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Financial Markets Conduct Act 2013

Governance of financial products - Intervention in debt securities offered under regulated offer or registered schemes - Powers to obtain court orders to intervene

207: Power of supervisor or FMA to apply for order to remedy problems

You could also call this:

"Someone can ask the court for help if a financial product or scheme has problems that might harm you."

Illustration for Financial Markets Conduct Act 2013

If you have a problem with a debt security or a registered scheme, someone called a supervisor or the FMA can ask the court for help. They can do this if they think the people who issued the financial products cannot pay their debts, or if the issuer is insolvent. The supervisor or FMA can also ask for help if the scheme or issuer is not managing its finances properly, or if it does not meet the requirements for registration under sections 127 to 132.

The FMA can only ask for help if the supervisor has not already done so, or if it is an emergency and the supervisor cannot be waited for. The FMA can also ask for help if there is no supervisor. You might be wondering what happens if the scheme's governing document is not good enough to protect the people who hold the products - the supervisor or FMA can ask for help in this situation too.

If you are a product holder, the supervisor or FMA can ask the court for an order under section 208 to fix problems with the scheme or issuer, such as a significant risk that your interests will be harmed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091227.

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206: FMA's directions to supervisor (or issuer), or

"The Financial Markets Authority gives orders to supervisors or companies to follow certain rules."

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208: Court orders to remedy problems, or

"Courts can fix financial product problems by making special orders to help people like you."

Part 4Governance of financial products
Intervention in debt securities offered under regulated offer or registered schemes: Powers to obtain court orders to intervene

207Power of supervisor or FMA to apply for order to remedy problems

  1. A supervisor of a debt security or a registered scheme, or the FMA, may apply for an order under section 208 if it is satisfied that—

  2. the issuer and any guarantor of the financial products are unlikely to be able to pay all money owing in respect of the financial products when it becomes due; or
    1. the issuer is insolvent; or
      1. in the case of a registered scheme, the scheme is insolvent; or
        1. the financial position of the scheme or issuer or the security of benefits or the management of the scheme or issuer is otherwise inadequate; or
          1. in the case of a registered scheme, the scheme does not meet the registration requirements, or the requirements for registration as a particular type of scheme, that apply to it under sections 127 to 132; or
            1. there is a significant risk that the interests of product holders will be materially prejudiced for any other reason; or
              1. the provisions of a governing document are no longer adequate to give proper protection to product holders.

                1. However, the FMA may apply for the order only if it is satisfied that—

                2. the supervisor has had a reasonable opportunity to apply for the order but has not done so; or
                  1. it is necessary as a matter of urgency for the FMA to do so and it is not reasonably practicable to wait for the supervisor to do so; or
                    1. there is no supervisor.

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