Financial Markets Conduct Bill

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Hon Simon Power

Financial Markets Conduct Bill

Government Bill

342—1

Contents

Explanatory note

1  Title

2  Commencement

Part 1
Preliminary provisions

Purposes

3  Main purposes

4  Additional purposes

Overview

5  Overview

Interpretation

6  Interpretation

7  Meaning of financial product

8  Definitions relating to kinds of financial products

9  Definitions of financial benefit and of managed investment scheme

10  Definitions of issued and issuer

11  Meaning of associated person and related body corporate

12  Miscellaneous interpretation provisions relating to statements and information

13  Status of examples

Act binds the Crown

14  Act binds the Crown

General application provision

15  Application of Act

Part 2
Misleading or deceptive conduct or false or misleading representations

16  Misleading or deceptive conduct generally

17  Misleading conduct in relation to financial products

18  Misleading conduct in relation to financial services

19  False or misleading representations

20  Certain conduct does not contravene this Part

21  Limited application of Part in relation to newspapers, magazines, broadcasting, etc

22  Defence for publisher

23  Defence for reasonable reliance on information supplied by another person

24  Licensed market operator does not contravene by notifying disclosures

25  Other exceptions

26  Territorial scope of Part

Part 3
Disclosure of offers of financial products

Subpart 1Application

27  Issue offers that need disclosure

28  Sale offers that need disclosure

29  Meaning of regulated offer and of regulated product

30  Regulated offers that need to meet additional governance requirements

31  Options over financial products

32  Treatment of offers of convertible financial products

33  Treatment of offers of renewals and variations

34  Territorial scope of Part

Subpart 2Procedure for making regulated offers

Product disclosure statement must be prepared and lodged

35  PDS must be prepared and lodged

36  Purpose of PDS

Disclosure to investors

37  PDS must be given if offer requires disclosure

38  Certain situations in which section 37 does not need to be complied with

39  PDS treated as having been given if application form used was included in, or accompanied by, PDS

40  Offence to knowingly or recklessly contravene section 37

41  Right to withdraw and have money returned

Content and presentation of product disclosure statements

42  Disclosure of material information and content of PDS and register entry

43  Meaning of material information in this Part

44  Consent of experts and persons who make endorsements

45  PDS must be worded and presented in clear, concise, and effective manner

46  PDS must comply with prescribed requirements relating to form and presentation

Other provisions relating to lodging of PDS and other documents

47  Supply of prescribed information and documents

48  Registrar must notify FMA of lodgement of PDS

49  Waiting period after lodgement before processing applications for financial products

50  FMA may extend period

51  Waiting period restriction does not prevent offeror from acting under another PDS

52  FMA may remove restrictions if its consideration complete or consideration or further consideration unnecessary

53  Waiting period does not usually apply to continuous issue PDSs

54  No guarantee or representation as to compliance

55  When supplementary document or replacement PDS may be lodged

56  Supplementary document

57  Replacement PDS

58  Registrar must notify FMA of lodgement of supplementary document or replacement PDS

59  Publication of lodgement

Amending register entry

60  When register entry may be amended

Conditions referred to in PDS

61  Minimum subscription condition must be fulfilled before issue or transfer

62  Issue or transfer void if quotation condition not fulfilled

Dealing with applications where condition referred to in PDS is not met or disclosure is defective

63  Application of section 64

64  Choices open to offeror

Prohibition of offers where defective disclosure in PDS or register entry

65  Misleading or deceptive statements, omissions, and new matters requiring disclosure

66  Persons who must inform offeror about disclosure deficiencies

Expiry

67  Expiry

68  How offeror must deal with applications on expiry

Money for financial products must be held in trust

69  Money for financial products must be held in trust

Other prohibitions and restrictions

70  Offering financial products in entity that does not exist

71  Prohibition of offers in course of unsolicited meetings with persons acting otherwise than in trade

72  Right to withdraw and have money returned

Subpart 3Advertising and publicity

73  Advertising or publicity for regulated offers

74  Inducements to apply

75  Distribution of PDS or registered documents

76  Advertising and publicity before PDS lodged

77  Advertising and publicity after PDS lodged

78  General exceptions

79  Defence for publishers

Subpart 4Ongoing disclosure and updating of registers

Duty to update register of offers of financial products and register of managed investment schemes

