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Financial Markets Conduct Act 2013

Disclosure of offers of financial products - Civil liability for certain contraventions of this Part

101: Part 3 offer provisions

You could also call this:

"Rules for selling financial products and what happens if you break them"

Illustration for Financial Markets Conduct Act 2013

If you break some rules about offering financial products, you might have to pay a penalty. You can read about the penalties in subpart 3 of Part 8. The penalty can be up to $1 million for an individual or $5 million for others.

Some rules are about how you must tell people about financial products. You must follow rules like preparing and lodging a Product Disclosure Statement, or PDS, as stated in section 48, and giving the PDS to the right people, as stated in section 50. You must also disclose important information, as stated in section 57, and get consent from experts, as stated in section 60.

There are other rules you must follow when offering financial products. These include rules about minimum amounts, as stated in section 77, and what to do if conditions are not met, as stated in section 80. You must not make false statements, as stated in section 82, and you must hold money in trust, as stated in section 87(2).

If you break some other rules, you might have to pay a penalty of up to $200,000 for an individual or $600,000 for others. You can read about these penalties in subpart 3 of Part 8. These rules are about things like offeror obligations, as stated in section 55, and publication of lodgement, as stated in section 75. You must also follow rules about dealing with applications, as stated in section 85, and money for financial products, as stated in section 87(3).

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"A guide to the rules for financial products in New Zealand, including debt securities and investments."

Part 3Disclosure of offers of financial products
Civil liability for certain contraventions of this Part

101Part 3 offer provisions

  1. All of the provisions specified in subsections (3) and (4) are Part 3 offer provisions.

  2. A contravention of any of the provisions listed in subsection (3) may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary penalty not exceeding the greatest of the consideration for the relevant transaction, 3 times the amount of the gain made or the loss avoided, and $1 million in the case of an individual or $5 million in any other case.

  3. The provisions are the following:

  4. section 48 (PDS must be prepared and lodged):
    1. section 50 (PDS must be given to person to whom disclosure is required):
      1. section 57 (disclosure of material information and content of PDS and register entry):
        1. section 60 (consent of experts and persons who make endorsements):
          1. section 77 (minimum number or amount condition must be fulfilled before issue or transfer):
            1. section 80 (choices open to offeror if condition in PDS not met or defective disclosure):
              1. section 82 (false or misleading statements, omissions, and new matters requiring disclosure):
                1. section 87(2) (money for financial products must be held in trust):
                  1. section 89 (advertising for regulated offers):
                    1. sections 97 and 99 (ongoing disclosure):
                      1. clauses 13 and 17 of Schedule 1 (restrictions on advertising for small offers and small schemes):
                        1. any provision of regulations made for the purposes of clause 26 of Schedule 1 that is prescribed by the regulations to be a Part 3 offer provision and stated to give rise to civil liability under this subsection:
                          1. clause 27 of Schedule 1 (false or misleading statements and omissions).

                            1. A contravention of any of the following may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary penalty not exceeding $200,000 in the case of an individual or $600,000 in any other case:

                            2. section 55 (offeror obligations if notice of withdrawal is given):
                              1. section 62 (PDS must comply with prescribed requirements relating to form and presentation):
                                1. section 75 (publication of lodgement):
                                  1. section 83 (certain persons must inform offeror about disclosure deficiencies):
                                    1. section 85 (dealing with applications on expiry):
                                      1. section 87(3) (money for financial products must be dealt with in prescribed manner and repaid as soon as practicable if required):
                                        1. section 88 (offering financial products in entity that does not exist):
                                          1. any provision of regulations made for the purposes of clause 26 of Schedule 1 that is prescribed by the regulations to be a Part 3 offer provision and stated to give rise to civil liability under this subsection:
                                            1. clause 28 of Schedule 1 (certain persons must inform offeror about disclosure deficiencies).

                                              Notes
                                              • Section 101(3)(l): replaced, on , by section 52(1) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                                              • Section 101(4)(ga): inserted, on , by section 52(2) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).
                                              • Section 101(4)(h): amended, on , by section 52(3) of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).