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Overseas Investment Act 2005

National security and public order risks management regime - Risk management actions - Statutory management

111: Modifications where person under statutory management is regulated by Reserve Bank

You could also call this:

"What happens when the government takes control of a bank or financial business regulated by the Reserve Bank"

Illustration for Overseas Investment Act 2005

If you are put under statutory management, it means the government is taking control of you or your business. This section applies if you are a registered bank, a covered bond SPV, a licensed insurer, a non-bank deposit taker, or an operator of a designated FMI. You can find what these terms mean in the Banking (Prudential Supervision) Act 1989, the Insurance (Prudential Supervision) Act 2010, the Non-bank Deposit Takers Act 2013, or the Financial Market Infrastructures Act 2021.

Before the Minister makes a recommendation about your statutory management, they must talk to the Reserve Bank. The statutory manager must think about the purpose of statutory management, which you can find in section 94.

The statutory manager must also think about maintaining public confidence in the financial system and avoiding significant damage to it. They must consider preserving the interests of members and creditors, and the business or undertaking of the person under statutory management. The statutory manager must listen to any advice from the Reserve Bank.

If a notice is given under section 99(2)(e), it must also be given to the Reserve Bank. When giving directions, the Reserve Bank and the regulator must work together and think about certain matters. Either the regulator or the Reserve Bank can ask for a report under section 100(1)(c).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS359041.

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Part 3National security and public order risks management regime
Risk management actions: Statutory management

111Modifications where person under statutory management is regulated by Reserve Bank

  1. This section applies if a person who will be made subject to statutory management by an order under section 95 is any of the following:

  2. a registered bank (within the meaning of section 2(1) of the Banking (Prudential Supervision) Act 1989):
    1. a covered bond SPV (within the meaning of section 139B of the Banking (Prudential Supervision) Act 1989):
      1. a licensed insurer (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2010):
        1. a non-bank deposit taker (within the meaning of NBDT in section 5 of the Non-bank Deposit Takers Act 2013):
          1. an operator of a designated FMI (within the meaning of section 5 of the Financial Market Infrastructures Act 2021).

            1. The Minister must consult the Reserve Bank before making a recommendation under section 96.

            2. Section 99(1) does not apply and instead the statutory manager must have regard to—

            3. the purpose of statutory management (see section 94):
              1. the need to maintain public confidence in the operation and soundness of the financial system:
                1. the need to avoid significant damage to the financial system:
                  1. to the extent not inconsistent with paragraphs (a), (b), and (c), the desirability of preserving the interests of members and creditors of the person under statutory management and the overseas person or, where appropriate, the need to protect the beneficiaries under any trust administered by the person under statutory management or the overseas person or the public interest:
                    1. to the extent not inconsistent with paragraphs (a), (b), (c), and (d), the need to preserve the business or undertaking of the person under statutory management and the overseas person.

                      1. The statutory manager must have regard to any advice given to the statutory manager by the Reserve Bank.

                      2. A notice under section 99(2)(e) must also be given to the Reserve Bank.

                      3. Section 100 is amended as it relates to directions so that—

                      4. a direction under section 100(1)(b) must be given jointly by the Reserve Bank and the regulator; and
                        1. section 100(3) applies to the regulator and the Reserve Bank; and
                          1. when making a joint direction, the Reserve Bank and the regulator must have regard to the matters set out in subsection (3)(b) and (c).

                            1. A requirement for a report under section 100(1)(c) may be made by the regulator or the Reserve Bank.

                            Notes
                            • Section 111: inserted, on , by section 52 of the Overseas Investment (Urgent Measures) Amendment Act 2020 (2020 No 21).
                            • Section 111(1)(a): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
                            • Section 111(1)(b): amended, on , by section 300(1) of the Reserve Bank of New Zealand Act 2021 (2021 No 31).
                            • Section 111(1)(e): replaced, on , by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).