Financial Markets Conduct Regulations 2014

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Version as at 28 July 2022

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

The Parliamentary Counsel Office has made editorial and format changes to this version using the powers under subpart 2 of Part 3 of the Legislation Act 2019.

Note 4 at the end of this version provides a list of the amendments included in it.

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 certain products is made urgently and PDS is later provided
18	PDS does not have to be given for certain 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
61AA	Fund update requirements apply to foreign passport funds
	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
	Passport funds
63A	Annual report requirements apply to foreign passport funds
63B	Manager of passport fund must lodge certain information
63C	Manager of passport fund must lodge information for updating scheme register
	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
71AA	Additional information to accompany KiwiSaver confirmation information
	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
82A	Passport funds are type of registered scheme
82B	Additional initial and ongoing registration requirements for passport funds
	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
	Application of Trusts Act 2019 to PIE fund units
106C	Application of Trusts Act 2019 to PIE fund units
	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
114AA	Criterion for withdrawal of Schedule 3 scheme approval on trustee’s application
	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
	Subpart 1—Issue of licences
	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
187A	Additional eligibility criteria for service of acting as administrator of financial benchmark
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
	Subpart 2—Conditions of licences
	Conditions imposed by regulations
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
197A	Condition for manager of passport fund
197B	Conditions for service of acting as administrator of financial benchmark
198	Conditions are Part 6 services provisions
	Additional conditions that FMA may impose on licences
199	General FMA conditions
199A	Other FMA conditions for licences for managers of passport funds
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
	Subpart 3—Disclosure obligations
	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
	Subpart 4—Client agreements
	Client agreement requirements apply to prescribed intermediary services [Revoked]
223	Client agreement requirements apply to prescribed intermediary services
	Client agreements [Revoked]
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
	Subpart 5—Additional regulation
	Disclosure for financial advice and financial advice services
229A	Outline of disclosure requirements when giving financial advice to retail clients
229B	Application and interpretation
229C	Information that must be publicly available
229D	Information that must be given when nature and scope of advice known
229E	Information that must be given when advice given
229F	Information that must be given if complaint received
229G	Disclosures relating to advice not required if client has current information
229H	General requirements for form and manner of disclosure
229I	Additional requirements for form and manner of disclosure relating to advice
229J	Information given or supplied by provider
	Financial advice that is not regulated
229K	Circumstances in which financial advice is not regulated financial advice
229L	Lender’s duty to ensure borrower understands that advice about credit contract or insurance is not regulated financial advice
	Record of nominated representatives
229M	Record of nominated representatives
	Custodians of financial products
229N	Application of regulations relating to custodians of financial products
229O	Definitions in regulations 229N to 229W
229P	Relevant custodial services provided on behalf of business of another person
229Q	Custodian must provide information to clients
229R	Alternative means of providing information required by regulation 229Q(1)
229S	Client request for information from custodian
229T	Procedures for reconciling custodian’s records
229U	Custodian must obtain assurance engagement
229V	Requirements of assurance engagement and report
	Application of obligations to custodial services provided to wholesale clients
229W	Application of sections 431ZC to 431ZH of Act and regulations to wholesale clients
	Holding client money or property together with other money or property
229X	Application of regulations that allow client money or property to be held together with other money or property
229Y	Client money or property not held separately in order to facilitate settlements
229Z	When firm money or property not held separately in order to facilitate settlements is treated as client money or property
229ZA	Client money not held separately in order to rectify or reduce risk of shortfall
229ZB	When firm money not held separately in order to rectify or reduce risk of shortfall is treated as client money
229ZC	Provider that holds client money or property together with other money or property must comply with duties
	Miscellaneous provisions relating to regulation of client money or property services
229ZD	Custodianship of property of registered scheme is not regulated client money or property service
229ZE	Overseas banks prescribed entities for purposes of section 431ZC of Act
	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
	Subpart 6—Holding and application of investor funds and property by derivatives issuers
	Holding and application of investor funds and property by derivatives issuers [Revoked]
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 with Australia, interest rates, and other miscellaneous provisions
	Subpart 1—Preliminary provisions relating to mutual recognition of financial product offerings: Australia
256	Interpretation
256A	Offeror may act under alternative mutual recognition regime
	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 Simple NBDT debt securities
	Schedule 7A Additional information to accompany KiwiSaver confirmation information
	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 9A Limited disclosure document for bank perpetual preference shares
	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 21A Information to be disclosed when giving regulated financial advice to retail clients
	Schedule 21B Financial advice not regulated financial advice in certain circumstances
	Schedule 21C Duties that apply when client money or property is held together with other money or property
	Schedule 22 Infringement fees
	Schedule 23 Infringement notice
	Schedule 24 Reminder notice
	Schedule 25 Mutual recognition of securities offerings—warning statements
	Schedule 26 Passport fund statement
	Schedule 27 Part A information for registration as passport fund
	Schedule 28 Market services licence for service of acting as administrator of financial benchmark
	Gazette Information
	Notes

Regulations

1 Title

These regulations are the Financial Markets Conduct Regulations 2014.

2 Commencement

These regulations come into force on 1 December 2014.

Part 1 Preliminary provisions

3 Overview

In these regulations,—

(a)

this Part provides for preliminary matters, including prescribing certain matters relating to interpretation for the purposes of Part 1 of the Act:

(b)

Part 2 declares, for the purposes of Part 2 of the Act (fair dealing), that the service of being a creditor under a credit contract is not a financial service:

(c)

Part 3 and Schedules 2 to 9A prescribe matters for the purposes of Part 3 of the Act (disclosure of offers of financial products), including—

(i)

regulating product disclosure statements and register entries; and

(ii)

providing for limited disclosure and other requirements and conditions for offers made in reliance upon the exclusions in Schedule 1 of the Act; and

(iii)

providing for ongoing disclosure; and

(iv)

prescribing matters in connection with money relating to financial products that is held in trust:

(d)

Part 4 and Schedules 10 to 13 prescribe matters for the purposes of Part 4 of the Act (governance of financial products), including matters relating to—

(i)

governing documents; and

(ii)

meetings of product holders; and

(iii)

superannuation scheme rules; and

(iv)

the custodianship of scheme property; and

(v)

limit breaks, pricing errors, and related party transactions; and

(vi)

registers of regulated products:

(e)

Part 5 and Schedules 14 to 20 prescribe matters for the purposes of Part 5 of the Act (dealing in financial products on markets), including matters relating to—

(i)

market manipulation; and

(ii)

substantial holding disclosure; and

(iii)

directors’ and senior managers’ disclosure obligations; and

(iv)

the transfer of financial products; and

(v)

unsolicited offers:

(f)

Part 6, Schedule 21, and Schedule 21A prescribe matters for the purposes of Part 6 of the Act (licensing and other regulation of market services), including matters relating to—

(i)

exemptions from the DIMS licensing requirement; and

(ii)

intermediary services, licensing criteria, conditions, and other matters to facilitate the issue of licences for market services under that Part of the Act; and

(iii)

disclosure obligations of certain licensees; and

(iv)

client agreements; and

(iva)

additional regulation of financial advice and financial advice services; and

(ivb)

additional regulation of regulated client money or client property services; and

(v)

additional regulation of DIMS:

(g)

Part 7 prescribes matters for the purposes of Part 7 of the Act (financial reporting), including providing for entities that rely on the small offer exclusion to be FMC reporting entities:

(h)

Part 8 and Schedules 22 to 24 provide for enforcement matters for the purposes of Part 8 of the Act, including prescribing infringement fees, an infringement notice, and a reminder notice:

(i)

Part 9 and Schedule 25 contain miscellaneous provisions, including provisions relating to the mutual recognition of financial product offerings (in respect of Australia).

Regulation 3(c): amended, on 28 July 2022, by regulation 4 of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 3(f): amended, on 15 March 2021, by regulation 4(1) of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Regulation 3(f)(iva): inserted, on 15 March 2021, by regulation 4(2) of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Regulation 3(f)(ivb): inserted, on 15 March 2021, by regulation 4 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

4 Transitional, savings, and related provisions

The transitional, savings, and related provisions set out in Schedule 1 have effect according to their terms.

5 Interpretation

(1)

In these regulations, unless the context otherwise requires,—

Act means the Financial Markets Conduct Act 2013

address, of a person (A), means—

(a)

the address (including an electronic address) specified by A for the relevant purpose; or

(b)

the actual or last known address (including an electronic address) for A, if—

(i)

paragraph (a) does not apply; or

(ii)

the sender knows that the address referred to in paragraph (a) is not correct

applicable framework or methodology, in relation to a requirement or any other matter, means a framework or methodology specified in a notice issued by the FMA under subpart 4 of Part 9 of the Act that applies to the requirement or matter (if any)

average net asset value has the meaning given to it by clause 1(2) of Schedule 4

bank notice product has the meaning set out in clause 44(3) of Schedule 8

bank perpetual preference share means an equity security—

(a)

in respect of which a registered bank is the issuer; and

(b)

that, when issued, will be additional tier 1 capital for the purposes of the capital adequacy requirements set out in a condition of registration imposed under section 74 of the Banking (Prudential Supervision) Act 1989; and

(c)

that is not a financial product that the registered bank, in the ordinary course of its business, continuously offers

board, in relation to an issuer, means—

(a)

the board or any other governing body of the issuer; or

(b)

the issuer, if the issuer does not have a governing body

bonus bond has the meaning set out in clause 46A(2) of Schedule 8

borrowing group, in relation to an NBDT, has the same meaning as in section 4 of the Non-bank Deposit Takers Act 2013

call building society share has the meaning set out in clause 46A(2) of Schedule 8

call credit union share has the meaning set out in clause 46A(2) of Schedule 8

call debt security means a debt security under which—

(a)

the product holder has a right to demand repayment of the principal sum in full at any time; and

(b)

the issuer has an obligation to repay the principal sum in full not later than 1 working day after the demand is made; and

(c)

the rate of interest payable or any other benefit provided does not alter as a result of the demand being made; and

(d)

no fee or other amount is payable as a result of the principal sum not having been held by the issuer for a particular period of time

closed for applications status, in relation to a PDS, means that the PDS has, or should have, a closed for applications status under regulation 280

closed to all investment status, in relation to a specified fund, multi-fund investment option, or life cycle investment option, means that the fund or option has, or should have, a closed to all investment status under clause 51(1)(ea), (ga)(iv), or (h)(iv) and (2) of Schedule 4

closed to new investors status, in relation to a specified fund, multi-fund investment option, or life cycle investment option, means that the fund or option has, or should have, a closed to new investors status under clause 51(1)(ea), (ga)(iv), or (h)(iv) and (2) of Schedule 4

continuous issue PDS means a PDS that relates to financial products that the issuer, in the ordinary course of its business, continuously offers

convertible means a financial product that will be converted, or is or may become convertible, into another financial product

co-operative shares means—

(a)

nominal value shares in a co-operative company that are offered only to persons who are, or immediately after the issue or sale will be, transacting shareholders of the co-operative company; or

(b)

shares in an industrial and provident society

credit contract has the same meaning as in section 4 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

credit union fixed term deposit product means a share referred to in section 107 of the Friendly Societies and Credit Unions Act 1982, and issued by a credit union, under which—

(a)

the member has a right to demand repayment of the value of the share in full at any time; and

(b)

the credit union has an obligation to repay the value of the share in full in accordance with section 107(4) of the Friendly Societies and Credit Unions Act 1982; and

(c)

a fixed rate of dividend or interest is payable if the principal sum is held by the credit union for a fixed period of time of up to 5 years (but the rate of dividend or interest payable may alter as a result of a demand being made before that fixed period ends); and

(d)

no fee or other amount is payable as a result of the principal sum not having been held by the credit union for a particular period of time

credit union products means debt securities issued by a credit union

credit union savings account product means a share referred to in section 107 of the Friendly Societies and Credit Unions Act 1982, and issued by a credit union under a savings account, under which—

(a)

the member has a right to demand repayment of the value of the share in full at any time; and

(b)

the credit union has an obligation to repay the value of the share in full in accordance with section 107(4) of the Friendly Societies and Credit Unions Act 1982; and

(c)

the rate of dividend or interest payable or any other benefit provided does not alter as a result of the demand being made; and

(d)

a fee or other amount may be payable as a result of the principal sum not having been held by the credit union for a particular period of time; and

(e)

the fee or other amount referred to in paragraph (d) does not exceed $50

creditor has the same meaning as in section 4 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008

crime involving dishonesty—

(a)

has the same meaning as in section 2(1) of the Crimes Act 1961; and

(b)

includes an offence committed in an overseas jurisdiction that, if committed in New Zealand, would be a crime involving dishonesty within the meaning of that section

crowd funding service has the meaning set out in regulation 185

Crown-related entity means—

(a)

a Crown entity under section 7 of the Crown Entities Act 2004, other than Public Trust:

(b)

a department within the meaning of section 5 of the Public Service Act 2020:

(c)

a government-related organisation as defined in section 4 of the Crown Organisations (Criminal Liability) Act 2002:

(d)

the Reserve Bank

custodial fee means a fee paid to a custodian for the safe keeping of an asset

date of the PDS means the date on which the board of the issuer consents to the lodgement of the PDS with the Registrar (being no more than 5 working days before that lodgement)

disclosure year means,—

(a)

in the case of a managed investment product (other than a product referred to in paragraph (ab)), a period starting on 1 April in a year and ending on 31 March in the following year:

(ab)

in the case of a managed investment product in a KiwiSaver scheme, a superannuation scheme, or a workplace savings scheme under which benefits payable from the scheme are based on the investment return of scheme property at the end of the scheme’s accounting period (but excluding a scheme that is operated on a unitised basis), a 12-month period ending on the scheme’s balance date:

(b)

in the case of a DIMS provided to an investor, a 12-month period starting on 1 April or any other date in each year that is determined by the provider in respect of the investor, and if, as a result of a change of that date, the period ending on that date is longer or shorter than 12 months, that longer or shorter period is a disclosure year (see subclause (5))

dividend means,—

(a)

in relation to equity securities in a company within the meaning of section 2(1) of the Companies Act 1993, a dividend within the meaning of section 53 of that Act; and

(b)

in relation to any other equity securities, a distribution of the income or gains of the issuer to a holder of the equity securities that is comparable to a dividend referred to in paragraph (a)

exemption means an exemption granted under subpart 2 of Part 9 of the Act

existence,—

(a)

in relation to a fund or scheme, has the meaning set out in subclause (4)(b):

(b)

in relation to a multi-fund investment option or life cycle stage, has the meaning set out in clause 8C(a) of Schedule 4

facility, in relation to a crowd funding service or a peer-to-peer lending service, means the facility referred to in regulation 185

financial covenant includes any agreement or undertaking to—

(a)

maintain a minimum capital ratio, liquidity ratio, or other financial ratio; or

(b)

comply with any other restriction or prohibition that relates to the issuer’s, or the issuing group’s, or the borrowing group’s financial position or performance

financial service provider number, in relation to a person, is the number given to the person on the person’s registration under the Financial Service Providers (Registration and Dispute Resolution) Act 2008

fixed term redeemable building society share has the same meaning as in clause 46A(2) of Schedule 8

foreign passport fund has the same meaning as in regulation 3 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019

FRS-42 means the financial reporting standard known as Financial Reporting Standard No 42 (Prospective Financial Statements) that is in effect under the Financial Reporting Act 2013

fund means a defined pool of assets that are held for the benefit of a group of investors and that are managed together under a single investment mandate

fund charges has the meaning set out in clause 2(1) of Schedule 4

fund update means a fund update prepared under regulations 56 to 61

generally accepted accounting practice or GAAP has the meaning set out in regulation 7(1)

generally available to the market has the meaning set out in section 232 of the Act

group financial statements—

(a)

has the same meaning as in section 6(1) of the Act; but

(b)

in the case of an issuing group that consists of only an issuer, means financial statements for that issuer

guarantee, in relation to debt securities, means a guarantee given by a guarantor in respect of those securities

guarantor, in relation to debt securities, means a person that guarantees the repayment of the securities offered (in whole or in part) or the payment of any interest or other money to holders of the securities

holding company has the same meaning as in section 5 of the Companies Act 1993

host economy has the same meaning as in section 55 of the passport rules

investor money, in relation to a crowd funding service or a peer-to-peer lending service, means money to which the following apply:

(a)

the money is received under that service; and

(b)

the money is received from, or on account of, an investor by a person (A) (and not on A’s own account)

investor’s portfolio, in respect of a DIMS provided to an investor, means the financial products that the DIMS provider is managing on behalf of the investor

issuing group has the meaning set out in regulation 6

KIS means a key information summary

licensed derivatives issuer—

(a)

means a person who holds, or is treated as holding, a licence that covers the service referred to in section 388(d) of the Act; and

(b)

includes an authorised body in respect of that licence

life cycle investment option has the meaning set out in clause 1(1) of Schedule 4

life cycle stage has the meaning set out in clause 1(1) of Schedule 4

limit break has the meaning set out in section 167 or 438 of the Act (as the case may be)

managed fund—

(a)

means a managed investment scheme the managed investment products of which are or were—

(i)

offered on the basis that, in the ordinary course of business, the products will be continuously offered and redeemed on a basis calculated wholly or mainly on the value of the scheme property; or

(ii)

offered on a basis that the scheme will invest, in the ordinary course of business, at least 80% of its assets in 1 or more of the following ways:

(A)

in debt securities issued by a specified bank or NBDT where the money invested is available for withdrawal immediately on request during the specified bank’s or NBDT’s normal business hours or at the end of a fixed-term period that does not exceed 3 months:

(B)

in managed investment products that are redeemable on request, or within a period not exceeding 10 working days, on a basis calculated wholly or mainly on the value of the scheme property of the scheme to which those products relate:

(C)

in assets where the manager can reasonably expect to realise the investment, at the market value of the assets, within 10 working days; and

(b)

includes a KiwiSaver scheme, superannuation scheme, or workplace savings scheme

material information has the same meaning as in section 59 of the Act

memorandum of cooperation has the same meaning as memorandum has in regulation 3 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019 (see Schedule 2 of those regulations, which sets out the text of the memorandum)

moratorium means a variation of the terms or conditions of a debt security that extends the time for payment of the principal or interest, or reduces or cancels the principal or interest, under the debt security

multi-fund investment option has the meaning set out in clause 1(1) of Schedule 4

net asset value means,—

(a)

in relation to a fund, the residual value of the fund’s assets after all liabilities, other than net assets attributable to investors, have been deducted; and

(b)

in relation to information required by these regulations to be included in a fund update, the net asset value at the date to which the fund update relates (unless otherwise provided in these regulations)

new product, in relation to a convertible, means the financial product into which the convertible is or may be converted

New Zealand Business Number means the number allocated to an entity under the New Zealand Business Number Act 2016

NZ IAS 34 means the financial reporting standard known as the New Zealand Equivalent to International Accounting Standard 34 (Interim Financial Reporting) that is in effect under the Financial Reporting Act 2013

offer register means the register of offers of financial products kept under Schedule 2 of the Act

open for applications status, in relation to a PDS, means that the PDS has, or should have, an open for applications status under regulation 280

open status, in relation to a specified fund, multi-fund investment option, or life cycle investment option, means that the fund or option has, or should have, an open status under clause 51(1)(ea), (ga)(iv), or (h)(iv) and (2) of Schedule 4

overseas market means a financial product market that is authorised to operate in an overseas jurisdiction

passport fund means a scheme that is registered on the scheme register as a passport fund

passport rules means the rules in Annex 3 of the memorandum of cooperation (see Schedule 2 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019)

peer-to-peer lending service has the meaning set out in regulation 185

PIE or portfolio investment entity means a portfolio investment entity within the meaning of section YA 1 of the Income Tax Act 2007

PIE call fund unit has the same meaning as in clause 44(3) of Schedule 8

PIE term fund unit has the same meaning as in clause 44(3) of Schedule 8

prescribed investor rate has the same meaning as in section YA 1 of the Income Tax Act 2007

proposed director, in relation to an issuer, means a person who has consented to act as a director of the issuer

proposed senior manager, in relation to an issuer, means a person who has been appointed as a senior manager of the issuer

public security means any security issued under section 63 of the Public Finance Act 1989, and includes any loan or credit agreement, guarantee, indemnity, bond, note, debenture, bill of exchange, Treasury bill, Government stock, and any other security representing part of the public debt of New Zealand

publicly available has the meaning set out in subclause (3)

quarter,—

(a)

in the case of regulations 56, 57, and 220 and Schedule 4, means each of the 4 quarters of a year ending on 30 June, 30 September, 31 December, and 31 March:

(b)

in any other case, means each 3-month period of a 12-month period (where each quarter ends on the date that the manager, any other issuer, or the provider determines)

(a)

means a register kept or maintained by the Registrar (or the Registrar of Companies); but

(b)

does not include the register of financial service providers

related underlying fund means, in relation to a fund (fund A),—

(a)

an underlying fund managed by the manager of fund A or by an associated person of the manager of fund A; and

(b)

if fund A’s assets are managed as a whole by a person other than the manager, an underlying fund managed by that person or that person’s associated persons

Example

A KiwiSaver scheme is managed by ABC Investment Limited and provides an option for members to select XYZ Balanced Fund, a fund the assets of which are managed by XYZ Investment Limited. All underlying funds managed by ABC Investment Limited, XYZ Investment Limited, an associated person of ABC Investment Limited, or an associated person of XYZ Investment Limited are related underlying funds.

relevant party has the meaning set out in subclause (4)(c)

relevant proceeding or action means—

(a)

a civil or criminal proceeding or regulatory action (whether in New Zealand or overseas) in relation to the contravention, or involvement in the contravention, of any—

(i)

financial markets legislation; or

(ii)

overseas law that regulates the supply of any financial service, any dealing in financial products, or the management of an entity; or

(b)

a regulatory or disciplinary action for a breach of a professional or industry code of conduct or the rules of a financial product market (whether in New Zealand or overseas)

retail investor, in relation to an offer of financial products, financial products that have previously been offered, or the supply of a DIMS, means a person who is not a wholesale investor (as defined in subclause (5A)) in relation to the offer, financial products, or service

returns means capital, earnings, or other financial returns

scheme participant’s accumulation has the meaning set out in regulation 82(5)

scheme register means the register of managed investment schemes

SDS or service disclosure statement, in relation to a service, means a disclosure statement under section 423 of the Act for the service

security interest means an interest in property created or provided for by a transaction that, in substance, secures payment or performance of an obligation, without regard to—

(a)

the form of the transaction; and

(b)

the identity of the person who has title to the property that is subject to the security interest

simple NBDT debt security means a debt security issued by an NBDT that is—

(a)

a call debt security; or

(b)

a call building society share; or

(c)

a call credit union share; or

(d)

a credit union fixed term deposit product; or

(e)

a credit union savings account product

simplified disclosure offer has the meaning set out in regulation 49G(2)

simplified disclosure PDS means a PDS of a class that is declared to be a class of simplified disclosure PDSs under regulation 22(4) or 23(3)

SIPO means a statement of investment policy and objectives

specified bank means—

(a)

a registered bank; or

(b)

a bank that is authorised to accept deposits under the law of Australia, Canada, Hong Kong, Ireland, Singapore, the United Kingdom, or the United States of America; or

(c)

any other overseas bank within the meaning of regulation 229ZE

specified fund means a fund that may be, or previously has been, selected as an investment option by holders of a managed investment product

specified life cycle stage means a life cycle stage for a life cycle investment option that may be, or previously has been, selected as an investment option by holders of a managed investment product

specified multi-fund investment option means a multi-fund investment option that may be, or previously has been, selected as an investment option by holders of a managed investment product

subsidiary—

(a)

has the meaning set out in section 5 of the Companies Act 1993; and

(b)

includes any entity that is classified as a subsidiary in any applicable financial reporting standard

successful has the meaning set out in subclause (4)(a)

superannuation scheme rules means the provisions implied into the governing document for a superannuation scheme under regulation 81 and Schedule 12

supervisor includes a representative of the supervisor

unconditional guarantor, in relation to an offer of debt securities, means a person that—

(a)

is unconditionally liable (whether or not jointly or severally with the issuer or any other person) to repay the securities; or

(b)

is liable to repay the securities subject only to the condition that the issuer or any other person has failed to do so

underlying fund means, in relation to a managed investment scheme or a fund of that scheme (a specified fund), a fund in which the specified fund, or any part of that specified fund, is invested, whether directly or indirectly, through a number of layers of funds

unique identifying information, in relation to an issuer or any other person or a scheme, means a statement of—

(a)

its name; and

(b)

its legal form (for example, partnership); and

(ba)

in the case of a trust or a partnership (other than a limited partnership), the names of the trustees or partners; and

(c)

its balance date; and

(d)

the jurisdiction in which it is incorporated, formed, established, or resident, and the number (if any) under which it is so incorporated, formed, or established; and

(e)

its address for service in New Zealand

URL means a World Wide Web uniform resource locator.

(2)

Section 13(1) of the Act applies (with all necessary modifications) to a reference in these regulations to a statement or other information that is false, misleading, deceptive, or confusing.

(3)

In these regulations, unless the context otherwise requires, a document or any other information relating to financial products is publicly available if the document or information is available, free of charge,—

(a)

on an Internet site maintained by, or on behalf of, the issuer of the financial products in a way that ensures—

(i)

that the document or information, or a link to the document or information, is prominently displayed on the site either on the home page or on an investor or a scheme section of the site; and

(ii)

that the home page prominently displays a link to the investor or scheme section of the site (if the document or information is displayed on that section of the site); and

(iii)

that members of the public (or members of the section of the public to which the document or information is applicable) can easily access the document or information at all reasonable times; and

(b)

in hard copy, on request to the issuer of the financial products.

(4)

In these regulations, unless the context otherwise requires,—

(a)

a civil or criminal proceeding, regulatory action, or disciplinary action is successful in relation to the person that is the subject of the proceeding or action if 1 or more of the following apply:

(i)

a penalty or an order is imposed or made against the person:

(ii)

any licence, registration, or other authorisation of the person is cancelled, revoked, or suspended:

(iii)

the person is found guilty or liable:

(iv)

the person is censured:

(b)

a fund or scheme is in existence from the date on which the manager started accepting contributions to the fund or scheme (whether before or after the registration of the scheme under subpart 2 of Part 4 of the Act):

(c)

a person (R) is a relevant party in relation to another person (A) if—

(i)

A is a body corporate and R has the power, directly or indirectly, to exercise, or control the exercise of, the rights to vote attaching to 25% or more of the voting products of A; or

(ii)

A and R are acting jointly or in concert; or

(iii)

A acts, or is accustomed to act, in accordance with the wishes of R; or

(iv)

R is able, directly or indirectly, to exert a substantial degree of influence over the activities of A; or

(v)

R is a director or senior manager of A or of a relevant party of A under subparagraphs (i) to (iv).

(5)

For the purposes of paragraph (b) of the definition of disclosure year in subclause (1), if the provider changes the date on which a disclosure year starts, the period between any 2 starting dates of disclosure years must not exceed 15 months.

(5A)

For the purposes of the definition of retail investor in subclause (1) and regulation 65, wholesale investor,—

(a)

in relation to an offer of financial products, has the same meaning as in clause 36(a) of Schedule 1 of the Act and includes an entity that is controlled (within the meaning of clause 48 of Schedule 1 of the Act) by—

(i)

a wholesale investor in relation to the offer; or

(ii)

a close business associate of the offeror (within the meaning of clause 4 of Schedule 1 of the Act); or

(iii)

a relative of the offeror or of a director of the offeror (within the meaning of clause 5 of Schedule 1 of the Act):

(b)

in relation to financial products that have previously been offered, means a person who, if the previous offer had been made to the person, would have been a wholesale investor in relation to the offer under paragraph (a):

(c)

in relation to the supply of a DIMS, has the same meaning as in clause 36(b) of Schedule 1 of the Act and includes an entity that is controlled (within the meaning of clause 48 of Schedule 1 of the Act) by a wholesale investor in relation to the DIMS.

(6)

Terms defined in other provisions of these regulations have the meanings given unless the context otherwise requires.

Regulation 5(1) bank notice product: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) bank perpetual preference share: inserted, on 28 July 2022, by regulation 5 of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 5(1) bonus bond: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) call building society share: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) call credit union share: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) call debt security: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) closed for applications status: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) closed to all investment status: replaced, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) closed to new investors status: replaced, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) convertible: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) credit union fixed term deposit product: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) credit union savings account product: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) Crown-related entity: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) DIMS: revoked, on 15 March 2021, by regulation 5(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) disclosure year paragraph (a): replaced, on 1 December 2015, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) disclosure year paragraph (ab): inserted, on 1 December 2015, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) existence: inserted, on 17 December 2015, by regulation 4(6) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) fixed term redeemable building society share: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) foreign passport fund: inserted, on 14 June 2019, by regulation 4 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 5(1) host economy: inserted, on 14 June 2019, by regulation 4 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 5(1) life cycle investment option: inserted, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) life cycle stage: inserted, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) memorandum of cooperation: inserted, on 14 June 2019, by regulation 4 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 5(1) multi-fund investment option: inserted, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) NBDT category 2 debt securities: revoked, on 15 March 2021, by regulation 5(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) new product: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) New Zealand Business Number: inserted, on 31 December 2017, by regulation 4 of the Financial Markets Conduct Amendment Regulations (No 2) 2017 (LI 2017/287).

Regulation 5(1) New Zealand Business Number: amended, on 2 September 2019, by regulation 4 of the Financial Markets Conduct (New Zealand Business Numbers) Amendment Regulations 2019 (LI 2019/171).

Regulation 5(1) open status: replaced, on 9 August 2017, by regulation 4(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) passport fund: inserted, on 14 June 2019, by regulation 4 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 5(1) passport rules: inserted, on 14 June 2019, by regulation 4 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 5(1) personalised DIMS: revoked, on 15 March 2021, by regulation 5(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) PIE call fund unit: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) PIE term fund unit: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) quarter: replaced, on 1 December 2015, by regulation 4(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) quarter paragraph (b): amended, on 28 October 2016, by regulation 4 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 5(1) retail investor: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) simple NBDT debt security: inserted, on 15 March 2021, by regulation 5(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) simplified disclosure offer: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) simplified disclosure PDS: inserted, on 1 December 2015, by regulation 4(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) specified bank paragraph (c): amended, on 15 March 2021, by regulation 5(3) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 5(1) specified life cycle stage: inserted, on 17 December 2015, by regulation 4(6) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) specified life cycle stage: amended, on 9 August 2017, by regulation 4(3) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) specified multi-fund investment option: inserted, on 17 December 2015, by regulation 4(6) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) specified multi-fund investment option: amended, on 9 August 2017, by regulation 4(3) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 5(1) unique identifying information paragraph (ba): inserted, on 1 June 2016, by regulation 4(4) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(1) unique identifying information paragraph (d): replaced, on 1 June 2016, by regulation 4(5) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 5(5A): inserted, on 1 December 2015, by regulation 4(8) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

6 Meaning of issuing group

(1)

In these regulations, issuing group, in relation to an offer of debt securities or equity securities, means the issuer of the securities and all subsidiaries of the issuer at the date of the PDS (subject to subclauses (2) to (4)).

(2)

In the case of an offer of debt securities, the issuing group is the holding company of the issuer and all subsidiaries of the holding company at the date of the PDS if the holding company is an unconditional guarantor of those securities.

(3)

Subclause (4) applies to an offer of debt securities if—

(a)

the PDS states that an intended use of the money raised under the offer is to provide money to either or both of the following:

(i)

the holding company of the issuer:

(ii)

1 or more subsidiaries of the holding company of the issuer; and

(b)

the issuer reasonably considers that information about the financial position and financial performance of the holding company and its subsidiaries would be more useful to investors (in terms of deciding whether or not to acquire the securities) than information about the financial position and financial performance of the issuer and its subsidiaries.

(4)

If this subclause applies, the issuing group is the holding company and all subsidiaries of the holding company at the date of the PDS.

7 Matters relating to GAAP

(1)

In these regulations, generally accepted accounting practice or GAAP—

(a)

has the same meaning as generally accepted accounting practice in section 6(1) of the Act; and

(b)

includes, if the Financial Reporting Act 1993 applies in respect of the entity, generally accepted accounting practice within the meaning of that Act.

(2)

In these regulations, an amount or information is determined in accordance with GAAP or prepared in accordance with GAAP if—

(a)

it is taken or derived from interim financial statements, prospective financial statements, financial statements, or group financial statements that are prepared in accordance with GAAP; or

(b)

the amount or information would have appeared in interim financial statements, prospective financial statements, financial statements, or group financial statements prepared in accordance with GAAP if those statements had included the amount or information.

(3)

For the purposes of subclause (2), GAAP means,—

(a)

in the case of information for accounting periods that have ended before the relevant date,—

(i)

GAAP as in effect on the relevant date; or

(ii)

GAAP as in effect during those accounting periods:

(b)

in any other case, GAAP as in effect on the relevant date.

(4)

For the purposes of subclause (2), a requirement in a schedule of these regulations for an amount or information to be prepared or determined in accordance with GAAP is subject to any provision of these regulations that requires or permits pro forma financial information to be substituted for other financial information.

(5)

In subclause (3), relevant date means—

(a)

the date of lodgement of the relevant disclosure document or information for the register entry; or

(b)

if the information is not lodged, the date of the information.

8 Status of examples

(1)

An example used in these regulations is only illustrative of the provisions to which it relates. It does not limit those provisions.

(2)

If an example and a provision to which it relates are inconsistent, the provision prevails.

9 General provision relating to statements in particular form, warning statements, etc

(1)

This regulation applies if a provision of these regulations requires—

(a)

a statement to be included in a PDS, any other disclosure document, or a register entry in a specified form or using prescribed wording; or

(b)

a warning statement to be provided.

(2)

A statement included, or a warning statement provided, for the purpose referred to in subclause (1) is not invalid just because it contains differences from the requirements prescribed by these regulations if—

(a)

the differences are necessary—

(i)

because particular information required by these regulations is inapplicable to the particular offer or service; or

(ii)

because additional or modified information that relates to the offer, the financial products, or the service needs to be included to ensure that the statement is not false, misleading, deceptive, or confusing; or

(iii)

to ensure that the statement is grammatically correct; and

(b)

the issuer or provider reasonably considers that the differences are not broader than is reasonably necessary to address the matters referred to in paragraph (a)(i) to (iii).

