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Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Additional regulation of discretionary investment management services - Related party transactions

441: Certain related party benefits permitted

You could also call this:

"Getting benefits from family or friends is okay in certain situations"

Illustration for Financial Markets Conduct Act 2013

You can get a benefit from a related party in certain situations. This happens when you get the benefit on terms that are fair and reasonable, like you would if you were not related. You can also get a benefit when you buy or sell a managed investment product in a registered scheme.

You are allowed to make investments in certain bank products, like the ones mentioned in clause 21(a) to (c) of Schedule 1, as long as you do it in the normal course of business. There are also other benefits or transactions that are allowed, but they have to be prescribed. These are the situations where you can get a benefit from a related party without any issues.

When a benefit is given on terms that are less favourable to the person giving it, it is also allowed. This means that if you get a worse deal than you would if you were not related, it is still okay. You just have to make sure that the terms are fair and reasonable, or that it is one of the allowed situations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091648.

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

"No favours: don't make deals that unfairly help people you're connected to, unless it's best for investors."

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

"Rules for certificates about benefits to related parties"

Part 6Licensing and other regulation of market services
Additional regulation of discretionary investment management services: Related party transactions

441Certain 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 DIMS licensee or the associated person of the DIMS licensee than the terms referred to in subparagraph (i):

        2. Transactions in registered schemes

      2. an acquisition or a disposal of a managed investment product in a 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.