80  Duty to notify relevant matters and provide certain documents and information to Registrar

Disclosure to particular persons

81  Information to be made available to investors or other prescribed persons

Public disclosure

82  Information to be made publicly available

Defective ongoing disclosure

83  Defective ongoing disclosure

Subpart 5Civil liability for certain contraventions of this Part

84  Part 3 offer provisions

Part 4
Governance of financial products

Subpart 1Application and overview

85  Part applies to all regulated products

86  Regulated offers of debt securities need governing document and supervisor

87  Regulated offers of managed investment products need to be in registered scheme

88  All regulated products have other accountability requirements under this Part

Subpart 2Governance of offers of debt securities

89  Need for governing document and supervisor for regulated offer of debt security

Governing document requirements

90  Contents of trust deed for debt securities

91  Limits on permitted exemptions and indemnities

92  Trust deed must be legally enforceable

93  Effect of trust deed

94  Changes to trust deed

95  Power to make FMA-approved changes to trust deeds

96  Lodging of changes to trust deed

Role of supervisor

97  Functions of supervisor

98  General duties applying in exercise of supervisor's functions

99  Duty of supervisor to comply with professional standard of care

100  Duty of issuer to provide regular reports to supervisor

101  Duty of issuer to provide requested information and reports to supervisor

102  Issuer must report contravention or possible contravention of issuer obligations

103  Restriction on section 102

104  Duty of issuer to report serious financial problems

105  Power of supervisor to engage expert

Meetings of product holders

106  Meetings of product holders

107  Power of supervisor to attend meetings and appoint chair

Change of supervisor

108  Supervisor ceasing to hold appointment

109  Lodging of notice of change of supervisor

Subpart 3Registration of managed investment schemes

110  Overview

Need to register

111  Need to register managed investment scheme for regulated offer of managed investment product

Registration

112  Application for registration

113  Initial and ongoing registration requirements for all managed investment schemes

114  Additional initial and ongoing registration requirements for KiwiSaver schemes

115  Additional initial and ongoing registration requirements for superannuation schemes

116  Extent to which superannuation scheme may provide non-retirement benefits

117  Additional ongoing registration requirements for restricted schemes

118  Additional initial and ongoing registration requirements for locked-in superannuation schemes

119  Additional prescribed registration requirements for other particular prescribed types of schemes

120  Manager must ensure that ongoing registration requirements are complied with

121  Changes to registration as particular type of registered scheme

Governing document requirements

122  Contents of governing document for registered scheme

123  Limits on permitted exemptions and indemnities

124  Governing document must be legally enforceable

125  Effect of governing document

126  Changes to governing document

127  Power to make FMA and court-approved changes to governing documents

128  Lodging of changes to governing document

Role of manager

129  Management and administration functions of manager

130  General duties applying in exercise of manager's functions

131  Duty of manager and investment manager to comply with relevant professional standard of care

132  Duties of directors and senior managers of manager

133  Contracting out of management functions

134  Duty of manager to provide regular reports to supervisor or FMA

135  Duty of manager to provide requested information and reports to supervisor

136  Duty of manager to report contravention or possible contravention of issuer obligations

137  Restriction on section 136

138  Duty of manager to report serious financial problems

Role of supervisor

139  Functions of supervisor

140  General duties applying in exercise of supervisor's functions

141  Duty of supervisor to comply with professional standard of care

142  Power of supervisor to engage expert

Custodianship of scheme property

143  Requirement to have supervisor or other independent person as custodian

144  Custodian holds scheme property on trust

145  Custodian must keep records of scheme property

146  Duty of supervisor to refuse to act on wrongful directions

Meetings of scheme participants

147  Meetings of scheme participants

148  Power of supervisor to attend meetings and appoint chair

149  Manager and associated persons cannot vote if interested in resolution

Management of scheme

150  Requirement for statement of investment policy and objectives

151  Changes to statement of investment policy and objectives

152  Lodging of statement of investment policy and objectives and changes to statement

153  Action that must be taken on limit breaks

154  Action that must be taken on pricing errors and failure to comply with pricing methodologies

155  Actuarial examination of defined benefit scheme or life benefit scheme

156  Power of manager to adjust financial benefits to comply with portfolio investment entity rules

157  Limits on reversion of scheme property in certain schemes to non-scheme participant contributor

Related party transactions

158  Definition of related party benefit

159  General prohibition on transactions giving related party benefits

160  Certain related party benefits permitted

161  Additional restrictions on related party transactions of restricted schemes

Scheme participant transfer rules for KiwiSaver and superannuation schemes

162  Application of scheme participant transfer rules

163  Methods of transfer of scheme participants to another scheme or another section of scheme

164  Transfer of substantial numbers of scheme participants with scheme participant consent

165  Transfer with FMA consent

166  Transfers from KiwiSaver scheme

Provisions as to deferred benefits for superannuation schemes

167  Deferred benefits

Change of manager

168  Application of sections 169 to 176

169  Removal of manager of registered scheme

170  Supervisor or FMA may make temporary appointment

171  Term, powers, and duties of temporary manager

172  FMA's costs must be reimbursed from scheme