(3)

Nothing in this regulation limits any other provision of these regulations that requires or permits a statement referred to in subclause (1) to be modified.

Regulation 9(3): inserted, on 1 December 2015, by regulation 5 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

10 Name of financial products or services

(1)

This regulation applies if—

(a)

these regulations require a statement to be included in a PDS, an SDS, or any other disclosure document using a specified form or using prescribed wording; and

(b)

the form or wording requires the name of financial products or services to be specified (for example, [name of financial products]).

(2)

The issuer or provider may insert any name of the financial products or services that clearly identifies those products or services, which may be—

(a)

a generic label (for example, unsecured bonds); or

(b)

a name that is particular to the issuer or provider (for example, ABC bonds).

11 Section numbers may be renumbered

If a section of a PDS or other disclosure document is not included because it is not applicable, the section heading numbers of the PDS or document may be renumbered and any references to those numbers may be consequentially amended.

12 PDS, other disclosure document, or register entry not required to refer to matter that is not applicable

(1)

If a matter that is required by these regulations to be contained in a disclosure document or register entry is not applicable to the offer, the financial products, or the service for which the disclosure document or register entry is required, the disclosure document or register entry is not required to refer to that matter and, in particular, is not required to state that the matter is not applicable.

(2)

If the name or contact details of an offeror are required by—

(a)

these regulations to be contained in a disclosure document but that information is not known by the issuer at the date of the disclosure document, the disclosure document is not required to contain that information:

(b)

any of regulations 37 to 41 and 43 to be contained in a register entry but that information is not known by the issuer at the date on which the information is required to be lodged on the register entry, the register entry is not required to contain that information under those regulations.

Regulation 12(2): inserted, on 1 December 2015, by regulation 6 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

13 Derivative definition prescribed times

(1)

For the purposes of section 8(4)(a)(ii) of the Act, the prescribed time is,—

(a)

for a foreign exchange agreement, 3 working days; and

(b)

in any other case, 1 working day.

(2)

In this regulation, working day, in relation to a derivative,—

(a)

has the same meaning as in section 29 of the Interpretation Act 1999; but

(b)

if a payment or delivery under the derivative is made or received in an overseas jurisdiction, does not include a day that, under the law of that jurisdiction, is a public holiday or a bank holiday in that jurisdiction.

Part 2 Fair dealing

14 Financial service does not include being creditor under credit contract

For the purposes of paragraph (c) of the definition of financial service in section 6(1) of the Act, the service of being a creditor under a credit contract is declared not to be a financial service for the purposes of any provision of Part 2 of the Act.

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

(1)

For the purposes of section 51(1)(c) of the Act, an offeror does not have to comply with section 50 of the Act in respect of an offer of financial products to a person (A) if—

(a)

A already holds a financial product of the same class as those that are offered; and

(b)

the offeror has reasonable grounds for believing that A has already been given (or has access and knows that they have access to) all of the information that the PDS referred to in section 50 of the Act would be required to contain through 1 or more of the following:

(i)

a PDS (for the same or a different offer):

(ii)

information provided to A under subpart 4 of Part 3 of the Act:

(iii)

in the case of products issued by a listed issuer, information notified to a licensed market operator for the purpose of that information being made available to participants in the licensed market (for example, under a continuous disclosure obligation).

(2)

For the purposes of subclause (1)(b), immaterial differences in the information that is contained in the PDS referred to in section 50 of the Act and the documents or information referred to in subclause (1)(b)(i) to (iii) may be disregarded.

16 Offeror treated as having reasonable grounds

(1)

An offeror must be treated as having reasonable grounds for believing that A has already been given (or has access and knows that they have access to) 1 or more documents or the information referred to in regulation 15(1)(b)(i) to (iii) if—

(a)

the offeror has previously provided to A a written notice that—

(i)

identifies the documents or information; and

(ii)

includes a statement to the effect that the identified documents or information may help the investor to make decisions about whether or not to acquire the relevant financial products; and

(b)

the notice was provided by giving it to A or delivering or sending it to A’s address; and

(c)

the notice—

(i)

includes or attaches the documents or information; or

(ii)

includes a statement as to how the investor may obtain a copy of, or access to, the documents or information by electronic means (for example, from a specified Internet site address); and

(d)

in the case of paragraph (c)(ii), the documents or information is available by that means.

(2)

This regulation does not limit the circumstances in which the offeror may have reasonable grounds for the belief referred to in subclause (1).

17 PDS does not have to be given before application if investment in certain products is made urgently and PDS is later provided

For the purposes of section 51(1)(c) of the Act, an offeror does not have to comply with section 50 of the Act in respect of an offer of financial products to a person (A) if—

(a)

the products are—

(i)

call building society shares; or

(ii)

call credit union shares; or

(iii)

call debt securities; or

(iv)

co-operative shares; or

(v)

credit union fixed term deposit products; or

(vi)

credit union savings account products; and

(b)

A expressly requests that the products are issued or transferred urgently or by a specified time, and it is not reasonably practicable to comply with section 50 of the Act and still comply with the request; and

(c)

the offeror provides to A, not later than 10 working days after the date on which the products are issued or transferred to A,—

(i)

a PDS for the offer; and

(ii)

a written notice of the right under paragraph (e) and how the right may be exercised; and

(d)

the PDS and written notice are provided to A by giving them to A or delivering or sending them to A’s address; and

(e)

the terms of the offer include a right for A to withdraw from holding the financial products and to have the relevant money repaid, and that right is exercisable up until the expiry of at least 20 working days after the PDS is provided under paragraph (c).

Regulation 17 heading: amended, on 15 March 2021, by regulation 6(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 17(a): replaced, on 15 March 2021, by regulation 6(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

18 PDS does not have to be given for certain products issued by NBDT that are debt securities

For the purposes of section 51(1)(c) of the Act, an offeror does not have to comply with section 50 of the Act in respect of an offer of simple NBDT debt securities to a person (A) if—

(a)

the PDS for the offer is publicly available; and

(b)

the offeror complies with regulation 19 in respect of A (if applicable).

Regulation 18 heading: amended, on 15 March 2021, by regulation 7(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 18: amended, on 15 March 2021, by regulation 7(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

19 NBDT must give credit risk statement to investors if it does not have investment-grade credit rating

(1)

This regulation applies for the purposes of regulation 18(b) if, at the time of the offer to A, the NBDT does not have an investment-grade credit rating.

(2)

The offeror must make available to A a credit risk statement before the offeror accepts an application for the simple NBDT debt securities that is made by A or the offeror issues or transfers the simple NBDT debt securities to A (whichever is earlier).

(3)

The credit risk statement must be made available by—

(a)

including the statement in an application form for the simple NBDT debt securities that includes a confirmation from A that A has received the statement (being a confirmation that must be completed before the offeror accepts the application); or

(b)

giving it to A.

(4)

The credit risk statement must—

(a)

be headed “What is [name of NBDT]’s credit risk?”; and

(b)

include a statement in the following form:

“
Deposits have risks. A key risk is that [name of NBDT] does not meet its commitment to repay you or to pay you any interest that is due (credit risk).”; and

(c)

include whichever of the statements specified in clause 5(2) and (5) of Schedule 7 that better applies (and clause 5(3) of that schedule applies with any necessary modifications for the purposes of clause 5(2), including the requirement to include a diagram in the credit risk statement); and

(d)

include a statement—

(i)

to the effect that further information about the credit risk of the NBDT is provided in the PDS and the offer register; and

(ii)

that describes how an investor may obtain this information.

(5)

If the credit risk statement is included in an application form or other document, the statement must be reasonably prominent in that document.

(6)

An NBDT has an investment-grade credit rating if the NBDT has a current rating of its creditworthiness or, if required by regulations made under the Non-bank Deposit Takers Act 2013, the creditworthiness of its borrowing group that is—

(a)

BBB– or better by any of the following:

(i)

Standard & Poor’s:

(ii)

Fitch Ratings:

(iii)

Equifax Australasia Credit Ratings Pty Limited; or

(b)

Baa3 or better by Moody’s Investors Service.

Regulation 19(2): amended, on 15 March 2021, by regulation 8 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 19(3)(a): amended, on 15 March 2021, by regulation 8 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 19(6)(a): replaced, on 9 August 2017, by regulation 5 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Information at start of product disclosure statement

20 Information at start of PDS

(1)

Every PDS must, at the start of the PDS,—

(a)

include, in a prominent position, the words “Product Disclosure Statement”; and

(b)

identify the offer of financial products to which the PDS relates; and

Example

Initial public offering of ordinary shares in ABC Limited

(c)

identify the issuer; and

(d)

state the date of the PDS; and

(e)

contain a statement in the following form:

“
This document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer on [specify Internet site address of offer register]. [Name of issuer] has prepared this document in accordance with the Financial Markets Conduct Act 2013. You can also seek advice from a financial advice provider to help you to make an investment decision.”

(2)

The PDS may also, at the start of the PDS, do any or all of the following:

(a)

identify the lead manager or managers (for example, a bank that is organising the offer):

(b)

identify the offeror (if the offeror is not the issuer):

(c)

identify 1 or more underwriters:

(d)

identify the investment manager or managers:

(e)

identify the issuing group if regulation 6(1) or (2) applies:

(f)

include 1 or more brands or logos customarily used by the issuer or any person referred to in paragraphs (a) to (e).

(3)

In the case of derivatives, the statement under subclause (1)(e) must be in the following form:

“
This document provides important information about [name of financial product or products or offer] to help you decide whether you want to enter into [it or any of these derivatives]. There is other useful information about this offer at [specify Internet site address of the offer register].
*Many derivatives are complex and high-risk financial products that are not suitable for most retail investors. If you do not fully understand a derivative described in this document and the risks associated with it, you should not enter into it. You can also seek advice from a financial advice provider to help you make your decision. You should ask if that provider has experience with these types of derivatives.
[Name of issuer] has prepared this document in accordance with the Financial Markets Conduct Act 2013.”

*Omit this sentence if the PDS covers only currency forwards.

Regulation 20(1)(e): amended, on 15 March 2021, by regulation 9(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 20(3): amended, on 15 March 2021, by regulation 9(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

21 Information at front may be on separate cover page or before key information summary

(1)

The information required or permitted by regulation 20 must be—

(a)

on a separate cover page; or

(b)

on the same page as, and before, the start of the KIS.

(2)

If the cover page contains no information other than the information required or permitted by regulation 20 or an exemption, the cover page must be disregarded when determining whether the PDS complies with the length restrictions that apply under regulations 22 to 29.

Content of product disclosure statements

22 Content of PDS for offer of debt securities

(1)

Every PDS for an offer of debt securities must contain all of the information specified in Part 1 of Schedule 2 that is applicable.

(2)

However,—

(a)

in the case of an offer of simple NBDT debt securities, the PDS must—

(i)

contain all of the information specified in Schedule 7 that is applicable (in which case subclause (1) does not apply); or

(ii)

comply with subclause (1):

(b)

in the case of a simplified disclosure offer of debt securities, the PDS must—

(i)

contain all of the information specified in Part 1 of Schedule 2 that is applicable (as modified in accordance with Part 1A of Schedule 2); or

(ii)

comply with subclause (1).

(3)

The PDS under subclause (1) or (2) must comply with at least 1 of the following length limits:

(a)

30 A4 pages when printed:

(b)

15 000 words.

(4)

PDSs that comply with subclause (2)(b)(i) are declared to be a class of simplified disclosure PDSs for the purposes of section 470 of the Act.

Regulation 22(2): replaced, on 1 December 2015, by regulation 7(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 22(2)(a): amended, on 15 March 2021, by regulation 10 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 22(4): inserted, on 1 December 2015, by regulation 7(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

23 Content of PDS for offer of equity securities

(1)

Every PDS for an offer of equity securities must contain all of the information specified in Part 1 of Schedule 3 that is applicable.

(1A)

However, in the case of a simplified disclosure offer of equity securities, the PDS must—

(a)

contain all of the information specified in Part 1 of Schedule 3 that is applicable (as modified in accordance with Part 1A of Schedule 3); or

(b)

comply with subclause (1).

(2)

The PDS under subclause (1) or (1A) must comply with at least 1 of the following length limits:

(a)

60 A4 pages when printed:

(b)

30 000 words.

(3)

PDSs that comply with subclause (1A)(a) are declared to be a class of simplified disclosure PDSs for the purposes of section 470 of the Act.

Regulation 23(1A): inserted, on 1 December 2015, by regulation 8(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 23(2): amended, on 1 December 2015, by regulation 8(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 23(3): inserted, on 1 December 2015, by regulation 8(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

24 Content of PDS for offer of managed investment products

(1)

Every PDS for an offer of managed investment products in a managed fund must contain all of the information specified in Part 1 of Schedule 4 that is applicable.

(1A)

However, in the case of interests in a foreign passport fund that are offered under Part 1 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019, the following apply (regardless of whether the fund is a managed fund):

(a)

the PDS must contain all of the information specified in Part 1 of Schedule 4 that is applicable (as modified in accordance with Part 6 of Schedule 4); and

(b)

the PDS must be accompanied by a statement in the form set out in Schedule 26.

(2)

The PDS under subclause (1) or (1A) must comply with at least 1 of the following length limits:

(a)

12 A4 pages when printed:

(b)

6 000 words.

(3)

Every PDS for an offer of managed investment products in any other managed investment scheme must contain all of the information specified in Part 1 of Schedule 5 that is applicable.

(4)

The PDS under subclause (3) must comply with at least 1 of the following length limits:

(a)

60 A4 pages when printed:

(b)

30 000 words.

(5)

If a foreign passport fund referred to in subclause (1A) is not a managed fund, this regulation and the rest of these regulations apply with all necessary modifications as if—

(a)

the foreign passport fund were a managed fund; and

(b)

the interests in the foreign passport fund were managed investment products.

Example

Regulation 29(2) sets length restrictions for the key information summary. Regulation 29(2)(c), which is the length restriction for managed funds, applies to an offer of interests in a foreign passport fund.

Regulation 24(1A): inserted, on 14 June 2019, by regulation 5(1) of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 24(2): amended, on 14 June 2019, by regulation 5(2) of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 24(5): inserted, on 14 June 2019, by regulation 5(3) of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

25 Content of PDS for offer of derivatives

(1)

Every PDS for an offer of derivatives must contain all of the information specified in Part 1 of Schedule 6 that is applicable.

(2)

The PDS must comply with at least 1 of the following length limits:

(a)

30 A4 pages when printed:

(b)

15 000 words.

Key information summary

26 Key information summary

(1)

Every PDS must contain a key information summary (KIS).

(2)

However, subclause (1) does not apply to an offer of simple NBDT debt securities if the PDS contains all of the information specified in Schedule 7 that is applicable.

Regulation 26(2): amended, on 15 March 2021, by regulation 11 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

27 Purpose of key information summary

(1)

The purpose of a KIS is to provide the issuer’s assessment of the most significant aspects of the offer of the financial products that are relevant to a prudent but non-expert person’s decision as to whether or not to acquire the financial products.

(2)

The issuer must have regard to that purpose when preparing the KIS.

28 Key information summary must be identified

Every KIS must, at the start of the KIS, include, in a prominent position, the words “Key Information Summary”.

29 Key information summary requirements

(1)

Every KIS must comply with the following requirements:

(a)

the KIS must comply with the length limits under subclause (2); and

(b)

the KIS must contain all of the information for a KIS that is set out in the schedule of these regulations that applies to the PDS; and

(c)

no information, other than the required or permitted information, may be included in the KIS.

(2)

The KIS must comply with,—

(a)

in the case of an offer of debt securities, at least 1 of the following length limits:

(i)

3 A4 pages when printed:

(ii)

1 500 words:

(b)

in the case of an offer of equity securities, at least 1 of the following length limits:

(i)

4 A4 pages when printed:

(ii)

2 000 words:

(c)

in the case of an offer of managed investment products in a managed fund, at least 1 of the following length limits:

(i)

2 A4 pages when printed:

(ii)

1 000 words:

(d)

in the case of an offer of managed investment products in a scheme other than a managed fund, at least 1 of the following length limits:

(i)

4 A4 pages when printed:

(ii)

2 000 words:

(e)

in the case of an offer of derivatives, at least 1 of the following length limits:

(i)

2 A4 pages when printed:

(ii)

1 000 words.

(3)

A KIS does not fail to comply with subclause (1)(c) merely because the KIS contains additional information that is necessary—

(a)

to clarify the required or permitted information; or

(b)

to put the required or permitted information in context to ensure that the information that is disclosed is not false or misleading.

(4)

A KIS does not fail to comply with subclause (1)(c) merely because it includes—

(a)

1 or more brands or logos customarily used by the issuer or any person referred to in regulation 20(2)(a) to (e) (provided that the brand or logo is not distracting); or

(b)

a warning required to be contained in the PDS under an order made under section 49 of the Financial Markets Authority Act 2011.

(5)

A warning referred to in subclause (4)(b) must be disregarded when determining whether the KIS or PDS complies with the length restrictions that apply under subclause (2) or regulations 22 to 25.

(6)

In this regulation, required or permitted information means the information that is required or permitted to be contained in the KIS by these regulations or an exemption.

Presentation requirements

30 PDS must be easily readable

(1)

The format, font, and font size of the PDS must be easily readable.

(2)

See also section 61 of the Act (PDS must be worded and presented in a clear, concise, and effective manner).

Miscellaneous matters relating to PDSs

31 Blank pages

Blank pages must be disregarded when determining whether the KIS or PDS complies with the length restrictions that apply under regulations 22 to 29.

32 PDS may relate to more than 1 class of products, etc

(1)

A PDS may—

(a)

relate to more than 1 class of financial products if those financial products are of the same kind (for example, the PDS may relate to 2 or more classes of debt securities):

(b)

in the case of a managed fund, relate to more than 1 registered scheme:

(c)

in the case of derivatives, relate to more than 1 type of derivatives (for example, the PDS may relate to currency forwards and currency options).

(2)

However, subclause (1) applies only if the issuer reasonably considers that disclosing information about those classes, registered schemes, or types in 1 document is useful to investors.

(3)

In the case of an offer referred to in section 44 of the Act (convertible financial products), the PDS may, in accordance with regulations 49A to 49F, relate to the convertibles and the new products.

Regulation 32(3): inserted, on 1 December 2015, by regulation 9 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

33 Incorporation by reference

(1)

If these regulations require information to be contained or included in a PDS or register entry,—

(a)

the information may be incorporated by reference only if incorporation by reference is authorised by these regulations (see section 13 of the Act); and

(b)

the requirements in subclause (2) apply.

(2)

The requirements are that the PDS or register entry must—

(a)

include a brief description of the information; and

(b)

include a link to or URL for the page or section of the Internet site where the information is located (if the reference is to information on an Internet site); and

(c)

identify the document that contains the information and state how the information may be obtained (if paragraph (b) does not apply).

(3)

If a document that is lodged with the Registrar contains information that is incorporated by reference in the PDS,—

(a)

the information must be placed in the document under the relevant PDS heading; and

(b)

if there is more than 1 item of such information, each item must be presented in the same order as it would otherwise appear in the PDS; and

(c)

the document must identify the PDS and state that the information forms part of that PDS.

34 Additional information

(1)

A PDS must not contain any information in addition to the required or permitted information unless—

(a)

the PDS meets the length restrictions that apply under regulations 22 to 29; and

(b)

either—

(i)

the additional information is included after the relevant section of the PDS; or

(ii)

the additional information does not detract from the prominence of the information that is required to be included in the PDS by the Act, these regulations, or an exemption.

(2)

See also section 61 of the Act (which requires the information in the PDS to be worded and presented in a clear, concise, and effective manner).

(3)

This regulation does not limit any other permission to include additional information in the PDS.

(4)

In this regulation,—

relevant section means, in relation to a PDS for an offer of—

(a)

debt securities, section 9 of the PDS (unless paragraph (f) or (g) applies):

(b)

equity securities, section 9 of the PDS:

(c)

managed investment products in a managed fund, section 6 of the PDS:

(d)

managed investment products in a scheme other than a managed fund, section 9 of the PDS:

(e)

derivatives, section 6 of the PDS:

(f)

simple NBDT debt securities (in the case of a PDS under regulation 22(2)(a)), section 6 of the PDS:

(g)

convertibles to which regulation 49D applies, section 7 of the PDS

required or permitted information means the information that is required or permitted to be contained in the PDS by—

(a)

the Act, these regulations, or an exemption; or

(b)

any other Act.

Regulation 34(3): amended, on 1 December 2015, by regulation 10(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 34(4) relevant section paragraph (a): amended, on 1 December 2015, by regulation 10(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 34(4) relevant section paragraph (f): amended, on 15 March 2021, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 34(4) relevant section paragraph (g): inserted, on 1 December 2015, by regulation 10(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

35 Information that must be included in PDS where regulations do not otherwise provide for placement

(1)

This regulation applies if—

(a)

the Act requires particular information to be included in a PDS, but these regulations do not otherwise provide for where that information must be included; or

Example

A PDS contains a statement made by John Smith as an expert. Section 60(1)(a) of the Act requires Mr Smith to consent to the statement being contained in the PDS. Section 60(1)(b) of the Act requires the PDS to state that Mr Smith has given his consent, but these regulations do not otherwise indicate where the statement should be included.

(b)

any other enactment requires a PDS to include particular information and neither that enactment nor these regulations otherwise provide for where that information must be included (for example, section 129 of the KiwiSaver Act 2006).

(2)

The information must be included in the PDS in the place that the issuer considers is most appropriate in terms of the PDS being presented in a clear, concise, and effective manner.

36 Application form

(1)

A PDS may include an application form if that form is included in an unnumbered section at the end of the PDS.

(2)

The application form must be disregarded when determining whether the PDS complies with the length restrictions that apply under regulations 22 to 25.

(3)

Subclause (2) does not apply if the application form contains information that is not directly related to an application for the financial products (for example, information that promotes the offer).

(4)

In this regulation, application form means an application form for the financial products that are offered under the PDS (or, in the case of derivatives, an application form to enter into a client agreement with a derivatives issuer).

Content of register entries when PDS is lodged

37 Content of register entries when PDS is lodged

(1)

Regulations 38 to 41 and 43 specify the information that the register entry (if any) is required to contain for the purposes of—

(a)

section 48(1)(c) of the Act (which requires the issuer to supply the information before making the regulated offer and before distributing application forms); and

(b)

section 57(1)(b)(i) and (iii) of the Act (content of register entry as at the date on which the PDS is lodged).

(2)

See regulations 50 and 51 (which provide for the updating of register entries).

38 Content of register entry for offer of debt securities

Every register entry for an offer of debt securities must contain all of the information specified in Part 2 of Schedule 2 that is applicable.

39 Content of register entry for offer of equity securities

Every register entry for an offer of equity securities must contain all of the information specified in Part 2 of Schedule 3 that is applicable.

40 Content of register entry for offer of managed investment products

(1)

Every register entry for an offer of managed investment products in a managed fund must contain all of the information specified in Part 2 of Schedule 4 that is applicable.

(1A)

However, in the case of interests in a foreign passport fund that are offered under Part 1 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019, the register entry must contain all of the information specified in Part 2 of Schedule 4 that is applicable (as modified in accordance with Part 6 of Schedule 4).

(2)

Every register entry for an offer of managed investment products in any other managed investment scheme must contain all of the information specified in Part 2 of Schedule 5 that is applicable.

Regulation 40(1A): inserted, on 14 June 2019, by regulation 6 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

41 Content of register entry for offer of derivatives

Every register entry for an offer of derivatives must contain all of the information specified in Part 2 of Schedule 6 that is applicable.

42 Register entry must contain material information and may contain other lodged information

Regulations 37 to 41 do not limit—

(a)

section 57(1)(b)(ii) and (iv) of the Act (which require the register entry to contain all material information relating to the regulated offer that is not contained in the PDS and to contain information concerning consents for expert statements or endorsements):

(b)

other provisions of these regulations or any other enactment that require information to be lodged with the Registrar.

42A Requirement to include all material information does not apply to simplified disclosure offers

Section 57(1)(b)(ii) of the Act does not apply to a simplified disclosure offer.

Regulation 42A: inserted, on 1 December 2015, by regulation 11 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

42B Requirement to include all material information does not apply to information in supplement for multiple-participant scheme

(1)

This regulation applies to an offer of interests in a multiple-participant scheme.

(2)

Section 57(1)(b)(ii) of the Act does not apply to information contained in relevant supplements that are given to investors under clause 8B of Schedule 4.

(3)

In this clause, multiple-participant scheme and relevant supplement have the same meanings as in clause 8B of Schedule 4.

Regulation 42B: inserted, on 28 October 2016, by regulation 5 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

43 Register entry must contain information referred to in PDS

If any of Schedules 2 to 7 require a PDS to refer to information contained on the offer register, the register entry must contain that information.

44 Lodging or giving information for register entry

Information for a register entry that is lodged with or given to the Registrar must be lodged or given in the manner specified by the Registrar in accordance with clause 13(1) of Schedule 2 of the Act.

Example

The identification of the industry in which the issuer operates is selected from a drop-down list of options specified by the Registrar on the offer register Internet site maintained by the Registrar.

Other provisions relating to lodging of PDS and other documents

45 Lodgement of PDS

(1)

For the purposes of section 63 of the Act, an issuer that lodges a PDS must, when the PDS is lodged, supply to the Registrar evidence of the board’s consent—

(a)

to the lodgement of the PDS; and

(b)

to the supply to the Registrar of information under section 48(1)(c) of the Act (which relates to information for the register entry).

(2)

Evidence of the board’s consent may include a statement of the board’s consent to the lodgement and supply that is signed on behalf of the board—

(a)

by 2 directors of the issuer; or

(b)

if the issuer has only 1 director, by that director.

(3)

Subclause (2) does not limit the form that the evidence may take.

46 When supplementary document may not be lodged

For the purposes of section 71(2) of the Act, a supplementary document must not be lodged with the Registrar if—

(a)

the document purports to supplement a PDS for an offer of managed investment products in a managed fund; or

(b)

the document purports to supplement any part of the key information summary (unless the document covers the whole key information summary).

Dealing with applications where condition referred to in PDS not met or disclosure defective

47 How offeror must act under section 80 of Act

An offeror must, when acting under section 80 of the Act, comply with the following requirements:

(a)

the offeror must act as soon as practicable under section 80(1)(a), (b), or (c) of the Act:

(b)

in the case of section 80(1)(b) or (c) of the Act,—

(i)

the offeror must, by way of a written notice (the notice), give the applicant 1 month to confirm under that paragraph; and

(ii)

the notice must state how the applicant may confirm under that paragraph; and

(iii)

the notice must state the reason why section 80 of the Act applies; and

(iv)

if a replacement PDS is given, the notice must state how the replacement PDS is materially different from the PDS that it replaces; and

(v)

if the register entry has been amended, the notice must state how the register entry has been amended; and

(vi)

the notice must state that, if the applicant does not confirm to the issuer that the applicant still wants to acquire the financial products by a date specified in the notice (that is 1 month after the notice is given), no issue or transfer of financial products will be made and the applicant’s money will be repaid.

Expiry

48 How offeror must deal with applications on expiry

(1)

This regulation applies if a PDS specifies an expiry date for the PDS.

(2)

An offeror must, when acting under section 85 of the Act, comply with the following requirements:

(a)

the offeror must act as soon as practicable under section 85(3)(a) or (b) of the Act; and

(b)

in the case of section 85(3)(b) of the Act,—

(i)

the offeror must, by way of a written notice (the notice), give the applicant 1 month to confirm under that paragraph; and

(ii)

the notice must state how the applicant may confirm under that paragraph; and

(iii)

the notice must state the reason why section 85 of the Act applies; and

(iv)

the notice must state that if the applicant does not confirm to the offeror that the applicant still wants to acquire the financial products by a date specified in the notice (that is 1 month after the notice is given), no issue or transfer of financial products will be made and the applicant’s money will be repaid.

Money for financial products must be held in trust

49 Dealing with money while it is held in trust

(1)

For the purposes of section 87 of the Act, an issuer or offeror—

(a)

must ensure that the money is paid promptly into a specified bank to a trust account; and

(b)

must ensure that the money is held separate from money held by or for the issuer or offeror on its own account; and

(c)

must keep, or ensure that there are kept, trust account records that disclose clearly the position of the money in the trust account; and

(d)

must ensure that the trust account records are kept in a manner that enables those records to be conveniently and properly audited, reviewed, or inspected; and

(e)

must ensure that the bank and any other interested parties are put on notice that the money in the trust account is trust money.

(2)

In this regulation,—

money means the money held in trust under section 87 of the Act

trust account means any account at a bank—

(a)

in the name of the issuer, offeror, supervisor, or custodian; and

(b)

that is designated as a trust account.

Provisions relating to convertibles

Heading: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

49A Offers of convertible financial products

Regulations 49B to 49F apply to offers referred to in section 44 of the Act (convertible financial products) if—

(a)

the convertible is—

(i)

a debt security; or

(ii)

an equity security; or

(iii)

a managed investment product in a managed investment scheme other than a managed fund; and

(b)

the issuer of the convertible is—

(i)

the issuer of the new product; or

(ii)

a related body corporate of the issuer of the new product.

Regulation 49A: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 49A: amended, on 28 October 2016, by regulation 6 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

49B Requirements that apply to convertibles

The requirements in regulations 49C to 49E apply instead of the requirements that would otherwise apply to the offers of the convertible and the new product.

Example

XYZ Limited makes an offer of debt securities that will convert into ordinary shares. XYZ Limited is not a registered bank (see regulation 49D).

The convertibles are debt securities, while the new products are equity securities.

The PDS will comply with the requirements for a PDS for debt securities (in Schedule 2) rather than those that apply to equity securities (in Schedule 3). The PDS must include the additional information about the new products that is required by Schedule 2.

The register entry will comply with the requirements for debt securities (in Part 2 of Schedule 2) rather than those that apply to equity securities (in Part 2 of Schedule 3).

Regulation 49B: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 49B: amended, on 28 October 2016, by regulation 7(1) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 49B example: replaced, on 28 October 2016, by regulation 7(2) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

49C PDS and register entry requirements

(1)

The PDS must comply with—

(a)

regulation 22 if the convertibles are debt securities:

(b)

regulation 23 if the convertibles are equity securities:

(c)

regulation 24(3) and (4) if the convertibles are managed investment products.

(2)

The KIS must comply with—

(a)

regulation 29(2)(a) if the convertibles are debt securities:

(b)

regulation 29(2)(b) if the convertibles are equity securities:

(c)

regulation 29(2)(d) if the convertibles are managed investment products.

(3)

Despite subclauses (1)(a) and (2)(a), if the convertibles are debt securities and the new products are equity securities or managed investment products,—

(a)

regulations 22(3) and 29(2)(a) do not apply; and

(b)

the PDS must instead comply with—

(i)

regulation 23(2) if the new products are equity securities:

(ii)

regulation 24(4) if the new products are managed investment products; and

(c)

the KIS must instead comply with—

(i)

regulation 29(2)(b) if the new products are equity securities:

(ii)

regulation 29(2)(d) if the new products are managed investment products.

(4)

The register entry must comply with—

(a)

regulation 38 if the convertibles are debt securities:

(b)

regulation 39 if the convertibles are equity securities:

(c)

regulation 40(2) if the convertibles are managed investment products.

(5)

For the purposes of this regulation, unless the context otherwise requires, each reference to the debt securities in Schedule 2, the equity securities in Schedule 3, or the managed investment products in Schedule 5 (as the case may be) is a reference to the convertibles (rather than to the new products).

(6)

This regulation does not apply if regulation 49D applies.

Regulation 49C: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

49D Convertible debt securities issued by registered banks

(1)

This regulation applies if—

(a)

the convertible is a debt security issued by a registered bank; and

(b)

the new product is an equity security.

(2)

The disclosure document must—

(a)

contain all of the information specified in Schedule 9 that is applicable; and

(b)

comply with regulation 23(2).

(3)

The KIS must comply with regulation 29(2)(b).

(4)

The register entry must comply with regulation 38.

(5)

Subclause (4) is subject to clause 26 of Schedule 8 (which applies to the register entry with all necessary modifications).

(6)

[Revoked]

(7)

For the purposes of this regulation, unless the context otherwise requires, each reference to the debt securities in Schedule 2 or 9 is a reference to the convertibles (rather than to the new products).

(8)

Nothing in regulation 49B or this regulation limits the application of regulation 72 in relation to the offer of the convertible.

Example

ABC Limited (a registered bank) makes an offer of debt securities that will convert into ordinary shares.

The convertibles are debt securities, while the new products are equity securities.

An offer of the debt securities issued by a registered bank does not require disclosure under Part 3 of the Act (see clause 21 of Schedule 1 of the Act). Instead, a limited disclosure document (LDD) that complies with Schedule 9 is required. However, the offer of the equity securities requires disclosure under Part 3 of the Act.

The disclosure document (which is a PDS for the offer of the equity securities and an LDD for the offer of the debt securities) must comply with the requirements in Schedule 9. Most of the disclosure required by Schedule 9 relates to the debt securities, but that schedule does require some additional information to be included relating to the equity securities.

The register entry for the offer of equity securities must comply with the requirements for debt securities (in Part 2 of Schedule 2) rather than those that apply to equity securities (in Part 2 of Schedule 3).

Regulation 49D: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 49D(2): replaced, on 28 October 2016, by regulation 8(1) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 49D(5): replaced, on 28 October 2016, by regulation 8(2) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 49D(6): revoked, on 28 October 2016, by regulation 8(2) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 49D(8): inserted, on 28 October 2016, by regulation 8(3) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 49D example: inserted, on 28 October 2016, by regulation 8(3) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

49E Modification of statement at start of PDS

If the convertibles will be converted into new products in connection with an event or a circumstance relating to the insolvency or a financial difficulty of the issuer, the statement under regulation 20(1)(e) must be in the following form:

“
This document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer on [specify Internet site address of offer register].
This investment is riskier than a bank deposit.* These [name of convertibles] are complex financial products that are not suitable for many investors. If you do not fully understand how they work or the risks associated with them, you should not invest in them. You can seek advice from a financial advice provider to help you make an investment decision.
[Name of issuer] has prepared this document in accordance with the Financial Markets Conduct Act 2013.”

