Financial Markets (Regulators and KiwiSaver) Bill

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Hon Simon Power

Financial Markets (Regulators and KiwiSaver) Bill

Government Bill

211—1

Contents

Explanatory note

Part 1
Preliminary provisions

3 Purpose of Parts 1 to 4

4 Interpretation

5 Act binds the Crown

Part 2
Financial Markets Authority

Establishment of FMA

6 Financial Markets Authority established

7 FMA is Crown entity

FMA's main objective and functions

8 FMA's main objective

9 FMA's functions

Membership of board of FMA

10 Membership of board of FMA

11 Associate members

12 Associate member treated as member of board

13 Removal of associate members

Provisions relating to divisions

14 FMA may act by divisions

15 Membership, chairperson, meetings, and resolutions of division

16 Powers of division

Provisions relating to meetings of FMA

17 Quorum for meetings of FMA

18 Completion of proceedings where member unable to attend meeting

19 Assent to resolution without meeting

Miscellaneous matters

20 Minister may request that FMA inquire and report

21 Provisions relating to Government Superannuation Fund

22 Protection from liability for FMA and members and employees

23 FMA's warnings, reports, guidelines, or comments protected by qualified privilege

24 Evidence of orders and decisions of FMA

Part 3
General information-gathering and enforcement powers

Subpart 1—General information-gathering powers

Power to obtain information, documents, and evidence

25 FMA may require person to supply information, produce documents, or give evidence

26 Powers of FMA to receive evidence

27 How evidence may be given

28 Witnesses' expenses

Power to enter and search place

29 Power to enter and search place

Subpart 2—Sharing information and documents

Power to share information and documents with other law enforcement or regulatory agencies

30 Sharing of information and documents with law enforcement or regulatory agencies

Power to act on requests of overseas regulators

31 Power of FMA to act on requests of overseas regulators

32 FMA's consideration of requests

33 Conditions that may be imposed on providing information, documents, or evidence to other agencies or regulators

Subpart 3—FMA may exercise person’s right of action

34 FMA may exercise person’s right of action

35 Requirements for FMA exercising person’s right of action

36 High Court may grant leave

37 Procedural requirements for leave to exercise person’s right of action

38 Costs of proceedings to be met by person

39 Powers of High Court for proceedings exercising person’s right of action

40 Representative actions

41 Proceedings must not be settled, compromised, or discontinued without approval

Subpart 4—Other powers

Power to make confidentiality orders

42 Power to make confidentiality orders

43 Publication or disclosure with FMA's consent

Power to accept undertakings

44 FMA may accept undertakings

45 Enforcement of undertakings

Power to state case for opinion of High Court

46 FMA may state case for opinion of High Court

Power to require warning to be disclosed

47 FMA may require its warning to be disclosed

Subpart 5—Miscellaneous provisions relating to powers

FMA may authorise person to obtain information or documents

48 Power to authorise person to obtain information or documents

49 Requirements for persons authorised to obtain information or documents

50 Disclosure of information or documents from exercise of powers

51 Non-disclosure of information or documents from exercise of powers under section 25

52 Protection from liability for persons exercising powers

53 Witnesses and counsel to have privileges of witnesses and counsel in court

Effect of proceedings on exercise of powers

54 Effect of proceedings

55 Effect of final decision that exercise of powers under section 25 unlawful

56 Criminal liability for obstructing exercise of powers

Other miscellaneous provisions

58 Service of notices

59 Powers not limited

60 Limitation on disclosure of information obtained in FMA's operations

61 Part does not limit Privacy Act 1993

Part 4
Miscellaneous provisions

Subpart 1—Fees, charges, costs, and levies

62 Regulations relating to fees, charges, and costs

63 Levy of financial markets participants

64 FMA must consult about request for appropriation

Subpart 2—Transitional provisions

65 Interpretation

Disestablishment of Securities Commission

66 Securities Commission disestablished

67 Consequences of disestablishment

68 References to Securities Commission

69 Transfer of employees

70 Effect of Act

Disestablishment of office of Government Actuary

72 Office of Government Actuary disestablished

73 Consequences of disestablishment

74 References to Government Actuary

Miscellaneous provisions

75 Ministry of Economic Development employees

Subpart 3—Amendments to other enactments

76 Amendments to other enactments

77 Amendments consequential on replacement of Commission by FMA

78 Amendments consequential on replacement of Government Actuary by FMA

Part 5
Amendments to Securities Act 1978

79 Principal Act amended

80 Long Title amended

81 Interpretation

82 Meaning of advertisement

83 Exemptions from this Act

84 Exemption for employer superannuation schemes

85 Previously allotted securities

86 Term implied in certain offers of previously allotted securities

87 Part 1 repealed

88 Restrictions on offer of securities to public

89 Restrictions on distribution of prospectuses

90 Void irregular allotments

91 Court must make relief order in certain circumstances

92 Consent for purposes of section 37AC(1)(c) or (d)

93 Voidable irregular allotments

94 Prohibition of advertisements

95 Section 38F repealed

96 Requirements relating to prospectuses delivered to Registrar for registration

97 New sections 42 to 43M substituted

42 Registration of prospectus

43 Amendment of registered prospectus

43A Registrar not required to consider certain matters

43B Publication of registration

FMA's consideration of prospectuses, amendments, trust deeds, and deeds of participation

