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Financial Markets Conduct Act 2013

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

174: Certain related party benefits permitted

You could also call this:

"Some benefits can be given to family or friends if the deal is fair and follows the rules"

Illustration for Financial Markets Conduct Act 2013

This section is about benefits you can give to related parties. You can give a benefit if it is on terms that you would normally agree to if you were not related. This means the terms must be reasonable and fair for both parties.

You can also give benefits when you buy or sell a managed investment product in another registered scheme. This includes products from overseas schemes that are allowed under the rules. You can invest in certain bank products, like the ones mentioned in clause 21(a) to (c) of Schedule 1, as long as it is part of your normal business.

There are other benefits or transactions that are allowed, but they must be specifically prescribed. This means they must be clearly stated as allowed under the rules. You can give these prescribed benefits or do these transactions, as long as you follow the rules.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091176.

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

"No favours: scheme managers can't do deals that unfairly benefit friends or family."

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175: Requirements for certificates as to related party benefits, or

"What to include in a certificate about benefits to related parties"

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

174Certain related party benefits permitted

  1. This section applies to—

    Arm's-length terms

  2. a benefit that is given on terms that—
    1. 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
      1. are less favourable to the related party than the terms referred to in subparagraph (i):

        2. Investments in other registered schemes

      2. an acquisition or a disposal of a managed investment product in another registered scheme or of a prescribed interest in a prescribed overseas scheme:

          1. Certain registered bank investments

        1. investments made in the ordinary course of business in products referred to in clause 21(a) to (c) of Schedule 1:

            1. Other prescribed benefits or transactions

          1. a prescribed benefit or transaction.