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Financial Markets Conduct Act 2013

Dealing in financial products on markets - Licensing of markets for trading financial products - Control limits on licensed market operators

344: Power to impose control limits on licensed market operators

You could also call this:

"Rules to stop one person controlling too much of a financial company"

Illustration for Financial Markets Conduct Act 2013

The Governor-General can make rules to limit how much control one person can have over a company that operates in the financial markets. You need to understand that this limit is on the percentage of voting rights in the company that one person can hold. The company must be, or might become, a licensed market operator, or be a parent company of one.

The Minister must talk to the company and think it is in the public's best interest before recommending these rules. A control limit is when someone has direct or indirect control over the right to vote at company meetings. The Minister's recommendation is used to make these rules, which are called regulations, and they do not apply to a company before it gets its licence.

Regulations under this section are secondary legislation, (see Part 3 of the Legislation Act 2019 for publication requirements). The rules can be changed or removed, and they only apply after the company gets its licence. You can find more information about how these regulations are published by looking at the Legislation Act 2019.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091501.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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343: Minister may vary, suspend, or cancel licence, or

"The Minister can change, stop, or cancel a licence if rules are not followed."

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345: Control limit not to be exceeded, or

"Don't own or control more of a company than the rules allow"

Part 5Dealing in financial products on markets
Licensing of markets for trading financial products: Control limits on licensed market operators

344Power to impose control limits on licensed market operators

  1. The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations imposing, altering, or revoking a control limit (which is the highest percentage of voting rights in the body corporate that may be held or controlled by any person) for a body corporate that—

  2. is, or may be, a licensed market operator; or
    1. is a holding company of a body corporate referred to in paragraph (a).

      1. A control limit does not apply to a body corporate before its licence as a licensed market operator takes effect.

      2. The Minister must not make a recommendation for the purposes of subsection (1) unless he or she has consulted the body corporate and is satisfied that it is in the public interest to make the recommendation.

      3. For the purposes of this section and the rest of this subpart,—

        control, in relation to a voting right, means having, directly or indirectly, effective control of the voting right

          voting right means a currently exercisable right to cast a vote at meetings of members or shareholders of a body corporate, not being a right to vote that is exercisable only in 1 or more of the following circumstances:

          1. during a period in which a payment or distribution (or part of a payment or distribution) in respect of the financial product that confers the voting right is in arrears or some other default exists:
            1. on a proposal that affects rights attached to the financial product that confers the voting right:
              1. during the liquidation of the body corporate:
                1. in respect of a special, immaterial, or remote matter that is inconsequential to control of the body corporate.

                2. Regulations under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

                Compare
                Notes
                • Section 344(5): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).