173  Supervisor or FMA must take reasonable steps to arrange for new appointment

174  Former manager must hand over records and give reasonable assistance

175  Statutory novation of rights, obligations, and liabilities of former manager

176  Lodging of notice of changes to manager

Change of supervisor

177  Change of supervisor

178  Lodging of notice of change of supervisor

Change of independent trustee

179  Change of independent trustee

Cancellation of registration

180  Cancellation of registration

181  Registrar must remove scheme from register on cancellation of registration

Subpart 4Intervention in debt securities or registered schemes

Provisions assisting supervisor or FMA to intervene

182  Duty of auditor to report to supervisor

183  Duty of auditor, investment manager, administration manager, custodian, or actuary to report serious problems

184  What person must do if duty to report serious problem applies

185  Protections extend to volunteers of supporting information for other protected disclosures

186  FMA may require supervisor to attest as to issuer's compliance with issuer obligations

187  Duty of supervisor to report contravention or possible contravention of issuer obligations to FMA

188  Duty of supervisor to report serious financial problems to FMA

189  FMA's powers of direction

190  FMA's directions to supervisor (or issuer)

Powers to obtain court orders to intervene

191  Power of supervisor or FMA to apply for order to remedy problems

192  Court orders to remedy problems

193  Power of court to appoint new manager, provide for manager powers, and deal with changes of managers

194  Power of court to direct supervisor

195  Court power to order winding up of scheme

196  Initial steps in winding up of registered scheme

197  Winding up report

Miscellaneous

198  Offence of false or misleading statements

199  Protection for relevant person in respect of disclosure under this subpart

Subpart 5Registers that must be kept by issuers of all regulated products

200  Issuers must keep registers of regulated products

201  Manner of keeping registers

202  Contents of registers

203  Audit of registers

204  Auditor must advise if auditor considers that subpart is not being complied with

205  Issuer must notify Registrar of registers

206  Public inspection of register

207  Manner of inspection

208  Copies of documents

209  Reasons for request must be given and FMA may authorise non-compliance

210  Restriction on use of information in registers

211  Issuer to send confirmation of financial products

212  Requirement for confirmation document does not apply in certain circumstances

213  Certain provisions prevail over Companies Act 1993

Subpart 6Accounting records, copies of documents, and audit of financial statements

Accounting records

214  Issuer must keep proper accounting records

215  Place where accounting records to be kept

216  Accounting records to be in English

217  Period for which accounting records to be kept

218  Inspection of accounting records

Copies of documents to be retained

219  Copies of documents must be retained for 7 years

Audit requirement

220  Financial statements to be audited

221  Meaning of qualified auditor

Miscellaneous

222  Application of other Acts not affected

Subpart 7Civil liability for certain contraventions of this Part

223  Part 4 governance provisions

Part 5
Dealing in financial products on markets

Subpart 1Purposes, overview, and interpretation

224  Additional purposes of Part

225  Overview

Material information and generally available to the market

226  Meaning of material information

227  Meaning of generally available to the market

Certain derivatives treated as being quoted financial products of listed issuer

228  Certain derivatives treated as being quoted financial products of listed issuer

Insider conduct

229  Meaning of information insider, inside information, and adviser

Relevant interests

230  Relevant interests in financial products (basic rule)

231  Extension of basic rule to powers or controls exercisable through trust, agreement, etc

232  Extension of basic rule to interests held by other persons under control or acting jointly

233  Situations not giving rise to relevant interests

Subpart 2Insider trading

Insider conduct prohibited

234  Prohibition of insider conduct

235  Information insider must not trade

236  Information insider must not disclose inside information

237  Information insider must not advise or encourage trading

238  Criminal liability for insider conduct

When prohibition on insider conduct does not apply

239  Exception for trading required by enactment or rule of law

240  Exception for disclosure required by enactment or rule of law or by FMA

241  Exception for disclosure in connection with preparing PDS or disclosure document

242  Exceptions in respect of underwriting agreements

243  Exception in case of knowledge of person's own intentions or activities

244  Exception in case of knowledge in relation to derivatives

245  Exception for agent executing trading instruction only

246  Exceptions from section 235 for takeovers

247  Exceptions from sections 236 and 237 for takeovers

248  Exception for schemes of arrangement approved under Companies Act 1993

249  Exception for redemption of managed investment products

250  Exception for Reserve Bank

Defences

251  Absence of knowledge of trading

252  Inside information obtained by independent research and analysis

253  Equal information

254  Options and trading plans

255  Chinese wall defence

Subpart 3Market manipulation

256  Misleading or deceptive conduct generally in dealings in quoted financial products

257  False or misleading statement or information

258  Exception for takeovers

259  Criminal liability for false or misleading statement or information

260  False or misleading appearance of trading

261  Exception for short selling and crossings

262  Persons treated as contravening false or misleading appearance of trading prohibition

263  Defence

264  Criminal liability for false or misleading appearance of trading

Subpart 4Continuous disclosure

265  Listed issuers must disclose in accordance with listing rules if continuous disclosure listing rules apply

266  What are continuous disclosure provisions

267  No contravention of continuous disclosure provisions by person who takes reasonable steps to ensure listed issuer complies

Subpart 5Disclosure of interests of substantial product holders in listed issuers

