Financial Markets Conduct Regulations 2014

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Reprint as at 9 August 2017

Coat of Arms of New Zealand

Financial Markets Conduct Regulations 2014

(LI 2014/326)

Jerry Mateparae, Governor-General

Order in Council

At Wellington this 3rd day of November 2014

Present:
His Excellency the Governor-General in Council

Note

Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.

Note 4 at the end of this reprint provides a list of the amendments incorporated.

These regulations are administered by the Ministry of Business, Innovation, and Employment.

Pursuant to subpart 1 of Part 9, sections 344, 382, 448, 576, and 581, and clause 29 of Schedule 1 of the Financial Markets Conduct Act 2013, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council and on the recommendation of the Minister of Commerce and Consumer Affairs made in accordance with sections 344(3), 382(3), 448(2), 547(2), 549, 550, 576(2), and 581(2) and clause 29(3) of Schedule 1 of that Act, makes the following regulations.

Contents

1Title
2Commencement
3Overview
4Transitional, savings, and related provisions
5Interpretation
6Meaning of issuing group
7Matters relating to GAAP
8Status of examples
9General provision relating to statements in particular form, warning statements, etc
10Name of financial products or services
11Section numbers may be renumbered
12PDS, other disclosure document, or register entry not required to refer to matter that is not applicable
13Derivative definition prescribed times
14Financial service does not include being creditor under credit contract
15PDS does not have to be given if investor already holds products and has received, or has access to, same information
16Offeror treated as having reasonable grounds
17PDS does not have to be given before application if investment in category 2 products is made urgently and PDS is later provided
18PDS does not have to be given for category 2 products issued by NBDT that are debt securities
19NBDT must give credit risk statement to investors if it does not have investment-grade credit rating
20Information at start of PDS
21Information at front may be on separate cover page or before key information summary
22Content of PDS for offer of debt securities
23Content of PDS for offer of equity securities
24Content of PDS for offer of managed investment products
25Content of PDS for offer of derivatives
26Key information summary
27Purpose of key information summary
28Key information summary must be identified
29Key information summary requirements
30PDS must be easily readable
31Blank pages
32PDS may relate to more than 1 class of products, etc
33Incorporation by reference
34Additional information
35Information that must be included in PDS where regulations do not otherwise provide for placement
36Application form
37Content of register entries when PDS is lodged
38Content of register entry for offer of debt securities
39Content of register entry for offer of equity securities
40Content of register entry for offer of managed investment products
41Content of register entry for offer of derivatives
42Register entry must contain material information and may contain other lodged information
42ARequirement to include all material information does not apply to simplified disclosure offers
42BRequirement to include all material information does not apply to information in supplement for multiple-participant scheme
43Register entry must contain information referred to in PDS
44Lodging or giving information for register entry
45Lodgement of PDS
46When supplementary document may not be lodged
47How offeror must act under section 80 of Act
48How offeror must deal with applications on expiry
49Dealing with money while it is held in trust
49AOffers of convertible financial products
49BRequirements that apply to convertibles
49CPDS and register entry requirements
49DConvertible debt securities issued by registered banks
49EModification of statement at start of PDS
49FAdditional information
49GSimplified disclosure offers for listed issuers
49HCleansing notice
49ICleansing notice may not be provided in certain circumstances
50Duty to notify changes to Registrar
51Information to be lodged with Registrar for updating register
52Confirmation notice
52AAnnual confirmation notice
52BSupplementary confirmation notice if PDS, fund, or option opens after being closed
53Issuer must make information available on request
53ACertain members of defined benefit schemes may request information
54Disclosure for unquoted convertible financial products where holder has option to convert
54ACorrecting defective cleansing notice
55Event disclosures to be made publicly available
56Duty to make fund update publicly available
57Information at start of fund update
58Content of fund update for funds
58AContent of fund update for specified multi-fund investment option or specified life cycle stage
59Templates
60How long fund updates must be publicly available
61Revised fund update to be made publicly available in certain circumstances
61AFund update must be given if PDS incorporates it by reference
61BInterpretation
61CWhat is an e-reporting entity
61DAnnual report to be publicly available
61ENotice to shareholders
61FCopies of annual report to be provided to shareholders on request
62Annual report
63Content of annual report
64Annual report for issuer of equity securities must compare prospective financial information with actual results
64AInformation relating to KiwiSaver fees to be published
65When confirmation information is provided
66Who provides confirmation information
67Confirmation information
68How confirmation information is provided
69Confirmation for KiwiSaver schemes, superannuation schemes, and workplace savings schemes
70Confirmation information for KiwiSaver schemes
70ARequirements if fees required as confirmation information cannot be determined
70BConfirmation information for superannuation schemes and workplace savings schemes
71How confirmation information for KiwiSaver schemes, superannuation schemes, and workplace savings schemes is provided
71AOngoing confirmation for derivatives
71BOngoing confirmation information for derivatives
71CHow ongoing confirmation information for derivatives is provided
72Provisions relating to exclusions and other Schedule 1 of Act matters
