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Acts
Financial Markets Conduct Act 2013
Licensing and other regulation of market services
Regulating conduct of financial institutions
Miscellaneous provisions
446O: Pecuniary penalty order may not be made if failure relates only to certain legal obligations

Part 1:
Preliminary provisions

Purposes

Overview

Part 2:
Fair dealing

17Overview 18Interpretation in this Part

Misleading or deceptive conduct, false or misleading representations, and unsubstantiated representations

19Misleading or deceptive conduct generally 20Misleading conduct in relation to financial products 21Misleading conduct in relation to financial services 22False or misleading representations 23Unsubstantiated representations 24Court must have regard to certain matters 25Limitation on commencement of proceedings in relation to unsubstantiated representations 26Section 23 does not apply to representations in PDSs, register entries, or other disclosure documents 27Section 23 subject to other enactments 28Certain conduct does not contravene various provisions 29Limited application of provisions in relation to newspapers, magazines, broadcasting, etc 30Defence for publisher 31Licensed market operator does not contravene by notifying disclosures 32Other exceptions 33Territorial scope of sections 19 to 23

Offers in course of unsolicited meetings

34Prohibition of offers in course of unsolicited meetings with persons acting otherwise than in trade 35Right to withdraw 36Offeror obligations if notice of withdrawal given 37Director not liable if no misconduct or negligence

Civil liability

38Civil liability for certain contraventions of this Part

Part 3:
Disclosure of offers of financial products

Application

39Issue offers that need disclosure 40Sale offers that need disclosure 41Meaning of regulated offer and of regulated product 42Regulated offers that need to meet additional governance requirements 43Options over financial products 44Treatment of offers of convertible financial products 45Treatment of offers of renewals and variations 46Offers of financial products involving customised terms 47Territorial scope of Part

Procedure for making regulated offers

Product disclosure statement must be prepared and lodged

48PDS must be prepared and lodged 49Purpose of PDS

Disclosure to investors

50PDS must be given if offer requires disclosure 51Certain situations in which section 50 does not need to be complied with 52PDS treated as having been given if application form used was included in, or accompanied by, PDS 53Offence to knowingly or recklessly contravene section 50 54Right to withdraw 55Offeror obligations if notice of withdrawal given 56Director not liable if no misconduct or negligence

Content and presentation of product disclosure statements and register entries

57Disclosure of material information and content of PDS and register entry 58Register entry not required in prescribed circumstances 59Meaning of material information in this Part 60Consent of experts and persons who make endorsements 61PDS must be worded and presented in clear, concise, and effective manner 62PDS must comply with prescribed requirements relating to form and presentation

Other provisions relating to lodging of PDS and other documents

63Supply of prescribed information 64Registrar must notify FMA of lodgement of PDS 65Waiting period after lodgement before processing applications for financial products 66FMA may extend period 67Waiting period restriction does not prevent offeror from acting under another PDS 68FMA may remove restrictions if its consideration complete or consideration or further consideration unnecessary 69Waiting period does not usually apply to continuous issue PDSs 70No guarantee or representation as to compliance 71When supplementary document or replacement PDS may be lodged 72Supplementary document 73Replacement PDS 74Registrar must notify FMA of lodgement of supplementary document or replacement PDS 75Publication of lodgement

Amending register entry

76When register entry may be amended

Conditions referred to in PDS

77Minimum number or amount condition must be fulfilled before issue or transfer 78Issue or transfer void if quotation condition not fulfilled

Dealing with applications where condition referred to in PDS not met or disclosure defective

79Application of section 80 80Choices open to offeror 81Director not liable if no misconduct or negligence

Prohibition of offers where defective disclosure in PDS or register entry

82False or misleading statements, omissions, and new matters requiring disclosure 83Persons who must inform offeror about disclosure deficiencies

Expiry

84Expiry 85How offeror must deal with applications on expiry 86Director not liable if no misconduct or negligence

Money for financial products must be held in trust

87Money for financial products must be held in trust

Offering financial products in entity that does not exist

88Offering financial products of entity that does not exist

Advertising

89Advertising for regulated offers 90Distribution of PDS or registered documents 91Advertising before PDS lodged 92Advertising after PDS lodged 93Documents to which subpart does not apply 94Defence for publishers

Ongoing disclosure and updating of registers

Duty to update register of offers of financial products and register of managed investment schemes

95Duty to notify changes to Registrar

Disclosure to particular persons

96Information to be made available to investors, FMA, Registrar, or other prescribed persons