268  Purpose of subpart

269  Meaning of substantial product holder, substantial holding, and percentage

270  Persons must disclose if begin to have substantial holding

271  Substantial product holders must disclose if subsequent movement of 1% or more in holdings

272  Substantial product holders must disclose if subsequent changes in nature of relevant interests

273  Persons must disclose if cease to have substantial holding

274  What disclosure required

275  Form and method of disclosure

276  Listed issuer must give acknowledgement of disclosure

277  How to ascertain total financial products in class for purposes of disclosure

278  Exemption for persons with interest in other substantial product holders who comply

279  Exemption for corporate trustees and nominee companies

280  Conditions of exemption for corporate trustees and nominee companies

281  Exemption for persons under control or acting jointly with corporate trustees and nominee companies

282  Extended time for disclosure for trustees, executors, and administrators

283  FMA may require persons to disclose to market relevant interests and powers to get relevant interests

284  Listed issuer may require registered holder to disclose relevant interests to it

285  Listed issuer may require person who has relevant interest to disclose information to it

286  Form and method of notice requiring disclosure

Register and publication of substantial holdings

287  Listed issuers must maintain register of disclosures of substantial holdings

288  Public inspection of register

289  Copies of documents

290  Offences relating to substantial holdings register

291  Listed issuers must publish information on substantial holdings

292  No liability for publication of substantial holdings

293  Notice under this subpart not to affect incorporation of listed issuer or constitute notice of trust

Subpart 6Disclosure of relevant interests in quoted financial products by directors and senior managers of listed issuers

294  Purpose of subpart

295  Directors and senior managers of listed issuers must disclose relevant interests and dealings in relevant interests

296  Disclosure of relevant interests and dealings in relevant interests in relation to specified derivatives

297  What disclosure required

298  Form and method of disclosure

299  Disclosure obligation applies for 6 months after ceasing to hold office

300  Exemption for directors or senior managers who disclose substantial holdings

301  Exemption for overseas listed issuers

302  Listed issuer must keep interests register

303  Public inspection of interests register

304  Copies of documents

305  Offences relating to interests register

Subpart 7Licensing of markets for trading financial products

306  Principles guiding exercise of powers under this subpart

Need for financial product market licence

307  What is a financial product market

308  Need for financial product market licence

309  Prohibitions on holding out

310  Exemptions

311  When financial product market taken to be operated in New Zealand

General obligations of licensed market operator

312  General obligations in respect of licensed markets

Issue of licence

313  Application for licence

314  When licence may be issued

315  When licence may be issued for overseas-regulated market

316  Conditions of licence

317  Procedural requirements

318  Licence may cover more than 1 financial product market

319  Licence may cover subsidiaries

320  FMA must maintain list of licensed markets on Internet site

Changes to licences

321  Variation of conditions

322  Minister may suspend or cancel licence

323  Procedure for varying of conditions or suspension or cancellation of licence

324  Effect of suspension

325  Variation or revocation of suspension

Approval of contractual market rules

326  Licensed markets must be operated under market rules that comply with this subpart

327  Required matters for market rules

328  When market rules have effect

329  Approval process for proposed market rules and rule changes

330  Approval of proposed market rules and changes

331  Notice of decision on rules

332  Power of FMA to request changes to market rules on certain matters

333  Overseas-regulated markets must give notice of market rules and rule changes to FMA

334  Market rules must be available for public inspection

335  Application of Acts relating to regulations to contractual market rules

Monitoring of licensed market obligations

336  Licensed market operator must give report on compliance with licensed market obligations to FMA

337  FMA to carry out licensed market obligations reviews

338  FMA must make written report on licensed market obligations review

339  FMA may require licensed market operator to submit action plan on failure to meet licensed market obligations

340  Approval, amendment, or rejection of action plan

341  Minister may give licensed market obligations direction to licensed market operator

342  Minister may vary, suspend, or cancel licence

Control limits on licensed market operators

343  Power to impose control limits on licensed market operators

344  Control limit not to be exceeded

345  Effect of exceeding control limit

346  Application for approval to exceed control limit

347  Revocation or amendment of approval

Other provisions relating to licensing of financial product markets

348  FMA may give advice to Minister

349  Delegation of Minister's licensing functions and powers to FMA

350  Regulations modifying subpart for licensed markets

Subpart 8Operation of licensed markets

351  Licensed market operator must notify FMA of disciplinary actions and suspected contraventions

352  When notification required

353  Details and method of notification

354  Licensed market operator must ensure FMA has access to real-time trading and other information

355  Licensed market operator must give FMA material information given to market participants

356  Waiver of notification and disclosure obligations

357  Licensed market operator must give FMA or Takeovers Panel other information and assistance on request

358  Power to disclose further information

359  Licensed market operator must give notice and have regard to submissions on continuous disclosure determinations

360  Limited notice and submissions for urgent determinations

361  FMA may give directions to licensed market operators

362  Grounds for continuous disclosure direction

363  Grounds for other directions

364  Notice, opportunity for licensed market operator to act, and submissions before FMA gives directions

365  Limited notice and submissions for urgent continuous disclosure directions

366  Notice and opportunity to be heard and represented after FMA gives direction

367  Effect of directions to licensed market operator

368  Provisions as to directions

369  Contracting out of or modification of continuous disclosure process requirements

370  Offence for failing to comply with direction

Subpart 9Transfer of transferable financial products

371  Financial products to which this subpart applies

Transfer of specified financial products using transfers in prescribed form or containing prescribed information