*Include this sentence if the issuer is a registered bank.

Regulation 49E: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 49E: amended, on 15 March 2021, by regulation 13 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

49F Additional information

(1)

The PDS may include additional information if that information is of a kind that would be required or permitted to be disclosed in a PDS if the offer related only to the new products (for example, information about the issuing group of the new products).

(2)

The additional information under this regulation may be included in any section of the PDS where the issuer reasonably considers the information is useful to investors.

(3)

However, the additional information may be included in the KIS only if it is of a kind that would be required or permitted to be disclosed in a KIS if the offer related only to the new products.

Regulation 49F: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Simplified disclosure offers for listed issuers

Heading: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

49G Simplified disclosure offers for listed issuers

(1)

The purpose of this regulation is to define the offers for which—

(a)

a simplified disclosure PDS may be used (see regulations 22(4) and 23(3)); and

(b)

all material information in the register entry is not required (see regulation 42A).

(2)

An offer of financial products is a simplified disclosure offer if—

(a)

the offer is an offer—

(i)

of debt securities or equity securities that rank equally with, or in priority to, existing quoted products of the issuer; or

(ii)

of options referred to in section 43 of the Act where the underlying financial products are equity securities that rank equally with, or in priority to, existing quoted products of the issuer; or

(iii)

referred to in section 44 of the Act where—

(A)

the convertibles are debt securities or equity securities that rank equally with, or in priority to, existing quoted products of the issuer; and

(B)

the new products are debt securities, equity securities, or managed investment products that rank equally with, or in priority to, existing quoted products of the issuer; and

(b)

the existing quoted products have been quoted on a licensed market (the licensed market) at all times during the 3-month period before the time of the offer; and

(c)

trading in the existing quoted products on the licensed market was not suspended for more than a total of 5 trading days during the 3-month period referred to in paragraph (b); and

(d)

the market rules of the licensed market contain continuous disclosure provisions; and

(e)

the issuer has, at a relevant time, provided a notice that complies with regulation 49H to the licensed market operator that operates the licensed market for the purpose of that notice being notified to the market.

(3)

In this regulation,—

existing quoted products means the financial products that are quoted at the time of the offer

relevant time, in relation to an offer of financial products, means—

(a)

a time within the 24-hour period before the offer is made; or

(b)

an earlier time required by the licensed market operator; or

(c)

if a similar notice is also being given for the purposes of an offer of the financial products in Australia, an earlier time required by ASX Limited (a company incorporated in Australia) for giving the similar notice.

(4)

In this regulation, a financial product ranks equally with, or in priority to, another financial product if—

(a)

it has that ranking on a liquidation of the issuer; and

(b)

in the case of equity securities in relation to other equity securities, it has that ranking on a liquidation of the issuer and on the payment of dividends.

Regulation 49G: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

49H Cleansing notice

(1)

This regulation applies to a notice under regulation 49G(2)(e).

(2)

The notice must—

(a)

state that an offer for issue or sale is being made using short-form disclosure; and

(b)

state that the notice is provided under regulation 49G(2)(e); and

(c)

state that, as at the date of the notice, the issuer is in compliance with the continuous disclosure obligations that apply to it in relation to the existing quoted products; and

(d)

state that, as at the date of the notice, the issuer is in compliance with its financial reporting obligations; and

(e)

set out the information (if any) that is excluded information as at the date of the notice; and

(f)

in the case of an offer involving equity securities, describe—

(i)

the potential effect that the offer will have on the control of the issuer; and

(ii)

the consequences of that effect.

(3)

If the offer is an offer referred to in section 44 of the Act and the convertibles are equity securities, subclause (2)(f) applies to the convertibles and, if the new products are equity securities, subclause (2)(f) also applies to those securities.

(4)

The notice must contain information under subclause (2)(e) and (f) only to the extent to which it is material information.

(5)

[Revoked]

(6)

See regulation 54A (which provides for the correction of a defect in a notice under this regulation).

(7)

In this regulation,—

control has the same meaning as in clause 48 of Schedule 1 of the Act

excluded information means information to which a continuous disclosure obligation would apply but which has not been disclosed under such an obligation as a result of an exclusion in, or a waiver given under, the listing rules for the licensed market upon which the existing quoted products are quoted

existing quoted products means the quoted financial products referred to in regulation 49G(2)

financial reporting obligations, in relation to an issuer, means requirements imposed under—

(a)

the Act or another enactment to prepare financial statements or group financial statements in relation to the issuer, its group, or (if it is a manager) a scheme of which it is a manager for the most recently completed accounting period, to have those statements audited, and to lodge or register those statements; and

(b)

any listing rules of the licensed market that provide for financial statements to be released to the market for a more recent interim accounting period than the period referred to in paragraph (a).

Regulation 49H: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 49H(5): revoked, on 28 July 2022, by regulation 6(1) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 49H(7) NXT market: revoked, on 28 July 2022, by regulation 6(2) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

49I Cleansing notice may not be provided in certain circumstances

(1)

A notice under regulation 49H may not be provided under regulation 49G(2)(e) (and, accordingly, the requirements of regulation 49G(2) are not satisfied) if—

(a)

the offer is made within 3 months after a change to the essential nature of the issuer’s business; or

(b)

the offer is made within 3 months after a transaction for which the issuer has provided disclosure to the licensed market as if it were listing on that market; or

(c)

the offer is made in connection with enabling—

(i)

a change to the essential nature of the issuer’s business; or

(ii)

a transaction for which the issuer will be required to provide disclosure to the licensed market as if it were listing on that market; or

(d)

the FMA has, in the 12-month period before the offer is made, made an order under section 474 of the Act in respect of the issuer.

(2)

Regulation 49G is subject to this regulation.

Regulation 49I: inserted, on 1 December 2015, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Subpart 2—Ongoing disclosure and updating of registers

Updating register entry

50 Duty to notify changes to Registrar

(1)

For the purposes of section 95 of the Act, the following are prescribed changes:

(a)

if, at the time of the change, the PDS for the regulated offer has an open for applications status,—

(i)

a change relating to the information disclosed under a relevant clause that makes that information in the register entry incorrect:

(ii)

a change of circumstances that has arisen that would have required different information to have been disclosed under a relevant clause had it arisen before the date of the PDS:

(b)

a change to an address for communications that is specified in the register entry for the issuer or any other person.

(2)

In this regulation, relevant clause means,—

(a)

in relation to debt securities, clause 63 of Schedule 2:

(b)

in relation to equity securities, clause 52 of Schedule 3:

(c)

in relation to managed investment products in a managed fund, clause 51 of Schedule 4:

(d)

in relation to other managed investment products, clause 47 of Schedule 5:

(e)

in relation to derivatives, clause 28 of Schedule 6.

Regulation 50(1)(a)(ii) example: revoked, on 1 December 2015, by regulation 13 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

51 Information to be lodged with Registrar for updating register

For the purposes of section 96 of the Act, an issuer of—

(a)

debt securities must lodge with the Registrar the information specified in clause 67 of Schedule 2 within the time specified in that clause:

(b)

equity securities must lodge with the Registrar the information specified in clause 55 of Schedule 3 within the time specified in that clause:

(c)

managed investment products in a managed fund must lodge with the Registrar the information specified in clause 54 of Schedule 4 within the time specified in that clause.

52 Confirmation notice

(1)

For the purposes of section 97 of the Act, an issuer of regulated products must, at the times referred to in regulations 52A and 52B, lodge with the Registrar—

(a)

a confirmation notice; and

(b)

evidence of the board’s consent to the lodgement of the confirmation notice (being consent that is given no more than 5 working days before that lodgement).

(2)

The confirmation notice must confirm that, as at the date of the board’s consent to the lodgement of the notice, an offeror is not prohibited under section 82(1) of the Act from offering, or continuing to offer, financial products under the regulated offer.

(3)

Evidence of the board’s consent under this regulation may include a statement of the board’s consent to the lodgement that is signed on behalf of the board—

(a)

by 2 directors of the issuer; or

(b)

if the issuer has only 1 director, by that director.

(4)

Subclause (3) does not limit the form that the evidence may take.

Regulation 52: replaced, on 1 June 2016, by regulation 14 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

52A Annual confirmation notice

(1)

A confirmation notice and evidence under regulation 52 must be lodged with the Registrar in each year not later than 1 month after the confirmation date.

(2)

However, this regulation applies only if, at the confirmation date, at least 1 PDS on the register entry has an open for applications status.

(3)

In this regulation and regulation 52B, confirmation date, in relation to an issuer and a register entry, means—

(a)

the anniversary in each year of the date of lodgement of the PDS on the register entry (or, if more than 1 PDS has been lodged, the anniversary in each year of the date of lodgement of the first PDS); or

(b)

any other date that the issuer adopts as the confirmation date (see subclause (4)).

(4)

A date that is adopted under subclause (3)(b) is effective only if—

(a)

the date is notified to the Registrar; and

(b)

in the case of a date that is adopted as the first confirmation date for the register entry, the period between the date of lodgement of the PDS referred to in subclause (3)(a) and the date that is adopted does not exceed 13 months; and

(c)

the period between any 2 confirmation dates does not exceed 13 months.

Regulation 52A: inserted, on 1 June 2016, by regulation 14 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

52B Supplementary confirmation notice if PDS, fund, or option opens after being closed

(1)

This regulation applies if—

(a)

a PDS—

(i)

has a closed for applications status; and

(ii)

at the most recent confirmation date, had a closed for applications status; or

(b)

a specified fund in a managed fund, a multi-fund investment option, or a life cycle investment option that is covered by a PDS—

(i)

has a closed to all investment status; and

(ii)

at the most recent confirmation date, had a closed to all investment status.

(2)

A confirmation notice and evidence under regulation 52 must be lodged with the Registrar before—

(a)

the status of the PDS changes to an open for applications status; or

(b)

the status of the specified fund or option changes to an open status or a closed to new investors status.

Regulation 52B: inserted, on 1 June 2016, by regulation 14 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 52B heading: amended, on 9 August 2017, by regulation 6(1) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 52B(1): replaced, on 9 August 2017, by regulation 6(2) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 52B(2)(b): amended, on 9 August 2017, by regulation 6(3) of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Request disclosure

53 Issuer must make information available on request

(1)

This regulation applies if a disclosure document, a register entry, or an entry in the scheme register contains a statement to the effect that a document or other information is available from an issuer on a request that is made by a particular person or a person of a particular class (A).

(2)

For the purposes of section 96 of the Act, the issuer must, after receiving a request from A, provide the document or other information to A as soon as practicable but, in any event, within 5 working days after the issuer receives the request.

(3)

The document or other information must be provided by giving it to A or delivering or sending it to A’s address.

(4)

The document or other information must be provided free of charge (unless a charge is otherwise expressly permitted by these regulations).

53A Certain members of defined benefit schemes may request information

(1)

This regulation applies if a member of a defined benefit scheme to whom contributions are not allocated on a defined basis (A) requests from the issuer 1 or more of the following:

(a)

an estimate of A’s benefits:

(b)

a copy of a report of an actuary required under section 169 of the Act:

(c)

a statement of the specific interest, mortality, and other assumptions and bases of calculation applied in determining the value of the assets and liabilities of the scheme for the purposes of the actuarial report:

(d)

if A is considering a proposed change to A’s benefits,—

(i)

a statement of the specific interest, mortality, and other assumptions and bases of calculation applied in determining the benefits under consideration; and

(ii)

if different assumptions and bases of calculation have been applied in the last 12 months in determining similar benefits to those under consideration, a statement of the reason why different bases and assumptions applied.

(2)

(3)

The document or other information must be provided by giving it to A or delivering or sending it to A’s address.

(4)

The document or other information must be provided free of charge.

(5)

In this regulation, proposed change includes (without limitation)—

(a)

an election to convert any benefit into a lump sum:

(b)

an election to defer receipt of a benefit:

(c)

a change to a benefit regardless of whether or not the benefit is specified in the governing document of the scheme of which A is a member:

(d)

an election to convert all or part of a benefit into a benefit to be provided to some other person:

(e)

an election to transfer a benefit to another scheme or from one section of a scheme to another section of the same scheme.

Regulation 53A: inserted, on 17 December 2015, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Convertible financial products

54 Disclosure for unquoted convertible financial products where holder has option to convert

(1)

This regulation applies in respect of a specified convertible if—

(a)

the new product is not quoted at any time at which a product holder may exercise the option to convert; and

(b)

the issuer becomes aware—

(i)

that a statement in the PDS, any application form that accompanies the PDS, or the register entry is false or misleading or is likely to mislead; or

(ii)

that there is an omission from the PDS, or the register entry, of information that is required to be contained in the PDS, or the register entry, by the Act or these regulations; or

(iii)

of a circumstance that has arisen since the PDS was lodged with the Registrar that would have been required by the Act or these regulations to be disclosed or otherwise contained in the PDS, or the register entry, if it had arisen before the PDS was lodged, and the circumstance is not so disclosed or otherwise contained in the PDS or the register entry; and

(c)

the matter referred to in paragraph (b) is materially adverse from the point of view of an investor.

(2)

For the purposes of section 96 of the Act, the issuer must, as soon as practicable after becoming aware of the matter in subclause (1)(b), send a copy of a correcting document (or a notice of how to obtain a copy of a correcting document) to all product holders of the specified convertible.

(3)

For the purposes of section 97 of the Act, the issuer must, as soon as practicable after becoming aware of the matter in subclause (1)(b), make publicly available a correcting document.

(4)

See regulation 5(3) (which defines publicly available).

(5)

In this regulation,—

correcting document, in relation to a deficiency referred to in subclause (1)(b), means a document that—

(a)

corrects the deficiency; and

(b)

states the reason why this regulation applies

option to convert means the option of the product holder referred to in the definition of specified convertible

PDS means the PDS for the offer of the specified convertible

specified convertible means a convertible that will be converted, or is or may become convertible, into another financial product at the option of the product holder (whether or not the financial product will be converted, or is or may become convertible, in any other circumstances).

Regulation 54(1): amended, on 1 December 2015, by regulation 16(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 54(2): amended, on 1 December 2015, by regulation 16(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 54(5): replaced, on 1 December 2015, by regulation 16(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Correcting defective cleansing notice

Heading: inserted, on 1 December 2015, by regulation 17 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

54A Correcting defective cleansing notice

(1)

This regulation applies if—

(a)

a notice to which regulation 49H applies is defective; and

(b)

the issuer becomes aware of the defect in the notice before the close of the offer to which the notice relates.

(2)

For the purposes of section 97 of the Act, the issuer must, within a reasonable time after becoming aware of the defect, provide a notice to the licensed market operator that sets out the information necessary to correct the defect (for the purpose of the licensed market operator notifying that information to the market).

(3)

For the purposes of section 98(2)(b) of the Act, section 98(1) of the Act does not apply to information provided under this regulation.

(4)

In this regulation, a notice is defective if—

(a)

there is—

(i)

a statement in the notice that is false or misleading or that is likely to mislead; or

(ii)

an omission from the notice of information that is required to be contained in the notice by regulation 49H; or

(iii)

a circumstance that has arisen since the notice was provided to the licensed market operator that would have been required by regulation 49H to be contained in the notice if it had arisen before the notice was provided, and the circumstance is not so contained in the notice; and

(b)

the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.

Regulation 54A: inserted, on 1 December 2015, by regulation 17 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Event disclosures

55 Event disclosures to be made publicly available

(1)

For the purposes of section 97 of the Act, an issuer of—

(a)

debt securities must make the information specified in clause 68 of Schedule 2 publicly available within the time specified in that clause:

(b)

equity securities must make the information specified in clause 56 of Schedule 3 publicly available within the time specified in that clause:

(c)

managed investment products in a scheme (other than a managed fund) must make the information specified in clause 52 of Schedule 5 publicly available within the time specified in clause 51 of that schedule.

(2)

See regulation 5(3) (which defines publicly available).

Fund updates for managed funds

56 Duty to make fund update publicly available

(1)

Every manager of a registered scheme that is a managed fund must make publicly available, within 20 working days after the last day of each quarter of each disclosure year,—

(a)

a fund update for each specified fund in the registered scheme; and

(b)

a fund update for each specified multi-fund investment option in the registered scheme; and

(c)

a fund update for each specified life cycle stage in a life cycle investment option in the registered scheme.

(2)

However, if the managed fund is a restricted scheme or a closed scheme or the managed fund has a closed section,—

(a)

subclause (1) does not apply to the restricted scheme, closed scheme, or closed section; and

(b)

the manager must make a fund update for each specified fund, specified multi-fund investment option, and specified life cycle stage in that scheme or section publicly available within 3 months after—

(i)

the last day of each disclosure year; or

(ii)

the balance date of the scheme in each year.

(2A)

If a managed fund is a defined benefit scheme, subclause (1) or (2) applies if, and only if, contributions are allocated on a defined basis to any member.

(2B)

If a specified fund, specified multi-fund investment option, or specified life cycle stage relates to both a closed section and an open section of a superannuation scheme or workplace savings scheme, the manager must,—

(a)

for the purposes of the open section, make the fund update for the fund, option, or stage publicly available in accordance with subclause (1); and

(b)

for the purposes of the closed section, make the fund update for the fund, option, or stage publicly available in accordance with subclause (2)(b).

(3)

This regulation and regulations 57 to 61 apply for the purposes of section 97 of the Act.

(4)

See regulation 5(3) (which defines publicly available).

(5)

In this regulation,—

closed scheme means a superannuation scheme, or workplace savings scheme, that—

(a)

was closed to new members on its registration as a registered scheme; and

(b)

remains closed to new members

closed section means a section of a superannuation scheme, or workplace savings scheme, that—

(a)

was closed to new members on the scheme’s registration as a registered scheme; and

(b)

remains closed to new members

open section means a section of a superannuation scheme, or workplace savings scheme, that is not a closed section

working day means a day that is not—

(a)

Saturday, Sunday, Good Friday, Easter Monday, Anzac Day, Labour Day, the Sovereign’s birthday, Te Rā Aro ki a Matariki/Matariki Observance Day, or Waitangi Day; or

(b)

a day in the period commencing on 25 December in one year and ending on 15 January in the next year; or

(c)

if Waitangi Day or Anzac Day falls on a Saturday or a Sunday, the following Monday.

Regulation 56(1): replaced, on 17 December 2015, by regulation 18(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 56(2): replaced, on 28 October 2016, by regulation 9(1) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 56(2A): inserted, on 17 December 2015, by regulation 18(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 56(2B): inserted, on 28 October 2016, by regulation 9(2) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 56(5): replaced, on 28 October 2016, by regulation 9(3) of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 56(5) working day paragraph (a): amended, on 12 April 2022, by wehenga 7 o Te Ture mō te Hararei Tūmatanui o te Kāhui o Matariki 2022/section 7 of the Te Kāhui o Matariki Public Holiday Act 2022 (2022 No 14).

57 Information at start of fund update

Every fund update must, at the start of the fund update,—

(a)

include, in a prominent position, the words “Fund Update” (or, in the case of a specified multi-fund investment option or life cycle stage, the words “Investment update”); and

(b)

identify the fund, investment option, or stage to which the fund update relates; and

(c)

identify the registered scheme to which that fund, investment option, or stage relates; and

(d)

identify, in the case of—

(i)

regulation 56(1), the last day of the quarter as at which the fund update is prepared (being the most recently completed quarter):

(ii)

regulation 56(2), the last day of the disclosure year or the balance date of the scheme as at which the fund update is prepared (being the last day of the most recently completed disclosure year or the most recent balance date); and

(e)

state the date on which the fund update is first made publicly available.

Regulation 57(a): amended, on 17 December 2015, by regulation 19(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 57(b): amended, on 17 December 2015, by regulation 19(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 57(c): amended, on 17 December 2015, by regulation 19(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

58 Content of fund update for funds

Every fund update for a fund must contain all of the information specified in Part 4 of Schedule 4 that is applicable.

Regulation 58: replaced, on 17 December 2015, by regulation 20 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

58A Content of fund update for specified multi-fund investment option or specified life cycle stage

(1)

Every fund update for a specified multi-fund investment option or specified life cycle stage must contain all of the information specified in Part 4 of Schedule 4 that is applicable (applied with all necessary modifications as if the investment option or stage were a fund).

(2)

However, if the manager reasonably considers that it is likely to be useful to investors, the information in clauses 67 to 72 of Schedule 4 may (instead of being provided as would otherwise be required by subclause (1)) be—

(a)

set out on a per-fund basis (that is, on a basis relating to the funds to which the specified multi-fund investment option or specified life cycle stage relates); or

(b)

incorporated by reference to a relevant fund update for each fund to which the specified multi-fund investment option or specified life cycle stage relates.

(3)

In this regulation, relevant fund update means a fund update that is publicly available and is prepared as at the same date as the fund update for the specified multi-fund investment option or specified life cycle stage.

Regulation 58A: inserted, on 17 December 2015, by regulation 20 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

59 Templates

(1)

A fund update must disclose the required or permitted information in the same format as in the templates for that fund update that are set out in an applicable framework or methodology (if any).

(2)

A fund update must—

(a)

round figures to 2 decimal places, or more if additional decimal places are necessary to ensure that the fund update is not misleading or are necessary to provide the required or permitted information; and

(b)

present the required or permitted information in the same order as in the relevant template; and

(c)

contain no information other than the required or permitted information.

(3)

A fund update does not fail to comply with subclause (2)(c) merely because the fund update contains additional information that is necessary—

(a)

to clarify the required or permitted information; or

(b)

to put the required or permitted information in context to ensure that the information that is disclosed is not false or misleading.

(4)

A fund update does not fail to comply with subclause (1) merely because the fund update deviates from a template in the following ways:

(a)

uses a different font and size, as long as it is easily readable:

(b)

uses different borders, shading, colours, and other minor formatting variations:

(c)

includes 1 or more of the following:

(i)

the registered scheme’s or issuer’s brand or logo, provided that it is not distracting:

(ii)

contact information for the registered scheme, provided that it is not distracting:

(iii)

a reference or a link, or both, to the PDS or other relevant documents:

(d)

presents information side by side, uses columns, or uses more of the page than the template:

(e)

contains minor variations from the format in the template if this is necessary to ensure that the fund update is not false or misleading.

(5)

In this regulation, required or permitted information means the information that is required or permitted to be contained in the fund update by these regulations or an exemption.

60 How long fund updates must be publicly available

The manager of a registered scheme must—

(a)

ensure that each fund update is publicly available for a period of not less than 2 years; and

(b)

after the fund update ceases to be publicly available under paragraph (a), ensure that the Internet site maintained by, or on behalf of, the manager prominently displays a link to the place on the offer register where previous fund updates can be obtained.

61 Revised fund update to be made publicly available in certain circumstances

(1)

This regulation applies if—

(a)

there is—

(i)

a statement in a fund update that is false or misleading or is likely to mislead; or

(ii)

an omission from a fund update of information that is required to be contained in the fund update by these regulations; and

(b)

the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.

(2)

For the purposes of this regulation, a statement about a future matter (including the doing of, or the refusal to do, an act) must be taken to be misleading if the person making the statement does not have reasonable grounds for making it.

(3)

The manager of the registered scheme must, as soon as practicable after the manager becomes aware of the deficiency,—

(a)

remove the fund update from the Internet site maintained by, or on behalf of, the manager; and

(b)

prepare a replacement fund update that corrects the deficiency; and

(c)

make the replacement fund update publicly available; and

(d)

ensure that, at the beginning of a replacement fund update, there is—

(i)

a statement that it is a replacement fund update; and

(ii)

an identification of the 1 or more fund updates that it replaces; and

(iii)

a summary of the changes that have been made.

61A Fund update must be given if PDS incorporates it by reference

(1)

This regulation applies if a PDS for an offer of managed investment products in a managed fund incorporates by reference a relevant fund update for a fund or other investment option (the fund or option) as referred to in clause 8A of Schedule 4.

(2)

For the purposes of section 96 of the Act, the manager of the managed fund must, before accepting contributions to, or investments in, the fund or option in respect of a retail investor, give the relevant fund update to the retail investor.

(3)

In this regulation, a relevant fund update means a fund update for the fund or option that—

(a)

is one of the 4 fund updates most recently made publicly available or (if regulation 56(2) applies) the fund update most recently made publicly available; and

(b)

includes the information required in the PDS by clauses 28, 33, and 37 of Schedule 4 for the fund or option (to the extent that the information is not contained in the PDS).

Regulation 61A: inserted, on 17 December 2015, by regulation 21 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

61AA Fund update requirements apply to foreign passport funds

If interests in a foreign passport fund are offered under Part 1 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019, regulations 56 to 61A of these regulations apply with all necessary modifications as if the fund were a registered scheme that is a managed fund.

Regulation 61AA: inserted, on 14 June 2019, by regulation 7 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Annual reports to be made available by e-reporting entities

Heading: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

61B Interpretation

In this regulation and regulations 61C to 61F,—

annual report has the same meaning as in section 209C of the Companies Act 1993

e-reporting entity has the meaning set out in regulation 61C

shareholder has the same meaning as in section 96 of the Companies Act 1993.

Regulation 61B: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

61C What is an e-reporting entity

(1)

An FMC reporting entity is an e-reporting entity for an accounting period if the entity—

(a)

is a company that is required by section 208 of the Companies Act 1993 to prepare an annual report for that period; and

(b)

is an issuer of equity securities that are regulated products.

(2)

Any other FMC reporting entity is an e-reporting entity for an accounting period if the entity—

(a)

is a company that is required by section 208 of the Companies Act 1993 to prepare an annual report for that period; and

(b)

has elected under section 209C(3) of the Companies Act 1993 to comply with regulations 61D to 61F in relation to that annual report.

Regulation 61C: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

61D Annual report to be publicly available

(1)

An e-reporting entity for an accounting period must make its annual report for that period available in accordance with this regulation.

(2)

The report must be available, free of charge, on an Internet site maintained by, or on behalf of, the entity in a way that ensures that—

(a)

the report is prominently displayed on the site; and

(b)

members of the public can easily access the report at all reasonable times.

(3)

The report must—

(a)

be made available on the site as soon as practicable after it is prepared, but in any event—

(i)

not less than 20 working days before the date fixed for the entity’s annual meeting of shareholders for the accounting period; or

(ii)

if the entity is not required to hold an annual meeting of shareholders for that period, not more than 20 working days after the annual report for the period is prepared; and

(b)

remain available for at least 5 years after it is first made available.

(4)

This regulation applies for the purposes of section 97 of the Act.

Regulation 61D: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 61D(3)(a): replaced, on 7 June 2018, by regulation 4 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

61E Notice to shareholders

(1)

An e-reporting entity for an accounting period must send a notice to every notifiable shareholder of the entity.

(2)

A person is a notifiable shareholder for an accounting period if—

(a)

the person is a shareholder of the entity on—

(i)

a date fixed by the board of the entity for the purpose (being a date that is no more than 20 working days before the last date by which the notice for that period must be sent under subclause (4)); or

(ii)

the working day before the last date by which the notice for that period must be sent under subclause (4) (if the board of the entity has not fixed a date under subparagraph (i)); and

(b)

either—

(i)

the entity has not previously sent the shareholder a notice under this regulation; or

(ii)

the entity was not an e-reporting entity for 1 or more accounting periods since the shareholder was last sent a notice under this regulation.

(3)

The notice must set out the following:

(a)

a statement to the effect that the entity’s annual report for the accounting period is or will be publicly available on an Internet site maintained by, or on behalf of, the entity:

(b)

the URL of that site:

(c)

a statement to the effect that the entity’s annual reports for all future accounting periods for which it is an e-reporting entity will be publicly available on that site as required by regulation 61D:

(d)

a statement to the effect that the shareholder may, at any time, request a free copy (as a hard copy or an electronic copy) of the most recent and future annual reports.

(4)

The notice must be sent—

(a)

not less than 20 working days before the date fixed for the entity’s annual meeting of shareholders for the accounting period; or

(b)

if the entity is not required to hold an annual meeting of shareholders for that period, not more than 20 working days after the annual report for the period is prepared.

(5)

The notice may be—

(a)

sent on behalf of the entity by another person (such as the person who maintains the entity’s share register); and

(b)

combined with a notice given under this regulation by 1 or more other e-reporting entities.

(6)

The notice may be sent electronically if section 391(3A) of the Companies Act 1993 allows the entity to send notices to the shareholder by electronic means.

(7)

This regulation applies for the purposes of section 96 of the Act.

Regulation 61E: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 61E(2)(a): replaced, on 7 June 2018, by regulation 5 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

61F Copies of annual report to be provided to shareholders on request

(1)

If a shareholder of an e-reporting entity requests an annual report from the entity, the entity must—

(a)

send its most recent annual report to the shareholder as soon as practicable after receiving the request; and

(b)

send its annual report for each future accounting period to the shareholder as soon as practicable after the report is prepared.

(2)

The annual reports must be sent to the shareholder as a hard copy or an electronic copy as requested by the shareholder.

(3)

Subclause (1)(b) ceases to apply if any of the following occurs:

(a)

the shareholder revokes the request:

(b)

the person ceases to be a shareholder:

(c)

the entity is not an e-reporting entity for 1 or more accounting periods.

(4)

This regulation applies for the purposes of section 96 of the Act.

Regulation 61F: inserted, on 9 August 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Annual report for registered scheme

62 Annual report

(1)

For the purposes of section 96 of the Act, every manager of a registered scheme must,—

(a)

within 4 months after each balance date of the scheme, prepare an annual report on the affairs of the scheme during the accounting period ending on that date; and

(b)

within 28 days after the annual report is prepared, send to every scheme participant—

(i)

a copy of the annual report; or

(ii)

a notice containing the statements specified in subclause (2).

(2)

The notice referred to in subclause (1)(b)(ii) must contain—

(a)

a statement to the effect that the scheme participant has a right to receive from the manager, free of charge, a copy of the annual report if the scheme participant, within 15 working days of receiving the notice, makes a request to the manager to receive a copy of the annual report; and

(b)

a statement to the effect that the scheme participant may obtain a copy of the annual report by electronic means; and

(c)

a statement as to how the scheme participant may obtain a copy of the annual report by electronic means (for example, from the address of the offer register).

(3)

For the purposes of section 97 of the Act, a manager of a registered scheme must lodge with the Registrar each annual report prepared in respect of the scheme under this regulation (and that report must be so lodged within 28 days after it is prepared).

63 Content of annual report

Every annual report under regulation 62 must contain,—

(a)

in the case of a managed fund, all of the information specified in Part 5 of Schedule 4 that is applicable:

(b)

in the case of any other scheme, all of the information specified in Part 4 of Schedule 5 that is applicable.

Passport funds

Heading: inserted, on 14 June 2019, by regulation 8 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

63A Annual report requirements apply to foreign passport funds

(1)

If interests in a foreign passport fund are offered under Part 1 of the Financial Markets Conduct (Asia Region Funds Passport) Regulations 2019, regulation 62(1) and (2) applies with all necessary modifications as if the fund were a registered scheme that is a managed fund.

(2)

However, the documents referred to in regulation 62(1)(b) are only required to be sent to a scheme participant if the participant is—

(a)

resident in New Zealand (in the case of a natural person); or

(b)

incorporated in, or established under the laws of, New Zealand.

(3)

The annual report of the foreign passport fund must contain all of the information specified in Part 5 of Schedule 4 that is applicable (as modified in accordance with Part 6 of Schedule 4).

(4)

For the purposes of section 97 of the Act, a manager of a foreign passport fund must ensure that each annual report prepared in respect of the fund under regulation 62 is available on the register entry for the offer on and after the date that is 28 days after it is prepared.

Regulation 63A: inserted, on 14 June 2019, by regulation 8 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

63B Manager of passport fund must lodge certain information

(1)

For the purposes of section 97 of the Act, if a registered scheme becomes registered as a passport fund (see regulations 82A and 82B), the manager must, as soon as practicable, lodge with the Registrar the following (for inclusion on the scheme register):

(a)

an indication of the scheme’s status as a passport fund:

(b)

the information referred to in section 7 of Annex 2 of the memorandum of cooperation, including the Part A information set out in Schedule 27 of these regulations, subject to the exceptions referred to in section 7(1)(a) of Annex 2 (see section 3(2)(a) of Annex 2).

(2)

If regulation 82B(3) applies, the Part A information set out in Schedule 27 must be provided under subclause (1)(b) in relation to each relevant fund instead of in relation to the scheme (and, for that purpose, Schedule 27 applies with all necessary modifications as if each relevant fund were a scheme).

Regulation 63B: inserted, on 14 June 2019, by regulation 8 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

63C Manager of passport fund must lodge information for updating scheme register

(1)

This regulation applies if—

(a)

the information referred to in section 7 of Annex 2 of the memorandum of cooperation that is recorded in the scheme register in relation to a passport fund has changed; or

(b)

a change of circumstances has arisen that would have required different information to have been lodged under regulation 63B had it arisen before the information was lodged.

(2)

For the purposes of section 97 of the Act, the manager of the passport fund must, within 5 working days after becoming aware of the matter referred to in subclause (1), lodge with the Registrar information to update the information recorded in the scheme register.

Example

Regulation 63B and section 7 of Annex 2 of the memorandum of cooperation provide for the scheme register to include a list of the host economies in which the passport fund has completed the entry process under the memorandum.

After becoming registered as a passport fund, ABC Fund has completed the entry process in Japan. The manager of ABC Fund must lodge information with the Registrar to update the list on the scheme register.

Regulation 63C: inserted, on 14 June 2019, by regulation 8 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Annual report for issuer of equity securities

64 Annual report for issuer of equity securities must compare prospective financial information with actual results

(1)

This regulation applies to an issuer of equity securities that includes in a PDS for an offer of the securities prospective financial information in a table under clause 35 of Schedule 3.