Public disclosure

97Information to be made publicly available 98Issuer must provide information to Registrar

Defective ongoing disclosure

99Defective ongoing disclosure

Confirmation

100Issuer or offeror must provide confirmation

Civil liability for certain contraventions of this Part

101Part 3 offer provisions

Part 4:
Governance of financial products

102Overview

Governance of debt securities

103Need for governing document and supervisor for regulated offer of debt security

Governing document requirements

104Contents of trust deed for debt securities 105Limits on permitted exemptions and indemnities 106Trust deed must be legally enforceable 107Effect of trust deed 108Changes to trust deed 109Power to make FMA-approved changes to trust deeds 110Lodging of changes to trust deed

Application of Trusts Act 2019

110AApplication of Trusts Act 2019

Role of supervisor

111Functions of supervisor 112General duties applying in exercise of supervisor's functions 113Duty of supervisor to comply with professional standard of care 114Duty of issuer to provide reports to supervisor 115Duty of issuer to provide requested information and reports to supervisor 116Issuer must report contravention or possible contravention of issuer obligations 117Restriction on use of reports on contraventions 118Duty of issuer to report serious financial problems 119Power of supervisor to engage expert

Meetings of product holders

120Meetings of product holders 121Supervisor's attendance at meetings of product holders and power to appoint chair

Change of supervisor

122Change of supervisor 123Lodging of notice of change of supervisor

Governance of managed investment products

124Overview

Need to register

125Need to register managed investment scheme for regulated offer of managed investment product

Registration

126Application for registration 127Initial and ongoing registration requirements for all managed investment schemes 128Additional initial and ongoing registration requirements for KiwiSaver schemes 129Additional initial and ongoing registration requirements for superannuation schemes 130Additional initial and ongoing registration requirements for workplace savings schemes 131Additional ongoing registration requirements for restricted schemes 132Additional prescribed registration requirements for other particular prescribed types of schemes 133Manager must ensure that ongoing registration requirements are complied with 134Changes to registration as particular type of registered scheme

Governing document requirements

135Contents of governing document for registered scheme 136Limits on permitted exemptions and indemnities 137Governing document must be legally enforceable 138Effect of governing document 139Changes to governing document 140Power to make FMA and court-approved changes to governing documents 141Lodging of changes to governing document

Role of manager

142Management and administration functions of manager 143General duties applying in exercise of manager's functions 144Duty of manager and investment manager to comply with relevant professional standard of care 145Duties of directors and senior managers of manager 146Contracting out of management functions 147Duty of manager to provide reports to supervisor or FMA 148Duty of manager to provide requested information and reports to supervisor 149Duty of manager to report contravention or possible contravention of issuer obligations 150Restriction on use of reports on contraventions 151Duty of manager to report serious financial problems

Role of supervisor

152Functions of supervisor 153General duties applying in exercise of supervisor's functions 154Duty of supervisor to comply with professional standard of care 155Power of supervisor to engage expert

Application of Trusts Act 2019

155AApplication of Trusts Act 2019

Custodianship of scheme property

156Requirement to have supervisor or other independent person as custodian 157Custodian holds scheme property on trust 158Custodian must keep records of scheme property 159Custodian must report on scheme property 160Duty of supervisor to refuse to act on wrongful directions

Meetings of scheme participants

161Meetings of scheme participants 162Supervisor's attendance at meetings of scheme participants and power to appoint chair 163Manager and associated persons cannot vote if interested in resolution

Management of scheme

164Requirement for statement of investment policy and objectives 165Changes to statement of investment policy and objectives 166Lodging of statement of investment policy and objectives and changes to statement 167Action that must be taken on limit breaks 168Action that must be taken on pricing errors and failure to comply with pricing methodologies 169Actuarial examination of defined benefit scheme or life benefit scheme 170Power of manager to adjust financial benefits to comply with portfolio investment entity rules 171Limits on reversion of scheme property in certain schemes to non-scheme participant contributor

Related party transactions

172Definition of related party benefit 173General prohibition on transactions giving related party benefits 174Certain related party benefits permitted 175Requirements for certificates as to related party benefits 176Additional restrictions on acquisitions by restricted schemes of in-house assets 177General duties not affected

Scheme participant transfer rules for KiwiSaver, superannuation, and workplace savings schemes

178Application of scheme participant transfer rules 179Methods of transfer of scheme participants to another scheme or another section of scheme 180Transfer of substantial numbers of scheme participants with scheme participant consent 181Transfer with FMA consent 182Transfers from KiwiSaver scheme