372  Transfer of specified financial products by transfer

373  Transfer of specified financial products by products transfer and brokers transfer

374  Products transfer does not need to be witnessed

375  Transfers to be instruments of transfer for purposes of other enactments and instruments

Transfer of specified financial products by electronic means

376  Approval of electronic transfer system

377  Specified financial products may be transferred under approved system

378  Minor technical modifications to system

Registration may not be refused

379  Registration may not be refused on ground that financial products have been transferred under this subpart

380  Effect of this Act on other enactments

Subpart 10Unsolicited offers to purchase financial products off-market

381  Definitions relating to unsolicited offer regulations and related provisions

382  Regulations concerning unsolicited offers

383  Specific provisions for regulations concerning unsolicited offers

384  Protection from liability in connection with unsolicited offer provisions

Subpart 11Civil liability for certain contraventions of this Part

385  Part 5 market provisions

Part 6
Licensing and other regulation of market services

386  Overview

Subpart 1Key provisions

387  When provider of market services must be licensed

388  When providers of other market services may be licensed

389  Meaning of licensed market services

390  Prohibitions on holding out

Subpart 2Issue of licences, conditions, and duration

391  Principles guiding the exercise of FMA powers

Issue of licences

392  FMA may issue licence

393  Application for licence

394  When licence must be issued

395  Procedural requirements

396  Notice of decision

397  Licence must be issued for particular market services

398  Licence may cover subsidiaries

399  FMA must send licence details to Registrar

Conditions of licence

400  Conditions of licence

401  When FMA may impose permitted conditions

402  Licensee may apply for variation of conditions

403  Procedure for variation of conditions

404  Consequences of contravening conditions

Expiry or cancellation of licences

405  Duration of licence

406  When FMA may cancel licence

407  Effect of expiry or cancellation of licence on appointments

Subpart 3Monitoring and enforcement of licences

408  Meaning of material change of circumstances

Reports

409  Licensee must deliver regular reports to FMA

410  Licensee must report certain matters

411  Restriction on section 410

FMA's powers in case of contravention of market services licensee obligation, material change, etc

412  FMA's powers in case of contravention of market services licensee obligation, material change, etc

413  Procedure for exercising powers

414  Notice requirements

Action plan

415  Action plan

416  Approval, amendment, or rejection of action plan

417  Consequences of failure to submit action plan, rejection of action plan, or failure to comply with action plan

Directions

418  Directions

419  Consequences of failure to comply with directions

Subpart 4Disclosure obligations for licensees providing market services to retail investors

420  Application of subpart

421  Licensee must make disclosure before providing service to retail investor

422  Timing and method of disclosure

423  Purpose of disclosure statement

424  Disclosure statement

425  Misleading or deceptive statements and omissions

426  Further prescribed information to be made available

Subpart 5Requirement for licensees to provide service under client agreements

427  Application of subpart

428  Requirement to have client agreement

Subpart 6Provision of discretionary investment management services

429  Application of subpart

430  Meaning of provider of discretionary investment management service and related terms

Duties of DIMS licensee

431  DIMS licensee's duties

432  Duties of directors and senior managers of DIMS licensee

433  Duty of DIMS licensee to comply with professional standard of care

434  Limits on permitted exemptions and indemnities

435  Requirement for agreed investment mandate with retail investor

436  Action that must be taken on limit breaks

Related party transactions

437  Definition of related party benefits

438  General prohibition on transactions giving related party benefits

439  Certain related party benefits permitted

DIMS licensees must hold investor money in trust

440  Money paid by, or on account of, investors must be held in trust

Custodial service performed as part of discretionary investment management service

441  Application of sections 442 and 443

442  Requirements for custodian

443  Certain broker obligations of Financial Advisers Act 2008 apply under this Act

Subpart 7Holding and application of investor funds and property by derivatives issuers