72AACivil liability for contravention of certain provisions in Schedule 8
72AWholesale offer exclusion does not apply to certain offers of Crown debt securities
73References to trust deeds and debt securities
74Trust deed for debt security must provide for certain matters
75Terms implied into trust deed for debt security
76Duty of NBDT to provide reports to supervisor
77Proceedings at meetings of holders of debt security
78Resolution in lieu of meeting
79Application for registration
80Lodging or giving information for scheme register
81Superannuation scheme rules
82Additional initial and ongoing registration requirement for workplace savings schemes
83Governing document for registered scheme must provide for certain additional matters
84Terms implied into governing document for registered scheme
85Custodian’s records of scheme property
86Procedures for reconciling records
87Custodian must obtain assurance engagement
88Requirements of assurance engagement
89Proceedings at meetings of scheme participants
90Resolution in lieu of meeting
91Manager and associated persons may vote if interested in resolution to remove and replace manager in certain circumstances
92Annual meeting of closed-ended schemes
93Statement of investment policy and objectives or change does not need to be lodged in certain circumstances
94Manager must provide immediate report to supervisor (or FMA) in event of uncorrected limit break
95Manager must provide quarterly reports to supervisor (or FMA) about limit breaks
96Contents of reports about limit breaks
97Manager must report to supervisor (or FMA) about pricing error or failure to comply with pricing methodologies
98Contents of reports about pricing error or failure to comply with pricing methodologies
99Other action that must be taken on pricing errors and failure to comply with pricing methodologies
100Manager must provide quarterly report to supervisor (or FMA) on related party transaction certificates
101Investments in Australian registered managed investment scheme is permitted related party benefit transaction
102Investment in Government securities is permitted related party benefit transaction
103Transaction to acquire first property is permitted related party benefit transaction
104Listed manager transaction is permitted related party transaction
105Requirements for certificates as to related party benefits
106Restriction on acquisitions of in-house assets does not apply to public securities
106ARestriction on acquisitions of in-house assets does not apply to restricted schemes that invest in certain unregistered schemes
107Circumstances in which duty for issuer to keep register does not apply
108Audit of registers
109Audit of particular register
110Collective audit of registers kept by registrar entity
111Public inspection of register not required in certain circumstances
112Inspection and copies of documents
113Reporting obligations for Schedule 3 schemes
114Terms implied into trust deed of Schedule 3 schemes
114AExemption involving acquiring certain products by way of issue
115Interpretation
116Exemption
117Prohibited purpose
118Size of IPO
119Period of market stabilisation
120Disclosure by offeror
121Stabilisation agreement
122Appointment of stabilisation manager
123Stabilisation manager must notify licensed market operator and FMA that market stabilisation to begin
124Duties and responsibilities of stabilisation manager
125Stabilisation bids
126Price of stabilisation bids: before any trades
127Price of stabilisation bids: after trades
128Stabilisation manager must keep daily record of trading
129Stabilisation manager’s report to licensed market operator
130Over-allocation
131Interpretation
132Person treated as holding financial products where person has relevant interest in certain derivatives
133How to make event disclosures to licensed market operator
134How to make event disclosures to listed issuer
135How to disclose more than 1 type of event disclosure
136How to disclose more than 1 substantial holding
137How to disclose for more than 1 connected holder with similar or related substantial holding
138What information must be disclosed in event disclosures
139When relevant agreement documents must be attached to event disclosures
140Previously attached relevant agreement documents need not be attached again
141Relevant agreement documents need not be attached for ownership relevant interests
142Relevant agreement documents need not be attached in case of investment management contracts
143How listed issuer must give acknowledgement of event disclosure
144Exemption for substantial holdings in overseas issuer with only secondary listing on domestic licensed markets
145Exemption for substantial holdings held for hedging by derivatives issuer acting in client-serving capacity
146Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying is disclosed
147Setting of licensed market operator’s form and delivery method for event disclosure
148Forms for tracing and disclosure of interests in listed issuers
149Interpretation
150Directors and senior managers must complete disclosure
151What information must be disclosed
152Aggregation of multiple transactions in transaction disclosure notice
153Method by which disclosure notice must be given
154Exemption relating to overseas-regulated markets
155Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying is disclosed
156Setting of licensed market operator’s form for disclosure
157Products transfer
158Brokers transfer
159Interpretation
160Application of subpart
161Miscellaneous provisions relating to application
162Obligations do not apply to offers to certain persons
163Offeror must notify intention to make unsolicited offer
164Contents of written notice to issuer
165Unsolicited offer must be made in disclosure document
166Restricted unsolicited offer communications
167Disclosure document must be prominently identified if accompanied by other documents
168Contents of disclosure document
169Presentation of information and statements
170Offer period
171Withdrawal of offer
172Terms of offer cannot be varied
173Right to cancel
174Right to cancel does not apply if FMA has exempted offeror
175Notice of cancellation
176Offeror’s cancellation duties where offer to acquire financial products
