New Zealand Legislation: Regulations

7 Restriction on certain transactions involving money of clients of practice

• (1) A practice must not authorise or permit money of any client of the practice to be lent, or credit to be otherwise provided by a client, to any of the following persons:

  • (a) the sole practitioner, partnership, or incorporated firm:

  • (b) any partner or voting shareholder:

  • (c) any parent, sibling, child, spouse, or civil union partner of the practitioner, partner, or voting shareholder:

  • (d) any body corporate, partnership, or trust if the principal financial benefit or the effective control is vested directly or indirectly in any of the persons referred to in paragraphs (a), (b), and (c).

  (2) Despite subclause (1), a practice may authorise or permit money of a client to be lent, or credit to be otherwise provided, to any of the persons referred to in subclause (1)(a) to (d) if—

  • (a) the client obtains legal advice and representation in respect of that loan, or provision of credit, from an independent lawyer; or

  • (b) the client is a financial institution that normally instructs the borrower's practitioner to prepare loan or credit or security documentation in respect of loans made or credit provided by that client.

  (3) A lawyer acting in that capacity must not authorise or permit any rent, interest, instalments, or debts due to a client of the lawyer to be collected by any person, other than the lawyer’s firm, referred to in subclause (1)(a).

  (4) Nothing in this regulation prevents the operation of a practice’s lawyers nominee company.