this section.
8: Nothing in this section affects the application of section 60 of the Evidence Act 2006. Confidentiality of information
157ZO: Confidentiality of information
1: This section applies to—
a: information supplied or disclosed to, or obtained by,—
i: the Bank, under or for the purposes of, or in connection with, the exercise of powers conferred by this Part
ii: a person appointed by the Bank under section 157ZJ(2)﻿(b)
b: information derived from, or based on, information referred to in paragraph (a)
c: information relating to the exercise, or possible exercise, of the powers conferred by this Part
2: The Bank, and any person appointed by the Bank under section 157ZJ(2)﻿(b)
a: with the consent of the person to whom the information relates; or
b: to the extent that the information is available to the public under any Act, other than the Official Information Act 1982, or in a public document; or
c: for the purposes of this Part this Part
d: in connection with any proceedings for an offence against this Part
e: to the Registrar of the Companies Office or the Securities Commission; or
f: to the trustee of the deposit taker to whom the information relates; or
g: to any person who the Bank is satisfied has a proper interest in receiving the information.
3: Information to which this section applies must not be published or disclosed under subsection (2)﻿(f) or (g)
4: A person to whom information to which this section applies is published or disclosed under subsection (2)﻿(c)
a: for the purposes of this Part this Part
b: in accordance with any conditions that may be specified by the Bank.
5: A person to whom information to which this section applies is disclosed under subsection (2)﻿(e), (f), or (g)
a: authorised by the Bank; or
b: necessary or desirable in connection with the exercise of any function or power conferred by any enactment.
157ZP: Person who does not comply with section 157ZO commits offence
Every person who does not comply with section 157ZO
a: in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $50,000; or
b: in the case of a body corporate, to a fine not exceeding $500,000.
157ZQ: Application of Official Information Act 1982, etc
Nothing in the Official Information Act 1982 or any other Act, other than this Act, applies to information to which section 157ZO Offences and penalties
157ZR: Offences by deposit takers against this Part
Every deposit taker who breaches any of the following sections commits an offence:
a: section 157I
b: section 157L
c: section 157M
d: section 157N
e: section 157O
f: section 157Q
g: section 157R
h: section 157T
i: section 157U
j: section 157X
k: section 157Y
l: section 157ZA
m: section 157ZB
157ZS: Other offences by deposit takers against this Part
Every deposit taker commits an offence who—
a: fails to provide a report to the Bank if required to do so under section 157ZI
b: fails to provide access to accounting and other records of the deposit taker or fails to provide information relating to those records if requested to do so for the purposes of a report under section 157ZI
c: fails to provide any information, papers, documents, records, or things as and when required to do so by notice under section 157ZJ
d: fails, as and when required by this Part this Part
e: fails, as and when required by this Part this Part
f: fails, as and when required to do so by this Part this Part
g: makes any statement or supplies any paper, document, record, copy, or thing to the Bank knowing that it is false or misleading in a material particular; or
h: without reasonable excuse, obstructs or hinders an authorised person in the execution of any powers conferred on that person by or under this Part this Part
157ZT: Defence for deposit takers charged with offences against this Part
1: In any prosecution of a deposit taker for an offence against section 157ZR or 157ZS
a: the contravention was due to the act or omission of another person, or some other cause beyond the deposit taker's control; and
b: the deposit taker took reasonable precautions and exercised due diligence to avoid the contravention.
2: For the purposes of subsection (1)﻿(a) another person
3: A deposit taker is not, without the leave of the court, entitled as part of a defence provided by this section to rely on any of the matters specified in subsection (1)﻿(a)
157ZU: Power of court to discharge deposit taker
1: If a deposit taker is charged with an offence against section 157ZR or 157ZS
2: A direction under subsection (1) may be made at any stage of the proceeding—
a: on the motion of the court or on the application of the defendant; and
b: after giving both the prosecutor and the defendant a reasonable opportunity to be heard on the matter.
3: A discharge under this section is deemed to be an acquittal.
4: Nothing in this section limits sections 106 to 109 of the Sentencing Act 2002.
157ZV: Liability of directors
If a body corporate is convicted of an offence under section 157ZR or 157ZS
a: that the act that constituted the offence took place with his or her authority, permission, or consent; and
b: that he or she—
i: knew, or could reasonably be expected to have known, that the offence was to be or was being committed; and
ii: failed to take reasonable steps to prevent or stop it.
157ZW: Offences by trustees against this Part
1: Every trustee who breaches any of the following sections commits an offence:
a: section 157Q
b: section 157T
c: section 157X
d: section 157ZA
e: section 157ZE
f: section 157ZF
g: section 157ZG
2: Every trustee commits an offence who makes a statement to the Bank in relation to its obligations to the Bank, including providing an attestation, knowing it to be false or misleading in a material particular.
157ZX: Penalties for offences
1: Every deposit taker who commits an offence under section 157ZR(a)
a: in the case of an individual, to imprisonment for a term not exceeding 18 months or to a fine not exceeding $200,000, or both; or
b: in the case of a body corporate, to a fine not exceeding $2,000,000.
2: Every deposit taker who commits an offence under any other provision in section 157ZR or 157ZS
a: in the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $100,000, or both; or
b: in the case of a body corporate, to a fine not exceeding $1,000,000.
3: Every director who commits an offence under section 157ZV
4: Every trustee who commits an offence under any provision in section 157ZW Miscellaneous
157ZY: Matters relating to regulation-making powers under this Part
Regulations made under section 157K, 157P, 157S, 157V, or 157Z
a: prescribe clauses relating to all or any of the matters referred to in those sections that are deemed to be contained in, or adopted by, trust deeds; and
b: prescribe requirements or clauses that apply to all deposit takers; and
c: prescribe different requirements or clauses for different classes of deposit takers; and
d: prescribe different requirements or clauses for particular deposit takers.
