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Financial Markets Conduct Act 2013

Governance of financial products - Governance of managed investment products - Related party transactions

172: Definition of related party benefit

You could also call this:

"What is a related party benefit in a scheme, and who gets it?"

Illustration for Financial Markets Conduct Act 2013

When you are looking at a registered scheme, a related party benefit is a benefit that comes from the scheme's property or puts the scheme's property at risk of loss. This benefit is given to or received by someone who is connected to the scheme, known as a related party. You do not include fees or expenses that the manager is allowed to be paid or reimbursed according to the law or the scheme's rules.

A related party of the scheme can be the manager, a trustee, or someone the manager has contracted to do some of their work. It can also be someone who contributes to the scheme but is not a participant, or someone associated with any of these people.

You are also considered a related party if you were connected to the scheme in the last six months, or if you think you will be connected to the scheme in the next year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091171.

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173: General prohibition on transactions giving related party benefits, or

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Part 4Governance of financial products
Governance of managed investment products: Related party transactions

172Definition of related party benefit

  1. A related party benefit, in relation to a registered scheme, is a benefit—

  2. that either is given out of scheme property or creates an exposure to loss for scheme property; and
    1. that is given to, or received by, a related party of the scheme; but
      1. does not include fees or expenses that are paid or reimbursed to the manager in accordance with this Act or the governing document of the scheme.

        1. A related party of the scheme is—

        2. any of the following persons (a scheme-connected person):
          1. the manager of the scheme or any trustee of a restricted scheme; and
            1. any investment manager, administration manager, or other person to whom the manager has contracted out some or all of its functions as a manager; and
              1. for a restricted scheme that is identified on the register of managed investment schemes as an employer-related scheme, any contributor to the scheme who is not a scheme participant (other than the Crown); or
              2. an associated person of a scheme-connected person.

                1. A person is also a related party of the scheme at a particular time if—

                2. the person was a related party of the scheme under subsection (2) at any time within the previous 6 months; or
                  1. the person believes or has reasonable grounds to believe that the person is likely to become a related party of the scheme under subsection (2) at any time within the next 12 months.