43C FMA's consideration of prospectuses, amendments, trust deeds, and deeds of participation

43D No allotments may be made and no applications or subscription money may be accepted during consideration period

43E FMA may remove restrictions if its consideration is complete or further consideration unnecessary

FMA's powers to prohibit distribution of investment statements, prohibit allotments, or cancel registration of prospectuses

43F Prohibition of distribution of investment statement

43G FMA may prohibit allotment or cancel registration

43H Repayment of subscriptions

43I Order may be made on terms and conditions and may be varied or revoked

43J Notices and submissions concerning exercise of power under section 43F or 43G

43K FMA may make interim orders pending exercise of powers

43L FMA may revoke interim order

43M Nothing done or omitted to be done by Registrar or FMA guarantees or represents that prospectus complies with Act and regulations

98 New heading and sections 43N to 43S inserted

Register of securities

43N Register of securities

43O Purpose of register

43P Contents of register

43Q Duty to notify relevant matters and provide certain documents and information to Registrar

43R Amendments to register

43S Search of register

99 Notices and submissions concerning delayed allotment orders

100 Limited notice and submissions for urgent delayed allotment orders

101 Notices and submissions concerning prohibition orders

102 Commission's powers in respect of contributory mortgages

103 Sections 46 to 47A substituted

46 Registration of trust deeds and deeds of participation

47 Amendment of registered deed

47A Registrar not required to consider certain matters

104 New sections 54C to 54F inserted

54C Documents, information, and other matters to be made publicly available

54D FMA may specify frameworks or methodologies

54E Consultation

54F FMA may vary or revoke notice

105 Which persons are liable for misstatements

106 Which experts are liable for misstatements

107 Criminal liability for misstatement in advertisement or registered prospectus

108 Section 59A substituted

59A Criminal liability for delivering prospectus or amendment for registration that does not comply with various requirements

109 Other offences

110 When Court may make management banning orders

111 Persons automatically banned from management

112 When Court may prohibit payment or transfer of money, securities, or other property

113 New sections 65G and 65H inserted

65G Appeals against decisions of FMA on questions of law only

65H Power of Registrar to delegate

114 Section 66 repealed

115 Part 3 repealed

116 Heading to Part 4 amended

117 Regulations and Orders in Council

118 New section 70AB inserted

70AB Regulations relating to exemptions under section 5(1)

119 Fees and charges

120 New sections 70B to 70D inserted

70B FMA may grant exemptions

70C Status and publication of exemptions

70D Variation or revocation of exemptions

121 Matters that must be stated in regulations implementing application regime

122 Schedule 1 repealed

Transitional provisions

123 Registration of prospectus continues

124 Regulations for purposes of section 123

125 Registration of deeds continues

126 Prospectuses, amendments, and deeds delivered but not yet registered must be dealt with under old law

127 Exemptions continue in force

Part 6
Amendments to Securities Markets Act 1988

128 Principal Act amended

129 Interpretation

130 Purpose of this subpart

131 Public issuers must disclose in accordance with listing rules if continuous disclosure listing rules apply

132 Heading to subpart 1 of Part 2B amended

133 Registration of exchanges

134 New subpart 1A of Part 2B inserted

Subpart 1A—Market rules and market integrity regulations for registered exchanges

36FA Purpose and criteria applying under this subpart

Key requirements

36G Registered exchange must operate markets under market rules that comply with this subpart

36H Required matters for market rules

36I When market rules have effect

Process for approving new market rules and changes

36J Registered exchange must provide proposed new market rules and changes to FMA

36K Approval process for proposed market rules and changes

36L Approval of market rules

36M Power for FMA to request market rules on certain matters

Miscellaneous provisions on market rules

36N Market rules must be available for public inspection

36O Application of Acts relating to regulations to contractual market rules

Market integrity regulations

36P Market integrity regulations

36Q Requirements for market integrity regulations

36R Effect of market integrity regulations on market rules

Application of subpart to futures markets

36RA Application of subpart to registered exchange in relation to futures markets