444  Application of regulations made under this subpart

445  Regulations regulating holding and application of investor funds and property by derivatives issuers

Subpart 8Miscellaneous provisions

Civil liability

446  Part 6 licence provisions

Part 7
Enforcement, liability, and appeals

447  Meaning of contravene

Subpart 1FMA's enforcement powers

Stop orders

448  When FMA may make stop orders

449  Terms of stop order

450  Meaning of restricted communication

451  FMA may make interim stop order pending exercise of powers

452  Persons to whom stop orders and interim stop orders may apply

Direction orders

453  When FMA may make direction orders

454  Terms of direction orders

Unsolicited offer orders

455  When FMA may make unsolicited offer orders

456  Terms of unsolicited offer orders

Process for FMA's orders

457  FMA must follow steps before making orders

458  FMA may shorten steps for specified orders

459  FMA must give notice after making orders

General provisions

460  General provisions on FMA's orders

461  Consequences of failing to comply with FMA's orders

Subpart 2High Court's enforcement powers

Injunctions

462  Court may grant injunctions

463  When court may grant injunctions and interim injunctions

464  Undertaking as to damages not required by FMA

Court may make FMA orders under this Part

465  Court may make FMA orders under this Part

Subpart 3Civil remedies

Overview of civil remedies

466  Overview of civil remedies

467  What are civil remedy provisions

Declarations of contravention and pecuniary penalty orders

468  When court may make declarations of contravention

469  Purpose and effect of declarations of contravention

470  What declarations of contravention must state

471  When court may make pecuniary penalty orders

472  Directors treated as having contravened in case of defective disclosure and may be ordered to pay pecuniary penalty

473  Maximum amount of pecuniary penalty

474  Guidance for court on how to determine gains made or losses avoided for purposes of maximum amount

475  Considerations for court in determining pecuniary penalty

476  Court must order that recovery from pecuniary penalty be applied to FMA's or Commerce Commission's actual costs

Compensatory orders

477  When court may make compensatory orders

478  Terms of compensatory orders

479  Director has due diligence defence

480  Person treated as suffering loss or damage in case of defective disclosure

Other civil remedy orders

481  When court may make other civil remedy orders

482  Terms of other civil remedy orders

Interrelationship of civil remedies

483  More than 1 civil remedy order may be made for same conduct

484  Only 1 pecuniary penalty order may be made for same conduct

485  No pecuniary penalty and fine for same conduct

Due diligence defence

486  Defence for persons other than primary person in contravention

General

487  Rules of civil procedure and civil standard of proof apply to civil remedies

Subpart 4Offences of knowingly or recklessly contravening disclosure provisions

488  Offence of knowingly or recklessly contravening prohibition on offers where defective disclosure in PDS or register entry

489  Offence of knowingly or recklessly contravening other provisions relating to defective disclosure

Subpart 5Infringement offences

490  Infringement offences

491  Infringement notices

492  Procedural requirements for infringement notices

493  Payment of infringement fee

Subpart 6Banning orders

494  When court may make banning orders

495  Terms of banning orders

496  Offence of contravening banning order

497  Only 1 banning order may be made for same conduct

498  General provisions for banning orders

Subpart 7Orders to protect interests of aggrieved persons in case of financial markets investigations or proceedings

499  When court may make order to protect interests of aggrieved persons

500  What orders may be made

501  Interim orders

502  Relationship with other law

Subpart 8Indemnities or insurance for directors, employees, and auditors of issuers and offerors

503  General prohibition on indemnities or insurance for directors, employees, and auditors of issuer or offeror

504  Permitted indemnities for certain costs of directors, employees, and auditors of issuers or offerors

505  Permitted insurance for certain liability of directors and employees of issuer or offeror

506  Interpretation for this subpart

Subpart 9Appeals

507  Appeals against market services licence decisions

508  Appeals against other decisions of FMA on questions of law only

Subpart 10Miscellaneous

509  Time for laying information for summary offences

510  Jurisdiction of courts in New Zealand

511  Orders to secure compliance

512  General provisions as to court's orders

513  Persons entitled to appear before court

514  State of mind of directors, employees, or agents attributed to body corporate or other principal

515  Conduct of directors, employees, or agents attributed to body corporate or other principal

516  Saving of liability under general law

Part 8
Regulations and exemptions

Subpart 1Regulations

517  Regulations for purposes of Part 3 (disclosure of offers of financial products)

518  Regulations for purposes of Part 4 (governance of financial products)

519  Regulations for purposes of Part 5 (dealing in financial products on markets)

520  Regulations for purposes of Part 6 (market services)

521  Transitionals, savings, and orderly implementation of Act

522  Other regulations

523  Procedural requirements for regulations relating to exemptions, exclusions, and definitions

524  Miscellaneous provisions relating to exemptions

525  Miscellaneous provisions relating to fees and charges

526  Regulations or exemptions may require compliance with generally accepted accounting practice, financial reporting standards, or FMA frameworks or methodologies