(2)

For the purposes of section 96 of the Act, the issuer must include, in its annual report that is made available to its shareholders for a relevant period (if any), a table that restates the prospective financial information referred to in subclause (1) for the relevant period together with a comparison with the corresponding actual financial information for that period.

(3)

The information must be stated in the same form as is required for the table under clause 35 of Schedule 3 and must comply with the requirements that apply to the information that is included under that clause.

(4)

In this regulation, relevant period means a period in respect of which prospective financial information is included in the PDS referred to in subclause (1).

KiwiSaver fees information

Heading: inserted, on 21 April 2017, by regulation 4 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

64A Information relating to KiwiSaver fees to be published

For the purposes of section 97 of the Act, the manager of a KiwiSaver scheme must, on or before the date on which the confirmation information described in regulation 70(2) is provided to scheme participants, publish on an Internet site maintained by or on behalf of the manager—

(a)

the method used for calculating the approximate total sum of fees referred to in regulation 70(2)(c); and

(b)

a description of the information and assumptions used to estimate any fee or charge in accordance with regulation 70A(2); and

(c)

if any information relating to fund charges is omitted under regulation 70A(3)(b) from the confirmation information provided to 1 or more scheme participants, a statement—

(i)

specifying the underlying funds for which information is omitted and, if available, the proportion of the specified fund’s net asset value that those underlying funds represent; and

(ii)

if known, specifying which types of fund charges are omitted.

Regulation 64A: inserted, on 21 April 2017, by regulation 4 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

Confirmation

65 When confirmation information is provided

(1)

For the purposes of section 100(1) of the Act, the prescribed circumstances are—

(a)

when a regulated product is issued to a person (other than a wholesale investor); or

(b)

when a regulated product is transferred to a person (other than a wholesale investor); or

(c)

when a regulated product held by a person (other than a wholesale investor) is redeemed.

(2)

See the definition of wholesale investor in regulation 5(5A).

(3)

Regulations 66 to 68 apply for the purposes of confirmation in the circumstances specified in subclause (1).

(4)

This regulation and regulations 66 to 68—

(a)

do not apply to KiwiSaver schemes, superannuation schemes, or workplace savings schemes:

(b)

apply to a regulated product that is a derivative only when the derivative is issued.

Regulation 65(2): replaced, on 1 December 2015, by regulation 22 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

66 Who provides confirmation information

(1)

The issuer of the regulated product must provide the confirmation information to the product holder.

(2)

However, if a transfer referred to in regulation 65(1)(b) is under an offer referred to in section 40 of the Act (sale offers that need disclosure), the offeror of the regulated product (rather than the issuer) must provide the confirmation information to the product holder.

67 Confirmation information

(1)

The confirmation information that must be provided is, in relation to a transaction referred to in regulation 65(1)(a) to (c), the information that the issuer (or offeror) reasonably believes the product holder needs in order to have a reasonable understanding of the nature of the transaction (having regard to the information the product holder has received before the transaction).

(2)

The confirmation information must—

(a)

include a brief description of the transaction and the parties to the transaction (and of the issuer if the issuer is not a party); and

(b)

identify the financial products involved; and

(c)

state the price per financial product if known at the relevant time (and if the transaction relates to more than 1 financial product); and

(d)

state the number or amount of financial products; and

(e)

state any fees or costs deducted if known at the relevant time; and

(f)

state the total amount paid or payable for the transaction if known at the relevant time; and

(g)

state the date of the transaction.

(3)

In this regulation and regulation 68,—

relevant time means the time when the confirmation information is first made available

transaction means a transaction involving the issue, transfer, or redemption of regulated products.

68 How confirmation information is provided

(1)

The confirmation information must be provided to the product holder—

(a)

by making it available through an electronic facility on a substantially continuous basis (but only if the product holder has agreed to this method); or

(b)

by giving it to the product holder or delivering or sending it to the product holder’s address not later than 10 working days after the last day of each reporting period in each year (but only if the products were issued under a continuous issue PDS and the product holder has agreed to this method); or

(c)

by giving it to the product holder or delivering or sending it to the product holder’s address not later than 5 working days after a financial product is issued or transferred or redeemed.

(2)

In the case of a transfer from one investor (A) to another investor (B), product holder means—

(a)

both A and B; or

(b)

in the case of regulation 66(2), B.

(3)

For the purposes of subclause (1)(a), the information must cover the transactions entered into in the period starting when regulation 65 first applies to the issuer or offeror of the regulated product in respect of the product holder and ending at a stated time that is not earlier than 48 hours before the information is made available.

(4)

For the purposes of subclause (1)(b), the following apply:

(a)

the information must cover the transactions entered into in the last reporting period:

(b)

the information must state the reporting period that it covers:

(c)

no information is required to be made available under that paragraph for a reporting period if no transactions are entered into in that period:

(d)

the requirement in that paragraph for the product holder to agree to the method does not apply if, before 1 December 2014 or during the transition period, the issuer provided similar information to the product holder on a periodic basis in accordance with the former enactments (for example, under the Securities Act (Unit Trust Certificates) Exemption Notice 2012).

(4A)

In subclause (4)(d), former enactments and transition period have the same meanings as in clause 16(1) of Schedule 4 of the Act.

(5)

In this regulation, reporting period means each 6-month period of a year (where each period ends on the date that the issuer determines).

Regulation 68(1)(a): amended, on 1 December 2015, by regulation 23(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 68(4)(d): replaced, on 1 December 2015, by regulation 23(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 68(4A): inserted, on 1 December 2015, by regulation 23(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

69 Confirmation for KiwiSaver schemes, superannuation schemes, and workplace savings schemes

(1)

This regulation applies to KiwiSaver schemes, superannuation schemes, and workplace savings schemes.

(2)

For the purposes of section 100(1) of the Act, a prescribed circumstance is the expiry of an accounting period of the KiwiSaver scheme, superannuation scheme, or workplace savings scheme.

(3)

Regulations 70 to 71 apply for the purposes of confirmation in the circumstance specified in subclause (2).

Regulation 69(3): amended, on 21 April 2017, by regulation 5 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

70 Confirmation information for KiwiSaver schemes

(1)

This regulation applies to KiwiSaver schemes.

(2)

The confirmation information that must be provided is, in relation to the accounting period that has expired and a particular scheme participant (A),—

(a)

A’s balance in the scheme at the relevant date and at the end of the period; and

(b)

the difference, expressed as a dollar amount, between A’s balance in the scheme at the relevant date and at the end of the period (but see subclause (3)); and

(c)

the approximate total sum, expressed as a dollar amount, of the fees charged to A for the period; and

(d)

the approximate total sum, expressed as a dollar amount (whether positive or negative), of each type of transaction that occurred during the period; and

(e)

if, in accordance with regulation 70A(2)E, an estimate is used to calculate fees charged to A,—

(i)

a statement of the fees or costs that are estimated; and

(ii)

an explanatory note stating that an estimate has been used; and

(f)

if, in accordance with regulation 70A(3)(b), fund charges charged in respect of underlying funds have been omitted, a statement recording that the manager is unable to determine those fund charges.

(3)

For the purposes of subclause (2)(b),—

(a)

the confirmation information must identify the relevant date; and

(b)

if there is no difference between A’s balance in the scheme at the relevant date and at the end of the accounting period, the confirmation information must include a statement to that effect.

(4)

For the purposes of subclause (2)(c), fees must be calculated—

(a)

net of rebates that are paid or payable to the fund; and

(b)

in accordance with an applicable framework or methodology (if any).

(5)

In this regulation,—

fees means—

(a)

fund charges; and

(b)

individual action fees (as defined in clause 2(1) of Schedule 4); and

(c)

other charges (as defined in clause 2(1) of Schedule 4)

relevant date means—

(a)

the date on which the accounting period started; or

(b)

if A became a member of the scheme during the accounting period, the date on which A became a member

type of transaction

(a)

means—

(i)

contributions to the scheme in respect of A; and

(ii)

returns; and

(iii)

tax withdrawals or credits; and

(iv)

permitted withdrawals (as defined in section 4(1) of the KiwiSaver Act 2006); and

(v)

transfers of money into the scheme from another retirement scheme; and

(vi)

any other movement of money that results in an increase or decrease to A’s balance in the scheme; but

(b)

excludes fees charged to A.

Regulation 70: replaced, on 21 April 2017, by regulation 6 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

70A Requirements if fees required as confirmation information cannot be determined

(1)

For the purposes of calculating the fund charges, individual action fees, and other charges referred to in regulation 70, the actual figures for fees and costs in the accounting period must be used or, if actual figures are not available (for example, if underlying fund charges are not available), the best estimate of those figures must be used.

(2)

If estimates are used, the estimates must be made by the manager on the basis of the information available after the manager has made reasonable endeavours to obtain all relevant information.

(3)

If, after the manager has made reasonable endeavours to obtain all relevant information, the manager cannot make a reasonable estimate of the fund charges charged in respect of 1 or more underlying funds because of a lack of information,—

(a)

all known fund charges must be included in the confirmation information; and

(b)

other fund charges charged in respect of the underlying funds may be omitted from the confirmation information.

Regulation 70A: inserted, on 21 April 2017, by regulation 6 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

70B Confirmation information for superannuation schemes and workplace savings schemes

(1)

This regulation applies to superannuation schemes and workplace savings schemes.

(2)

The confirmation information that must be provided is, in relation to the accounting period that has expired and a particular scheme participant (A),—

(a)

A’s balance in the scheme at the start and at the end of the period; and

(b)

the amount of each type of contribution received by the manager in respect of A during the period.

Regulation 70B: inserted, on 21 April 2017, by regulation 6 of the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (LI 2017/77).

71 How confirmation information for KiwiSaver schemes, superannuation schemes, and workplace savings schemes is provided

The confirmation information must, not later than 3 months after the expiry of the scheme’s accounting period, be provided to the scheme participant (A)—

(a)

by making it available through an electronic facility (but only if A has agreed to this method); or

(b)

by giving it to A or delivering or sending it to A’s address.

Regulation 71(a): amended, on 1 December 2015, by regulation 24 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

71AA Additional information to accompany KiwiSaver confirmation information

(1)

This regulation—

(a)

applies to KiwiSaver Schemes; and

(b)

prescribes information that must be made available under section 96 of the Act.

(2)

The following information must be made available to scheme participant A (as defined in regulation 70) in relation to an accounting period in relation to which confirmation information is required to be provided to A under regulation 70:

(a)

A’s retirement savings and income projections in accordance with clause 1 of Schedule 7A; and

(b)

a “Consider your choices” statement in accordance with clause 2 of Schedule 7A.

(3)

However,—

(a)

if A was not a participant in the scheme for the whole of the accounting period, subclause (2)(a) does not apply:

(b)

if A was under 18 years of age at the end of the accounting period,—

(i)

subclause (2)(a) and (b) does not apply; but

(ii)

the information made available to A must instead include a statement in accordance with clause 3 of Schedule 7A:

(c)

if A was 65 years of age or over at the end of the accounting period, subclause (2) does not apply.

(4)

The information required to be made available under this clause—

(a)

must be made available to A at the same time and in the same manner as the confirmation information is provided under regulation 70; and

(b)

must be included in the same document as the confirmation information.

Regulation 71AA: inserted, on 13 June 2019, by regulation 4 of the Financial Markets Conduct Amendment Regulations 2019 (LI 2019/104).

Ongoing confirmation for derivatives investor money or property

Heading: inserted, on 17 December 2015, by regulation 25 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

71A Ongoing confirmation for derivatives

(1)

This regulation and regulations 71B and 71C—

(a)

apply to regulated products that are derivatives; and

(b)

do not limit the application of regulations 65 to 68 to derivatives.

(2)

For the purposes of section 100(1) of the Act, a prescribed circumstance is the expiry of a reporting period.

(3)

Regulations 71B and 71C apply for the purposes of confirmation in the circumstance specified in subclause (2).

(4)

If there is no information that is required to be provided under regulation 71B in relation to a reporting period, confirmation information does not need to be provided under this regulation for that period.

(5)

In this regulation and regulations 71B and 71C,—

derivatives investor money has the same meaning as in regulation 238

derivatives investor property has the same meaning as in regulation 238

reporting period means—

(a)

each 6-month period of a year (where each period ends on the date that the derivatives issuer determines); or

(b)

each shorter period agreed with the investor.

Example

The derivatives issuer and an investor agree on a daily reporting period (with the confirmation information being made available through an electronic facility).

Regulation 71A: inserted, on 17 December 2015, by regulation 25 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

71B Ongoing confirmation information for derivatives

(1)

The confirmation information that must be provided is, in relation to an investor, the following (as at the end of the reporting period to which the information relates):

(a)

a list of the investor’s derivatives issued by the derivatives issuer:

(b)

in the case of a derivative that can be terminated or closed out by the investor at any time, the value of the derivative:

(c)

the total amount of derivatives investor money held by the derivatives issuer on behalf of the investor:

(d)

the total amount that is allocated to margins (if any).

(2)

In this regulation, investor means—

(a)

a retail investor on behalf of whom derivatives investor money is held at the end of the reporting period; or

(b)

a retail investor who, at the end of the reporting period, holds a derivative with the derivatives issuer that can, under the terms of the derivative, be terminated or closed out by the investor at any time.

(3)

For the purposes of subclause (1)(b), the value is the amount the investor will receive if the investor chooses to terminate or close out the derivative.

Regulation 71B: inserted, on 17 December 2015, by regulation 25 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

71C How ongoing confirmation information for derivatives is provided

The confirmation information must, not later than 10 working days after the expiry of the reporting period, be provided to the investor (A)—

(a)

by making it available through an electronic facility (but only if A has agreed to this method); or

(b)

by giving it to A or delivering or sending it to A’s address.

Regulation 71C: inserted, on 17 December 2015, by regulation 25 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

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

(1)

The provisions in Schedule 8 of these regulations have effect for the purposes of prescribing—

(a)

limited disclosure and other requirements and conditions for the purposes of clause 26 of Schedule 1 of the Act; and

(b)

other matters for the purposes of Schedule 1 of the Act.

(2)

The provisions in Schedule 9 have effect for the purpose of prescribing matters for the purposes of clauses 25 and 31 of Schedule 8.

(3)

The provisions in Schedule 9A have effect for the purpose of prescribing matters for the purposes of clause 26C of Schedule 8.

Regulation 72(3): inserted, on 28 July 2022, by regulation 7 of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

72AA Civil liability for contravention of certain provisions in Schedule 8

(1)

The following provisions in Schedule 8 of these regulations are prescribed to be Part 3 offer provisions and to give rise to civil liability under section 101(3)(l) of the Act:

(a)

clause 7 (offeror must not breach $2 million aggregate limit):

(b)

clause 20 (issuer must give notice to licensed market operator and be in compliance with continuous disclosure and financial reporting obligations):

(c)

clause 21 (obligation to correct defective notice):

(d)

clause 22 (further requirements for offers of debt securities):

(e)

clause 24(1) and (3)(a) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(f)

clause 25(1)(a) and (2) (limited disclosure document must comply with Schedule 9 and requirements that apply to equivalent PDS):

(fa)

clause 26B(1) and (3)(a) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(fb)

clause 26C(1)(a) and (2) (limited disclosure document must comply with Schedule 9A and requirements that apply to equivalent PDS):

(g)

clause 30(1) and (3)(a) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(h)

clause 31(1)(a) and (2) (limited disclosure document and register entry):

(i)

clause 33 (offeror must provide limited disclosure document for variations):

(j)

clause 34(2)(a) and (b)(i) (content of limited disclosure document for moratorium or change of issuer):

(k)

clause 35 (content of limited disclosure document for other variations):

(l)

clause 36 (supplementary disclosure to correct deficiency for renewal offers):

(m)

clause 38 (limited disclosure document and register entry requirements):

(n)

clause 42 (offeror must comply with section 80 of Act).

(2)

The following provisions in Schedule 8 of these regulations are prescribed to be Part 3 offer provisions and to give rise to civil liability under section 101(4)(ga) of the Act:

(a)

clause 4 (offeror must provide warning statement):

(b)

clause 5 (offeror must obtain acknowledgement):

(c)

clause 10 (offeror must provide description of scheme, warning, and access to annual report and financial statements):

(d)

clause 14 (offeror must provide description of plan and access to annual report and financial statements):

(e)

clause 18 (small offer warning):

(f)

clause 24(3)(b) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(g)

clause 25(1)(b) (limited disclosure document must comply with Schedule 9 and requirements that apply to equivalent PDS):

(ga)

clause 26B(3)(b) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(gb)

clause 26C(1)(b) (limited disclosure document must comply with Schedule 9A and requirements that apply to equivalent PDS):

(h)

clause 30(3)(b) (offeror must provide limited disclosure document and comply with ongoing disclosure duties):

(i)

clause 31(1)(b) (limited disclosure document and register entry):

(j)

clause 34(2)(b)(ii) (content of limited disclosure document for moratorium or change of issuer):

(k)

clause 43 (limited disclosure document must be provided on request).

Regulation 72AA: inserted, on 9 August 2017, by regulation 8 of the Financial Markets Conduct Amendment Regulations 2017 (LI 2017/181).

Regulation 72AA(1)(fa): inserted, on 28 July 2022, by regulation 8(1) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 72AA(1)(fb): inserted, on 28 July 2022, by regulation 8(1) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 72AA(2)(ga): inserted, on 28 July 2022, by regulation 8(2) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

Regulation 72AA(2)(gb): inserted, on 28 July 2022, by regulation 8(2) of the Financial Markets Conduct (Disclosure Requirements for Bank Perpetual Preference Shares and Other Matters) Amendment Regulations 2022 (SL 2022/206).

72A Wholesale offer exclusion does not apply to certain offers of Crown debt securities

For the purposes of clause 29 of Schedule 1 of the Act, the exclusion in clause 3 of Schedule 1 of the Act (offer to wholesale investor) does not apply to an offer of debt securities that are continuously offered by the Crown by way of issue if—

(a)

the offer is made by the Crown to 1 or more wholesale investors; and

(b)

the offer is made in reliance on clause 22(1)(a) of Schedule 1 of the Act (and in compliance with clauses 30 and 31 of Schedule 8); and

(c)

the limited disclosure document that is provided under clause 30 of Schedule 8 includes a statement to the effect that this regulation applies in relation to the offer.

Regulation 72A: inserted, on 28 October 2016, by regulation 10 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Part 4 Governance of financial products

Subpart 1—Governance of debt securities

73 References to trust deeds and debt securities

A reference in this Part to—

(a)

a trust deed is a reference to the trust deed required by section 103(1) of the Act; and

(b)

a debt security is a reference to a debt security offered under a regulated offer.

Requirements for governing document for debt security

74 Trust deed for debt security must provide for certain matters

A trust deed for a debt security must provide adequately for all of the following matters:

(a)

the financial covenants (if any) that the issuer has given in favour of the holders of the debt security or the supervisor:

(b)

the prohibitions or restrictions (if any) on the issuer entering into transactions with—

(i)

any of its related parties within the meaning of section 6 of the Non-bank Deposit Takers Act 2013 (in the case of an issuer that is an NBDT); or

(ii)

any of its associated persons (in any other case):

(c)

reporting by the issuer to the supervisor (other than reporting required by the Act or these regulations), where the details relating to the frequency or content of the reports (or both) are set out in the trust deed or in a separate written agreement between the issuer and the supervisor:

(d)

the appointment and removal of the supervisor:

(e)

any additions or changes to the meeting procedures set by Schedule 11:

(f)

any other matters that materially affect—

(i)

the rights and duties of holders of the debt security:

(ii)

the powers, rights, and duties of the issuer and the supervisor.

75 Terms implied into trust deed for debt security

(1)

Clauses 1 to 3 of Schedule 10 are implied into a trust deed for a debt security.

(2)

Clauses 4 and 5 of Schedule 10 are implied into a trust deed for a debt security if the issuer is an NBDT (in addition to the provisions implied by subclause (1)).

(3)

However, subclause (2) does not apply to a building society, a credit union, or a co-operative company.

Reports by NBDT

76 Duty of NBDT to provide reports to supervisor

(1)

This regulation applies to an issuer of a debt security if the issuer is an NBDT.

(2)

However, this regulation does not apply to a building society, a credit union, or a co-operative company.

(3)

For the purposes of section 114 of the Act, the issuer must provide to the supervisor,—

(a)

within 30 days after the end of each month, a report for that month that is a copy of the monthly management report prepared for the directors of the issuer; and

(b)

a monthly report, in a form required by the supervisor and within 30 days after the end of each month, on—

(i)

the capital of the issuer; and

(ii)

the liquidity of the issuer; and

(iii)

the asset quality of the issuer (including arrears reports, and restructured, impaired, past due, and bad debts); and

(iv)

reinvestment rates; and

(v)

any breaches by members of the borrowing group of financial covenants in financing arrangements with third parties; and

(c)

at least once in every 3 months, a report confirming whether,—

(i)

at any time since the last confirmation under this paragraph, the issuer was prohibited under section 82(1) of the Act from offering, or continuing to offer, debt securities; and

(ii)

at all times during the period since the last confirmation under this paragraph, the issuer has complied with all provisions of the trust deed; and

(d)

a report to advise the supervisor, in advance or as soon as it is known, of—

(i)

every transaction that would require the consent of the Reserve Bank under section 43 of the Non-bank Deposit Takers Act 2013 (Bank’s consent for change of ownership); and

(ii)

every change of directors of the issuer; and

(iii)

every change in the senior managers of the issuer; and

(e)

a report to notify the supervisor, in advance, of any major transaction (as defined in the Companies Act 1993), or any related series of transactions that have the effect of a major transaction, entered into or to be entered into by the issuer.

(4)

The report that is given under subclause (3)(a) does not need to contain particular information in the monthly management report prepared for the directors of the issuer if the supervisor has waived the requirement for the report to contain information of that kind.

(5)

Subclause (3)(c)(i) applies to a period only if the PDS has an open for applications status.

(6)

Each report must be signed by at least 2 directors on behalf of the board of the issuer or, if the issuer has only 1 director, by that director.

Meetings of product holders

77 Proceedings at meetings of holders of debt security

(1)

Schedule 11 governs meetings of a class of holders of a debt security and proceedings at those meetings except to the extent that the trust deed expressly provides otherwise.

(2)

However, a trust deed may not disapply or modify clauses 2 and 5 of Schedule 11 in relation to a meeting of a class of holders of a debt security to approve a special resolution of those holders (except to the extent that those clauses are expressly subject to, or allow matters to be set by, the trust deed).

(3)

In subclause (2) and Schedule 11, special resolution means—

(a)

a resolution relating to a matter that is required by the Act or these regulations to be done by way of a special resolution; and

(b)

a resolution relating to a matter that is required by the trust deed to be done by way of a special resolution (by whatever name called).

78 Resolution in lieu of meeting

(1)

A written resolution is as valid as if it had been passed at a meeting of a class of holders of a debt security if, in the case of—

(a)

credit union products, it is signed by no less than 75% of the number of members of the credit union who are entitled to vote:

(b)

any other debt securities, it is signed by product holders who hold debt securities with a combined nominal value of no less than 75% of the nominal value of the debt securities held by those persons who are entitled to vote.

(2)

In this regulation, entitled to vote means entitled to vote on the resolution at a meeting of the class of holders of a debt security.

(3)

A written resolution that is signed by the persons specified in subclause (1) is as effective for the purposes of the Act and the trust deed as it would be if passed by resolution at a meeting of the class of the product holders.

(4)

A written resolution under this regulation may consist of 1 or more documents in similar form (including letters, electronic mail, or other similar means of communication) each signed by or on behalf of 1 or more of the persons specified in subclause (1).

(5)

The issuer must ensure—

(a)

that a proposed resolution under this regulation is dated with the date on which the proposed resolution is first sent to a person entitled to vote for the purpose of signing (the circulation date); and

(b)

that the proposed resolution is sent to every person entitled to vote; and

(c)

as far as is reasonably practicable, that the proposed resolution is sent under paragraph (b) on the circulation date; and

(d)

that a proposed resolution sent under paragraph (b) is accompanied by a statement of the effect of subclause (6).

(6)

A proposed resolution lapses if it is not passed under this regulation within 3 months (or any shorter period provided in the trust deed) after the circulation date.

(7)

The accidental omission to send a proposed resolution or statement under subclause (5) to a person entitled to vote does not invalidate a resolution passed under this regulation.

(8)

The issuer must, within 5 working days after a resolution is passed under this regulation, send a copy of the resolution to every person entitled to vote who did not sign the resolution and on whose behalf the resolution was not signed.

(9)

This regulation does not apply (or does not apply to resolutions of a particular kind) if the trust deed expressly states that this regulation does not apply (or does not apply to resolutions of that kind).

Subpart 2—Governance of managed investment products

Registration

79 Application for registration

(1)

An application for registration of a managed investment scheme must be made on an Internet site maintained by or on behalf of the Registrar for the purpose of the register of managed investment schemes.

(2)

The application must include the following information in respect of the scheme (in addition to the information required by section 126 of the Act):

(a)

the name of the scheme:

(b)

an identification of the type or types of scheme:

(c)

if the scheme is a default KiwiSaver scheme, confirmation of that fact:

(d)

the name of each of the following (as selected from another register kept by the Registrar) or, if the person does not have an entry on such a register, the unique identifying information of the person:

(i)

the manager:

(ii)

the supervisor:

(iii)

each custodian that is not the supervisor (other than a sub-custodian):

(e)

the financial service provider number (if any) for each person referred to in paragraph (d):

(f)

the address for communications from the Registrar to the manager:

(g)

the address for communications from the Registrar to the supervisor:

(h)

if the manager is relying, or intends to rely, on an exemption granted under subpart 2 of Part 9 of the Act in relation to the registration of the scheme, confirmation of that fact and the name of the exemption notice:

(i)

the balance date of the scheme:

(j)

the financial statements for the scheme (if any) for the most recently completed accounting period before the date of the application that are prepared in accordance with GAAP, and a copy of a qualified auditor’s report on those statements:

(k)

the annual report for the scheme for that accounting period (if any):

(l)

if the assets of any fund in the scheme are available to be applied to meet the liabilities of any other fund in the scheme, confirmation of that fact.

80 Lodging or giving information for scheme register

Information for the scheme register that is lodged with or given to the Registrar must be lodged or given in the manner specified by the Registrar in accordance with clause 13(1) of Schedule 2 of the Act.

Example

The identification of the type of scheme may be selected from a drop-down list of options specified by the Registrar on the scheme register Internet site maintained by the Registrar.

81 Superannuation scheme rules

(1)

The provisions set out in Schedule 12 are to be known as the superannuation scheme rules.

(2)

The superannuation scheme rules—

(a)

apply for the purposes of section 129(1)(c) of the Act (rules relating to permitted redemptions, withdrawals, and the provision of benefits); and

(b)

must be treated as implied into a governing document for a superannuation scheme (or, if a scheme is registered as a superannuation scheme in respect of only a section of the scheme, into a governing document in respect of that section only).

(3)

This regulation does not apply to a scheme, or a section of a scheme, that is closed to new members at the time of its registration (a legacy scheme).

82 Additional initial and ongoing registration requirement for workplace savings schemes

(1)

Every workplace savings scheme must meet the registration requirement specified in subclause (2) (in addition to the requirements in sections 127 and 130(1)(a) to (e) and (g) of the Act).

(2)

The requirement is that the governing document has the effect that each scheme participant who satisfies the requirements for withdrawal of the scheme participant’s accumulation set out in the governing document, and who elects to withdraw from membership of the scheme, may transfer the accumulation to any of the following types of schemes (to the extent that transfers are available to that other scheme):

(a)

another workplace savings scheme:

(b)

a superannuation scheme:

(c)

a KiwiSaver scheme:

(d)

an equivalent overseas retirement scheme.

(3)

In subclause (2)(d), equivalent overseas retirement scheme means any trust or other arrangement established in a country other than New Zealand that—

(a)

has the purpose of providing retirement benefits directly or indirectly to individuals; or

(b)

has the purposes of providing—

(i)

retirement benefits directly or indirectly to individuals; and

(ii)

benefits to eligible individuals on ceasing employment or engagement with a contributor or a related body corporate of a contributor (whether immediately on ceasing that employment or engagement, or subsequently).

(4)

For the purposes of that definition, a scheme may be considered to be for the purpose of providing retirement benefits even if it permits redemptions, withdrawals, and the provision of benefits in limited circumstances (provided that those permitted redemptions, withdrawals, and benefits are incidental or secondary to the purpose of providing retirement benefits).

(5)

In this regulation,—

net value means the value once any appropriate debits and credits have been made to account for things like fees, permitted withdrawals, and positive and negative returns

scheme participant’s accumulation, in relation to a scheme participant,—

(a)

means, in the case of a defined benefit scheme, the amount of the benefit that the scheme participant is entitled to receive on ceasing to be a member of the scheme:

(b)

means, in any other case, the net value of the total of—

(i)

the scheme participant’s contributions; and

(ii)

any other vested contributions in respect of the scheme participant.

82A Passport funds are type of registered scheme

A passport fund is prescribed as a type of registered scheme.

Regulation 82A: inserted, on 14 June 2019, by regulation 9 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

82B Additional initial and ongoing registration requirements for passport funds

(1)

Every passport fund must meet the registration requirements specified in subclause (2) and, if applicable, subclause (3) (in addition to the requirements in section 127 of the Act).

(2)

The requirements are as follows:

(a)

the scheme is constituted or governed by a trust deed or other governing document that is interpreted and administered in accordance with New Zealand law:

(b)

the scheme must already be registered as a registered scheme:

(c)

a request under section 134(3) of the Act for a direction that the scheme be registered as a passport fund is made and is accompanied by the Part A information set out in Schedule 27 in relation to—

(i)

the scheme; or

(ii)

if subclause (3) applies, each relevant fund (and, for that purpose, Schedule 27 applies with all necessary modifications as if each relevant fund were a scheme):

(d)

that request is accompanied by all other information that is reasonably necessary to assess whether the scheme or, if subclause (3) applies, each relevant fund is likely to be operated in compliance with the passport rules and with financial markets legislation:

(e)

at the time of that request, the manager of the scheme is an eligible entity under section 3(4) of Annex 2 of the memorandum of cooperation:

(f)

the scheme is operating, and is likely to continue to be operated, in compliance with financial markets legislation:

(g)

the scheme,—

(i)

if it is not yet operating in a host economy, is likely to be operated in compliance with the passport rules; and

(ii)

if it is operating in a host economy, is operated in compliance with the passport rules and the relevant laws and regulations:

(h)

no request has been made to the FMA under section 14(1)(b) of Annex 2 of the memorandum of cooperation.

(3)

If, when interests in the scheme are offered in a host economy, the investment options that may be selected by investors in the host economy are or will be limited to options that involve 1 or more (but not all) specified funds in the scheme, subclause (1)(g) does not apply. Instead, the following requirements must be met:

(a)

each relevant fund,—

(i)

if the scheme is not yet operating in the host economy, is likely to be operated in compliance with the passport rules; and

(ii)

if the scheme is operating in a host economy, is operated in compliance with the passport rules and the relevant laws and regulations:

(b)

the manager’s licence is or will be subject to a condition imposed under regulation 199A.

(4)

In considering whether a relevant fund is likely to operate or is operating in compliance with the passport rules and the relevant laws and regulations, those rules, laws, and regulations apply with all necessary modifications as if the relevant fund were a scheme.

(5)

In this regulation and regulation 63B,—

relevant fund means a specified fund referred to in subclause (3) in respect of which an investment option may be selected by investors in a host economy

relevant laws and regulations means the laws and regulations (as defined in paragraph 4.1(f) of the memorandum of cooperation) of each host economy in which interests in the scheme are or will be offered.

Regulation 82B: inserted, on 14 June 2019, by regulation 9 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Requirements for governing document for registered scheme

83 Governing document for registered scheme must provide for certain additional matters

(1)

The governing document for a registered scheme must provide adequately for all of the following matters under the scheme (in addition to the matters in section 135(1)(a) to (i) and (k) of the Act):

(a)

reporting by the manager to the supervisor (other than reports required by the Act and these regulations), where the details relating to the frequency or content of the reports (or both) are set out in the governing document or in a separate written agreement between the manager and the supervisor; and

(b)

any additions or changes to the meeting procedures set by Schedule 11.

(2)

Subclause (1)(a) does not apply to a restricted scheme.

84 Terms implied into governing document for registered scheme

(1)

Clauses 1 to 3 of Schedule 13 are implied into a governing document for a registered scheme (other than a restricted scheme).

(2)

Clause 4 of Schedule 13 is implied into a governing document for a restricted scheme.

Custodianship of scheme property

85 Custodian’s records of scheme property

Regulations 86 to 88 prescribe requirements for the purposes of section 158 of the Act.

86 Procedures for reconciling records

(1)

For the purpose of ensuring that the custodian’s records accurately state its holdings of scheme property, the scheme property relating to each fund, and all transactions relating to that property, the custodian must—

(a)

take adequate steps, or ensure adequate steps are taken, to reconcile records of scheme property kept by or on behalf of the custodian with records kept by sub-custodians and third parties; and

(b)

ensure adequate procedures are in place for promptly identifying discrepancies in those records and determining the cause of those discrepancies; and

(c)

promptly and fully rectify any discrepancies referred to in paragraph (b) or ensure that those discrepancies are promptly and fully rectified.

(2)

The frequency of the reconciliation must be appropriate to—

(a)

the type of scheme property to which the records relate; and

(b)

the frequency with which scheme property is traded; and

(c)

the timing of any custody reports provided.

(3)

However, all records of money must be reconciled daily.

87 Custodian must obtain assurance engagement

(1)

A custodian must obtain, within 4 months after the relevant date, an assurance engagement with a qualified auditor (including obtaining the assurance report within that period).

(1A)

The assurance engagement must be done in accordance with applicable auditing and assurance standards.

(2)

The custodian must, within 20 working days after obtaining an assurance report, provide a copy of the assurance report to each of the relevant persons.

(3)

This regulation does not apply to a sub-custodian (A) if the custodian that appointed A has complied with this regulation in respect of the scheme property held by A.