135 Heading above section 36S substituted

Subpart 1B—Control limits for registered exchanges

136 Heading above section 36X and sections 36X to 36Z repealed

137 Heading to subpart 2 of Part 2B substituted

Subpart 2—Obligations and oversight of registered exchanges

138 New heading and sections 36Y to 36YF inserted

General obligations of registered exchange

36Y General obligations of registered exchange

36YA Registered exchange must give annual report to FMA

36YB FMA may carry out general obligations review of registered exchange

36YC FMA must make written report on general obligations review

36YD FMA may require registered exchange to submit action plan on failure to meet general obligations

36YE Approval, amendment, or rejection of action plan

36YF Minister may give general obligation direction to registered exchange

139 Registered exchange must notify Commission of disciplinary actions and suspected contraventions

140 Registered exchange must give Commission material information given to market participants

141 When disclosure of material information required

142 Form and method of disclosure

143 New section 36ZK substituted

36ZK Registered exchange must give FMA or Takeovers Panel other information and assistance on request

144 Power to disclose further information

145 Commission may give directions to registered exchanges

147 New heading and section 36ZXA inserted

Application of subpart to futures markets

36ZXA Application of subpart to registered exchange that is also authorised futures exchange

148 New subpart 3 of Part 2B inserted

Subpart 3—Overseas exchanges

36ZY Overseas exchanges

36ZYA Revocation or amendment of authorisation

36ZYB Offence for breach of terms or conditions of authorisation

149 Interpretation of terms used in this Part

150 Dealers in futures contracts to be authorised

151 New Part inserted

Part 3A
Securities Markets Rulings Panel

40A Purpose of this Part

40B Interpretation

Subpart 1—Securities Markets Rulings Panel

Securities Markets Rulings Panel

40C Securities Markets Rulings Panel established

40D Membership of Rulings Panel

40E Functions of Rulings Panel

40F Provisions applying to Rulings Panel

Divisions of Rulings Panel

40G Rulings Panel may act by divisions

40H Membership, chairperson, meetings, and resolutions of division

40I Powers of division

Subpart 2—Powers and procedures of Rulings Panel

40K Rulings Panel may determine own procedures

40L Rulings Panel may receive and hear evidence

40M Powers of Rulings Panel relating to proceedings and parties

40N Parties' failures to act do not affect Rulings Panel's powers to decide matter

40O Rulings Panel may draw inference from parties' failures to act and decide matter based on available information

40P District Court may authorise Rulings Panel to summon witnesses

40Q Issuing of summons by Rulings Panel

40R Serving of summons

40S Witnesses' expenses

40T Failure to comply with summons

40U Protection for witnesses and counsel

Hearings and decisions

40V Persons entitled to be heard

40X Decisions of Rulings Panel

40Y Rulings Panel must consider previous decisions

40Z Remedial orders

40ZA Pecuniary penalty orders

40ZB Interim orders

40ZC Confidentiality orders

40ZD Orders generally

40ZE Enforcement of Rulings Panel's orders

Reviews of decisions

40ZF Powers of Rulings Panel on reviewing decisions made under securities markets rules or regulations