527  Miscellaneous provisions relating to regulations

Subpart 2Exemptions

528  FMA may grant exemptions

529  Restriction on FMA's exemption power

530  Exemption in force for not more than 5 years

531  Breach of exemption conditions

532  Exemptions in respect of specified overseas jurisdictions

Subpart 3FMA's designation power

533  FMA may designate financial products and offers

534  Procedural requirements

535  Transitional matters

536  FMA may make interim orders pending exercise of powers

537  Period in which interim order is in force

Subpart 4Frameworks or methodologies

538  FMA may specify frameworks or methodologies

539  Consultation

Subpart 5General provisions relating to certain FMA instruments

540  Application of subpart

541  Status and publication of instruments

542  Variation and revocation

Subpart 6Recognition and application regimes

543  Purpose of this subpart

544  Definition of country in this subpart

Exemption from Parts 3 and 4 and regulations for New Zealand offers under recognition regime

545  Exemption from Parts 3 and 4 and regulations for New Zealand offers under recognition regime

546  Power to exempt from Parts 3 and 4 and regulations under recognition regime

547  Matters that must be stated in regulations implementing recognition regime

548  Offence for breach of regulations implementing recognition regime

Extension of Parts 3 and 4 and regulations to overseas offers under application regime

549  Extension of Parts 3 and 4 and regulations to overseas offers under application regime

550  Power to extend Parts 3 and 4 and regulations under application regime

551  Matters that must be stated in regulations implementing application regime

Subpart 7Enforcement of overseas pecuniary penalties under application regime

552  Purpose of this subpart

553  Enforcement of overseas pecuniary penalties under application regime

554  Power to enforce overseas penalties under application regime

555  Interpretation

556  Registration of judgment

557  Effect of registration

558  Enforceability of registered judgment

559  Stay may be granted

560  Costs

561  Interest

562  Rules of private international law not to apply

563  Other regulations for registration of judgments under application regime

Part 9
Repeals, amendments, and transitional provisions

Subpart 1Repeals and revocations

564  Repeals

565  Revocations

Subpart 2Amendments to Fair Trading Act 1986

566  Principal Act amended

567  New section 5A substituted

Subpart 3Amendments to Financial Advisers Act 2008

568  Principal Act amended

569  Interpretation

570  Who are wholesale clients

571  When person provides discretionary investment management service

572  Other exemptions

573  When financial adviser service is personalised service or class service

574  Who is permitted to provide personalised service to retail clients

575  Who is permitted to provide class service to retail clients

576  Financial adviser must make disclosure before providing personalised service to retail client

577  What financial adviser must disclose

578  QFE must make disclosure before personalised service provided to retail client

579  No compliance with disclosure obligation if disclosure out of date

580  New section 29A inserted

581  What is conduct obligation and when does it apply

582  New sections 36A to 36D inserted

583  New section 38 substituted

584  Other exemptions

585  What is conduct obligation and when does it apply

586  Restriction on use of term sharebroker

587  New section 77O substituted

588  Offence of recommending offer of securities when subscription illegal

589  Offences of receiving client money if offer for subscription illegal

590  Heading to subpart 4 of Part 4 amended

591  Sections 137C to 137J and heading repealed

592  Pecuniary order for contravening wholesale certification requirement

593  When FMA may make temporary banning orders for financial adviser services or broking services

594  General regulations

Subpart 4Financial Markets Authority Act 2011

595  Principal Act amended

596  Interpretation

597  FMA's functions

598  FMA may exercise person’s right of action

599  FMA may accept undertakings

600  New section 46A inserted

601  New heading and section 48A inserted

Power to appear and be heard and adduce evidence

602  FMA may require its warning to be disclosed

603  Schedule 1 amended

Subpart 5Amendments to KiwiSaver Act 2006

604  Principal Act amended

605  Purpose

606  Interpretation

607  Meaning of provider

608  Outline

609  Outline of how people become members of overall KiwiSaver scheme

610  Extension of opt-out period

611  Sections 24 to 32 and heading repealed

612  Employer must also supply investment statement for employer’s chosen KiwiSaver scheme (if any)

613  Effect of employer choice of KiwiSaver scheme

614  Commissioner provisionally allocates certain people to default KiwiSaver schemes and sends investment statement

615  New section 52 substituted

616  Notification of transfers and requirement to transfer funds and information

617  Compulsory employer contribution amount: general rule

618  Sections 101H to 101K and heading repealed

619  Part 4 substituted

KiwiSaver scheme rules

Provisions about unreasonable fees that apply to both KiwiSaver schemes and complying superannuation funds