(4)

In this regulation and regulation 88,—

relevant date, in relation to a custodian, means—

(a)

the custodian’s balance date; or

(b)

a date in each calendar year that is—

(i)

determined by the custodian; and

(ii)

notified in writing, within 10 working days after the determination is made, to each of the relevant persons

relevant persons means,—

(a)

in the case of a restricted scheme, the FMA and (unless the manager is the custodian) the manager of the scheme:

(b)

in the case of any other scheme, the manager of the scheme and (unless the supervisor is the custodian) the supervisor of the scheme.

(5)

The following apply for the purposes of the date under paragraph (b) of the definition of relevant date in subclause (4):

(a)

in the case of a date that is adopted as the first relevant date, the date must be within the first 12 months of this regulation applying to the custodian in respect of the scheme; and

(b)

the custodian may change the date if—

(i)

the period between any 2 dates does not exceed 15 months; and

(ii)

the change is notified in writing, within 10 working days after the custodian decides to make the change, to each of the relevant persons; and

(c)

if the custodian adopts a date in accordance with paragraph (a) or changes the date in accordance with paragraph (b), it need not have a date in a particular calendar year.

Regulation 87(1): replaced, on 15 March 2021, by regulation 14 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 87(1A): inserted, on 15 March 2021, by regulation 14 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 87(2): replaced, on 1 December 2015, by regulation 26(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 87(4): inserted, on 1 December 2015, by regulation 26(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 87(5): inserted, on 1 December 2015, by regulation 26(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

88 Requirements of assurance engagement

(1)

An assurance engagement referred to in regulation 87(1) must determine whether, in the auditor’s opinion, there is reasonable assurance that—

(a)

the custodian’s processes, procedures, and controls were suitably designed to meet the objectives in subclause (3) throughout the most recently completed relevant period; and

(b)

the custodian’s processes, procedures, and controls operated effectively throughout that relevant period.

(2)

Subclause (1)(a) applies in respect of—

(a)

scheme property held by the custodian; and

(b)

scheme property held by a sub-custodian appointed by the custodian.

(3)

The objectives are as follows:

(a)

transactions are authorised, processed, and recorded in an appropriate, accurate, and timely manner:

(b)

scheme property is held in accordance with the Act, these regulations, and the governing document:

(c)

records and changes to records relating to the service are accurate and kept—

(i)

in an appropriate and timely manner; and

(ii)

in accordance with the Act, these regulations, and the governing document:

(d)

there are adequate safeguards against the loss, misappropriation, and unauthorised use of scheme property:

(e)

sub-custodians are appropriately approved and managed, and are adequately monitored:

(f)

reports in respect of holdings of scheme property are—

(i)

complete and accurate; and

(ii)

provided within the time frames specified in the Act, these regulations, and the governing document:

(g)

information technology systems and processes are appropriate to allow the custodian to accurately and reliably meet the objectives in paragraphs (a) to (f).

(4)

In this regulation, relevant period, in relation to a custodian, means a 12-month period ending on the relevant date of the custodian, and if, as a result of the date on which it became a custodian or a change of the relevant date of the custodian, the period ending on that date is longer or shorter than 12 months, that longer or shorter period is a relevant period.

Regulation 88(1)(a): amended, on 1 December 2015, by regulation 27(1) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 88(1)(b): amended, on 1 December 2015, by regulation 27(2) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Regulation 88(4): inserted, on 1 December 2015, by regulation 27(3) of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

Meetings of scheme participants

89 Proceedings at meetings of scheme participants

(1)

Schedule 11 governs meetings of a class of scheme participants and proceedings at those meetings except to the extent that the governing document expressly provides otherwise.

(2)

However, a governing document may not disapply or modify any of clauses 2, 3, or 5 of Schedule 11 in relation to a meeting of a class of scheme participants to approve a special resolution of those scheme participants (except to the extent that those clauses are expressly subject to, or allow matters to be set by, the governing document).

(3)

In subclause (2) and Schedule 11, special resolution means—

(a)

a resolution relating to a matter that is required by the Act or these regulations to be done by way of a special resolution; and

(b)

a resolution relating to a matter that is required by the governing document to be done by way of a special resolution (by whatever name called).

90 Resolution in lieu of meeting

(1)

A written resolution is as valid as if it had been passed at a meeting of a class of scheme participants if, in the case of—

(a)

managed investment products in a superannuation scheme, a KiwiSaver scheme, or a workplace savings scheme, it is signed by no less than 75% of the number of scheme participants who are entitled to vote:

(b)

any other managed investment products, it is signed by the scheme participants who hold managed investment products with a combined value of no less than 75% of the value of the managed investment products held by those persons who are entitled to vote.

(2)

In this regulation, entitled to vote means entitled to vote on the resolution at a meeting of the class of scheme participants.

(3)

A written resolution that is signed by the persons specified in subclause (1) is as effective for the purposes of the Act and the governing document as it would be if passed by resolution at a meeting of the class of scheme participants.

(4)

(5)

The manager must ensure—

(a)

(b)

that the proposed resolution is sent to every person entitled to vote; and

(c)

as far as is reasonably practicable, that the proposed resolution is sent under paragraph (b) on the circulation date; and

(d)

that a proposed resolution sent under paragraph (b) is accompanied by a statement of the effect of subclause (6).

(6)

A proposed resolution lapses if it is not passed under this regulation within 3 months (or any shorter period provided in the governing document) after the circulation date.

(7)

The accidental omission to send a proposed resolution or statement under subclause (5) to a person entitled to vote does not invalidate a resolution passed under this regulation.

(8)

The manager must, within 5 working days after a resolution is passed under this regulation, send a copy of the resolution to every person entitled to vote who did not sign the resolution and on whose behalf the resolution was not signed.

(9)

This regulation does not apply (or does not apply to resolutions of a particular kind) if the governing document expressly states that this regulation does not apply (or does not apply to resolutions of that kind).

91 Manager and associated persons may vote if interested in resolution to remove and replace manager in certain circumstances

Section 163(1) of the Act does not apply in relation to a resolution to remove the manager and appoint a new manager of a registered scheme if—

(a)

there has been no regulated offer of managed investment products in the scheme; and

(b)

none of the scheme participants are retail investors; and

(c)

the governing document expressly permits the relevant person to vote their interest on the resolution; and

(d)

the manager certifies, before voting, that the manager considers that the manager (and, if applicable, its associated persons) is voting in the best interests of the scheme participants.

92 Annual meeting of closed-ended schemes

(1)

The manager of a registered scheme that is closed-ended must call an annual meeting of scheme participants to be held—

(a)

not later than 6 months after the balance date of the scheme; and

(b)

not later than 15 months after the previous annual meeting.

(2)

The manager must hold the meeting on the date on which it is called to be held.

(3)

A registered scheme (other than a scheme to which clause 22(1)(a) of Schedule 4 of the Act applies) that is closed-ended does not have to hold its first annual meeting in the calendar year of its registration under subpart 2 of Part 4 of the Act, but must hold that meeting within 18 months of that registration.

(4)

However,—

(a)

the manager is not required to call a meeting to be held in a calendar year if, before the date that a meeting in the calendar year would otherwise be required to be held, the scheme participants, by a written unanimous resolution, agree that an annual meeting need not be called; and

(b)

if a resolution under paragraph (a) is passed, an annual meeting must be treated as having been held on the date of the resolution for the purposes of subclause (1)(b).

(5)

A written resolution under subclause (4)(a) may consist of 1 or more documents in similar form (including letters, electronic mail, or other similar means of communication) each signed by or on behalf of the scheme participants.

(6)

A scheme is closed-ended unless—

(a)

the managed investment products in the scheme were offered on the basis that, in the ordinary course of business, the products would be continuously offered and redeemed on a basis calculated wholly or mainly on the value of the scheme property; or

(b)

the scheme is a KiwiSaver scheme, a superannuation scheme, or a workplace savings scheme.

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

(1)

This regulation prescribes circumstances in which a SIPO, and changes to a SIPO, do not need to be lodged for the purpose of section 166(1) of the Act.

(2)

A SIPO need not be lodged under section 166(1)(a) of the Act if all of the following circumstances apply:

(a)

there has been no regulated offer of managed investment products in the registered scheme (and no interests in the scheme have been offered to the public in New Zealand under the Securities Act 1978); and

(b)

the manager lodges with the Registrar a notice that states that—

(i)

the scheme register does not contain the SIPO because no regulated offer of managed investment products in the registered scheme has been made; and

(ii)

a copy of the SIPO is available, on request and free of charge, to scheme participants and the FMA; and

(c)

the notice under paragraph (b) is lodged—

(i)

before any managed investment product is issued; or

(ii)

at the time the scheme is registered (if the scheme is registered after any managed investment product is issued).

(3)

A change to the SIPO need not be lodged under section 166(1)(b) of the Act if all of the following circumstances apply:

(a)

(b)

the manager lodges with the Registrar a notice that states that—

(i)

the scheme register does not contain a change to the SIPO because no regulated offer of managed investment products in the registered scheme has been made; and

(ii)

a copy of any change to the SIPO is available, on request and free of charge, to scheme participants and the FMA; and

(c)

the notice under paragraph (b) is lodged within 5 working days after the change takes effect.

Limit breaks

94 Manager must provide immediate report to supervisor (or FMA) in event of uncorrected limit break

(1)

The manager of a registered scheme must provide to the supervisor (or, in the case of a restricted scheme, the FMA) a report in accordance with this regulation and regulation 96 if—

(a)

section 167 of the Act applies; and

(b)

the limit break is not corrected within 5 working days after the date that the manager becomes aware of the limit break.

(2)

The report must be provided as soon as practicable after the expiry of the 5-working-day period referred to in subclause (1)(b).

(3)

The report must contain the information specified in regulation 96.

95 Manager must provide quarterly reports to supervisor (or FMA) about limit breaks

(1)

For the purposes of section 147 of the Act, the manager of a registered scheme must provide to the supervisor (or, in the case of a restricted scheme, the FMA) a report in accordance with this regulation and regulation 96 within 10 working days after the expiry of each quarter of each year.

(2)

The report must—

(a)

state whether there have been any limit breaks in the previous quarter to which section 167 of the Act applies; and

(b)

if so, contain the information specified in regulation 96.

(3)

The report may be combined with any other report that is provided by the manager to the supervisor (or, in the case of a restricted scheme, the FMA).

96 Contents of reports about limit breaks

(1)

This regulation applies to—

(a)

a report under regulation 94:

(b)

a report under regulation 95 if regulation 95(2)(b) applies.

(2)

The report must disclose—

(a)

the date that the manager became aware of the limit break; and

(b)

the name of the registered scheme affected and the name of any fund within that scheme to which the limit break relates; and

(c)

the nature and cause of the limit break (the type of limit break); and

(d)

the net asset value of the scheme property in the registered scheme as a whole and in respect of any fund within that scheme to which the limit break relates (as at the date the limit break first occurred); and

(e)

the reasons why the limit break is material (as determined in accordance with an applicable framework or methodology (if any)); and

(f)

the date on which the limit break first occurred and the period for which the limit break continued before it was corrected (or whether the limit break remains uncorrected at the time of the report); and

(g)

the steps taken, or to be taken, by the manager to correct the limit break; and

(h)

what steps (if any) have been taken, or will be taken, to minimise risk of a recurrence of this type of limit break or to ensure early notification and correction of limit breaks of this type; and

(i)

the time frame within which the manager intends to take any steps not already taken under paragraph (g) or (h).

(3)

If any information referred to in subclause (2)(d) to (i) is not reasonably ascertainable as at the date of the report,—

(a)

the report is not required to include that information; but

(b)

the manager must make a further report containing that information to the supervisor (or, if there is no supervisor, to the FMA) as soon as is reasonably practicable after the information becomes reasonably ascertainable.

(4)

A quarterly report under regulation 95 is not required to include any information referred to in subclause (2)(d) to (i) if—

(a)

the information has previously been provided to the supervisor (or, in the case of a restricted scheme, the FMA) in a report provided under regulation 94 or in any other report that the manager is required to provide to the supervisor (or, in the case of a restricted scheme, the FMA); and

(b)

the quarterly report states the date of the report in which the information was previously provided; and

(c)

as at the date of the quarterly report, the information remains correct.

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

(1)

If section 168 of the Act applies, the manager must ensure that the pricing error or non-compliance is reported to the supervisor (or, if there is no supervisor, to the FMA) as soon as is reasonably practicable after the manager becomes aware of the pricing error or non-compliance.

(2)

In this regulation and regulations 98 and 99,—

non-compliance means a failure to comply with the methodology for pricing the managed investment products as set out in the governing document or a notice issued by the FMA under subpart 4 of Part 9 of the Act

pricing error means an error in the calculation of the price at which managed investment products are transferred or redeemed.

98 Contents of reports about pricing error or failure to comply with pricing methodologies

(1)

The report under regulation 97 must disclose—

(a)

the name of the registered scheme affected and the name of any fund within that scheme to which the pricing error or non-compliance relates; and

(b)

the nature and cause of the pricing error or non-compliance; and

(c)

the amount of the pricing error or the cost of the non-compliance as a percentage of the price of the relevant managed investment product or of the net asset value of the fund; and

(d)

the number and classes of current and former scheme participants affected by the pricing error or non-compliance; and

(e)

the date on which the pricing error or non-compliance was corrected and the period of time before which the manager became aware of the pricing error or non-compliance; and

(f)

if applicable, the steps taken, or to be taken, to correct, reimburse for, and compensate for the pricing error or non-compliance (including how reimbursement will be made and compensation will be paid) and the time frame within which the manager intends to take any steps not already taken; and

(g)

what steps (if any) have been taken, or will be taken, to minimise risk of a recurrence of the pricing error or non-compliance and the time frame within which the manager intends to take any steps not already taken.

(2)

If any information referred to in subclause (1)(c) to (g) is not reasonably ascertainable as at the date of the report under regulation 97,—

(a)

the report is not required to include that information; but

(b)

99 Other action that must be taken on pricing errors and failure to comply with pricing methodologies

(1)

This regulation applies if section 168 of the Act applies.

(2)

The manager must, as soon as is reasonably practicable, take all reasonable steps (in consultation with the supervisor or, if there is no supervisor, the FMA) to—

(a)

ensure that every disadvantaged current scheme participant is reimbursed, and every disadvantaged former scheme participant is compensated, so as to restore that person as near as possible to the position the person would be in (in relation to the scheme) had the pricing error or non-compliance not occurred; and

(b)

notify each of those current or former scheme participants of—

(i)

the pricing error or non-compliance; and

(ii)

any action that has been or will be taken to compensate or reimburse them; and

(c)

ensure that the manager and its associated persons do not retain any benefit from the pricing error or non-compliance.

(3)

Subclause (2) does not require a payment for the purposes of reimbursement or compensation to a current or former scheme participant if the amount of reimbursement or compensation is less than the minimum level specified in, or determined in accordance with, the governing document.

(4)

For the purposes of subclause (2),—

(a)

a disadvantaged current or former scheme participant includes a current or former scheme participant who is disadvantaged by the pricing error or non-compliance on the issue or transfer of a managed investment product:

(b)

the reimbursement may be made—

(i)

by issuing more managed investment products to a current scheme participant or otherwise adjusting a current scheme participant’s holdings of managed investment products, by adjusting the price of managed investment products, or by otherwise adjusting a current scheme participant’s accumulation; or

(ii)

by direct credit to a bank account or by cheque (if reimbursement under subparagraph (i) is impracticable):

(c)

compensation may be made to a former scheme participant—

(i)

by direct credit to a bank account or by cheque; or

(ii)

if the pricing error or non-compliance relates to a KiwiSaver scheme, by making a contribution to the scheme participant’s current KiwiSaver scheme:

(d)

a notice to a current or former scheme participant (A) under subclause (2)(b) must be provided by giving it to A or delivering or sending it to A’s address.

Related party transactions

100 Manager must provide quarterly report to supervisor (or FMA) on related party transaction certificates

(1)

For the purposes of section 147 of the Act, the manager of a registered scheme must provide to the supervisor (or, in the case of a restricted scheme, the FMA) a report in accordance with this regulation within 10 working days after the expiry of each quarter of each year.

(2)

The report must state whether any certificates have been given under section 173(2)(b) or (4) of the Act in the previous quarter and, if so, include a copy of those certificates.

(3)

The report may be combined with any other report that is provided by the manager to the supervisor (or, in the case of a restricted scheme, the FMA).

101 Investments in Australian registered managed investment scheme is permitted related party benefit transaction

For the purposes of section 174(b) of the Act, an interest in a registered scheme (within the meaning of section 9 of the Corporations Act 2001 (Aust)) is a prescribed interest in a prescribed overseas scheme.

102 Investment in Government securities is permitted related party benefit transaction

A transaction is prescribed for the purposes of section 174(d) of the Act if the transaction is the acquisition or disposal of any public security in the ordinary course of business.

103 Transaction to acquire first property is permitted related party benefit transaction

(1)

A transaction is prescribed for the purposes of section 174(d) of the Act if—

(a)

the transaction is the acquisition of a first property; and

(b)

an estimate of the value of the first property is specified in the first PDS; and

(c)

that estimate is based on,—

(i)

in the case where the first property is quoted financial products, the market price of those products as at the close of a trading day not earlier than 5 trading days before the lodgement of the first PDS:

(ii)

in the case where the first property is real property, a valuation from an independent registered valuer (within the meaning of the Valuers Act 1948) that complies with the requirements in subclause (2):

(iii)

in any other case, a valuation from a suitably qualified independent valuer.

(2)

For the purposes of subclause (1)(c)(ii), the valuation must—

(a)

be signed by the registered valuer; and

(b)

be dated not more than 4 months before the date of the first PDS; and

(c)

be contained on the offer register or the scheme register.

(3)

Subclause (1)(b) and (c) does not apply if the first property has an estimated value of $100 or less (and for that purpose, if the first property is quoted financial products, those products must be valued in aggregate rather than per product).

(4)

The valuer referred to in subclause (1)(c) is not independent if the valuer is a related party of the scheme.

(5)

In this regulation,—

first PDS, in relation to a registered scheme,—

(a)

means the first PDS for a regulated offer of managed investment products in the scheme; but

(b)

does not include a PDS if interests in the scheme have previously been offered to the public in New Zealand under the Securities Act 1978

first property, in relation to a registered scheme, means property identified in the first PDS as being property the purchase price of which is to be met (in whole or in part) out of the proceeds of the offer to which the first PDS relates.

104 Listed manager transaction is permitted related party transaction

(1)

A transaction, in relation to a registered scheme, is prescribed for the purposes of section 174(d) of the Act if—

(a)

the managed investment products in the scheme are quoted; and

(b)

the transaction is entered into by the manager; and

(c)

the listing rules of the licensed market on which those products are quoted contain related party provisions.

(2)

In this regulation, related party provisions means provisions that—

(a)

apply to the manager as a listed issuer; and

(b)

prohibit or restrict the ability of listed issuers to enter into transactions with 1 or more types of associated persons.

105 Requirements for certificates as to related party benefits

For the purpose of section 175(1)(b) of the Act, a certificate under section 173 of the Act—

(a)

must,—

(i)

if the monetary value of the related party benefit or benefits to which the certificate relates can be quantified, state the nature and monetary value of that benefit or those benefits; or

(ii)

if the monetary value of the related party benefit or benefits to which the certificate relates cannot be quantified, state the nature and extent of that benefit or those benefits; and

(b)

must provide, or have attached to it, reasonable evidence supporting—

(i)

the statement under paragraph (a); and

(ii)

the stated basis for relying on a ground in section 173 of the Act and (if relevant) section 174 of the Act.

106 Restriction on acquisitions of in-house assets does not apply to public securities

Section 176 of the Act does not apply to an acquisition of a new in-house asset if—

(a)

the asset is a public security; and

(b)

the public security is acquired in the ordinary course of business of the restricted scheme.

Regulation 106 heading: replaced, on 30 June 2016, by regulation 4 of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

106A Restriction on acquisitions of in-house assets does not apply to restricted schemes that invest in certain unregistered schemes

(1)

Section 176 of the Act does not apply to an investment in an unregistered scheme that is made by a restricted scheme if—

(a)

the requirements of section 173(4) of the Act are met in relation to the transaction or series of transactions by which the investment is made; and

(b)

the unregistered scheme is a trust that is used for the purpose of facilitating investment and reporting for registered schemes; and

(c)

the manager of the unregistered scheme is an investment business (as defined in clause 37 of Schedule 1 of the Act); and

(d)

the manager of the unregistered scheme has in place ongoing arrangements that can reasonably be expected to ensure that, in exercising any powers or performing any duties as a manager, it exercises the care, diligence, and skill that a prudent person engaged in the business of managing a registered scheme would exercise in the same circumstances; and

(e)

the manager of the unregistered scheme has in place ongoing arrangements that can reasonably be expected to ensure that section 174 of the Act applies to the relevant transactions or all related party benefits to be given under those transactions; and

(f)

in the case of a scheme that is identified on the scheme register as an employer-related scheme, the requirement specified in regulation 106B is satisfied.

(2)

For the purposes of subclause (1)(e),—

related party benefit, in relation to the unregistered scheme,—

(a)

is a benefit—

(i)

that either is given out of scheme property of the unregistered scheme or creates an exposure to loss for scheme property of the unregistered scheme; and

(ii)

that is given to, or received by, a related party of the unregistered scheme; but

(b)

does not include fees or expenses that are paid or reimbursed to the manager in accordance with the governing document of the unregistered scheme

relevant transactions means transactions entered into for or on behalf of the unregistered scheme that provide for 1 or more related party benefits to be given (as defined in this subclause).

(3)

Any term or expression that is defined in section 172 or 176(3) of the Act and used, but not defined, in this regulation or regulation 106B has the same meaning as in those provisions.

Regulation 106A: inserted, on 30 June 2016, by regulation 5 of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

Regulation 106A(1)(e): replaced, on 1 December 2017, by regulation 6(1) of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

Regulation 106A(1)(f): inserted, on 1 December 2017, by regulation 6(1) of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

Regulation 106A(3): amended, on 1 December 2017, by regulation 6(2) of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

106B Additional requirement for employer-related scheme

(1)

The requirement for the purposes of regulation 106A(1)(f) is that, immediately after the investment referred to in regulation 106A is made, the restricted scheme must not have an in-house assets ratio of 5% or more (where the ratio is calculated in accordance with section 176(2) and (4) of the Act (applied with all necessary modifications)).

(2)

Subclause (3) applies if the unregistered scheme has or acquires an asset that—

(a)

is a loan to, or an investment in,—

(i)

a contributor to the restricted scheme who is not a scheme participant (other than the Crown); or

(ii)

an associated person of a contributor referred to in subparagraph (i); or

(b)

is subject to a lease or lease arrangement with a person referred to in paragraph (a)(i) or (ii).

(3)

For the purposes of subclause (1), the restricted scheme must be treated as having or acquiring that asset in proportion to the restricted scheme’s interest in the unregistered scheme.

(4)

For the purposes of subclause (1), the restricted scheme’s investment in the unregistered scheme must not be treated as an in-house asset (but this subclause does not limit subclause (3)).

Example

ABC scheme (ABC) makes regular investments into an unregistered scheme called XYZ scheme (XYZ).

ABC currently has in-house assets that are valued at $200,000.

ABC is preparing to make another investment in XYZ and intends to rely on regulation 106A. To rely on that regulation, the requirement in this regulation must be satisfied.

After the investment is made, ABC will own 20% of XYZ’s units.

Employer Limited is a contributor to ABC on behalf of its employees. It is a related party of ABC.

XYZ currently holds shares in Employer Limited that have a value of $10 million. Under subclause (3), 20% of this asset is attributed to ABC as if ABC holds the shares (that is, $2 million worth of shares). This asset is treated as an in-house asset because it is an investment in ABC’s related party.

The sum of the in-house assets directly held by ABC and the assets it is treated as holding is $2,200,000 ($200,000 plus $2 million).

The net asset value of ABC’s scheme property is $20 million.

Applying section 176(2) of the Act, the in-house assets ratio of ABC would be 11% (the ratio of $2.2 million to $20 million).

ABC does not satisfy the requirement in this regulation and cannot make a further investment in XYZ in reliance on regulation 106A. (Investments may resume once XYZ divests itself of enough shares in Employer Limited to reduce ABC’s in-house assets ratio below 5%.)

Regulation 106B: inserted, on 1 December 2017, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2016 (LI 2016/118).

Application of Trusts Act 2019 to PIE fund units

Heading: inserted, on 30 January 2021, by regulation 17 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

106C Application of Trusts Act 2019 to PIE fund units

(1)

This regulation applies to a managed investment scheme constituted (or to be constituted) as 1 or more trusts or as including 1 or more trusts (or both) if the interests in the scheme—

(a)

are—

(i)

PIE call fund units; or

(ii)

PIE term fund units; and

(b)

are or will be offered in reliance upon clause 21(a) or (c) of Schedule 1 of the Act.

(2)

The following provisions of the Trusts Act 2019 do not apply to any trust referred to in subclause (1):

(a)

section 39 (adviser must alert settlor to modification or exclusion of default duty):

(b)

sections 40 to 42 (exemption and indemnity clauses):

(c)

section 43 (adviser must alert settlor to liability exclusion or indemnity clause):

(d)

section 44 (court consideration of gross negligence):

(e)

sections 60 and 61 (power to determine treatment of returns and accounts):

(f)

sections 67 to 73 (exercise or performance of trustee powers and functions by others):

(g)

sections 74 to 76 (special trust advisers):

(h)

sections 81(2) and (3) and 82 to 85 (trustees’ indemnities):

(i)

section 96 (who may be appointed as trustee):

(j)

sections 121 to 123 (termination and variation of trusts).

(3)

See clause 28 of Schedule 8, which imposes governance requirements for offers made in reliance upon clause 21(a) or (c) of Schedule 1 of the Act.

Section 106C: inserted, on 30 January 2021, by regulation 17 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

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

Section 215 of the Act does not apply to—

(a)

bearer securities; or

(b)

call building society shares; or

(c)

call credit union shares; or

(d)

call debt securities; or

(e)

credit union fixed term deposit products; or

(f)

credit union savings account products.

Regulation 107(b): replaced, on 15 March 2021, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 107(c): inserted, on 15 March 2021, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 107(d): inserted, on 15 March 2021, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 107(e): inserted, on 15 March 2021, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 107(f): inserted, on 15 March 2021, by regulation 15 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

108 Audit of registers

Every issuer of regulated products must ensure that registers kept by, or on behalf of, the issuer under subpart 4 of Part 4 of the Act are audited in accordance with regulation 109 or 110 (which are alternative means of compliance with this regulation).

109 Audit of particular register

(1)

An audit of a register of regulated products must,—

(a)

in the case of managed investment products, be carried out every year within 4 months after the balance date of the registered scheme:

(b)

in any other case, be carried out every year within 4 months after the issuer’s balance date.

(2)

The audit must be carried out in accordance with applicable auditing and assurance standards.

(3)

The audit must determine whether, in the auditor’s opinion, there is reasonable assurance that the register, in all material respects, correctly contains the information referred to in section 217 of the Act.

Regulation 109(1): replaced, on 1 December 2015, by regulation 28 of the Financial Markets Conduct Amendment Regulations 2015 (LI 2015/276).

110 Collective audit of registers kept by registrar entity

(1)

This regulation applies to the registers of regulated products kept on behalf of 1 or more issuers by a registrar entity.

(2)

The registers kept by the registrar entity on behalf of 1 or more issuers must be collectively audited at least once a year.

(3)

The audit must be carried out in accordance with applicable auditing and assurance standards.

(4)

The audit must determine whether, in the auditor’s opinion, there is reasonable assurance that the registers kept by the registrar entity, in all material respects, correctly contain the information referred to in section 217 of the Act.

(5)

An issuer referred to in subclause (1) may elect that 1 or more of its registers be audited under regulation 109 rather than this regulation.

(6)

In this regulation, registrar entity means an entity that carries on a business of maintaining registers of regulated products on behalf of issuers (whether or not the business is the entity’s only business or the entity’s principal business).

111 Public inspection of register not required in certain circumstances

Section 221(1) of the Act does not apply in respect of a register of regulated products if—

(a)

the regulated products are debt securities issued by a continuous issuer of those debt securities; and

(b)

it is a term of the offer of those debt securities that—

(i)

the part of the register that concerns the debt securities of a particular product holder (A) is available for inspection by A in the manner referred to in section 222 of the Act if A serves written notice on the issuer of intention to inspect; and

(ii)

A may require a copy of, or an extract from, that part of the register to be sent to A within 5 working days after A has made a written request for the copy or extract to the issuer (free of charge).

112 Inspection and copies of documents

(1)

For the purposes of section 227(1)(b) of the Act, the issuer of a regulated product, the offeror under a regulated offer, or the manager of a registered scheme must—

(a)

keep a document that is relevant to a person (A) available for inspection in the manner prescribed in subclause (2) by A, or by a person authorised in writing by A for the purpose, who serves written notice of intention to inspect on the issuer, offeror, or manager; and

(b)

provide, on request and on payment of the relevant fee, to a person (A) a copy of, or an extract from, a document that is relevant to A (and must provide the copy or extract within 20 working days after receiving the request).

(2)

The documents must be available for inspection at the place at which the issuer’s, offeror’s, or manager’s records are kept between the hours of 9 am and 5 pm on each working day during the inspection period.

(3)

In this regulation, a document is relevant to a person if the person has or had a right to access or obtain a copy of the document under the Act, these regulations, a governing document, or the terms of the offer of a financial product.

(4)

In this regulation,—

inspection period means the period commencing on the third working day after the day on which notice of intention to inspect is served on the issuer, offeror, or manager by the person concerned and ending with the eighth working day after the day of service

relevant fee means a reasonable printing and administration fee set by the issuer, offeror, or manager.

Subpart 4—Schedule 3 schemes

113 Reporting obligations for Schedule 3 schemes

(1)

The trustees of a Schedule 3 scheme must,—

(a)

within 5 months after the balance date of the scheme, prepare an annual report on the affairs of the scheme during the accounting period ending on that date; and

(b)

within 28 days after the completion of that report, send a copy of the completed report to the FMA.

(2)

The annual report must, in respect of the accounting period to which it relates, include the following matters:

(a)

the financial statements of the scheme:

(b)

a copy of the auditor’s report (if any) on those financial statements:

(c)

a statement by the trustees as to whether all the contributions required to be made to the scheme in accordance with the terms of the trust deed have been made:

(d)

a statement by the trustees as to whether all the benefits required to be paid from the scheme in accordance with the terms of the trust deed have been paid:

(e)

a statement by the trustees as to whether the scheme has been operated in accordance with the terms of the trust deed and the Act:

(f)

a notification by the trustees if the assets of the scheme at any time during the accounting period were invested directly or indirectly (in a way in which it was reasonable for the trustees to be aware) in the scheme participant or in any associated person of the scheme participant and if so, details of all such investments held during the accounting period.

(3)

In this regulation and in the provisions implied into a trust deed under regulation 114, the balance date of a scheme is the close of 31 March or any other date that the trustees adopt as the scheme’s balance date (and, for that purpose, section 42 of the Financial Reporting Act 2013 (other than subsection (3)(b) of that section) applies with any necessary modifications).

114 Terms implied into trust deed of Schedule 3 schemes

The following provisions are implied into the trust deed of a Schedule 3 scheme:

1 Trustees must keep proper accounting records

(1)

The trustees must ensure that there are kept at all times accounting records that—

(a)

correctly record the transactions of the scheme; and

(b)

will enable the trustees to ensure that the financial statements of the scheme comply with generally accepted accounting practice; and

(c)

will enable the financial statements of the scheme to be readily and properly audited (if an audit is required by any enactment).

(2)

The trustees must establish and maintain a satisfactory system of control of those accounting records.

(3)

In this clause and clause 2, financial statements and generally accepted accounting practice have the same meanings as in the Financial Reporting Act 2013.

2 Financial statements must be prepared

The trustees must ensure that, within 5 months after the balance date of the scheme, financial statements that comply with generally accepted accounting practice are—

(a)

completed in relation to the scheme and that balance date; and

(b)

dated and signed on behalf of the trustees by 2 trustees or, if the scheme has only 1 trustee, by that trustee.

3 Prohibition on transactions giving related party benefits

(1)

The trustees must not, unless permitted under subclause (3), enter into a transaction that provides for a related party benefit to be given.

(2)

A related party benefit is a benefit that is given out of, or creates an exposure to loss for, scheme property and that is given to, or received by, the scheme participant or any associated person of the scheme participant (for example, benefits from the personal use of scheme property by the scheme participant or indirect financial advantages derived by the scheme participant).

(3)

Subclause (1) does not apply to—

(a)

withdrawals permitted by the trust deed; or

(b)

a transaction entered into on terms that—

(i)

would be reasonable in the circumstances if the parties were connected or related only by the transaction in question, each acting independently, and each acting in its own best interests; or

(ii)

are less favourable to the scheme participant or associated person than the terms referred to in subparagraph (i).

(4)

This clause does not affect the validity of any transaction entered into before the scheme is approved as a Schedule 3 scheme.

(5)

In this clause, associated person has the same meaning as in section 12 of the Financial Markets Conduct Act 2013.

114AA Criterion for withdrawal of Schedule 3 scheme approval on trustee’s application

For the purposes of clause 2(1)(b)(iv) of Schedule 3 of the Act, the FMA must be satisfied that the scheme participant is entitled under the terms of the trust deed to receive, before the approval is withdrawn, a lump sum benefit that is equal to the total value of the scheme property after the payment of taxes and fees.

Section 114AA: inserted, on 15 March 2021, by regulation 16 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Part 5 Dealing in financial products on markets

Subpart 1AA—Insider trading

Part 5 subpart 1AA: inserted, on 1 December 2016, by regulation 11 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

114A Exemption involving acquiring certain products by way of issue

(1)

Conduct by a person, to the extent that it is conduct falling within section 241(1) of the Act, is exempt from being insider conduct if—

(a)

the conduct is a trade in a quoted debt security, equity security, or managed investment product; and

(b)

the trade is an acquisition of the debt security, equity security, or managed investment product by way of issue.