177Offeror’s cancellation duties where offer to acquire disposal power or other interests or rights
178Prohibition on inviting offers to sell
179Unsolicited offer provisions
180Protection from liability in connection with unsolicited offer obligations
181Control limit for NZX Limited
182Exemptions from DIMS licensing requirement
183Exemption for temporary management of portfolio in situations of absence or incapacity or unexpected contingencies
184Prescribed intermediary services
185Meaning of crowd funding service and peer-to-peer lending service
186Additional eligibility criteria for crowd funding service
187Additional eligibility criteria for peer-to-peer lending service
188Eligibility criteria for authorised bodies
189FMA must have regard to compliance history of relevant parties
190FMA must consult Reserve Bank in relation to banks, NBDTs, and insurers
191General reporting condition
192Condition for independent trustees to report serious problems
193Condition for DIMS providers and prescribed intermediary service providers to keep documents and to give documents on request
194Condition for DIMS providers to disclose if service is wholesale
195Condition for intermediaries to notify FMA of suspected contraventions of Part 2 of Act or of investment cap
196Condition for provider of crowd funding service to make warning statement available
197Condition for provider of crowd funding service to obtain investor confirmation
198Conditions are Part 6 services provisions
199General FMA conditions
200Other FMA conditions for DIMS
201Other FMA conditions for derivatives issuer
202Other FMA conditions for crowd funding service or peer-to-peer lending service
203Application
204Information at start of SDS for DIMS
205Content of SDS for DIMS
206Investment proposal must be provided to investors
207Presentation requirements for SDS and investment proposal
208Information that must be available to investors
209Various PDS requirements also apply to SDSs and investment proposals
210Ongoing reporting for DIMS
211Annual information
212How information is made available
213Disclosure obligations apply to prescribed intermediary services
214Application
215SDS for crowd funding service or peer-to-peer lending service
216Presentation requirements
217SDS may refer to facility’s Internet site
218Timing of disclosure for prescribed intermediary services
219Prescribed intermediary service providers must provide transaction information to investors
220How transaction information is made available
221Document that identifies defects and material changes must accompany new SDS
222Provider of DIMS or prescribed intermediary service must make information available on request
223Client agreement requirements apply to prescribed intermediary services
224Time for entering into client agreement for prescribed intermediary services
225Terms implied into client agreements
226Client agreements for DIMS must provide for certain matters
227Client agreements for crowd funding service must provide for certain matters
228Client agreements for peer-to-peer lending service must provide for certain matters
229Client agreements may use different terminology
230DIMS licensee must provide report to FMA in event of limit break
231DIMS licensee must provide quarterly reports to FMA about limit breaks
232Contents of reports about limit breaks
233Investments in Australian registered managed investment scheme is permitted related party benefit transaction
234Investment in Government securities is permitted related party benefit transaction
235Requirements for certificates as to related party benefits
236DIMS licensee must provide quarterly report to FMA that identifies certificates
237Quarterly reports may be in single report
237ARequirements do not apply if money or property held solely for completing transaction or securing obligation
238Interpretation and application
239Derivatives investor money and investor property
240Derivatives issuer must ensure derivatives investor money and property held on trust for investor
241Derivatives issuer must pay money into trust account
242When derivatives investor money ceases to be held on trust
243When derivatives investor property ceases to be held on trust
244Responsibilities of derivatives issuer in event of shortfall
244AEquity-based reconciliation
244BCash-based reconciliation
245Protections
246Insolvency
247Record keeping
248Assurance engagement
249Contents of assurance report
250Application of Part 6 provisions
251Entities that are FMC reporting entities as a result of exclusions
252Prescribed circumstances for definition of recipient of money from conduit issuer
253Financial service does not include providing credit in definition of restricted communication
254Infringement offence fees
255Infringement notice and reminder notice
256Interpretation
257Australia designated as country to which recognition regime applies
258Class of financial products to which subpart applies
259When New Zealand is host country
260When offer is recognised offer
261Effect of recognised offer
262Preconditions
263Precondition for offer to be regulated offer in Australia
264Precondition concerning pre-offer advertising
265Precondition for Australian offeror to be entitled under Australian law to offer financial products
266Preconditions for Australian offeror to give notice to Registrar
267Requirements for notice to Registrar
268Documents that must accompany notice to Registrar
269Terms and conditions to be complied with
270Offer must remain Australian regulated offer, comply with Australian law, and be open to acceptance in Australia
271Warning statements
272Other terms and conditions
273Notice of changes
274Other requirements for notices under regulation 266 or 273
275Additional information that must be contained in specific notices required by regulation 273
276Extension of Act and regulations to financial products offered in Australia by New Zealand offeror
277Notice to Registrar of intention to make offer under Australian recognition scheme
278Form of notice required by regulation 277
279Prescribed rate of interest
280Status of PDS
280ANotices or other documents given, provided, or served by FMA
280BHow FMA notices or other documents are given, provided, or served
281Revocation of Financial Markets Conduct (Phase 1) Regulations 2014
Gazette Information
Reprint notes