Other implied terms

Other regulation of schemes

Interface with securities law

620  Sections 205 to 206 repealed

621  Sections 209 and 210 and heading repealed

622  Duty of Commissioner under section 50 modified in certain cases in which section 210 applies

623  Section 220 substituted

624  Administration of Act

625  Section 225 repealed

626  Status of Crown contribution and fee subsidy for tax purposes

627  Section 228 substituted

628  Regulations relating to default KiwiSaver providers

629  Sections 231 to 237 repealed

630  Amendments to Schedule 1 (KiwiSaver scheme rules)

631  Further amendments to Schedule 1 (KiwiSaver scheme rules)

632  Schedules 2 and 3 repealed

Subpart 6Amendments to Securities Trustees and Statutory Supervisors Act 2011

633  Principal Act amended

634  Name of principal Act changed

635  New section 3 substituted

636  Interpretation

637  Heading to Part 2

638  Heading to subpart 1 of Part 2

639  New section 6 substituted

640  New section 8 substituted

641  Requirement to be licensed: exception for certain FMA appointees

642  New section 10 substituted

643  FMA may impose conditions on licence

644  Information to be stated in licence

645  FMA must send licence and details to licensee and others

646  Decision on application for, or to vary, licence

647  Application to cancel licence

648  Notice, consultation, and submissions concerning decision under section 16(1)

649  Appeal to High Court against FMA's decision on application

650  Effect of expiry of licence

651  Licensee must apply for new licence or notify issuer or operator before licence expires

652  Rejection of application for new licence: FMA may replace existing appointee

653  Expiry of licence: issuer or operator may replace existing appointee or FMA appointee

654  Expiry of licence: existing appointee must provide documents

655  FMA may vary licence because of material change of circumstances, etc

656  FMA's powers if action plan not submitted, etc

657  Removal notice

658  Removal notice: FMA may give direction to existing appointee

659  Removal notice: FMA may replace existing appointee

660  Replacement notice: affected person may replace existing appointee or FMA appointee

661  Notice requiring documents: existing appointee, etc, must provide documents

662  New section 41 substituted

663  Compensation orders

664  Part 3 repealed

665  FMA may vary or cancel direction

666  New section 52 substituted

Transitional provisions

667  FMA may vary licences under Financial Markets Supervisors Act 2011

668  Appeal against licence decision

Subpart 7Amendments to other enactments

669  Amendments to other enactments

Subpart 8Transitional provisions for offers of financial products

670  Act applies to offer unless former enactments continue to apply

671  Former enactments continue to apply if prospectus registered before commencement

672  Issuer may elect to comply with former enactments instead of this Act if prospectus registered within 12 months of commencement

673  Former enactments apply if no prospectus is required unless issuer elects otherwise

674  Transitional provisions that apply after 12-month date in respect of registered prospectuses

675  This Act and 1978 Act are (on transitional basis) alternative means of compliance

676  All offers and allotments under old law must cease

677  All offers and allotments under old law must cease within 2 years of commencement

678  FMA may continue to perform and exercise functions, duties, and powers

679  Subpart does not prevent PDS from being lodged

680  Transitional and application provisions subject to exemption

Subpart 9Transitional provisions relating to securities offered under Securities Act 1978

681  Subpart applies to securities offered under Securities Act 1978

682  Interpretation in this subpart

683  Former enactments continue to apply until effective date

684  KiwiSaver schemes, superannuation schemes, and unit trusts continue under former enactments until effective date

685  Transition period

686  Ongoing requirements of this Act apply on and after effective date

687  Issuer of debt security must lodge trust deed and supply information

688  Managed investment scheme treated as being registered and issuer must supply information

689  Type of registration

690  Registrar to amend register

691  Restriction on making regulated offers and accepting contributions if requirements have not been complied with

692  Issuer may amend or replace governing document with FMA's consent

693  Conversion of governing documents to separate governing documents

694  Amalgamation of schemes

695  Amended enactments continue to apply or have effect in connection with securities

696  Issuer must send notification to security holders

697  PDS treated as having been given

698  FMA may continue to perform and exercise functions, duties, and powers

699  Transitional and application provisions subject to exemption

Subpart 10Other transitional provisions

Unit trusts and superannuation schemes in relation to which offers to the public have not been made

700  Unit trusts in relation to which offers to public have not been made

701  Superannuation schemes in relation to which offers to public have not been made

Amended enactments continue to apply or have effect in connection with schemes

702  Amended enactments continue to apply or have effect in connection with schemes

Extra transitional provisions relating to managed investment schemes

703  Remaining trustees (if any) cease to hold office

704  Restricted schemes have 3 years to comply with related party asset cap rule

705  Savings related to Superannuation Schemes Act 1976

Repealed enactments continue to be financial markets legislation

706  Repealed enactments continue to be financial markets legislation

Licensing of financial product markets

707  Transition process for existing financial product markets

Market services licences

708  Authorised dealers treated as holding market services licence

709  FMA may exercise powers in respect of licences

Approval of electronic transfer systems continues

710  Approval of electronic transfer systems continues

References to banning orders under this Act include references to banning orders under former enactments

711  References to banning orders under this Act include references to banning orders under former enactments

Financial Reporting Act 1993

712  Issuers continue to be issuers under Financial Reporting Act 1993

713  External Reporting Board must review tiers of financial reporting

Schedule 1
Provisions relating to when disclosure is required and exclusions

Schedule 2
Registers

Schedule 3
Schedule 3 schemes

Schedule 4
Consequential amendments


The Parliament of New Zealand enacts as follows: