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Financial Markets Conduct Act 2013

Governance of financial products - Civil liability for certain contraventions of this Part

228: Part 4 governance provisions

You could also call this:

"Rules for managing money and investments"

Illustration for Financial Markets Conduct Act 2013

If you break certain rules about managing financial products, you might have to pay a penalty. You can find out more about this 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 people manage investments and debts. These rules include things like having a governing document and a supervisor for debt securities, as outlined in section 103. You also need to register a managed investment scheme, as stated in section 125.

If you break other rules, you might have to pay a penalty of up to $200,000 for an individual or $600,000 for others. These rules are about things like changing trust deeds, as mentioned in section 108(2), and duties of supervisors and managers. You can find out more about this in subpart 3 of Part 8.

There are many other rules that managers and supervisors must follow. These include rules about reporting and providing information, as outlined in various sections such as sections 112 and 113. You must also follow rules about meetings and voting, as stated in sections 120, 121, 161, and 162.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091278.

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Part 4Governance of financial products
Civil liability for certain contraventions of this Part

228Part 4 governance provisions

  1. All of the provisions specified in subsections (3) and (4) are Part 4 governance 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 103 (need for governing document and supervisor for regulated offer of debt security):
    1. section 125 (need to register managed investment scheme for regulated offer of managed investment product):
      1. sections 156 to 158 (requirements relating to custodianship of scheme property):
        1. section 185(4) (manager and delegate must desist from all activities relating to scheme on removal).

          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 108(2) (changes to trust deed):
            1. sections 112 and 113 (duties applying to supervisor of debt security):
              1. sections 114 to 118 and 119(2) (duties on issuer to provide various reports, information, and assistance):
                1. sections 120, 121, 161, and 162 (meetings of product holders):
                  1. section 133 (manager must ensure that ongoing registration requirements are complied with):
                    1. section 134(5)(b) (manager must notify scheme participants of direction):
                      1. section 139(2) (changes to governing document):
                        1. sections 143 to 146 (duties applying to manager, investment manager, and directors and senior managers of manager):
                          1. sections 147 to 151 and 155(2) (duties on issuer to provide various reports, information, and assistance):
                            1. sections 153 and 154 (duties applying to supervisor of registered scheme):
                              1. section 159 (custodian must report on scheme property):
                                1. section 160 (duty of supervisor to refuse to act on wrongful directions):
                                  1. section 163(1) (manager and associated persons cannot vote if interested in resolution):
                                    1. sections 164 and 165 (requirements relating to statement of investment policy and objectives):
                                      1. sections 167 to 169 (actions that must be taken on limit breaks, pricing errors, and other non-compliances, and requirements for actuarial examinations):
                                        1. section 171 (limits on reversion of scheme property in certain schemes to non-scheme participant contributor):
                                          1. section 173 (general prohibition on related party transactions):
                                            1. section 176 (additional restrictions on acquisitions by restricted schemes of in-house assets):
                                              1. sections 179, 180, 181(4), and 182 (scheme participant transfer rules):
                                                1. section 190 (former manager must hand over records and give reasonable assistance):
                                                  1. section 195(3)(b) (manager must notify scheme participants of direction):
                                                    1. sections 198 to 200, and 202 to 204 (duties to report problems):
                                                      1. section 206(2) (FMA’s directions to supervisor):
                                                        1. section 219 (auditor must advise if auditor considers that subpart is not being complied with):
                                                          1. section 225 (restriction on use of information in registers).

                                                            Notes
                                                            • Section 228(4)(wa): inserted, on , by section 65 of the Regulatory Systems (Commercial Matters) Amendment Act 2017 (2017 No 12).