Provisions as to deferred benefits for superannuation schemes and workplace savings schemes

183Deferred benefits

Change of manager

184Application of sections 185 to 192 185Removal of manager of registered scheme 186Supervisor or FMA may make temporary appointment 187Term, powers, and duties of temporary manager 188FMA's costs must be reimbursed from scheme 189Supervisor or FMA must take reasonable steps to arrange for new appointment 190Former manager must hand over records and give reasonable assistance 191Statutory novation of rights, obligations, and liabilities of former manager 192Lodging of notice of changes to manager

Change of supervisor

193Change of supervisor 194Lodging of notice of change of supervisor

Cancellation of registration

195Cancellation of registration 196Registrar must remove scheme from register on cancellation of registration

Intervention in debt securities offered under regulated offer or registered schemes

Provisions assisting supervisor or FMA to intervene

197Application 198Duty of auditor to report to supervisor or FMA 199Duty of auditor, investment manager, administration manager, custodian, or actuary to report serious problems 200What person must do if duty to report serious problem applies 201Protections extend to volunteers of supporting information for other protected disclosures 202FMA may require supervisor to attest as to issuer's compliance with issuer obligations 203Duty of supervisor to report contravention or possible contravention of issuer obligations to FMA 204Duty of supervisor to report serious financial problems to FMA 205FMA's powers of direction 206FMA's directions to supervisor (or issuer)

Powers to obtain court orders to intervene

207Power of supervisor or FMA to apply for order to remedy problems 208Court orders to remedy problems 209Power of court to appoint new manager, provide for manager powers, and deal with changes of managers 210Power of court to direct supervisor 211Court power to order winding up of scheme 212Initial steps in winding up of registered scheme 213Winding-up report

Miscellaneous

214Protection for persons in respect of disclosure under this subpart or subpart 4

Registers and keeping copies of documents

Registers

215Issuers must keep registers of regulated products 216Manner of keeping registers 217Contents of registers 218Audit or review of registers 219Auditor must advise if auditor considers that subpart is not being complied with 220Issuer must notify Registrar of registers 221Public inspection of register 222Manner of inspection 223Copies of documents 224Reasons for request must be given and FMA may authorise non-compliance 225Restriction on use of information in registers 226Certain provisions prevail over Companies Act 1993

Copies of documents to be retained

227Copies of documents must be retained for 7 years

Civil liability for certain contraventions of this Part

228Part 4 governance provisions

Part 5:
Dealing in financial products on markets

Purposes, overview, and interpretation

229Additional purposes of Part 230Overview

Material information and generally available to the market

231Meaning of material information 232Meaning of generally available to the market

Certain derivatives treated as being quoted financial products of listed issuer

233Certain derivatives treated as being quoted financial products of listed issuer

Insider conduct

234Meaning of information insider, inside information, and adviser

Relevant interests

235Relevant interests in financial products (basic rule)236Extension of basic rule to powers or controls exercisable through trust, agreement, etc 237Extension of basic rule to interests held by other persons under control or acting jointly 238Situations not giving rise to relevant interests

Territorial scope

239Territorial scope

Insider trading

Insider conduct prohibited

240Prohibition on insider conduct 241Information insider must not trade 242Information insider must not disclose inside information 243Information insider must not advise or encourage trading 244Criminal liability for insider conduct

When prohibition on insider conduct does not apply

245Exception for trading required by enactment or rule of law 246Exception for disclosure required by enactment or rule of law or by FMA 247Exception for disclosure in connection with preparing PDS or limited disclosure document 248Exceptions in respect of underwriting agreements 249Exceptions in case of knowledge of person's own intentions or activities 250Exceptions in case of knowledge in relation to derivatives 251Exception for agent executing trading instruction only 252Exceptions from section 241 for takeovers 253Exceptions from sections 242 and 243 for takeovers 254Exceptions for schemes of arrangement approved under Companies Act 1993 255Exception for redemption of managed investment products 256Exception for Reserve Bank

Defences

257Absence of knowledge of trading 258Inside information obtained by independent research and analysis 259Equal information 260Options and trading plans 261Chinese wall defence

Market manipulation

262False or misleading statement or information 263Exception for takeovers 264Criminal liability for false or misleading statement or information 265False or misleading appearance of trading 266Exception for short selling and crossings 267Persons treated as contravening false or misleading appearance of trading prohibition 268Defence 269Criminal liability for false or misleading appearance of trading

