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Financial Markets Conduct Act 2013

Enforcement, liability, and appeals - Indemnities or insurance for directors, employees, and auditors of issuers, offerors, and licensees

526: Prohibition on indemnities or insurance for directors or employees of issuers, offerors, or licensees that are not New Zealand companies

You could also call this:

"No protection for non-NZ company staff who break financial market rules"

Illustration for Financial Markets Conduct Act 2013

If you are a director or employee of a company that is not a New Zealand company, there are rules about what happens if you do something wrong. You cannot be protected from the consequences of your actions by the company you work for, if those actions are related to financial markets and you have done something wrong, like broken the law or been careless. This means the company you work for cannot pay for your legal costs or any fines you might get, and it also cannot pay for insurance to cover you in these situations, except in certain circumstances described in the Companies Act 1993, which has its own rules about this. If a company tries to protect you in this way, it will not be allowed, and the protection will be considered void. This rule does not apply to New Zealand companies, as they have their own rules, and you can find more information about this in section 162 of the Companies Act 1993. You should also know that this rule is connected to other rules, like sections 527 and 528, which have more details about how this works.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091772.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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525: Relationship with other law, or

"This law works together with other laws and doesn't change what courts can already do."

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527: Permitted indemnities for certain liabilities or costs, or

"When a company can help pay court costs for its directors and employees"

Part 8Enforcement, liability, and appeals
Indemnities or insurance for directors, employees, and auditors of issuers, offerors, and licensees

526Prohibition on indemnities or insurance for directors or employees of issuers, offerors, or licensees that are not New Zealand companies

  1. A specified person, or a related body corporate, must not indemnify, or directly or indirectly effect insurance for, a director or an employee of the specified person in respect of—

  2. liability, in connection with conduct regulated by the financial markets legislation, for any contravention, involvement in a contravention, negligence, breach of duty, or breach of trust in his or her capacity as a director or an employee; or
    1. costs incurred by that director or employee in defending or settling any claim or proceeding relating to that liability.

      1. An indemnity given in breach of this section is void.

      2. This section does not apply to a specified person or related body corporate that is a company within the meaning of section 2(1) of the Companies Act 1993 (see section 162 of the Companies Act 1993, which provides for limitations on indemnities and insurance).

      3. This section is subject to sections 527 and 528.

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