Source: http://www.legislation.govt.nz/sop/government/2019/0294/latest/whole.html
Timestamp: 2019-08-20 15:57:13
Document Index: 800318199

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Supplementary Order Paper No 294 (released 14 August 2019) – New Zealand Legislation
Supplementary Order Paper No 294
Proposed amendments to Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill
This Supplementary Order Paper makes a number of technical amendments to the Financial Markets (Derivatives Margin and Benchmarking) Reform Amendment Bill. These amendments are summarised below.
The commencement clause (clause 2) has been amended to provide for Part 1 to come into force on the day after Royal assent (instead of on a date appointed by Order in Council). Part 1 has the objective of ensuring that New Zealand financial market participants can continue to participate in international financial markets, particularly by using derivatives to hedge risks. The Part would enable compliance with foreign margin rules for over-the-counter derivatives.
Clause 2(3) currently provides for the rest of the Bill to come into force no later than 6 months after Royal assent. This has been extend to 12 months to allow more time to make regulations to support Part 2.
The current amendments to Schedule 7 of the Companies Act 1993 give priority to the claims of a qualifying derivative counterparty over preferential creditors where the collateral is accounts receivable or inventory (see clause 11). This applies where a liquidator is appointed. The amendments in this Supplementary Order Paper in Part 1 extend this change to apply in situations where a secured creditor—
directly enforces against the collateral (see the amendments to the Property Law Act 2007 in new subpart 5); or
appoints a receiver (see the amendments to the Receiverships Act 1993 in new subpart 6).
The amendments in this Supplementary Order Paper in Part 1 also make changes to provisions that apply where a statutory manager sells accounts receivable or inventory that is subject to a security interest (section 134 of the Reserve Bank of New Zealand Act 1989 and section 51 of the Corporations (Investigation and Management) Act 1989). The amendments ensure that a qualifying derivative counterparty is paid the proceeds of the sale in priority to other claims. This is consistent with the other provisions of the Bill that give a qualifying derivative security interest first ranking priority ahead of preferential creditors and other secured claims. See new clauses 5A and 14A.
Minor changes have been made to take into account the enactment of the Insolvency Practitioners Regulation (Amendments) Act 2019 (which also contains amendments to enactments that are amended by this Bill).
Section 18 of the Financial Markets Conduct Act 2013 (the FMC Act) sets out the definition of financial product for the purposes of Part 2 of the FMC Act (fair dealing). The amendments to Part 2 of the Bill add a security that is used to generate a financial benchmark to that definition. As a result, conduct in relation to a dealing with such a security will be subject to the provisions of Part 2 of the FMC Act. Consequential amendments are made to the Fair Trading Act 1986 as a result of this amendment.
A copy of the statement can be found at http://legislation.govt.nz/disclosure.aspx?type=sop &subtype=government&year=2019&no=294
5A Section 134 amended (Sale of property or assets subject to a security)
6 Section 173 amended (Regulations)
10A Consequential amendment to Insolvency Practitioners Regulation (Amendments) Act 2019
11 Schedule 7 amended
13 New section 2A inserted (Transitional, savings, and related provisions)
14 Section 42 amended (Moratorium)
14A Section 51 amended (Sale of property or assets subject to a security)
17 New section 21A inserted (Transitional, savings, and related provisions)
20A Principal Act
20B New section 6A inserted (Transitional, savings, and related provisions)
20D New Schedule 1AA inserted
20E Principal Act
20F New section 3A inserted (Transitional, savings, and related provisions)
20G Section 30 amended (Preferential claims)
20H New Schedule 1AA inserted
20I Consequential amendments to Insolvency Practitioners Regulation (Amendments) Act 2019
22 Section 6 amended (Interpretation)
22AA Section 18 amended (Interpretation in this Part)
22A Section 351 amended (Regulations modifying this Part or Part 7 for licensed markets)
23 Section 386 amended (Overview)
24 Section 390 amended (When providers of other market services may be licensed)
25 Section 393 amended (Principles guiding the exercise of FMA powers)
26 Section 396 amended (When licence must be issued)
27 Section 403 amended (When FMA may impose permitted conditions)
27A Section 410 amended (Meaning of material change of circumstances)
27B Section 414 amended (FMA’s powers in case of contravention of market services licensee obligation, material change, etc)
28 New subpart 7A of Part 6 inserted
29 Section 449 amended (Part 6 services provisions)
30 Section 451 amended (Meaning of FMC reporting entity)
30A Section 452 amended (Company that issues equity securities not FMC reporting entity if fewer than 50 shareholders)
31 Section 532 amended (Appeals against other decisions of FMA on questions of law only)
32 Section 546 amended (Regulations for purposes of Part 6 (market services))
33 Section 548 amended (Other regulations)
34 Section 550 amended (Procedural requirements for regulations relating to exemptions, exclusions, and definitions)
Consequential amendments to Financial Services Legislation Amendment Act 2019
This The rest of this Act comes into force on a date appointed by the Governor-General by Order in Council.
Any provision that has not earlier been brought into force comes into force on the expiry of the 6-month 12-month period that starts on the date of Royal assent.
See sections 122A to 122D for definitions and other matters relating to subsection (9A).
Section 122AB applies with all necessary modifications for the purposes of subsection (8)﻿(b) (and those modifications include treating references to section 122(9A)﻿(ab) as references to subsection (8)﻿(b) of this section).
providing for when collateral must or must not be taken to be in the possession or under the control of a person for the purposes of section 122(9A)﻿(ab) or any enactment that applies section 122AB (and those matters may be specified with reference to different kinds of collateral or any other circumstances):
providing that section 122AB(1)﻿(a)﻿(i), (b), or (c) does not apply to specified kinds of collateral or in any other specified circumstances:
In section 173, insert as subsections (2) to (3):
had regard to the matters set out in subsection (3); and
The Ministers must have regard to the following under subsection (2A)﻿(a):
the purposes of this Act, the Companies Act 1993, the Corporations (Investigation and Management) Act 1989, and the Personal Property Securities Act 1999, the Property Law Act 2007, and the Receiverships Act 1993:
Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subclause (3A)﻿(b) (and those modifications include treating references to section 122(9A)﻿(ab) of that Act as references to subclause (3A)﻿(b) of this clause and treating references to the grantor as references to the company that granted the security interest).
Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subsection (10)﻿(b) (and those modifications include treating references to section 122(9A)﻿(ab) of that Act as references to subsection (10)﻿(b) of this section and treating references to the grantor as references to the corporation that granted the security interest).
Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subsection (8)﻿(b) (and those modifications include treating references to section 122(9A)﻿(ab) of that Act as references to subsection (8)﻿(b) of this section and treating references to the grantor as references to the corporation that granted the security interest).
Insert the Schedule 1AA set out in Schedule 4A of this Act as the first schedule to appear after the last section of the principal Act.
Section 122AB of the Reserve Bank of New Zealand Act 1989 applies with all necessary modifications for the purposes of subsection (6)﻿(b) (and those modifications include treating references to section 122(9A)﻿(ab) of that Act as references to subsection (6)﻿(b) of this section and treating references to the grantor as references to the company that granted the security interest).
Insert the Schedule 1AA set out in Schedule 4B of this Act as the first schedule to appear after the last section of the principal Act.
Amend the Financial Services Legislation Amendment Act 2019 enactments specified in Schedule 5 as indicated in Schedule 5 that schedule.
Schedule 4A Transitional, savings, and related provisions for amendments to Property Law Act 2007
Schedule 4B Transitional, savings, and related provisions for amendments to Receiverships Act 1993
Schedule 5 Consequential amendments to Financial Services Legislation Amendment Act 2019