Financial Markets Conduct Regulations 2014

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Reprint as at 15 September 2018

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.

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