NZ Passes Financial Conduct Legislation

By Editorial 03 September, 2013

New Zealand's new Financial Markets Conduct (FMC) regime will "provide better information and protections for investors, and clearer rules and options for companies looking to raise capital," the Commerce Minister has said.

Craig Foss made the comment after parliament passed a major piece of legislation for implementing the new regulations. The FMC Bill amends many of the rules for how financial products and services are offered to the public, along with how they are governed and operated. It will replace the Securities Act 1978, the Securities Markets Act, the Unit Trusts Act, the Superannuation Schemes Act, and the non-tax parts of the KiwiSaver Act.

Under the changes, issuers will need to prepare a single product disclosure statement tailored to retail investors, while two new online public registers will make information more accessible to investors, their advisers, market analysts, and commentators. Specific financial service providers – including fund managers, independent trustees of workplace superannuation schemes, discretionary investment management services, and derivatives issuers – will also be subject to different licensing stipulations.

The system for regulating securities exchanges will be overhauled, and fund managers and supervisors can expect to take on additional duties. Escalating penalties will be introduced, ranging from infringement notices for minor breaches, to penalties of up to NZD1m (USD772,200) for individuals, NZD5m for companies, and criminal penalties of up to 10 years' imprisonment for the "worst" conduct.

The legislation will be implemented in two phases, beginning in April, 2014, when fair dealing obligations will enter into force and growth-focused initiatives, including share schemes and crowd-funding deals, will be made available. From December, 2014, the disclosure requirements, online registers, and licensing rules, will kick in.

Continuous issuers will be allowed a two-year transitional period, starting next December, during which they can continue to comply with the Securities Act 1978. Other issuers will be able to comply with the old law for one year from December, 2014.

The Financial Markets Authority (FMA) will be responsible for implementing the changes, and will consult on new licensing frameworks and other key operational changes this October.

Tags: Individuals | Investment | Law | Financial Services | Share Schemes | Licensing | Legislation | New Zealand | Regulation | Penalties | Retail | Services | Expats | Other |


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