(2)

Conduct by a person (A), to the extent that it is conduct falling within section 242(1) of the Act, is exempt from being insider conduct if—

(a)

the conduct is directly or indirectly disclosing inside information to another person (B) where A knows or ought reasonably to know or believes that B will, or is likely to,—

(i)

trade in a quoted debt security, equity security, or managed investment product; or

(ii)

advise or encourage another person (C) to trade in a quoted debt security, equity security, or managed investment product; and

(b)

the trade would be an acquisition of the debt security, equity security, or managed investment product by way of issue.

(3)

Conduct by a person (A), to the extent that it is conduct falling within section 243(1) of the Act, is exempt from being insider conduct if—

(a)

the conduct is—

(i)

advising or encouraging another person (B) to trade a quoted debt security, equity security, or managed investment product; or

(ii)

advising or encouraging B to advise or encourage another person (C) to trade a quoted debt security, equity security, or managed investment product; and

(b)

the trade would be an acquisition of the debt security, equity security, or managed investment product by way of issue.

(4)

Despite subclauses (1) to (3), this regulation does not apply if—

(a)

the trade referred to in any of those subclauses is an acquisition of a quoted managed investment product; and

(b)

the manager of the scheme to which the product relates continuously offers those managed investment products in the ordinary course of its business.

(5)

For the purposes of subclause (4)(b), managed investment products are not continuously offered merely because they are offered under a dividend reinvestment plan of a kind referred to in clause 10 of Schedule 1 of the Act.

Regulation 114A: inserted, on 7 June 2018, by regulation 6 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

114A Exemption involving acquiring certain products by way of issue

[Revoked]

Regulation 114A: revoked, on the close of 30 November 2017, by regulation 114A(5).

Subpart 1—Market manipulation

115 Interpretation

In this subpart, unless the context otherwise requires,—

independent bid means a bid by a buyer who is not—

(a)

the stabilisation manager; or

(b)

any person acting on behalf of, or in association with, the stabilisation manager

IPO means an offer of debt securities, equity securities, or managed investment products if, immediately before the offer, financial products of the same class are not quoted

licensed market means the licensed market on which the financial products are quoted

market stabilisation means the process of stabilising the market for financial products offered under an IPO

offer document—

(a)

means the PDS for the IPO; and

(b)

if an exemption has been granted under the Act from the requirement for a PDS, means the principal offer document for the IPO that complies with the exemption; and

(c)

includes a document that contains the IPO offer of financial products and by which an offer of those financial products is permitted by law to be made

offer price means the price of the financial products set under the IPO

offeror means the offeror of the financial products

over-allocation means the issue or transfer of additional financial products by the offeror at the option of the stabilisation manager

stabilisation agreement means the agreement referred to in regulation 121

stabilisation bid means a bid by the stabilisation manager for the purpose of the market stabilisation

stabilisation manager means the person appointed in accordance with regulation 122

stabilisation trade means a trade resulting from a stabilisation bid

trade means a completed buy and sell transaction.

Compare: SR 2007/373 r 3

116 Exemption

(1)

Market stabilisation that complies with each of the requirements set out in regulations 117 to 130 does not contravene section 262 or 265 of the Act.

(2)

For this exemption to apply, the market stabilisation must comply with each of the requirements set out in regulations 117 to 130 for the whole of the period of the market stabilisation.

Compare: SR 2007/373 r 4

117 Prohibited purpose

The market stabilisation must not—

(a)

have the purpose of raising the price of the financial products, except for the objective of stabilising the market in the products; or

(b)

be undertaken with the intention of creating a false or misleading appearance—

(i)

with respect to the extent of active trading in quoted financial products; or

(ii)

with respect to the supply of, demand for, price for trading in, or value of those financial products.

Compare: SR 2007/373 r 5

118 Size of IPO

(1)

At the close of the IPO, the total value of the IPO must not be less than $30 million.

(2)

In subclause (1), total value—

(a)

means the total value of the IPO when all payments, including any payments on instalment, are received by the offeror; but

(b)

does not include payment under any over-allocation.

Compare: SR 2007/373 r 6

119 Period of market stabilisation

The market stabilisation is limited to the period of 30 days beginning with the first day on which the financial products are available for trading on the licensed market.

Compare: SR 2007/373 r 7

120 Disclosure by offeror

The offeror must comply with the following before market stabilisation begins:

(a)

the offeror must disclose in each offer document—

(i)

the name of the stabilisation manager; and

(ii)

the nature and anticipated effect of the market stabilisation; and

(iii)

whether over-allocation has been agreed and, if so, the limit of the over-allocation; and

(b)

the offeror must include in each offer document a statement—

(i)

to the effect that the investor—

(A)

has a right to receive from the offeror, free of charge and on request, a copy of the stabilisation agreement; and

(B)

may obtain a copy of the stabilisation agreement by electronic means; and

(ii)

as to how the investor may obtain that copy by electronic means; and

(c)

if there is a register entry for the IPO, the offeror must lodge with the Registrar a copy of the stabilisation agreement.

Compare: SR 2007/373 r 8

121 Stabilisation agreement

(1)

Before the IPO opens, the offeror must enter into a stabilisation agreement with the licensed market operator and with the stabilisation manager.

(2)

The terms of the agreement must include the following:

(a)

the terms and conditions stipulated by the licensed market operator for the technical conduct of the market stabilisation; and

(b)

an undertaking by the offeror to comply with those terms and conditions.

(3)

The offeror must not breach the undertaking referred to in subclause (2)(b).

Compare: SR 2007/373 r 9

122 Appointment of stabilisation manager

(1)

The offeror must appoint a stabilisation manager, and must notify the stabilisation manager’s name and contact details to the licensed market operator.

(2)

A person (A) may be appointed the stabilisation manager only if, before the appointment is made,—

(a)

A has in place a Chinese wall to the satisfaction of the FMA; and

(b)

the FMA has notified the offeror and the licensed market operator that it is so satisfied.

(3)

In subclause (2), Chinese wall means an internal information barrier and other necessary procedures to—

(a)

confine confidential information relating to the market stabilisation and the financial products to those of A’s officers, employees, or agents (including any broker) who are engaged in the market stabilisation; and

(b)

prevent that information passing to any other of A’s officers, employees, or agents (including any broker).

Compare: SR 2007/373 r 10

123 Stabilisation manager must notify licensed market operator and FMA that market stabilisation to begin

(1)

The stabilisation manager must notify the licensed market operator and the FMA that the market stabilisation is to begin.

(2)

The notice must be given in writing and must be given,—

(a)

if the market stabilisation begins at the start of a trading day, before the market closes on the previous trading day; or

(b)

not less than 3 trading hours before the market stabilisation begins.

(3)

The licensed market operator must ensure that the notice is notified in accordance with its arrangements for notifying disclosures made to it (see section 314(b)(i) of the Act).

Compare: SR 2007/373 r 11

124 Duties and responsibilities of stabilisation manager

The stabilisation manager must—

(a)

ensure that the market stabilisation complies with this subpart and the terms and conditions of the stabilisation agreement; and

(b)

do everything that is required of the stabilisation manager by this subpart.

Compare: SR 2007/373 r 12

125 Stabilisation bids

(1)

A stabilisation bid must be made in the ordinary course of trading on a licensed market.

(2)

The stabilisation manager must notify each stabilisation bid to the licensed market operator for release to the market at the same time as the bid is made.

(3)

A stabilisation bid must be prioritised behind the current highest independent bid.

Compare: SR 2007/373 r 13

126 Price of stabilisation bids: before any trades

If there have been no trades in the financial products, and there are no current independent bids, a stabilisation bid must not be higher than the offer price.

Compare: SR 2007/373 r 14

127 Price of stabilisation bids: after trades

(1)

If there has been a trade in the financial products, and there are 1 or more current independent bids, a stabilisation bid must be the lower of the highest current independent bid and the offer price.

(2)

If there has been a trade in the financial products but there are no independent bids, the stabilisation bid must not be higher than the lower of the last trade and the offer price.

Compare: SR 2007/373 r 15

128 Stabilisation manager must keep daily record of trading

The stabilisation manager must keep a record for each day of trading during market stabilisation that records the following information:

(a)

in respect of each stabilisation trade for that day, the quantity, price, and time of the transaction:

(b)

for the period of market stabilisation to date, the cumulative total of financial products acquired under the market stabilisation.

Compare: SR 2007/373 r 16

129 Stabilisation manager’s report to licensed market operator

After the close of each trading day during the market stabilisation, and before the start of trading on the next trading day,—

(a)

the stabilisation manager must report in writing to the licensed market operator the information that is specified in regulation 128 for the day ended; and

(b)

the licensed market operator must ensure that the information referred to in paragraph (a) is notified in accordance with its arrangements for notifying disclosures made to it (see section 314(b)(i) of the Act).

Compare: SR 2007/373 r 17

130 Over-allocation

(1)

The payments made under an over-allocation must not exceed 15% of the total value of the IPO.

(2)

For the purposes of subclause (1), the amount of the over-allocation must not be subsequently increased, even if it is less than 15% of the total value of the IPO.

(3)

In this regulation, total value has the same meaning as in regulation 118(2).

Compare: SR 2007/373 r 18

Subpart 2—Disclosure of interests of substantial product holders in listed issuers

131 Interpretation

In this subpart, unless the context otherwise requires,—

attach, in relation to an event disclosure, includes send to a person (on or about the same time as the event disclosure is sent to the person) by a delivery method permitted for that person under these regulations

delivery does not include delivery by post

event disclosure means a disclosure under section 276, 277, 278, or 279 of the Act

relevant agreement has the meaning set out in regulation 139(1)

relevant agreement document has the meaning set out in regulation 139(3).

Compare: SR 2007/372 r 3

132 Person treated as holding financial products where person has relevant interest in certain derivatives

(1)

A person (A) that has a relevant interest in a derivative for which the underlying is a quoted voting product of a listed issuer must be treated, at a particular date, as having a relevant interest in the following number of those quoted voting products for the purposes of section 275 of the Act:

(a)

if the derivative gives A, in economic substance, the financial benefits of holding an ascertainable number of the quoted voting products for a period determined under the derivative and the derivative is a cash-settled derivative, that number of quoted voting products:

(b)

if the derivative is a cash-settled option to buy or sell an ascertainable number of quoted voting products at an agreed price on, or on or before, an agreed date and the derivative gives A a long position on those products, the number that is equal to the ascertainable number of products multiplied by the delta of the derivative at the end of the most recent trading day:

(c)

in any other case for which there is an applicable framework or methodology, the number calculated in accordance with that framework or methodology.

(2)

In subclause (1),—

ascertainable number, in relation to the particular date referred to in subclause (1), means a number that is specified in, determined in accordance with, or can be ascertained on that date under the terms of the derivative

financial benefit means capital, earnings, or other financial returns.

(3)

For the purposes of subclause (1)(b),—

(a)

A will have a long position if, under the terms of the derivative, A may benefit if the price of the underlying quoted voting products increases (rather than decreases); and

(b)

the delta of the derivative must be calculated in accordance with accepted market practice for applying a delta calculation to determine how many quoted voting products a counterparty should hold at the end of the most recent trading day to hedge the counterparty’s obligations under the derivative (whether or not the counterparty chooses to hedge this way in practice).

Form and delivery method for event disclosures

133 How to make event disclosures to licensed market operator

(1)

An event disclosure to a licensed market operator must be made using the operator’s form (for that type of event disclosure) and delivery method set under regulation 147 unless—

(a)

doing so would delay making the disclosure; or

(b)

the operator has not set a form or delivery method under regulation 147.

(2)

If subclause (1)(a) or (b) applies, an event disclosure to a licensed market operator must be made in the default form (for that type of event disclosure) set out in Schedule 14 and sent to the licensed market operator’s address,—

(a)

if reasonably possible, by email in the electronic format required by the operator for dissemination; or

(b)

otherwise by email in another electronic format, another electronic method consented to by the operator, or (if none of these is reasonably possible) delivery.

Compare: SR 2007/372 r 4

134 How to make event disclosures to listed issuer

(1)

An event disclosure to a listed issuer must be made using—

(a)

the relevant licensed market operator’s form (for that type of event disclosure) set under regulation 147; or

(b)

the default form (for that type of event disclosure) set out in Schedule 14.

(2)

The event disclosure must be sent to the listed issuer at the listed issuer’s address by email or another electronic method consented to by the listed issuer, or delivery.

Compare: SR 2007/372 r 5

When event disclosures may be combined

135 How to disclose more than 1 type of event disclosure

(1)

A person may disclose, in 1 event disclosure, both a movement of 1% or more in a substantial holding and a change in the nature of any relevant interest in the same substantial holding.

(2)

In all other cases, a person may disclose only 1 type of event disclosure in an event disclosure.

(3)

A person who ceases to have a substantial holding need make only that type of event disclosure, and not also the following types of event disclosures for the same transactions or events:

(a)

a movement of 1% or more in the substantial holding; or

(b)

a change in the nature of any relevant interest in the substantial holding.

Compare: SR 2007/372 r 7

136 How to disclose more than 1 substantial holding

A person who has a substantial holding in more than 1 class of quoted voting products must make a separate event disclosure for each substantial holding.

Compare: SR 2007/372 r 8

137 How to disclose for more than 1 connected holder with similar or related substantial holding

More than 1 person may disclose together, in 1 event disclosure, if—

(a)

they have a similar or related substantial holding in the same listed issuer; and

(b)

they are disclosing the same type of event disclosure; and

(c)

they are associated persons or connected in the ways set out in section 237(a) to (e) of the Act (and this association or connection is set out in the event disclosure); and

(d)

it is clear which information relates to which person or persons in the event disclosure, and the disclosure is not confusing in any other way as a consequence.

Compare: SR 2007/372 r 9

What disclosure required for event disclosures

138 What information must be disclosed in event disclosures

An event disclosure must contain the information required by—

(a)

the form in which it is made, in accordance with these regulations; and

(b)

the instructions to that form.

Compare: SR 2007/372 r 10

139 When relevant agreement documents must be attached to event disclosures

(1)

A relevant agreement is an agreement or a deed under which, or by virtue of which,—

(a)

a relevant interest arises; or

(b)

a qualification arises on a person’s relevant interest power to exercise, or control the exercise of, a right to vote, acquire, or dispose of a financial product.

(2)

If there is a relevant agreement for a relevant interest or qualification required to be disclosed in an event disclosure, the event disclosure must have attached to it a copy of—

(a)

the relevant agreement (if in writing); or

(b)

if the relevant agreement is not in writing, a document setting out the material terms of the relevant agreement.

(3)

That written relevant agreement or document is the relevant agreement document.

(4)

This regulation is subject to regulations 140 to 142.

Compare: SR 2007/372 r 11

140 Previously attached relevant agreement documents need not be attached again

A relevant agreement document need not be attached to an event disclosure if—

(a)

it has been attached to a previous event disclosure; and

(b)

the present event disclosure states this fact and gives the date of that previous event disclosure.

Compare: SR 2007/372 r 12

141 Relevant agreement documents need not be attached for ownership relevant interests

(1)

A relevant agreement document need not be attached to an event disclosure for a relevant interest if the substantial product holder has the relevant interest only because the holder—

(a)

is a registered holder of the financial products; or

(b)

is the beneficial owner of the financial products; or

(c)

is both the registered holder and beneficial owner of the financial products.

(2)

However, subclause (1) does not exempt the substantial product holder from the requirement to attach a relevant agreement document for any qualification on the substantial product holder’s relevant interest power to exercise, or control the exercise of, a right to vote, dispose of, or acquire a financial product.

Compare: SR 2007/372 r 13

142 Relevant agreement documents need not be attached in case of investment management contracts

(1)

A person (A) need not attach a relevant agreement document to an event disclosure for a relevant interest or qualification on a relevant interest if—

(a)

A’s ordinary business consists of, or includes, the investment of some or all of the funds of another person; and

(b)

the relevant agreement document (the investment management contract) gives A powers to buy and sell financial products for the benefit of the client and to manage investments held for the client (which may include the powers to hold those financial products and exercise the voting rights attached to the financial products, and may be qualified or unqualified powers); and

(c)

the relevant interest, or qualification on a relevant interest, arising under the investment management contract arises only because A has those powers; and

(d)

the client has the beneficial ownership of the quoted voting products bought or sold by A for the client, or has a beneficial interest in the fund that includes those quoted voting products; and

(e)

the event disclosure—

(i)

states that the relevant interest or interests, or qualifications on relevant interests, arising under the investment management contract arise only from the powers of investment contained in the investment management contract; and

(ii)

describes the nature of the investment management contract.

(2)

The exemption in this regulation also applies to a related body corporate of A that exercises some or all of the powers of, or performs some or all of the obligations of, A under the relevant agreement document (and, for that purpose, a reference to A in subclause (1) includes that related body corporate).

Compare: SR 2007/372 r 14

Acknowledgements of event disclosure

143 How listed issuer must give acknowledgement of event disclosure

If a person requests an acknowledgement of an event disclosure under section 282 of the Act, the listed issuer must send that acknowledgement to the person by delivery, post, or (if the disclosure was given by email or another electronic means) email or that other electronic means.

Compare: SR 2007/372 r 15

Exemptions from event disclosure obligations

144 Exemption for substantial holdings in overseas issuer with only secondary listing on domestic licensed markets

(1)

A person need not comply with any of sections 276 to 279 of the Act in relation to a substantial holding in a listed issuer if—

(a)

the class of quoted voting products in which the person has the substantial holding is also approved for trading on a financial product market in an overseas jurisdiction set out in Schedule 15; and

(b)

no financial product market that is licensed under section 316 of the Act has primary jurisdiction for the listing requirements for the listed issuer and the quotation of its financial products; and

(c)

the listed issuer is not incorporated in New Zealand or established under New Zealand law; and

(d)

the person is subject to overseas substantial holding disclosure requirements in connection with the substantial holding.

(2)

In this regulation, overseas substantial holding disclosure requirements, in relation to a financial product market in an overseas jurisdiction, means requirements (whether under the market’s rules or under the law of the overseas jurisdiction) for persons who have significant holdings of financial products approved for trading on the market to disclose those holdings to the market.

Compare: SR 2007/372 r 16

145 Exemption for substantial holdings held for hedging by derivatives issuer acting in client-serving capacity

(1)

This regulation applies to a person that is a derivatives issuer (A).

(2)

A need not comply with any of sections 276 to 279 of the Act in relation to a substantial holding to the extent that—

(a)

the substantial holding arises as a result of the application of section 275 of the Act to derivatives entered into in the ordinary course of A’s derivatives-issuing business for the purpose of hedging A’s obligations under other derivatives entered into with 1 or more investors in a client-serving capacity; and

(b)

A and the investor or investors are not associated persons; and

(c)

A has opted into this exemption by written notice to the FMA (and not withdrawn the notice by further written notice to the FMA); and

(d)

the FMA has given a written notice to A confirming that the FMA is satisfied that A’s reliance on this regulation would not have the effect of circumventing, evading, or defeating any of the purposes specified in section 273 of the Act (and the FMA has not withdrawn the confirmation by further written notice to A).

(3)

A derivatives issuer acts in a client-serving capacity when it deals in derivatives by fulfilling orders received from an investor or responding to an investor’s request to trade (rather than dealing on its own behalf).

146 Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying is disclosed

(1)

This regulation applies if—

(a)

a person (D) has a relevant interest in a derivative; and

(b)

the underlying of the derivative is the quoted voting products of a listed issuer; and

(c)

a relevant interest to acquire or dispose of those underlying quoted voting products arises under, or by virtue of, the derivative; and

(d)

D makes a disclosure under section 276, 277, or 279 of the Act in respect of the relevant interest referred to in paragraph (c).

(2)

D need not comply with the provision referred to in subclause (1)(d) under which the disclosure is made to the extent that the provision would require (by virtue of section 275 of the Act) additional disclosure of the relevant interest in the derivative itself.

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

(1)

A licensed market operator may set or change 1 or more forms and delivery methods for event disclosures.

(2)

The licensed market operator must, before setting or changing a form or delivery method for event disclosures, be satisfied that—

(a)

the form requires the disclosure of the same information and documents as the default form (for the same type of event disclosure) in Schedule 14 (although different words and format may be used); and

(b)

the form has sufficient instructions for its use; and

(c)

the form can also be used for disclosure to the listed issuer (either by the person making the disclosure or by the operator on that person’s behalf); and

(d)

the form generates a disclosure in a form that may be notified by the licensed market operator, and may continue to be made available, as referred to in section 314(b)(i) of the Act; and

(e)

the form requires a person making the disclosure to confirm that it is correct to the best of the person’s knowledge and belief and that the person is duly authorised to make the disclosure by all persons for whom it is made; and

(f)

using the form or delivery method will not generally delay the making of event disclosures in comparison with the default form (for the same type of event disclosure) in Schedule 14 or the delivery methods permitted under the regulations; and

(g)

using the form or delivery method will not impose unreasonable compliance costs on persons making event disclosures.

(3)

For the purposes of subclause (2)(a), immaterial differences in the information that is required in the default form and the information required by the operator’s form must be disregarded.

(4)

The licensed market operator must ensure that its approved form or forms and delivery method are accessible at all reasonable times on an Internet site maintained by, or on behalf of, the licensed market operator.

Compare: SR 2007/372 r 17

Forms for tracing and disclosure of interests in listed issuers

148 Forms for tracing and disclosure of interests in listed issuers

(1)

A listed issuer must use form 1 in Schedule 16 to require a person to disclose relevant interests to it under section 290 of the Act.

(2)

A listed issuer must use form 2 in Schedule 16 to require a person to disclose information to it under section 291 of the Act.

Compare: SR 2007/372 r 18

Subpart 3—Disclosure of relevant interests in quoted financial products or specified derivatives by directors and senior managers of listed issuers

149 Interpretation

In this subpart and in Schedule 17, unless the context otherwise requires,—

disclosure notice means a notice in a form referred to in regulation 150

disclosure on appointment or listing means the disclosure required under section 297(1) or 298(1) of the Act

financial product—

(a)

means a quoted financial product of a listed issuer or a related body corporate; and

(b)

includes a specified derivative as defined in section 298(3) of the Act

transaction means the agreement pursuant to which, or the circumstances in which, the acquisition or disposal of the financial product to which the relevant interest relates or related took place, and includes (without limitation)—

(a)

an on-market trade:

(b)

an off-market trade:

(c)

an exercise of options:

(d)

an issue of financial products under a dividend reinvestment plan:

(e)

participation in a buy-back scheme

transaction disclosure means the disclosure required under section 297(2) or 298(2) of the Act.

Compare: SR 2003/382 r 3

Form and delivery method for disclosure

150 Directors and senior managers must complete disclosure

(1)

A director or senior manager of a listed issuer who must make a disclosure on appointment or listing must do so using—

(a)

the relevant licensed market operator’s form (for disclosure on appointment or listing) set under regulation 156; or

(b)

the default form (for disclosure on appointment or listing) set out in Schedule 17.

(2)

A director or senior manager of a listed issuer who must make a transaction disclosure must do so using—

(a)

the relevant licensed market operator’s form (for transaction disclosure) set under regulation 156; or

(b)

the default form (for transaction disclosure) set out in Schedule 17.

Compare: SR 2003/382 r 5

151 What information must be disclosed

A disclosure on appointment or listing or a transaction disclosure must contain the information required by—

(a)

the form in which it is made, in accordance with these regulations; and

(b)

the instructions to that form.

Compare: SR 2007/372 r 10

152 Aggregation of multiple transactions in transaction disclosure notice

(1)

Multiple acquisitions and multiple disposals of relevant interests in financial products may be disclosed in 1 disclosure notice for transaction disclosure, provided that all the acquisitions and disposals disclosed in the notice took place within the 20-working-day or 5-trading-day period (as the case may be) referred to in section 297(2) or 298(2) of the Act.

(2)

A director or senior manager who discloses multiple acquisitions or multiple disposals of relevant interests in financial products in accordance with subclause (1) must state, in the transaction disclosure notice, the number of transactions that the disclosure notice relates to.

Compare: SR 2003/382 r 12

153 Method by which disclosure notice must be given

(1)

Every disclosure notice must be—

(a)

delivered to the address of the person to whom the notice is given; or

(b)

given by other electronic means to which the licensed market operator has given its consent (in the case of a notice given to a licensed market operator); or

(c)

given by other electronic means to which the listed issuer has given its consent (in the case of a notice given to a listed issuer).

(2)

In subclause (1)(a), delivered does not include delivered by post.

Compare: SR 2003/382 r 16

Exemptions from disclosure obligations

154 Exemption relating to overseas-regulated markets

(1)

A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a quoted financial product of the overseas listed issuer does not have to disclose that fact under section 297 of the Act.

(2)

A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a specified derivative does not have to disclose that fact under section 298 of the Act if the underlying is a financial product of the overseas listed issuer.

(3)

A director or senior manager of an overseas listed issuer who has, or who acquires or disposes of, a relevant interest in a quoted financial product of a related body corporate of that overseas listed issuer does not have to disclose that fact under section 297 of the Act unless—

(a)

the director or senior manager is also a director or senior manager of the related body corporate; and

(b)

the related body corporate is a listed issuer, but not an overseas listed issuer.

(4)

(a)

the director or senior manager is also a director or senior manager of the related body corporate; and

(b)

the related body corporate is a listed issuer, but not an overseas listed issuer.

(5)

In this regulation, overseas listed issuer means a listed issuer—

(a)

whose financial products are approved for trading on a market that—

(i)

is licensed under section 317 of the Act (the overseas-regulated market); and

(ii)

has primary jurisdiction for the listing requirements for the listed issuer and the quotation of its financial products; and

(b)

in relation to which no licensed market (other than the overseas-regulated market) has primary jurisdiction for the listing requirements for the listed issuer and the quotation of its financial products.

Compare: SR 2004/105 cl 12

155 Exemption from disclosing derivative where relevant interest to acquire or dispose of underlying is disclosed

(1)

This regulation applies if—

(a)

a person (A) has a relevant interest in a derivative; and

(b)

the underlying of the derivative is the quoted voting products of a listed issuer; and

(c)

A makes a disclosure under section 297(2) of the Act in respect of an acquisition or a disposal of a relevant interest in those underlying quoted voting products (or relies on section 302 of the Act in respect of the acquisition or disposal of that relevant interest).

(2)

A need not comply with section 298 of the Act to the extent that it requires disclosure of the relevant interest in the derivative.

Setting of licensed market operator’s form for disclosure

156 Setting of licensed market operator’s form for disclosure

(1)

A licensed market operator may set or change 1 or more forms for disclosure on appointment or listing or transaction disclosure.

(2)

The licensed market operator must, before setting or changing a form, be satisfied that—

(a)

the form requires the disclosure of the same information and documents as the default form (for the same type of disclosure) in Schedule 17 (although different words and format may be used); and

(b)

the form has sufficient instructions for its use; and

(c)

the form can also be used for disclosure to the listed issuer (either by the person making the disclosure or by the operator on that person’s behalf); and

(d)

the form generates a disclosure in a form that may be notified by the licensed market operator, and may continue to be made available, as referred to in section 314(b)(i) of the Act; and

(e)

(f)

using the form will not generally delay the making of disclosures in comparison with the default forms in Schedule 17; and

(g)

using the form will not impose unreasonable compliance costs on persons making disclosures.

(3)

For the purposes of subclause (2)(a), immaterial differences in the information that is required in the default form and the information required by the operator’s form must be disregarded.

(4)

The licensed market operator must ensure that its approved form or forms are accessible at all reasonable times on an Internet site maintained by, or on behalf of, the licensed market operator.

Compare: SR 2007/372 r 17

Subpart 4—Transfer of transferable financial products

157 Products transfer

A products transfer for the purposes of sections 372 and 373(1)(a) of the Act must be in form 1 in Schedule 18.

158 Brokers transfer

A brokers transfer for the purposes of section 373(1)(b) of the Act must be in form 2 in Schedule 18.

Subpart 5—Unsolicited offers to purchase financial products off-market

159 Interpretation

(1)

In this subpart, unless the context otherwise requires,—

agreement means the agreement that results from the acceptance of an unsolicited offer

disclosure document means the document referred to in regulation 165

financial products register means—

(a)

a register kept under subpart 4 of Part 4 of the Act; or

(b)

a register of financial products kept under any other enactment or overseas law

issuer, in relation to an unsolicited offer, means the listed issuer or issuer of the financial products to which the offer relates

offeree means a person to whom an unsolicited offer is made

offeror means a person who makes an unsolicited offer

same, or substantially similar, terms includes terms that have, in substance, the same, or substantially similar, effect.

(2)

See section 381 of the Act (which defines unsolicited offer).

Compare: SR 2012/331 r 3

160 Application of subpart

(1)

This subpart applies to an unsolicited offer made by a person (A) to another person (B) if—

(a)

the financial products are—

(i)

quoted financial products or approved for trading on a financial product market; or

(ii)

financial products of a class that has previously been offered under a regulated offer or in reliance on clause 6 of Schedule 1 of the Act; or

(iii)

financial products of a class that has previously been offered to the public in New Zealand under the Securities Act 1978 (whether before its repeal or under Part 1 of Schedule 4 of the Act); and

(b)

A or an associated person of A or both have made, are making, or intend to make (in aggregate) unsolicited offers on the same, or substantially similar, terms to 20 or more other persons in the period that begins 6 months before the date of the offer to B and ends 6 months after that date; and

(c)

the offer is received by B in New Zealand (regardless of where any resulting transfer occurs or where A is resident, incorporated, or carries on business).

Example

A makes an unsolicited offer to purchase the shares of B. Those shares are quoted financial products.

A makes substantially similar offers to 10 other persons in the 6-month period before the offer.

At the date of the offer to B, A intends to make substantially similar offers to a further 10 persons in the 6-month period after the offer.

It does not matter for the purposes of counting the number of persons to whom an offer is made under subclause (1)(b) that some of those offers are made to persons referred to in regulation 162.

These regulations apply to the offer to B because A has made, is making, or intends to make unsolicited offers on substantially similar terms to 20 other persons in the period referred to in subclause (1)(b).

(2)

However, this subpart does not apply to an unsolicited offer—

(a)

that is an offer to acquire a derivative, to acquire a power to dispose of a derivative, or to acquire another interest in or right attaching to a derivative; or

(b)

that is made in connection with an amalgamation under Part 13 of the Companies Act 1993; or

(c)

that is made in connection with an arrangement or amalgamation under Part 15 of the Companies Act 1993; or

(d)

that is made in connection with a compromise or an arrangement under Part 5.1 of the Corporations Act 2001 (Aust); or

(e)

that is made in connection with a takeover offer for quoted managed investment products that is made in accordance with the market rules of the licensed market on which the products are quoted; or

(f)

to acquire financial products issued by a body corporate that is incorporated outside New Zealand if—

(i)

the offer is made by, and the financial products are to be acquired by, that body corporate; or

(ii)

the offer is made as part of, or in connection with, a takeover offer that is regulated by overseas law or rules.

(3)

For the purposes of subclause (2)(f),—

overseas law or rules, in relation to the body corporate referred to in that paragraph, means—

(a)

the law of the country, State, or jurisdiction in which the body corporate is incorporated; or

(b)

the rules of an overseas market on which the financial products issued by the body corporate are approved for trading

overseas market means a financial product market that is authorised to operate in an overseas jurisdiction in which its principal place of business is located.

Compare: SR 2012/331 r 5(1), (3), (4)

161 Miscellaneous provisions relating to application

For the purposes of regulation 160(1)(b),—

(a)

the intention to make further offers must be considered as at the date of the offer to B:

(b)

if A or an associated person of A makes unsolicited offers on the same, or substantially similar, terms to other persons during the 6-month period after the date of the offer to B, it must be presumed that A or the associated person intended, as at the date of the offer to B, to make those offers unless the contrary is proved by A:

(c)

in determining the number of offers to other persons,—

(i)

offers to persons referred to in regulation 162 must be counted even though regulations 163 to 177 do not apply to those offers:

(ii)

an offer to 2 or more persons who are joint holders of the products must be treated as an offer to a single person:

(iii)

offers to persons made before or after commencement of these regulations must be counted:

(iv)

only offers to persons received in New Zealand must be counted:

(v)

invitations to persons to make offers to sell financial products, to confer powers to dispose of financial products, or to sell interests in or rights attaching to financial products must be counted as offers to acquire financial products, to acquire powers to dispose of financial products, or to acquire other interests in or rights attaching to financial products (as the case may be).

Compare: SR 2012/331 r 5(2)

162 Obligations do not apply to offers to certain persons

(1)

Regulations 163 to 177 do not apply to an offer made to any of the following:

(a)

a wholesale investor:

(b)

an associated person of the offeror:

(c)

a close business associate of the offeror or of a director of the offeror:

(d)

a relative of the offeror or of a director of the offeror (see clause 5(2) of Schedule 1 of the Act).

(2)

In this regulation,—

close business associate has the same meaning as in clause 4(2) and (3) of Schedule 1 of the Act (applied with all necessary modifications as if the references to the offeror or an offer of financial products were, respectively, references to the offeror as defined in regulation 159 or the unsolicited offer)

wholesale investor, in relation to financial products, means—

(a)

a person who acquired the financial products under an offer as a wholesale investor (as defined in clause 3(2) and (3) of Schedule 1 of the Act); or

(b)

a person who is a wholesale investor within the meaning of clause 3(2) of Schedule 1 of the Act (see subclause (3)).

(3)

The relevant time, for the purposes of applying Schedule 1 of the Act under paragraph (b) of the definition of wholesale investor in subclause (2), must be treated as the time immediately before the unsolicited offer is made to the person.

Compare: SR 2012/331 r 6

Offeror obligations

163 Offeror must notify intention to make unsolicited offer

(1)

A person (A) must not make an unsolicited offer unless A has given written notice to the issuer, at least 5 working days before the offer is made, of A’s intention to do so.

(2)

However, the written notice must not be given more than 10 working days before the offer is made.

(3)

If the unsolicited offer will relate to quoted financial products, A must, at least 5 working days before the offer is made, give a copy of the written notice referred to in subclause (1) (including the information referred to in regulation 164) to the relevant licensed market operator.

Compare: SR 2012/331 r 7(1), (2)

164 Contents of written notice to issuer

(1)

The written notice referred to in regulation 163 must be accompanied by—

(a)

a copy of the standard disclosure document that will be given to the offerees (excluding information relating only to a particular offeree); and

(b)

a list of the names and addresses of every offeree to whom the disclosure document will be given; and

(c)

a list of the names and addresses of every other person to whom the offeror or an associated person of the offeror or both have made, are making, or intend to make an unsolicited offer on the same, or substantially similar, terms in the period referred to in regulation 160(1)(b).

(2)

If the person referred to in regulation 163(1) intends to make the offer to all of the persons who, as at a particular date, are registered on a financial products register as holding financial products of a particular class, the written notice referred to in that regulation—

(a)

must state that intention (including the particular date and the class of financial products concerned); but

(b)

is not required to be accompanied by the lists referred to in subclause (1)(b) and (c).

(3)

The information referred to in subclause (1)(b) and (c) must be in a format that is readily accessible by the issuer so as to enable the issuer to readily communicate with the offerees or other persons referred to in those paragraphs.

Compare: SR 2012/331 r 7(3) to (6)

165 Unsolicited offer must be made in disclosure document

An offeror must ensure that an unsolicited offer is made only in a disclosure document that—

(a)

complies with regulations 168 and 169; and

(b)

is given to the offeree.

Compare: SR 2012/331 r 8(1)

166 Restricted unsolicited offer communications

(1)

An offeror must ensure that a restricted unsolicited offer communication is not distributed to a person who is or will be an offeree before the disclosure document is given to the offeree under regulation 165.

(2)

An offeror must, if distributing a restricted unsolicited offer communication to an offeree after giving a disclosure document to the offeree but before the offer is accepted, ensure that the communication is accompanied by another copy of the disclosure document that complies with regulations 168 and 169.

(3)

In this regulation, restricted unsolicited offer communication means a document or other communication that—

(a)

refers to an unsolicited offer or an intended unsolicited offer (for example, an acceptance form); and

(b)

is authorised or instigated by, or on behalf of, the person who is or will be the offeror or prepared with the co-operation of, or by arrangement with, that person.

Compare: SR 2012/331 r 8(2), (4)

167 Disclosure document must be prominently identified if accompanied by other documents

If the disclosure document is accompanied by 1 or more other documents when it is given to the offeree, the offeror must ensure—

(a)

that the disclosure document is prominently identified; and

(b)

in the case where it is given—

(i)

otherwise than by electronic means, that the disclosure document is placed in front of any of the other documents:

(ii)

by electronic means, that the disclosure document is in a position within the group of documents where it is reasonably likely to come to the attention of the offeree.

Compare: SR 2012/331 r 8(3)

168 Contents of disclosure document

(1)

The disclosure document must contain, at the front of the document, the information and statements specified in Schedule 19, in the form set out in that schedule, including,—

(a)

in the case of an unsolicited offer to acquire quoted financial products,—

(i)

the consideration that the offeror is offering under the offer to the offeree for each financial product (the offer price); and

(ii)

the current average market price of each financial product (the market price), being the average market price calculated over a 20-working-day period ending at a point in time specified in the document (being a time that is not earlier than 10 working days before the date of the offer); and

(iii)

the total consideration that the offeror is offering under the offer to the offeree (the total offer price); and

(iv)

the total current average market price of all of the financial products that are the subject of the offer to the offeree (the total market price), being the total average market price calculated over a 20-working-day period ending at a point in time specified in the document (being a time that is not earlier than 10 working days before the date of the offer); and

(v)

the unique identification code of the issuer as issued by the relevant licensed market operator; and

(vi)

a statement to the effect that the offeree may check the current market price of the financial products on the relevant licensed market operator’s Internet site and in newspapers; and

(vii)

the name of that licensed market operator and its Internet site address; and

(b)

in the case of an unsolicited offer to acquire non-quoted financial products,—

(i)

the consideration that the offeror is offering under the offer to the offeree for each financial product (the offer price); and

(ii)

a fair estimate of the value of each financial product as at a point in time specified in the document (being a time that is not earlier than 10 working days before the date of the offer) (the fair estimate of value); and

(iii)

the total consideration that the offeror is offering under the offer to the offeree (the total offer price); and

(iv)

a fair estimate of the total value of the financial products that are the subject of the offer to the offeree as at a point in time specified in the document (being a time that is not earlier than 10 working days before the date of the offer) (the total fair estimate of value); and

(v)

the basis for making the estimates (including the main assumptions on which the estimates are based); and

(vi)

a statement as to whether the estimates have been reviewed by an independent third party acting in his or her professional capacity or consist only of the expression of the offeror’s opinion; and

(c)

in the case of an unsolicited offer to acquire a power to dispose of financial products or to acquire other interests in or rights attaching to financial products,—

(i)

the total consideration that the offeror is offering under the offer to the offeree (the total offer price); and

(ii)

a fair estimate of the total value of the power, interests, or rights that are the subject of the offer to the offeree as at a point in time specified in the document (being a time that is not earlier than 10 working days before the date of the offer) (the total fair estimate of value); and

(iii)

the basis for making the estimate (including the main assumptions on which the estimate is based); and

(iv)

a statement as to whether the estimate has been reviewed by an independent third party acting in his or her professional capacity or consists only of the expression of the offeror’s opinion; and

(d)

in each case, the terms of payment of the consideration that the offeror is offering under the offer, including—

(i)

how and when payments will be made; and

(ii)

the date by which the consideration will be paid in full; and

(iii)

if payment of the consideration is to be made by way of a single payment more than 90 days after the date of the offer, a statement in the form set out in Part 1 of Schedule 20; and

(iv)

if payment of the consideration is to be made in instalments, the information and statement referred to in subclause (3).

(2)

Subclause (1)(c) does not apply if subclause (1)(a) or (b) applies.

(3)

The information and statement for the purposes of subclause (1)(d)(iv) are as follows:

(a)

the amount of each instalment:

(b)

when each instalment will be paid:

(c)

how many instalments will be paid:

(d)

how each instalment will be paid:

(e)

a statement in the form set out in Part 1 of Schedule 20 if the last instalment is to be made more than 90 days after the date of the offer.

(4)

Consideration, prices, values, or other monetary amounts that must be disclosed in a disclosure document must be expressed in New Zealand currency.

Compare: SR 2012/331 r 9

169 Presentation of information and statements

The information and statements required to be contained in a disclosure document must be worded and presented in a clear, concise, and effective manner.

Compare: SR 2012/331 r 10

170 Offer period

(1)

An offeror must ensure that the unsolicited offer—

(a)

specifies the period for which it will remain open; and

(b)

remains open for that period.

(2)

The offer period must—

(a)

commence with the date of the offer; and

(b)

be not shorter than 30 days and not longer than 12 months.

(3)

A specified person must not, in relation to an unsolicited offer made to a person (B), make a representation to B (whether in the disclosure document or otherwise) to the effect that B has less than 30 days after the date of the offer within which to make a decision on the offer.

(4)

In this regulation, specified person, in relation to an unsolicited offer, means—

(a)

the offeror; or

(b)

an associated person of the offeror; or

(c)

a person acting on behalf of the offeror or an associated person of the offeror.

(5)

This regulation is subject to regulation 171.

Compare: SR 2012/331 r 12

171 Withdrawal of offer

(1)

An unsolicited offer may be withdrawn only with the consent of the FMA.

(2)

A purported withdrawal of an unsolicited offer in contravention of subclause (1) is ineffective.

(3)

The FMA may give its consent subject to the conditions that it thinks fit (for example, conditions relating to notice being given to the offeree and the issuer).

(4)

The offerer must comply with the conditions of the FMA’s consent.

Compare: SR 2012/331 r 13

172 Terms of offer cannot be varied

(1)

The terms of an unsolicited offer, as set out in the disclosure document, cannot be varied.

(2)

A purported variation of the terms of the offer is ineffective.

(3)

This regulation does not—

(a)

prevent the offeror from withdrawing the offer in accordance with regulation 171 and making another offer on different terms; or

(b)

prevent the offeree from making a counter-offer on different terms.

Compare: SR 2012/331 r 14

Cancellation

173 Right to cancel

(1)

An offeree has a right to cancel an agreement by—

(a)

doing both of the following:

(i)

giving notice of the cancellation to the offeror not later than 10 working days after the date of the acceptance of the unsolicited offer; and

(ii)

repaying to the offeror any consideration paid by the offeror to the offeree under the agreement not later than 20 working days after the date of the acceptance of the unsolicited offer; or

(b)

repaying to the offeror any consideration paid by the offeror to the offeree under the agreement not later than 10 working days after the date of the acceptance of the unsolicited offer.

(2)

If the agreement is cancelled under subclause (1), no party is obliged or entitled to perform it further.

(3)

These regulations do not limit any other right to cancel the agreement exercisable apart from this regulation.

Compare: SR 2012/331 r 15(1), (4)

174 Right to cancel does not apply if FMA has exempted offeror

Despite regulation 173(1), the right to cancel under that subclause does not apply if—

(a)

the FMA has, before the right is exercised, granted an exemption under subpart 2 of Part 9 of the Act from the whole of regulation 176 or 177 (as the case may be); and

(b)

the exemption applies to the unsolicited offer; and

(c)

the offeror has complied with all of the terms and conditions of that exemption that are required to be complied with.

175 Notice of cancellation

(1)

Notice of the cancellation under regulation 173(1)(a)—

(a)

must be in writing and in a form that indicates (irrespective of the exact words used) the intention of the offeree to cancel or withdraw from the agreement; and

(b)

may be given by the offeree or any person authorised by the offeree to act on the offeree’s behalf.

(2)

A written refusal to complete the relevant transfer of the financial products given by or on behalf of the offeree must be treated as satisfying subclause (1)(a).

(3)

If an offeree gives notice of the cancellation under regulation 173(1) but does not comply with regulation 173(1)(a)(ii) within 5 working days after the notice is given to the offeror, the offeror must, as soon as practicable, give written notice to the offeree of the obligation to repay under regulation 173(1)(a)(ii).

Compare: SR 2012/331 r 15(2), (3), (5)

176 Offeror’s cancellation duties where offer to acquire financial products

(1)

This regulation applies in relation to an unsolicited offer to acquire financial products if the offeree has exercised the right under regulation 173(1).

(2)

If the financial products that are the subject of the unsolicited offer—

(a)

have not been transferred to the offeror, the offeror—

(i)

must not take any steps to arrange for the transfer of the financial products; and

(ii)

must take all reasonably practicable steps to prevent the registration of a transfer of the financial products:

(b)

have already been, or are subsequently, transferred to the offeror, the offeror must comply with subclause (3).

(3)

The offeror must—

(a)

either—

(i)

transfer the financial products back to the offeree; or

(ii)

if the financial products have been on-sold, transfer to the offeree an equal number of financial products of the same class; and

(b)

pay to the offeree all dividends and any other distribution received by the offeror in respect of the financial products; and

(c)

transfer to the offeree any other interest, rights, or benefits received by the offeror in respect of the financial products.

(4)

The offeror must act under this regulation as soon as practicable, but in any event not later than the end of the specified period after the offeree returns to the offeror any consideration paid by the offeror to the offeree under the agreement.

(5)

In this regulation, specified period means,—

(a)

if the financial products have been on-sold, 20 working days; or

(b)

in any other case, 10 working days.

Compare: SR 2012/331 r 16

177 Offeror’s cancellation duties where offer to acquire disposal power or other interests or rights

(1)

This regulation applies in relation to an unsolicited offer to acquire a power to dispose of financial products or to acquire other interests in or rights attaching to financial products if the offeree has exercised the right under regulation 173(1).

(2)

This regulation does not apply in relation to an unsolicited offer to acquire financial products (see regulation 176).

(3)

The offeror must not take any steps to arrange for the acquisition of the power, interests, or rights.

(4)

If the power, interests, or rights have already been, or are subsequently, acquired by the offeror, the offeror,—

(a)

in the case of a power to dispose of financial products, must not take any steps to exercise the power and must—

(i)

take all practicable steps to arrange for the termination of the power; or

(ii)

if the power has been exercised, transfer to the offeree an equal number of financial products of the same class as those that have been disposed of; and

(b)

in the case of interests in or rights attaching to financial products, must—

(i)

transfer the interests or rights back to the offeree; or

(ii)

if the interests or rights have been on-sold, transfer to the offeree equivalent interests or rights; and

(c)

in either case, must pay to the offeree all dividends and any other distribution received by the offeror in respect of the power, interests, or rights; and

(d)

in either case, must transfer to the offeree any other interest, rights, or benefits received by the offeror in respect of the power, interests, or rights that have been acquired.

(5)

(6)

In this regulation, specified period means,—

(a)

if the power, interests, or rights have been exercised or on-sold, 20 working days; or

(b)

in any other case, 10 working days.

Compare: SR 2012/331 r 17

Miscellaneous provisions

178 Prohibition on inviting offers to sell

(1)

A person (A) must not invite another person (B) to—

(a)

make an offer to sell a financial product in circumstances in which, if the invitation were an offer to acquire the financial product, it would be an unsolicited offer to which this subpart applies; or

(b)

make an offer to confer a power to dispose of a financial product in circumstances in which, if the invitation were an offer to acquire a power to dispose of a financial product, it would be an unsolicited offer to which this subpart applies; or

(c)

make an offer to sell an interest in or a right attaching to a financial product in circumstances in which, if the invitation were an offer to acquire an interest in or a right attaching to a financial product, it would be an unsolicited offer to which this subpart applies.

(2)

Subclause (1) does not apply to invitations made to any of the persons referred to in regulation 162(1) (applied with all necessary modifications as if A were the offeror).

Compare: SR 2012/331 r 19

179 Unsolicited offer provisions

Regulations 163 to 172, 175(3), 176, 177, and 178 are unsolicited offer provisions for the purposes of the Act (which means that a contravention may give rise to an unsolicited offer order, a direction order, a pecuniary penalty, or another civil liability order).

Compare: SR 2012/331 r 20

180 Protection from liability in connection with unsolicited offer obligations

(1)

The following persons, in relation to an unsolicited offer, are protected persons for the purposes of section 384 of the Act:

(a)

the issuer:

(b)

a person who maintains a financial products register on behalf of the issuer:

(c)

a person who acts on behalf of a person referred to in paragraph (a) or (b) in connection with a transfer of financial products.

(2)

For the purposes of section 384(2) of the Act, any thing done or omitted by a person referred to in subclause (1) for the purpose of implementing or giving effect to a cancellation of an agreement under regulations 173 to 177 is a protected act or omission.

Subpart 6—Control limit

181 Control limit for NZX Limited

For the purposes of section 344 of the Act, the control limit for NZX Limited is 10% of the voting rights in that company.

Part 6 Licensing and other regulation of market services

Subpart 1—Issue of licences

Subpart 1 heading: inserted, on 15 March 2021, by regulation 5 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Exemptions from DIMS licensing requirement

182 Exemptions from DIMS licensing requirement

(1)

For the purposes of section 389(3)(b) of the Act, the following are exempt services:

(a)

a service provided by a trustee corporation in the ordinary course of providing—

(i)

legal or financial services relating to the preparation or drafting of a will; or

(ii)

estate management and administration services (and associated legal, financial, and other services carried out under the relevant enactment governing the trustee corporation):

(b)

a service provided by a statutory officer or a Crown-related entity in—

(i)

discharging any duties or exercising any powers of the statutory officer or the Crown-related entity under any enactment; or

(ii)

doing anything that is incidental to the discharge of the functions of the statutory officer or the Crown-related entity under any enactment:

(c)

a service relating to only the financial products listed in subclause (3) that is provided—

(i)

by a non-profit organisation in the course of providing a money management service for budgeting assistance purposes; and

(ii)

without charge or for a charge set at a level to recover no more than the costs of providing the service:

(d)

a service provided by a lawyer or an incorporated law firm acting, in the ordinary course of business, as an attorney under an enduring power of attorney in respect of a donor’s property in circumstances where the donor becomes mentally incapable:

(e)

a service provided by a person appointed by the court in respect of a person’s assets.

(2)

In this regulation,—

incorporated law firm has the same meaning as in section 6 of the Lawyers and Conveyancers Act 2006

non-profit organisation means any organisation, whether incorporated or not, that is carried on other than for the purposes of profit or gain to an owner, a member, or a shareholder

statutory officer means a person—

(a)

holding or performing the duties of an office established by an enactment; or

(b)

performing duties expressly conferred on that person by virtue of their office by an enactment; or

(c)

holding office as the chief executive of a Crown-related entity

trustee corporation means one of the following:

(a)

Public Trust:

(b)

the Māori Trustee:

(c)

a corporation that is authorised by an Act to administer the estates of deceased persons and other trust estates:

(d)

a wholly owned subsidiary of a corporation referred to in paragraph (c) that is guaranteed by the corporation.

(3)

For the purposes of subclause (1)(c), the financial products are the following:

(a)

bank notice products:

(b)

bonus bonds:

(c)

call building society shares:

(d)

call credit union shares:

(e)

call debt securities:

(f)

credit union fixed term deposit products:

(g)

credit union savings account products:

(h)

fixed term deposit products issued by a registered bank:

(i)

fixed term redeemable building society shares:

(j)

PIE call fund units or PIE term fund units.

Regulation 182(1): amended, on 15 March 2021, by regulation 18(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 182(1)(b): replaced, on 15 March 2021, by regulation 18(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 182(1)(c): amended, on 15 March 2021, by regulation 18(3) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 182(2): replaced, on 15 March 2021, by regulation 18(4) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 182(3): inserted, on 15 March 2021, by regulation 18(4) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

183 Exemption for temporary management of portfolio in situations of absence or incapacity or unexpected contingencies

(1)

For the purposes of section 389(3)(b) of the Act, a service provided by a financial advice provider (P) to another person (B) is an exempt service if all of the circumstances specified in subclause (2) apply.

(2)

The circumstances are as follows:

(a)

the service referred to in subclause (1) is incidental or secondary to other financial advice services provided by P to B in connection with financial products; and

(b)

the investment authority is not granted for the purpose of providing a mechanism to allow P to regularly manage some or all of B’s holdings of financial products; and

(c)

the investment authority is restricted to temporary management of the investor’s portfolio under the investment authority in situations of absence or incapacity or unexpected contingencies where—

(i)

B has confirmed in writing that P may manage some or all of B’s holdings of financial products for a temporary period that is specified in the confirmation (being a period that is not longer than is reasonably necessary to cover the period of the absence, incapacity, or contingency); or

(ii)

P reasonably considers it urgent to act under the authority in the best interests of B, and P is not reasonably able to obtain instructions from B within a time frame that would enable P to act urgently; and

(d)

the management of some or all of B’s holdings of financial products under subclause (1) is for a period or periods that, in aggregate, do not exceed 6 months in any 12-month period; and

(e)

P agrees in a written client agreement with B that P will, in relation to acting under the investment authority,—

(i)

comply with the duties that would apply under sections 433(1) and 435 of the Act as if P were providing the service as a DIMS licensee under the Act; and

(ii)

take all reasonable steps to ensure that P’s directors and senior managers comply with the duties that would apply under section 434 of the Act as if P were providing the service as a DIMS licensee under the Act; and

(f)

if P has any rights to be indemnified by B for liabilities incurred in relation to the performance of the service referred to in subclause (1), those rights—

(i)

are set out in the client agreement referred to in paragraph (e); and

(ii)

are available only in relation to the proper performance of the duties referred to in paragraph (e)(i); and

(g)

the client agreement referred to in paragraph (e) must adequately provide for reporting on the transactions undertaken under the service, including—

(i)

providing for appropriate timing and content of reports; and

(ii)

requiring reporting on why P considered it necessary to act urgently in the case of paragraph (c)(ii); and

(h)

the client agreement referred to in paragraph (e) must adequately provide for a right for B to immediately revoke the investment authority by written or oral notice to P; and

(i)

neither P nor any person associated with P otherwise provides a DIMS to B (except to the extent otherwise permitted by clause 84 of Schedule 4 of the Act); and

(j)

neither P nor any associated person of P holds the financial products acquired or disposed of under the service; and

(k)

the investment authority—

(i)

is in writing; and

(ii)

clearly discloses the scope of the investment authority, including any limits on the nature or type of investments and on the proportion of each type of asset invested in, or if there are no such limits, clearly discloses that fact; and

(iii)

does not permit the authority to be changed without B’s prior written consent.

Regulation 183: replaced, on 15 March 2021, by regulation 19 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Prescribed intermediary services

184 Prescribed intermediary services

The following services are prescribed intermediary services:

(a)

a crowd funding service:

(b)

a peer-to-peer lending service.

185 Meaning of crowd funding service and peer-to-peer lending service

(1)

In these regulations,—

(a)

a person (A) provides a crowd funding service if—

(i)

A provides a facility by means of which offers of shares in a company are made; and

(ii)

the principal purpose of the facility is to facilitate the matching of companies who wish to raise funds with many investors who are seeking to invest relatively small amounts:

(b)

a person (A) provides a peer-to-peer lending service if—

(i)

A provides a facility by means of which offers of debt securities are made; and

(ii)

the principal purpose of the facility is to facilitate the matching of lenders with borrowers who are seeking loans for personal, charitable, or small business purposes.

(2)

A crowd funding service or a peer-to-peer lending service also includes—

(a)

any broking services that are provided in the course of providing the service referred to in subclause (1)(a) or (b) (as the case may be):

(b)

any service of operating an ancillary market for trading financial products that have been offered on the facility referred to in subclause (1)(a) or (b) (as the case may be) (see section 309(2)(c) of the Act).

(3)

If a facility referred to in—

(a)

subclause (1)(a)(i) allows offers of financial products other than shares in a company, the crowd funding service does not include providing the facility to the extent that it relates to offers of those other financial products:

(b)

subclause (1)(b)(i) allows offers of financial products other than debt securities, the peer-to-peer lending service does not include providing the facility to the extent that it relates to offers of those other financial products.

(4)

For the purposes of this regulation,—

debt security does not include—

(a)

an option to acquire, by way of issue, a debt security; or

(b)

a financial product that will be converted, or is or may become convertible, into another financial product

share does not include a financial product that will be converted, or is or may become convertible, into another financial product.

Additional eligibility criteria

186 Additional eligibility criteria for crowd funding service

(1)

The eligibility criteria for licences for a crowd funding service under section 396(a) of the Act are as follows:

(a)

the provider has fair, orderly, and transparent systems and procedures for providing the service:

(b)

the service is designed primarily for offers by persons other than the provider and its associated persons:

(c)

the provider has an adequate policy for identifying and managing the risk of fraud by issuers using the service (the anti-fraud policy) that, at a minimum,—

(i)

checks, against information that is readily accessible and information that is otherwise available to the public, the identity of the issuer and information provided by the issuer relating to the identity and character of its directors and senior managers; and

(ii)

excludes an issuer from using the service if the provider—

(A)

is not satisfied as to the identity of the issuer or of the issuer’s directors and senior managers; or

(B)

has reason to believe that any of the issuer’s directors or senior managers are not of good character; or

(C)

has reason to believe that the issuer is not likely to comply with the obligations imposed on it under the service:

(d)

the provider has adequate disclosure arrangements to give investors, or to enable investors to readily obtain, timely and understandable information to assist investors to decide whether to acquire the shares (for example, through initial disclosure, or question and answer forums, or other information that is made available) (see subclause (2)):

(e)

the provider has an adequate policy (a fair dealing policy) for excluding an issuer from using the service if the provider has information (for example, from checks or assessments it carries out (if any)) that gives it reason to believe that the issuer, in relation to any dealing in shares using the service, has—

(i)

engaged in conduct that is misleading or deceptive or likely to mislead or deceive; or

(ii)

made a false or misleading representation in contravention of section 22 of the Act; or

(iii)

made an unsubstantiated representation in contravention of section 23 of the Act:

(f)

the provider has adequate systems and procedures for implementing the anti-fraud policy and the fair dealing policy:

(g)

the provider has adequate systems and procedures for ensuring that each issuer does not raise more than $2 million in any 12-month period under the service:

(h)

the provider has adequate systems and procedures for handling conflicts between the commercial interests of the provider (or of its associated persons) and the need for the provider to have fair, orderly, and transparent systems and procedures for providing the service:

(i)

if a broking service is to be provided by the provider in the course of providing the service, the provider is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for the broking service on and from commencing to provide the broking service.

(2)

In considering whether disclosure arrangements are adequate, the FMA must have regard to—

(a)

the limits (if any) on the amount that retail investors may invest under the service; and

(b)

the amount that issuers may raise under the service.

187 Additional eligibility criteria for peer-to-peer lending service

The eligibility criteria for licences for a peer-to-peer lending service under section 396(a) of the Act are as follows:

(a)

the provider has fair, orderly, and transparent systems and procedures for providing the service:

(b)

the service is designed primarily for offers by persons other than the provider and its associated persons:

(c)

the provider has adequate systems and procedures for—

(i)

checking the identity of each issuer of debt securities, and of each director and senior manager of the issuer, before the issuer is authorised to offer debt securities using the service; and

(ii)

assessing, before debt securities are offered using the service, the risk of investors not being repaid in full or not receiving the interest or other returns that will be offered (for example, assessing the creditworthiness of the issuer, any guarantees, and any charge or other security to secure the performance of obligations under the securities); and

(iii)

disclosing information about that checking and assessment to investors:

(d)

(i)

engaged in conduct that is misleading or deceptive or likely to mislead or deceive; or

(ii)

made a false or misleading representation in contravention of section 22 of the Act; or

(iii)

made an unsubstantiated representation in contravention of section 23 of the Act:

(e)

the provider has adequate systems and procedures for implementing the fair dealing policy:

(f)

to the extent that the provider, under the service, carries out the activities referred to in regulation 228(d) and (e), the provider has adequate arrangements for ensuring the orderly administration of the debt securities in the event that it ceases to operate the service:

(g)

the provider has adequate systems and procedures for ensuring that each issuer does not raise more than $2 million in any 12-month period under the service:

(h)

(i)

if a broking service is to be provided by the applicant in the course of providing the service, the applicant is, or will be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for the broking service on and from commencing to provide the broking service.

187A Additional eligibility criteria for service of acting as administrator of financial benchmark

The eligibility criteria for licences for the service of acting as an administrator of a financial benchmark under section 396(a) of the Act are set out in Part 2 of Schedule 28.

Regulation 187A: inserted, on 15 March 2021, by regulation 4 of the Financial Markets Conduct (Licensing of Administrators of Financial Benchmarks) Amendment Regulations 2020 (LI 2020/319).

188 Eligibility criteria for authorised bodies

(1)

The eligibility criterion for a related body corporate under section 400(1)(e) of the Act is that the key personnel of the related body corporate are fit and proper persons to hold their respective positions.

(1A)

The eligibility criterion for an entity under section 400(1A)(e) of the Act is that the key personnel of the entity are fit and proper persons to hold their respective positions.

(2)

In this regulation and regulation 191, key personnel, in relation to a body corporate or other entity (A), means—

(a)

the executive directors of A; and

(b)

those senior managers of A who will perform duties in connection with providing a market service covered by the licence.

Regulation 188(1A): inserted, on 15 March 2021, by regulation 20(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 188(2): amended, on 15 March 2021, by regulation 20(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Procedural matters

189 FMA must have regard to compliance history of relevant parties

(1)

The FMA must, before making a decision in relation to the matters in section 396(c) and (d) of the Act, have regard to any conviction, order made, or successful disciplinary action taken under a relevant proceeding or action against any relevant party.

(2)

Subclause (1) applies only to the extent that the FMA is aware of the relevant proceeding or action.

(3)

In this regulation, a person (R) is a relevant party in relation to an applicant (A) if—

(a)

1 or more of the following apply:

(i)

A is a body corporate and R has the power, directly or indirectly, to exercise, or control the exercise of, the rights to vote attaching to 25% or more of the voting products of A:

(ii)

A and R are acting jointly or in concert:

(iii)

A acts, or is accustomed to act, in accordance with the wishes of R:

(iv)

R is able, directly or indirectly, to exert a substantial degree of influence over the activities of A:

(v)

R is a director or senior manager of A or of a person who is associated with or connected to A under subparagraphs (i) to (iv); and

(b)

the FMA considers that the nature of the association or connection referred to in paragraph (a)(i) to (v) is relevant to the carrying out of the service to which an application for a licence relates.

(4)

In this regulation, relevant proceeding or action means civil or criminal proceedings, regulatory action, or disciplinary action (whether in New Zealand or overseas) that the FMA considers is relevant to the carrying out of the service to which an application for a licence relates.

190 FMA must consult Reserve Bank in relation to banks, NBDTs, and insurers

The FMA must, before making a decision under section 396 of the Act, consult the Reserve Bank if the applicant, or a proposed authorised body, is a registered bank, an NBDT, or a licensed insurer.

Subpart 2—Conditions of licences

Subpart 2 heading: inserted, on 15 March 2021, by regulation 6 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Conditions imposed by regulations

Heading: replaced, on 15 March 2021, by regulation 7 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

191 General reporting condition

(1)

A market services licence is subject to a condition that, if any of the following occurs, the licensee or an authorised body must, as soon as practicable, send a report containing details of the matter to the FMA:

(a)

the licensee or an authorised body becomes aware or has reasonable grounds to believe that—

(i)

the licensee or an authorised body is, or it is likely that the licensee or authorised body will become, subject to an insolvency event; or

(ii)

a director or senior manager of the licensee, or any of the key personnel of an authorised body, is adjudicated bankrupt or it is likely that that person will be adjudicated bankrupt (whether in New Zealand or overseas); or

(b)

the licensee or an authorised body becomes aware that a relevant proceeding or action has been commenced or taken against any of the following:

(i)

the licensee:

(ii)

an authorised body:

(iii)

a director or senior manager of the licensee:

(iv)

any of the key personnel of an authorised body; or

(c)

a director or senior manager of the licensee, or any of the key personnel of an authorised body,—

(i)

resigns, is removed, or otherwise ceases to hold the office or position; or

(ii)

is appointed, employed, or engaged; or

(d)

an auditor of the licensee or an authorised body—

(i)

resigns or otherwise ceases to hold the office; or

(ii)

is appointed (other than by way of reappointment); or

(e)

the licensee or an authorised body proposes to change its name or its legal structure (for example, by virtue of an amalgamation); or

(f)

the licensee or an authorised body proposes to enter into a major transaction (within the meaning of section 129 of the Companies Act 1993 applied to a licensee or an authorised body whether or not it is a company); or

(g)

the licensee or an authorised body becomes aware that a transaction or an arrangement has been entered into, or it is likely that a transaction or arrangement will be entered into, that will result or has resulted in a person obtaining or losing control of the licensee or the authorised body.

(2)

In subclause (1)(b), relevant proceeding or action—

(a)

has the same meaning as in regulation 5(1); and

(b)

includes a criminal proceeding for a crime involving dishonesty; but

(c)

does not include any proceeding commenced, or action taken, by the FMA.

(3)

In subclause (1)(g), control has the same meaning as in clause 48 of Schedule 1 of the Act.

192 Condition for independent trustees to report serious problems

(1)

A market services licence for an independent trustee of a restricted scheme is subject to a condition that, if the licensee has reasonable grounds to believe that a serious problem has arisen in relation to a managed investment product in the scheme, the licensee must, as soon as practicable,—

(a)

report the serious problem to the FMA; and

(b)

disclose to the FMA all information relevant to the serious problem that is in the possession or control of the independent trustee and was obtained in the course of, or in connection with, the performance of the functions of that trustee.

(2)

In subclause (1), serious problem has the same meaning as in section 199(2) of the Act.

193 Condition for DIMS providers and prescribed intermediary service providers to keep documents and to give documents on request

(1)

A market services licence for a provider of a DIMS, a crowd funding service, or a peer-to-peer lending service is subject to a condition that the provider must, in respect of any document required by or for the purposes of the Act or these regulations in connection with the service,—

(a)

keep a copy of the document for a period of at least 7 years after the date on which the document comes into the possession of the provider; and

(b)

provide, on request and on payment of the relevant fee, to an investor a copy of, or an extract from, a document that is relevant to the investor (and the copy or extract must be provided in accordance with subclause (3) within 10 working days after receiving the request).

(2)

The condition in subclause (1) applies to a document only if the document is given, made, or provided by or to the provider.

(3)

The document must be provided by giving it to the investor or delivering or sending it to the investor’s address.

(4)

In this regulation,—

(a)

a document is relevant to an investor if the investor has or had a right to access or obtain a copy of the document under the Act, regulations made under the Act, a governing document, or the terms of the offer of a financial product or a DIMS:

(b)

relevant fee means a reasonable printing and administration fee set by the provider.

194 Condition for DIMS providers to disclose if service is wholesale

(1)

A market services licence for a provider of a DIMS that is not a retail service is subject to a condition that the provider must not acquire or dispose of a financial product under the service for an investor, or accept an investment authority from an investor, unless a warning statement has been provided to the investor before—

(a)

the provider acquires or disposes of a financial product under the service for the investor; or

(b)

the investor grants an investment authority to the provider.

(2)

A warning statement must be provided by giving it to the investor or delivering or sending it to the investor’s address.

(3)

The warning statement must—

(a)

contain a statement to the effect that—

(i)

the service is not a retail service:

(ii)

the service is not covered by the licence (and, accordingly, the protections and requirements of the Financial Markets Conduct Act 2013 may not apply); and

(b)

if it is included in another document, be in a prominent position in that document.

195 Condition for intermediaries to notify FMA of suspected contraventions of Part 2 of Act or of investment cap

(1)

A market services licence for a provider of a crowd funding service or a peer-to-peer lending service is subject to a condition that the provider must notify the FMA, in accordance with subclauses (2) and (3), if the provider knows or suspects that an issuer that uses the service has committed, is committing, or is likely to commit—

(a)

a significant contravention of Part 2 of the Act (which relates to fair dealing) in connection with the use of the service; or

(b)

a contravention of the $2 million aggregate limit referred to in clause 7 of Schedule 8.

(2)

The provider must give the notice immediately after knowing or suspecting the person has committed, is committing, or is likely to commit the contravention.

(3)

The notice must include—

(a)

the issuer’s name and contact details; and

(b)

the obligation to which the known or suspected contravention relates; and

(c)

the facts supporting the provider’s view relating to the known or suspected contravention; and

(d)

any supporting evidence for that view.

196 Condition for provider of crowd funding service to make warning statement available

(1)

A market services licence for a provider of a crowd funding service is subject to a condition that the provider must,—

(a)

if the facility is available through an Internet site, ensure that a warning statement is prominently displayed—

(i)

on the home page of the site; and

(ii)

to an investor, on a page on the site, immediately before the investor uses the site to apply for, or otherwise acquire, financial products; and

(b)

in all cases, ensure that a warning statement is prominently displayed in all application forms for acquiring financial products using the service.

(2)

The warning statement must be in the following form:

“
Warning statement about crowd funding
Equity crowd funding is risky.
*Issuers using this facility include new or rapidly growing ventures. *Investment in these types of businesses is very speculative and carries high risks.
You may lose your entire investment, and must be in a position to bear this risk without undue hardship.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision.
The usual rules do not apply to offers by issuers using this facility. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself.”

*Omit this sentence if the facility is confined to issuers for whom the sentence would be inapplicable.

197 Condition for provider of crowd funding service to obtain investor confirmation

(1)

A market services licence for a provider of a crowd funding service is subject to a condition that the provider must obtain from each investor, in accordance with subclauses (2) and (3), a confirmation to the following effect:

“
I confirm that I have seen the warning statement about crowd funding and—
I understand that equity crowd funding is risky and I may lose my entire investment; and
I confirm that I could bear that loss without suffering undue hardship; and
I understand that the usual legal protections do not apply to this investment; and
I understand that I may not be given the same information as is usually required by New Zealand law for investments.”

(2)

The confirmation must be obtained in writing in a separate document or, if it is obtained by electronic means, through a process by which it is obtained separately from the agreement to use the service.

(3)

The confirmation must be obtained by the provider before the investor is authorised to use the service.

197A Condition for manager of passport fund

(1)

A market services licence for a person acting as a manager of a passport fund is subject to a condition that, in respect of the passport fund, the manager must comply with the following to the extent that those rules, laws, or regulations apply to an operator of the fund (including rules, laws, or regulations that impose obligations on the fund):

(a)

the passport rules:

(b)

the laws and regulations (as defined in paragraph 4.1(f) of the memorandum of cooperation) of each host economy in which the fund operates.

(2)

If regulation 82B(3) applies, the reference to rules, laws, or regulations that impose obligations on the fund must be treated as the rules, laws, and regulations referred to in subclause (1)(a) and (b) applied with all necessary modifications in relation to each relevant fund as if the relevant fund were a passport fund.

(3)

See also regulation 199A (which relates to limitations on investment options).

Regulation 197A: inserted, on 14 June 2019, by regulation 10 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

197B Conditions for service of acting as administrator of financial benchmark

A market services licence for the service of acting as an administrator of a financial benchmark is subject to the conditions set out in Part 3 of Schedule 28.

Regulation 197B: inserted, on 15 March 2021, by regulation 5 of the Financial Markets Conduct (Licensing of Administrators of Financial Benchmarks) Amendment Regulations 2020 (LI 2020/319).

198 Conditions are Part 6 services provisions

(1)

The conditions imposed under regulations 191 to 197A are Part 6 services provisions that give rise to civil liability under section 449(4) of the Act.

(2)

In addition, the conditions imposed under clauses 15(2)(a), 22 to 25, 26(1) and (2), 27, and 31(1) to (5)(a) of Schedule 28 are Part 6 services provisions that give rise to civil liability under section 449(4) of the Act.

Regulation 198(1): amended, on 14 June 2019, by regulation 11 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

Regulation 198(2): inserted, on 15 March 2021, by regulation 6 of the Financial Markets Conduct (Licensing of Administrators of Financial Benchmarks) Amendment Regulations 2020 (LI 2020/319).

Additional conditions that FMA may impose on licences

199 General FMA conditions

(1)

The FMA may impose on a market services licence 1 or more of the following conditions:

(a)

conditions concerning the insurance of a licensee, an authorised body, or any director, employee, or agent of a licensee or an authorised body against claims made against any of them in respect of anything done or omitted by them in connection with a market service and for any costs associated with those claims, including—

(i)

requiring a licensee or an authorised body to hold professional indemnity insurance:

(ii)

requiring that insurance be held only with insurers approved by the FMA:

(iii)

specifying the minimum terms and conditions that an insurance policy must satisfy for the purposes of subparagraph (i):

(b)

conditions requiring the licensee or an authorised body to periodically report information to the FMA concerning the nature, scale, and operation of the service (including statistical information about numbers of transactions entered into and amounts involved):

(c)

conditions under section 400(1) of the Act to authorise 1 or more named related bodies corporate of the licensee to provide a market service covered by the licence:

(ca)

conditions under section 400(1A) of the Act to authorise 1 or more named entities to provide a financial advice service covered by the licence:

(d)

conditions for the purposes of section 400(2) of the Act.

(2)

See also section 403(3) and (4) of the Act (which allows the FMA to impose conditions that, for example, impose limits or restrictions on the services that are covered by the licence).

Regulation 199(1)(ca): inserted, on 15 March 2021, by regulation 21(1) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

Regulation 199(2): amended, on 15 March 2021, by regulation 21(2) of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

199A Other FMA conditions for licences for managers of passport funds

(1)

This regulation applies to a market services licence for a person acting as a manager of a passport fund if regulation 82B(3) applies.

(2)

The FMA may impose on the licence a condition that the manager must ensure that the investment options that may be selected by an investor in a host economy are limited to options that involve 1 or more specified funds that are listed in the condition.

Regulation 199A: inserted, on 14 June 2019, by regulation 12 of the Financial Markets Conduct (Asia Region Funds Passport) Amendment Regulations 2019 (LI 2019/101).

200 Other FMA conditions for DIMS

The FMA may impose on a market services licence for a provider of a DIMS 1 or more of the following conditions:

(a)

conditions regulating the provision of financial advice referred to in section 432A(1)(b) of the Act:

(b)

conditions that—

(i)

permit the custodian of investor money and investor property to be an associated person of the DIMS licensee (other than by virtue of the custodianship); and

(ii)

impose limitations on that permission (for example, limiting the permission to a specified period); and

(iii)

specify requirements that must be observed relating to that permission for the purposes of section 445(2)(b) of the Act, including requirements that relate to the systems or procedures that must be maintained to identify, disclose, or manage any risks associated with the custodian being an associated person of the DIMS licensee.

Regulation 200(a): amended, on 15 March 2021, by regulation 22 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

201 Other FMA conditions for derivatives issuer

(1)

The FMA may impose on a market services licence for a derivatives issuer conditions that do 1 or more of the following:

(a)

require the licensee or an authorised body to maintain a minimum level of capital that the FMA considers is adequate:

(b)

regulate the form of that capital (for example, the financial instruments that may be taken into account in calculating capital):

(c)

require the licensee or an authorised body to maintain a capital ratio (including providing for the capital ratio to be set at a specified minimum level):

(d)

require the licensee or an authorised body to maintain minimum amounts of liquid assets relative to liabilities that the FMA considers is adequate:

(e)

specify the assets that qualify as liquid assets, and requirements concerning matching maturity of assets and liabilities, for the purposes of paragraph (d):

(f)

impose other requirements to better ensure that a licensee or an authorised body maintains prudent cash flows and a level of liquid assets sufficient to enable it to withstand a plausible range of liquidity shocks (for example, events that result in it experiencing a significantly reduced inflow of liquid assets):

(g)

require the licensee or an authorised body to have systems or procedures for assessing the suitability of a derivative for a retail investor or class of retail investors and for preventing the issue of a derivative to a retail investor where the derivative is assessed as not suitable under those systems or procedures:

(h)

require the licensee or an authorised body to maintain and enforce limits on the extent to which a retail investor is permitted to be leveraged under a derivative issued by the licensee or authorised body.

(2)

The FMA may not impose a condition under subclause (1)(a) to (f) (capital and liquidity) for a derivatives issuer that is a registered bank, an NBDT, or a licensed insurer.

202 Other FMA conditions for crowd funding service or peer-to-peer lending service

The FMA may impose on a market services licence for a provider of a crowd funding service or a peer-to-peer lending service any or all of the following conditions:

(a)

conditions that restrict or prohibit the provider or its associated persons from issuing under or using the service:

(b)

conditions that specify requirements that must be observed relating to that issuing or use, including requirements that relate to the systems or procedures that must be maintained to identify, disclose, and manage any risks associated with the provider or its associated persons issuing under or using the service.

Subpart 3—Disclosure obligations

Subpart 3 heading: inserted, on 15 March 2021, by regulation 8 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Disclosure obligations for discretionary investment management service

203 Application

(1)

Regulations 204 to 209 apply to a service disclosure statement (SDS) for a DIMS.

(2)

In those regulations, provider means the person who is in the business of providing the service to which the SDS relates.

204 Information at start of SDS for DIMS

(1)

The SDS must, at the start of the SDS,—

(a)

include, in a prominent position, the words “Service Disclosure Statement”; and

(b)

identify the service to which the SDS relates; and

Example

ABC Limited’s Investment Management Services

(c)

identify the provider; and

(d)

state the date of the SDS; and

(e)

contain a statement in the following form:

“This document gives you important information about this service to help you decide whether you want to invest using this service. [Name of provider] has prepared this document in accordance with the Financial Markets Conduct Act 2013.”; and

(f)

contain, at the end of the statement under paragraph (e), whichever of the following sentences best applies:

(i)

“You can also seek advice from a financial advice provider to help you decide if this service is appropriate for you.”:

(ii)

“[Name of provider]’s advisers can also give you financial advice to help you decide if this service is appropriate for you.”

(2)

The sentence in subclause (1)(f)(ii) may, in addition to or instead of referring to the provider’s advisers, refer to the advisers of a named associated person.

(3)

The SDS may also, at the start of the SDS, do either or both of the following:

(a)

identify 1 or more persons involved in providing the service:

(b)

include 1 or more brands or logos customarily used by the provider or any person referred to in paragraph (a).

Regulation 204(1)(f)(i): amended, on 15 March 2021, by regulation 23 of the Financial Markets Conduct Amendment Regulations 2020 (LI 2020/315).

205 Content of SDS for DIMS

The SDS must contain all of the information specified in Part 1 of Schedule 21 that is applicable.

206 Investment proposal must be provided to investors

(1)

For the purposes of section 426A of the Act, a licensee or an authorised body that provides a DIMS that is a retail service must make available an investment proposal to each retail investor at the same time as or before the investment authority is granted by the investor.

(2)

The investment proposal is a written document that contains all of the information specified in Part 2 of Schedule 21 that is applicable.

(3)

The investment proposal must be made available to the investor by—

(a)

giving the investment proposal to the investor or delivering or sending the investment proposal to the investor’s address; or

(b)

combining the investment proposal with the investment authority; or

(c)

combining the investment proposal with the SDS; or

(d)

combining the investment proposal with both the investment authority and the SDS.

(4)

If the investment proposal is not combined with the SDS, the investment proposal must be incorporated by reference in the SDS by including a reference to the investment proposal in section 3 of the SDS.

(5)

In the case of subclause (3)(c), the investment proposal must be included after section 10 of the SDS.

(6)

In the case of subclause (3)(d), the investment proposal and the investment authority must be included after section 10 of the SDS.

Regulation 206(1): amended, on 7 June 2018, by regulation 7 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

207 Presentation requirements for SDS and investment proposal

(1)

Every SDS and investment proposal must be worded and presented in a clear, concise, and effective manner.

(2)

The format, font, and font size of the SDS and the investment proposal must be easily readable.

208 Information that must be available to investors

(1)

For the purposes of section 426A of the Act, if Schedule 21 requires an SDS or an investment proposal to refer to information that is available to the investor, the provider must ensure that the information is—

(a)

available to the investor—

(i)

through an electronic facility on a substantially continuous basis; and

(ii)

on request to the provider; or

(b)

provided to the investor at or about the same time, and by the same means, as the SDS or investment proposal is made available to the investor.

(2)

For the purposes of subclause (1)(a)(ii),—

(a)

the provider must, after receiving a request from an investor, provide the information to the investor as soon as practicable but, in any event, within 5 working days after it receives the request; and

(b)

the information must be provided by giving it to the investor or delivering or sending it to the investor’s address; and

(c)

the information must be provided free of charge.

Regulation 208(1): amended, on 7 June 2018, by regulation 8 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

209 Various PDS requirements also apply to SDSs and investment proposals

(1)

The following regulations apply to an SDS or an investment proposal with all necessary modifications as if it were a PDS:

(a)

regulation 33 (incorporation by reference):

(b)

regulation 34 (additional information).

(2)

For the purpose of subclause (1),—

(a)

a reference to a length restriction in regulation 34 must be disregarded:

(b)

a reference to the relevant section in regulation 34 is a reference to section 6 of the SDS or section 4 of the investment proposal (as the case may be).

210 Ongoing reporting for DIMS

(1)

For the purposes of section 426A of the Act, a licensee or an authorised body that provides a DIMS that is a retail service must, in accordance with regulation 212, make available the information specified in subclauses (2) to (4) to each retail investor who uses the service.

(2)

The information is a record of all transactions made by the provider on behalf of the investor under the service during the reporting period, including for each transaction (to the extent applicable)—

(a)

the name of the issuer and the number and class of financial products to which the transaction relates; and

(b)

the price per financial product; and

(c)

the total amount of the transaction; and

(d)

the date of the transaction.

(3)

The information is also the following as at the reporting time:

(a)

the name of each class of financial products in the investor’s portfolio, the name of the issuer of those products, and the number of those products in the investor’s portfolio; and

(b)

the cash held for the investor under the service.

(4)

The information is also the following in respect of the investor’s portfolio:

(a)

all dividends paid, all interest paid, and other distributions or income received during the reporting period:

(b)

all percentage-based charges paid during the reporting period:

(c)

all other charges paid during the reporting period:

(d)

all individual action fees paid during the reporting period:

(e)

other information that the licensee or authorised body reasonably believes the investor needs in order to have a reasonable understanding of any corporate action that affects the investor’s portfolio (for example, bonus issues).

(5)

If the information required under subclause (2), (3), or (4) is made available to an investor by a person (A) on behalf of the licensee or authorised body (for example, by a custodian), the information must be accompanied by a statement to that effect (and the statement must include A’s name and role).

(6)

For the purposes of section 426A of the Act, a licensee or an authorised body that provides a DIMS that is a retail service must, within 5 working days after receiving a request, make available the following requested information to the retail investor who makes the request:

(a)

the current value or the most recent valuation of any of the financial products in the investor’s portfolio and a statement of—

(i)

the basis on which that value is assessed or the valuation is carried out (for example, the value of quoted products is the market price); and

(ii)

the date on which the value is assessed or of the valuation; and

(b)

the total value of the financial products in the investor’s portfolio (based on the values disclosed under paragraph (a)).

(7)

The information under subclause (6) must be made available, free of charge, by giving it to the investor or delivering or sending it to the investor’s address.

(8)

In this regulation and regulations 211 and 212,—

individual action fees has the same meaning as in clause 37 of Schedule 21

other charges has the same meaning as in clause 37 of Schedule 21

percentage-based charges has the same meaning as in clause 37 of Schedule 21

quarter means each 3-month period of a disclosure year (where each quarter ends on the date that the provider determines)

reporting period means,—

(a)

in the case of regulation 212(1)(a), the period starting when this regulation first applies to the licensee or authorised body in respect of the investor and ending at a stated time (the stated time) that is not earlier than 48 hours before the information is made available:

(b)

in the case of regulation 212(1)(b),—

(i)

each of the 4 quarters of a disclosure year; or

(ii)

any period shorter than a quarter of a year that is agreed with the investor

reporting time means,—

(a)

in the case of regulation 212(1)(a), the stated time:

(b)

in the case of regulation 212(1)(b), the end of the reporting period.

(9)

In this regulation and regulations 211 and 212, financial products are of the same class if those financial products have attached to them identical rights, privileges, limitations, and conditions (including, in the case of debt securities, the same redemption date and interest rate).

Regulation 210(1): amended, on 7 June 2018, by regulation 9 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

Regulation 210(6): amended, on 7 June 2018, by regulation 9 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

211 Annual information

(1)

For the purposes of section 426A of the Act, a licensee or an authorised body that provides a DIMS that is a retail service must, in accordance with regulation 212, make available to each retail investor who uses the service the following information in respect of the most recently completed disclosure year:

(a)

a description of—

(i)

the investment strategy to which the information provided under this regulation relates (including the investment objectives and a diagram or other description summarising the target investment mix under the strategy); and

(ii)

the material changes to the investment strategy that have been made during the disclosure year (if any):

(b)

the return on the investor’s portfolio before tax but net of fees—

(i)

over the disclosure year; and

(ii)

over the 5-year period ending on the close of the disclosure year:

(c)

a bar graph showing the return on the investor’s portfolio before tax but net of fees, indicated by a bar on the graph and as a figure near the corresponding bar, that has been generated for the investor for—

(i)

each complete disclosure year since the date on which the investor first started using the service; or

(ii)

each of the last 10 complete disclosure years, if the investor has been using the service for 10 or more complete disclosure years:

(d)

the name of each class of financial products in the investor’s portfolio, the name of the issuer of those products, and the number of those products in the portfolio (as at the end of the disclosure year):

(e)

the current value of each of those financial products (as at the end of the disclosure year) or the most recent valuation of each of those financial products that was available at the end of the disclosure year, and a statement of—

(i)

the basis on which that value is assessed or the valuation is carried out (for example, the value of quoted products is the market price); and

(ii)

the date on which the value is assessed or of the valuation:

(f)

the total value of the investor’s portfolio at the beginning and the end of the disclosure year (based on the values disclosed under paragraph (e) and in the previous annual disclosure made under this regulation):

(g)

the cash held for the investor under the service at the end of the disclosure year:

(h)

the total of all dividends paid, all interest paid, and other distributions or income received, in respect of the investor’s portfolio during the disclosure year:

(i)

the total percentage-based charges paid during the disclosure year in respect of the investor’s portfolio, expressed as a percentage of the investor’s portfolio:

(j)

the total amount of other charges paid during the disclosure year in respect of the investor’s portfolio:

(k)

the individual action fees of each type paid during the disclosure year in respect of the investor’s portfolio:

(l)

a pie graph showing the composition of the financial products in the investor’s portfolio at the end of the disclosure year, according to the asset categories specified in clause 1(2) of Schedule 21:

(m)

a reminder that the investor may request past quarterly reports or obtain further information from the electronic facility referred to in regulation 212, as applicable.

(2)

The following apply in relation to that information:

(a)

the information under subclause (1)(b) or (c) may also include return information for the same periods net of trading expenses but before all other fees and tax:

(b)

subclause (1)(b) and (c) applies only in respect of disclosure years that start on or after 1 December 2014:

(c)

information about a disclosure year under subclause (1)(b) is not required if the investor did not have an investor’s portfolio over the whole of that period:

(d)

the information under subclause (1)(c) may be provided in a table (instead of a bar graph):

(e)

information under subclause (1)(f) about the beginning of a disclosure year is not required if the investor does not have an investor’s portfolio at the beginning of that disclosure year:

(ea)

if the category “other” is used in providing the information specified in subclause (1)(l), the information must include, as a note to the pie graph, an explanation of the nature of each of the financial products included in that category:

(eb)

the information specified in subclause (1)(l) must be based on the information that the provider judges to be the most appropriate to produce an accurate representation of the assets:

(f)

return has the same meaning as in clause 34 of Schedule 21:

(g)

the information may be combined in a document that includes information under regulation 210.

Regulation 211(1): amended, on 7 June 2018, by regulation 10 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

Regulation 211(2)(ea): inserted, on 1 April 2017, by regulation 12 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

Regulation 211(2)(eb): inserted, on 1 April 2017, by regulation 12 of the Financial Markets Conduct Amendment Regulations (No 2) 2016 (LI 2016/249).

212 How information is made available

(1)

The information under regulation 210(1) to (5) must be made available to the investor (A)—

(a)

through an electronic facility on a substantially continuous basis (but only if A has agreed to this method); or

(b)

by giving it to A or delivering or sending it to A’s address not later than 20 working days after the last day of each reporting period in each year.

(2)

In the case of subclause (1)(b), the information must cover the most recently completed reporting period.

(3)

The information under regulation 211 must, not later than 20 working days after the end of each disclosure year, be made available to the investor (A)—

(a)

through an electronic facility (but only if A has agreed to this method); or

(b)

by giving it to A or delivering or sending it to A’s address.

Disclosure obligations for prescribed intermediary services

213 Disclosure obligations apply to prescribed intermediary services

For the purposes of section 422(b) of the Act, subpart 4 of Part 6 of the Act applies to each of the following:

(a)

the provision of a crowd funding service:

(b)

the provision of a peer-to-peer lending service.

214 Application

(1)

Regulations 215 to 218 apply to an SDS for a crowd funding service or a peer-to-peer lending service.

(2)

In those regulations, provider means the person who is in the business of providing the service to which the SDS relates.

215 SDS for crowd funding service or peer-to-peer lending service

(1)

An SDS must contain a brief description of—

(a)

the nature of the service provided; and

(b)

how investors apply for, and obtain, access to the facility and the eligibility criteria that apply; and

(c)

how issuers apply for, and obtain, access to the facility and the eligibility criteria that apply; and

(d)

how investments are made and financial products are issued under the service; and

(e)

how investor money is received and dealt with; and

(f)

the nature and extent of the checks and assessments made by the provider of the following:

(i)

each issuer that offers financial products under the service:

(ii)

the directors and senior managers of those issuers:

(iii)

the risks involved in those financial products (or, if checks and assessments of those risks are not made as part of the service, a statement to that effect); and

(g)

the nature and extent of the disclosure arrangements that apply in relation to the financial products offered under the service; and

(h)

the charges that may be payable to the provider by an investor under the service (or, if those charges are not fixed, the types and bases on which charges will be imposed) and when the investor must pay the charges; and

(i)

the rights of the provider or any other person to alter any of the charges applicable to the service; and

(j)

the charges that may be payable to the provider by an issuer under the service (or, if those charges are not fixed, the types and bases on which charges will be imposed); and

(k)

if the provider is, or issuers that are associated with the provider are, restricted or prohibited from issuing under or using the service, the nature of the restrictions or prohibitions (see also subclause (2)); and

(l)

the nature and extent of any interest held by or in the provider that may materially adversely impact on the provider’s ability to have fair, orderly, and transparent systems and procedures for providing the service, and of the steps taken to manage any risks of that adverse impact; and

(m)

contact details of the provider; and

(n)

how investors may complain about the service to the provider and to any dispute resolution scheme that is available; and

(o)

the type of information relating to the service that is required to be, or otherwise will be, available on request from the provider and how the request should be made (including whether any charge may be made for the information and the amount of the charge).

(2)

If subclause (1)(k) does not apply in relation to the provider or issuers that are associated with the provider (or both), an SDS must also contain a statement to the effect that the provider or those issuers (or both) are not restricted or prohibited from issuing under or using the service.

(3)

An SDS for a crowd funding service must also contain the warning statement required by regulation 196.

(4)

An SDS for a peer-to-peer lending service must also contain—

(a)

a brief description of the nature and extent of the provider’s monitoring of compliance by the issuer with its obligations to make repayments and payments under the debt securities (or, if such monitoring is not part of the service, a statement to that effect); and

(b)

a brief description of processes in the event of a default by an issuer of those obligations or (if such processes are not part of the service) of the investor’s remedies in the event of a default.

216 Presentation requirements

(1)

An SDS must be worded and presented in a clear, concise, and effective manner.

(2)

The format, font, and font size of the SDS must be easily readable.

217 SDS may refer to facility’s Internet site

(1)

If the facility is available through an Internet site, the SDS may incorporate any information required by regulation 215(1), (2), and (4) by reference to the page or section of the Internet site on which the information is located.

(2)

The reference in the SDS must include—

(a)

a link to or URL for the page or section of the Internet site where that information is located; and

(b)

a brief description of the information on the relevant page or section.

218 Timing of disclosure for prescribed intermediary services

The prescribed time under section 424(1)(b) of the Act (for providing an SDS to a retail investor relating to a prescribed intermediary service) is before the investor enters into a client agreement for the crowd funding service or peer-to-peer lending service.

219 Prescribed intermediary service providers must provide transaction information to investors

(1)

For the purposes of section 426A of the Act, a licensee or an authorised body that provides a prescribed intermediary service must, in accordance with regulation 220, make available the information specified in subclause (2) to each investor who makes transactions under the service.

(2)

The information is a record of all transactions made by the investor under the service, including for each transaction (to the extent applicable)—

(a)

the names of the parties (unless the parties are anonymous under the service); and

(b)

a product description; and

(c)

the price per product; and

(d)

the quantity of products; and

(e)

the total amount of the transaction; and

(f)

the date of the transaction; and

(g)

in the case of a loan, any security given.

Regulation 219(1): amended, on 7 June 2018, by regulation 11 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

220 How transaction information is made available

(1)

This regulation applies for the purposes of regulation 219.

(2)

The information must be made available to the investor (A)—

(a)

through an electronic facility on a substantially continuous basis (but only if A has agreed to this method); or

(b)

by giving it to A or delivering or sending it to A’s address not later than 10 working days after the last day of each reporting period in each year (but only if A has agreed to this method); or

(c)

by giving it to A or delivering or sending it to A’s address not later than 5 working days after a financial product is issued or transferred under each transaction.

(3)

The information must cover,—

(a)

in the case of subclause (2)(a), the transactions entered into in the period starting when regulation 219 first applies to the provider in respect of A and ending at a stated time that is not earlier than 48 hours before the information is made available:

(b)

in the case of subclause (2)(b), the transactions entered into in the last reporting period.

(4)

The information under subclause (2)(a) or (b) must state the period that it covers.

(5)

No information is required to be made available under subclause (2)(b) for a reporting period if no transactions are entered into in that period.

(6)

In this regulation, reporting period means—

(a)

each of the 4 quarters of a year ending on 30 June, 30 September, 31 December, and 31 March; or

(b)

any period shorter than a quarter of a year that is agreed with A.

False or misleading SDS

Heading: replaced, on 7 June 2018, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

221 Application of regulations relating to defective SDS provided to investor

(1)

Regulations 221A to 221C apply for the purposes of section 427(3) to (5) of the Act (which relate to the consequences of a defective SDS being provided to an investor).

(2)

In those regulations,—

A means the person A referred to in section 427(3) of the Act (that is, the person to whom a defective SDS has already been provided)

provider means the person who is in the business of providing the service to which the SDS relates.

Section 221: replaced, on 7 June 2018, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

221A Circumstance in which service may not continue to be provided

For the purposes of section 427(3)(a) of the Act, the provider must not continue to provide the service to A if doing so would involve the provider acting otherwise than in the best interests of—

(a)

the investors using the service to whom the defective SDS was provided (if the service is provided to a class of investors); or

(b)

A (if the service is provided only to A).

Regulation 221A: inserted, on 7 June 2018, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

221B Conditions for continuing to provide service

(1)

For the purposes of section 427(3)(b) of the Act, the provider must—

(a)

provide to A a document that includes the information set out in subclause (3); and

(b)

ensure that a report under section 412 of the Act is sent in relation to the contravention of section 427 of the Act (that is, the contravention of providing a defective SDS to A).

(2)

The document under subclause (1)(a) must be provided—

(a)

as soon as practicable but, in any event, within 10 working days after the provider becomes aware that the SDS is defective; and

(b)

by giving it to A or delivering or sending it to A’s last known address or an address (including an electronic address) specified by A for that purpose.

(3)

The document under subclause (1)(a) must—

(a)

identify the SDS that is defective and briefly explain why it is defective in terms of section 427(1)(a) and (b) of the Act; and

(b)

state the steps being taken to remedy the defect; and

(c)

state that the provider will, as soon as practicable, provide a new SDS that is not defective; and

(d)

state that the provider will continue to provide the service to A unless continuing to do so would involve the provider acting otherwise than in the best interests of—

(i)

the investors using the service to whom the defective SDS was provided (if the service is provided to a class of investors); or

(ii)

A (if the service is provided only to A); and

(e)

explain what continuing to provide the service will involve; and

(f)

explain what rights A has to withdraw from the service.

(4)

Subclauses (1)(a), (2), and (3) do not apply if the provider complies with regulation 221C within 10 working days after the provider becomes aware that the SDS is defective.

Regulation 221B: inserted, on 7 June 2018, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

221C Provision of new SDS that is not defective

(1)

For the purposes of section 427(4) and (5) of the Act, the provider must—

(a)

provide to A a new SDS that is not defective in terms of section 427(1)(a) and (b) of the Act as soon as practicable after the provider becomes aware that the original SDS is defective; and

(b)

ensure that the new SDS is accompanied by a document that—

(i)

identifies the SDS that is defective and briefly explains why it is defective in terms of section 427(1)(a) and (b) of the Act; and

(ii)

describes the material changes that have been made in the new SDS to ensure that it is not defective in terms of section 427(1)(a) and (b) of the Act; and

(iii)

explains what rights A has to withdraw from the service.

(2)

The new SDS must be provided by giving it to A or delivering or sending it to A’s last known address or an address (including an electronic address) specified by A for that purpose.

(3)

Subclause (1)(b)(iii) does not apply if, before providing the new SDS, the provider has provided a document to A under regulation 221B in respect of the same defect.

Regulation 221C: inserted, on 7 June 2018, by regulation 12 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

Request disclosure

222 Provider of DIMS or prescribed intermediary service must make information available on request

(1)

This regulation applies if an SDS for a DIMS, a crowd funding service, or a peer-to-peer lending service contains a statement to the effect that a document or other information is available from the provider of the service on a request that is made by a particular person or a person of a particular class (A).

(2)

For the purposes of section 426A of the Act, the provider must, after receiving a request from A, provide the document or other information to A as soon as practicable but, in any event, within 5 working days after the provider receives the request.

(3)

The document or other information must be provided by—

(a)

giving it to A; or

(b)

delivering or sending it to A’s address; or

(c)

making it available to A in any other way agreed with A.

(4)

The document or other information must be provided free of charge (unless a charge is otherwise expressly permitted by these regulations).

Regulation 222(2): amended, on 7 June 2018, by regulation 13 of the Financial Markets Conduct Amendment Regulations 2018 (LI 2018/66).

Subpart 4—Client agreements

Subpart 4 heading: inserted, on 15 March 2021, by regulation 9 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

Client agreement requirements apply to prescribed intermediary services[Revoked]

Heading: revoked, on 15 March 2021, by regulation 9 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

223 Client agreement requirements apply to prescribed intermediary services

For the purposes of section 429(c) of the Act, subpart 5 of Part 6 of the Act applies to each of the following:

(a)

the provision of a crowd funding service:

(b)

the provision of a peer-to-peer lending service.

Client agreements[Revoked]

Heading: revoked, on 15 March 2021, by regulation 10 of the Financial Markets Conduct (Regulated Financial Advice Disclosure) Amendment Regulations 2020 (LI 2020/132).

224 Time for entering into client agreement for prescribed intermediary services

For the purposes of section 430(2)(c) of the Act, a client agreement required by subpart 5 of Part 6 of the Act for a crowd funding service or a peer-to-peer lending service must be entered into before the investor applies for or acquires any financial products under the service.

225 Terms implied into client agreements

(1)

The following provisions are treated as being implied into a client agreement required by subpart 5 of Part 6 of the Act:

1

The licensee and every authorised body must, in exercising any powers or performing any duties in relation to the service provided under the licence, exercise the care, diligence, and skill that a prudent licensee for that service would exercise in the same circumstances.

2

If the licensee or an authorised body contracts out any of its functions in providing the service, the licensee or authorised body must take all reasonable steps to—

(a)

ensure that those functions are performed in the same manner, and are subject to the same duties and restrictions, as if the licensee or authorised body were performing them directly; and

(b)

monitor the performance of those functions.

(2)

If clause 6(2) of Schedule 1 applies in relation to a DIMS provided to a person (B), the following provisions must be treated as being implied into the client agreement in respect of the DIMS provided to B (unless or until the client agreement expressly provides otherwise):

3

The investment authority may be changed only by written agreement between the investor and the licensee or authorised body.

4

The investor may terminate the client agreement, without penalty, by giving 2 days’ written notice to the licensee or an authorised body.

226 Client agreements for DIMS must provide for certain matters

(1)

A client agreement required by subpart 5 of Part 6 of the Act for a DIMS must provide adequately for the following matters:

(a)

if financial products are to be held under the service on behalf of investors,—

(i)

how custodianship will be provided under the service and the process for appointing and removing a custodian:

(ii)

whether and, if so, how the investor may give instructions to exercise rights over the investor’s financial products (for example, a right to vote at meetings of product holders):

(iii)

the consequences of the termination of the client agreement, including whether any financial products held by a custodian on behalf of the investor under the service will be transferred to the investor, will continue to be held by the custodian, or will be sold:

(iv)

how holdings of wholesale products (if any) will be dealt with on termination of the client agreement:

(b)

how the investment authority may be changed:

(c)

a right for the investor to terminate the client agreement without penalty:

(d)

how the right under paragraph (c) may be exercised within a reasonable notice period.

List of access keys

Financial Markets Conduct Regulations 2014

Financial Markets Conduct Regulations 2014

Order in Council

Note

Contents

Regulations

1 Title

2 Commencement

Part 1 Preliminary provisions

3 Overview

(a)

(b)

(c)

(i)

(ii)

(iii)

(iv)

(d)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(e)

(i)

(ii)

(iii)

(iv)

(v)

(f)

(i)

(ii)

(iii)

(iv)

(iva)

(ivb)

(v)

(g)

(h)

(i)

4 Transitional, savings, and related provisions

5 Interpretation

(a)

(b)

(i)

(ii)

(a)

(b)

(c)

(a)

(b)

(a)

(b)

(c)

(d)

(a)

(b)

(a)

(b)

(c)

(d)

(a)

(b)

(c)

(d)

(e)

(a)

(b)

(a)

(b)

(c)

(d)

(a)

(ab)

(b)

(a)

(b)

(a)