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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

346: Effect of exceeding control limit

You could also call this:

"What happens if you break the rules about controlling a company"

Illustration for Financial Markets Conduct Act 2013

If you break the rules in section 345, you must fix the problem within 60 working days. You have to make sure you are no longer breaking the rules after this time. You must follow the link to section 345 to understand what the rules are.

If you are breaking the rules, you cannot use your voting rights in a way that exceeds the control limit. This means you cannot control or exercise voting rights that are more than the allowed limit. Any votes you try to cast in this situation will not count.

However, if the body corporate did not know you were breaking the rules when they counted the votes, the decision will still stand. This is only the case if they counted the votes in good faith, without knowing about the problem. You can compare this to a similar law from 1988, which is available at s 36U.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091507.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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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"

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

346Effect of exceeding control limit

  1. Every person who contravenes section 345—

  2. must take the steps that are necessary to ensure that the person is no longer in contravention of that section at the end of 60 working days after the date of first contravention; and
    1. must not exercise or control the exercise of any voting rights that exceed the control limit while the person contravenes that section.

      1. An exercise of voting rights in a body corporate by or under the control of a person in contravention of subsection (1)(b) is of no effect, and must be disregarded in counting the votes concerned.

      2. However, subsections (1)(b) and (2) do not invalidate a resolution if the votes concerned were counted by the body corporate in good faith and without knowledge that the voting rights were exercised in contravention of subsection (1)(b).

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