Subpart 3—Appeals

40ZG Appeal against monetary orders made by Rulings Panel

40ZH Appeal against decisions of Rulings Panel on question of law

40ZI Who may exercise right of appeal

40ZJ Decisions and orders have effect pending determination of appeal

40ZK High Court may order proceedings be heard in private

40ZL Appeal to Court of Appeal in certain cases

Subpart 4—Miscellaneous provisions relating to Rulings Panel

40ZM Administrative support and funding of Rulings Panel and expenses of members

40ZN Rulings Panel must provide annual report

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

153 Penalties for failing to comply with Part 2B

154 Persons automatically banned from management

155 No pecuniary penalty and fine for same conduct

156 New heading and section 47A inserted

47A Appeals against decisions of FMA on questions of law only

157 New sections 48 to 48B substituted

48 Exemptions granted by FMA

48A Status and publication of exemptions

48B Variation or revocation of exemptions

158 New section 49CA inserted

49CA Rulings Panel regulations

159 New Schedule added

Transitional provisions

160 Transitional provisions for conduct rules and registered exchanges

161 Exemptions continue in force

162 Consequential amendment to Remuneration Authority Act 1977

163 Amendment to Securities Markets Amendment Act 2002

Part 7
Amendments to KiwiSaver Act 2006

164 Principal Act amended

165 Interpretation

166 Meaning of provider

167 Application

168 Effect on existing members of change, etc, in employer chosen scheme

169 Notification of transfers and requirement to transfer funds and information

170 Involuntary transfers

171 Compulsory employer contribution amount: general rule

172 Schemes eligible to be KiwiSaver scheme

173 New sections 116A to 116D inserted

116A Requirements for restricted KiwiSaver schemes

116B Trustees of KiwiSaver schemes

116C Managers of KiwiSaver schemes

116D Administration managers and investment managers

174 Additional duty of independent trustees

175 Heading above section 118 repealed

176 KiwiSaver scheme must be treated as registered superannuation scheme for most purposes

177 New headings and sections 119 to 122 substituted

119 Content of trust deeds

119A Implied provision as to amendments reducing accrued benefits, etc

119B Application of sections 119C to 119I

119C Implied provision as to transfer of members, etc

119D Procedural requirements in case of certain transfers

119E When requirements of section 119D not met

119F Information required in case of transfer under section 119D

119G When FMA may approve section 119D transfers without consent of members

119H How approval under section 119G may be granted

119I FMA may exempt trustees from requirement to obtain written consent of all members

119J Application and enforcement of implied provisions

Financial information

Prospective members' rights to information

121 Prospective members' rights to information

Members' rights to information

122 Members' rights to information

178 New heading inserted

Annual reports, returns, and statements

179 Requirement for annual report

180 Requirement for annual return

181 Requirement for annual personalised statement of contributions and accumulations for members

182 KiwiSaver scheme rules are implied in trust deeds establishing KiwiSaver scheme

183 Section 128 repealed

184 Amendment of trust deed or participation agreement governing KiwiSaver scheme

185 New sections 129A and 129B and heading inserted

129A Implied provision as to alterations to scheme

Reversion of scheme assets to employer

129B Implied provision as to reversion of scheme assets to employer

186 Consent to reversion of assets to employer

187 Applications for registration of scheme governed by trust deed

188 Section 132 repealed

189 Matters required to be specified in application

190 Registration of scheme

191 Heading above section 135, heading above section 148, and sections 135 to 155 repealed

192 Contents of register in relation to KiwiSaver schemes

193 Cancellation of registration and order to wind up KiwiSaver scheme

194 New section 168A inserted

168A Scheme may cease to be restricted scheme

195 Powers of FMA in event of scheme operating in contravention of this Act, etc

196 Implied terms continue to be implied on cancellation of registration

197 Receiver or liquidator to designate or appoint independent trustee if required

198 Initial steps in winding up of KiwiSaver scheme

199 New section 174A inserted

174A Registration deemed to be cancelled when assets distributed

200 Appointment of default providers

201 Power of High Court to act in respect of terms and conditions of appointment as default KiwiSaver scheme and regulations relating to default KiwiSaver schemes

202 Offence to fail to provide information under this Part

203 Application of section 13G of Trustee Act 1956 if power of investment exercised in relation to member allocated to scheme under sections 50 to 52

204 Certain sections of Securities Act 1978 modified in relation to KiwiSaver scheme

205 Regulations

206 Schedule 1 amended

1A Enforceability

Rules applying to KiwiSaver schemes other than restricted schemes

1B Trustee's functions

1C Manager's functions

1D Scheme investments and property

1E Manager to provide information to trustee

Rules applying to all KiwiSaver schemes

1F Investment of scheme money

207 Schedule 2 amended

Consequential amendments

208 Consequential amendments

Transitional provisions

209 Interpretation

210 Registrar must amend register to identify restricted schemes

211 Certain employer schemes are restricted schemes

212 Certain restricted-entry schemes are restricted schemes

213 Certain participation agreements executed before registration continue to have effect

214 Certain scheme provider agreements continue in force

215 Parties to trust deed may execute amendment to trust deed

216 References to department in instruments of appointment

Part 8
Amendments to Financial Advisers Act 2008

217 Principal Act amended

218 Office of Commissioner for Financial Advisers disestablished

Amendments to Financial Advisers Act 2008

219 Interpretation

220 Outline of this Part

221 Heading to subpart 1 of Part 4 amended

222 Heading above section 79 and sections 79 and 80 repealed

223 Section 81 substituted

81 Establishment of code committee

224 Membership of disciplinary committee

225 Failure to comply with summons by Commissioner to attend disciplinary committee hearing

227 Consequential replacements of references to Commission

Transitional provisions

228 Transitional provisions for general transfer of functions of Commissioner for Financial Advisers to FMA

229 Functions of Commissioner for Financial Advisers as chair of disciplinary committee continue to reside with chair

Schedule 1
Financial markets legislation

Schedule 2
Provisions relating to search power

Schedule 3
Amendments to other enactments

Schedule 4
Amendments to replace references to Securities Commission or Government Actuary

Schedule 5
New Schedule added to Securities Markets Act 1988

Schedule 6
Amendments consequential on amendments to KiwiSaver Act 2006

Schedule 7
Amendments to replace references to Commissioner for Financial Advisers

The Parliament of New Zealand enacts as follows: