Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019

Explanatory note

This note is not part of the regulations, but is intended to indicate their general effect.

These regulations come into force on 14 June 2019.

These regulations are related to amendments made to the Financial Markets Conduct Regulations 2014 (the 2014 regulations) by the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019.

These regulations and the amendments made to the 2014 regulations provide for a new recognition and application regime to be implemented under subpart 6 of Part 9 of the Financial Markets Conduct Act 2013 (the Act). This gives effect to the Memorandum of Cooperation on the Establishment and Implementation of the Asia Region Funds Passport (the memorandum) entered into between New Zealand and Australia, Japan, the Republic of Korea, and Thailand.

Under these arrangements,—

  • investments in certain overseas managed investment schemes (foreign passport funds) are able to be offered in New Zealand. Each foreign passport fund is primarily regulated under the laws of its home country (instead of New Zealand law); and

  • investments in certain New Zealand managed investment schemes (New Zealand passport funds) are able to be offered in Australia, Japan, the Republic of Korea, and Thailand. The New Zealand passport fund is primarily regulated under New Zealand law (for example, the governance requirements of Part 4 of the Act) rather than overseas law.

In summary, these regulations—

  • exempt certain offers of investments in foreign passport funds from most governance requirements in Part 4 of the Act and from financial reporting obligations in Part 7 of the Act (see regulations 6 to 10). The disclosure requirements in Part 3 of the Act still apply to these offers in New Zealand:

  • provide for the exemptions to apply only if certain preconditions are meet (see regulations 11 to 16). For example, the operator must apply to the Financial Markets Authority (the FMA) for entry of the foreign passport fund in accordance with the memorandum:

  • require the operator of the foreign passport fund to comply with certain terms and conditions (see regulations 17 to 22). For example, the operator must comply with the rules under the memorandum:

  • require the operator of the foreign passport fund to notify certain information to the FMA (see regulations 23 and 24):

  • provide for the application of the Act and the 2014 regulations (apart from disclosure requirements in Part 3 of the Act) to be extended when a New Zealand offeror offers managed investment products in Australia, Japan, the Republic of Korea, or Thailand under a passport fund recognition scheme (see Part 2).

Regulatory impact assessment

The Ministry of Business, Innovation, and Employment produced a regulatory impact assessment on 7 April 2016 to help inform the decisions taken by the Government relating to the contents of this instrument.