157ZZ: Bank must review and report on operation of this Part
1: The Bank must, not later than 5 years after the commencement of this section,—
a: review the operation of this Part
b: prepare a report on the review for the Minister.
2: The report on the review must include recommendations to the Minister on whether any amendments to the Act concerning the matters dealt with in this Part
3: As soon as practicable after receiving the report, the Minister must present a copy of that report to the House of Representatives.
2: Amendments to Part 6 of principal Act
18: Section 158 repealed
Section 158
19: Funding agreements
Section 159(1)
da: Part 5D
20: New section 162 substituted
Section 162
162: Determination of annual dividend
1: The Bank must, as soon as practicable after the end of each financial year, recommend to the Minister the amount appropriately payable by the Bank to the Crown as an annual dividend in respect of the financial year.
2: The Bank must determine the amount it recommends to the Minister under subsection (1)
3: The Minister must determine the amount that the Bank must pay to the Crown as an annual dividend in respect of the financial year having regard to—
a: the recommendation of the Bank; and
b: the views of the Board of the Bank; and
c: any other relevant matters.
4: The Bank must publish in its annual report—
a: the amount it recommends to the Minister under subsection (1)
b: the determination made by the Minister under subsection (3)
21: New Part 6 heading substituted
The Part 6
6: Financial and accountability matters
.
22: New heading and sections 162AA and 162AB inserted
The following heading and sections are inserted after section 162 Accountability documents
162AA: Purpose of accountability documents
The purpose of the 3 accountability documents required under this Part
a: statement of intent: to promote the public accountability of the Bank by—
i: enabling the Crown to participate in the process of setting the Bank’s medium-term intentions and undertakings; and
ii: setting out for the House of Representatives those intentions and undertakings; and
iii: providing a base against which the Bank’s actual performance can be later assessed:
b: annual report: to—
i: report on the activities of the Bank during the previous year; and
ii: assess those activities against the intentions and undertakings set out in the latest statement of intent; and
iii: ensure the accountability of the Bank for the funds available to it:
c: financial stability report: to—
i: report on matters relating to the soundness and efficiency of the financial system and other matters associated with the Bank’s statutory prudential purposes; and
ii: allow assessments to be made of the effectiveness of the Bank’s use of its powers to achieve its statutory prudential purposes. 2004 No 115 s 138
162AB: Assessment of regulatory impacts of policies
1: The Bank must—
a: assess the expected regulatory impacts of any policy that it intends to adopt under Part 5 and Parts 5B to 5D
b: assess the regulatory impacts of the policies adopted and applied under Part 5 and Parts 5B to 5D
c: give reports on the assessments to the Minister.
2: Subsection (1)
3: The Bank may provide reports on the assessments of regulatory impacts to the Minister—
a: as part of an accountability document or other report; or
b: as a stand-alone report prepared following a request by the Minister or on the Bank's own initiative.
4: The Bank must publish every report on the assessment of regulatory impacts on an Internet site maintained by, or on behalf of, the Bank.
5: However, the Bank may omit information from any report published if it is satisfied on reasonable grounds that it is proper to omit the information on the ground of commercial confidentiality relating to a financial institution.
6: To avoid doubt, the publication of an accountability document that includes a report on the assessments of regulatory impacts satisfies the obligation in subsection (4)
23: New heading inserted
The following heading is inserted above section 162A Statement of intent
24: Content of statement of intent
1: Section 162B(1)
c: the specific impacts, outcomes, or objectives that the Bank seeks to achieve or contribute to:
d: how the Bank intends to perform its functions and conduct its operations to achieve those impacts, outcomes, or objectives:
da: if a direction has been given under section 68B .
2: Section 162B(1)
g: a statement of the principles in accordance with which the Bank must determine the amount it recommends to the Minister as appropriately payable by the Bank to the Crown as an annual dividend:
h: the main financial and non-financial measures and standards by which the future performance of the Bank may be judged:
i: the matters on which the Bank will consult or notify the Minister before making a decision, the matters on which it will report to its Minister, and the frequency of reporting:
j: any other matters that are reasonably necessary to achieve an understanding of the Bank’s intentions and direction. 2005 No 115 s 141(1)﻿(c), (d), (f), (g), and (j)
25: Process for providing statement of intent to Minister
Section 162C
2: If the Minister’s comments include comment on the financial sector regulatory outcomes set out in the Bank’s draft statement of intent, the Bank must, when providing its final statement of intent to the Minister, also provide a response to the Minister’s comments that demonstrates how the Bank has taken those comments into account in formulating its objectives.
26: New heading inserted
The following heading is inserted above section 163 Annual reports
27: Annual reports and accounts
Section 163(2)
aaa: an assessment against the intentions, measures, and standards set out in the statement of intent prepared at the beginning of the financial year; and .
28: New heading and section 165A inserted
The following heading and section are inserted above section 166 Financial stability reports
165A: Financial stability reports
1: The Bank must, not less than twice in every calendar year,—
a: deliver a financial stability report to the Minister; and
b: publish the report on an Internet site maintained by, or on behalf of, the Bank.
2: A financial stability report must—
a: report on the soundness and efficiency of the financial system and other matters associated with the Bank’s statutory prudential purposes; and
b: contain the information necessary to allow an assessment to be made of the activities undertaken by the Bank to achieve its statutory prudential purposes under this Act and any other enactment.
3: The Minister must, as soon as practicable after receiving the report, present it to the House of Representatives.
29: New heading inserted
The following heading is inserted above section 166 Audits
30: New Schedules 3 and 4 added
The Schedules 3 and 4 set out in the Schedule