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Financial Markets Conduct Act 2013

Enforcement, liability, and appeals - Banning orders

517: When court may make banning orders

You could also call this:

"When can a court stop you from working in finance if you've done something wrong?"

Illustration for Financial Markets Conduct Act 2013

The court can make a banning order against you if you have done something wrong under the Financial Markets Conduct Act 2013. You might have been fined or convicted of an offence under this Act or other Acts referred to in the Financial Markets Authority Act 2011. The court can also make a banning order if you have been a director of a company and that company has done something wrong.

If you are a director of a company, the court can make a banning order against you if the company has persistently broken the law. This includes laws referred to in Part 1 or Part 2 of Schedule 1 of the Financial Markets Authority Act 2011. You might also get a banning order if you have been convicted of a crime involving dishonesty as defined in the Crimes Act 1961.

The court can make a banning order against you if you have been prohibited from doing certain activities in another country. This can happen if those activities are similar to the ones mentioned in section 518 and you broke the law related to financial products or services. A banning order can be applied for by an entitled person, which includes the FMA, a company you are a director of, or a person who has invested in or lent money to that company.

An entitled person can apply for a banning order at any time, even if you are already in court for something else. The application can be made during any civil or criminal proceedings or at any other time. When the court talks about laws referred to in Schedule 1 of the Financial Markets Authority Act 2011, it includes any regulations made under those laws.

In this context, a director is someone who is in charge of a company, and this can include people who are not officially directors but still make decisions for the company. This can include someone who tells the official directors what to do, or someone who has a lot of control over the company's decisions. It can also include someone who has been given power or duties by the official directors.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091748.

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Part 8Enforcement, liability, and appeals
Banning orders

517When court may make banning orders

  1. The court may, on application by an entitled person, make a banning order against a person (A) if—

  2. a pecuniary penalty order has been made against A under this Act; or
    1. A has been convicted of an offence under any Act referred to in Part 1 of Schedule 1 of the Financial Markets Authority Act 2011; or
      1. A has been convicted of an offence under any Act referred to in Part 2 of Schedule 1 of the Financial Markets Authority Act 2011 (where A is, or has been, a financial markets participant); or
        1. A has, while a director of an entity,—
          1. persistently contravened, or been involved in the contravention of, any Act specified in Part 1 of Schedule 1 of the Financial Markets Authority Act 2011; or
            1. persistently contravened, or been involved in the contravention of, any Act specified in Part 2 of Schedule 1 of the Financial Markets Authority Act 2011 (where A is, or has been, a financial markets participant); or
              1. if the entity has persistently contravened any of the Acts referred to in subparagraph (i) or (ii), persistently failed to take all reasonable steps to obtain compliance with those Acts; or
              2. A has been convicted of a crime involving dishonesty as defined in section 2(1) of the Crimes Act 1961 (where A is, or has been, a financial markets participant); or
                1. A has been prohibited in an overseas jurisdiction from carrying on activities that the court is satisfied are substantially similar to any of the activities referred to in section 518 in connection with a contravention of any law relating to the offering or trading of financial products or the supply of financial services.

                  1. Subsection (1)(d)(iii) applies in respect of the Acts specified in Part 2 of Schedule 1 of the Financial Markets Authority Act 2011 only if the entity is, or has been, a financial markets participant.

                  2. An entitled person is—

                  3. the FMA:
                    1. an entity that—
                      1. A is a director of at the time of the application; or
                        1. A was a director of at the time of the ground that triggers the making of the order under subsection (1):
                        2. the liquidator of an entity referred to in paragraph (b):
                          1. a person who is, or has been, a product holder or creditor of an entity referred to in paragraph (b).

                            1. An application under this section may be made in the course of any civil or criminal proceedings or at any other time.

                            2. In this section, a reference to any Act referred to in Schedule 1 of the Financial Markets Authority Act 2011 includes a reference to any regulations made under any of those Acts.

                            3. In this subpart, director—

                            4. has the same meaning as in section 6(1); and
                              1. includes, in relation to an entity,—
                                1. a person in accordance with whose directions or instructions a person referred to in paragraph (a) may be required or is accustomed to act; and
                                  1. a person in accordance with whose directions or instructions the board or other governing body of the entity may be required or is accustomed to act; and
                                    1. a person who exercises or who is entitled to exercise or who controls or is entitled to control the exercise of powers that, apart from the constitution of the entity, would fall to be exercised by the board or other governing body of the entity; and
                                      1. a person to whom a power or duty of the board or governing body of the entity has been directly delegated by the board or governing body with that person's consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the board or governing body.

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