Continuous disclosure

270Listed issuers must disclose in accordance with listing rules if continuous disclosure listing rules apply 271What are continuous disclosure provisions 272No contravention of continuous disclosure provisions by person who takes reasonable steps to ensure listed issuer complies

Disclosure of interests of substantial product holders in listed issuers

Substantial holding disclosure obligations

273Purposes of subpart 274Meaning of substantial product holder, substantial holding, and percentage 275Person may be treated as holding financial products where person has relevant interest in certain derivatives 276Persons must disclose if begin to have substantial holding 277Substantial product holders must disclose if subsequent movement of 1% or more in holdings 278Substantial product holders must disclose if subsequent changes in nature of relevant interests 279Persons must disclose if cease to have substantial holding 280What disclosure required 281Form and method of disclosure 282Listed issuer must give acknowledgement of disclosure 283How to ascertain total financial products in class for purposes of disclosure

Exemptions

284Exemption for persons with interest in other substantial product holders who comply 285Exemption for corporate trustees and nominee companies 286Conditions of exemption for corporate trustees and nominee companies 287Exemption for persons under control or acting jointly with corporate trustees and nominee companies 288Extended time for disclosure for trustees, executors, and administrators

Tracing and disclosure of interests in listed issuers

289FMA may require persons to disclose to market relevant interests and powers to acquire relevant interests 290Listed issuer may require registered holder or relevant interest holder to disclose relevant interests to it 291Listed issuer may require person who has relevant interest to disclose information to it 292Form and method of notice requiring disclosure 293Listed issuers must make available information on substantial holdings 294No liability for publication of substantial holdings 295Notice under this subpart not to affect incorporation of listed issuer or constitute notice of trust

Disclosure of relevant interests in quoted financial products by directors and senior managers of listed issuers

296Purposes of subpart 297Directors and senior managers of listed issuers must disclose relevant interests and dealings in relevant interests 298Disclosure of relevant interests and dealings in relevant interests in relation to specified derivatives 299What disclosure required 300Form and method of disclosure 301Disclosure obligation applies for 6 months after ceasing to hold office 302Exemption for directors or senior managers who disclose substantial holdings 303Exemption for overseas listed issuers 303AExtended time for disclosure for trustees, executors, and administrators 304Listed issuer must keep interests register 305Public inspection of interests register 306Copies of documents 307Offences relating to interests register

Licensing of markets for trading financial products

308Principles guiding exercise of powers under this subpart

Need for financial product market licence

309What is a financial product market 310Need for financial product market licence 311Prohibitions on holding out 312Exemptions 313When financial product market taken to be operated in New Zealand

General obligations of licensed market operator

314General obligations in respect of licensed markets

Issue of licence

315Application for licence 316When licence may be issued 317When licence may be issued for overseas-regulated market 318Conditions of licence 319Procedural requirements 320Licence may cover more than 1 financial product market 321FMA must maintain list of licensed markets on Internet site

Changes to licences

322Variation of conditions 323Minister may suspend or cancel licence 324Procedure for varying of conditions or suspension or cancellation of licence 325Effect of suspension 326Variation or revocation of suspension

Approval of contractual market rules

327Licensed markets must be operated under market rules that comply with this subpart 328Required matters for market rules 329When market rules have effect 330Approval process for proposed market rules and rule changes 331Approval of proposed market rules and changes 332Notice of decision on rules 333Power of FMA to request changes to market rules on certain matters 334Overseas-regulated markets must give notice of market rules and rule changes to FMA 335Market rules must be available for public inspection 336Application of Acts relating to regulations to contractual market rules

Monitoring of market operator obligations

337Licensed market operator must give report on compliance with market operator obligations to FMA 338FMA to carry out market operator obligations reviews 339FMA must make written report on market operator obligations review 340FMA may require licensed market operator to submit action plan on failure to meet market operator obligations 341Approval, amendment, or rejection of action plan 342Minister may give market operator obligations direction to licensed market operator 343Minister may vary, suspend, or cancel licence

Control limits on licensed market operators

344Power to impose control limits on licensed market operators 345Control limit not to be exceeded 346Effect of exceeding control limit 347Application for approval to exceed control limit 348Revocation or amendment of approval

Other provisions relating to licensing of financial product markets

349FMA may give advice to Minister 350Delegation of Minister's licensing functions and powers to FMA 351Regulations modifying this Part or Part 7 or 7A for licensed markets

Operation of licensed markets

352Licensed market operator must notify FMA of disciplinary actions and suspected contraventions 353When notification required 354Details and method of notification 355Licensed market operator must ensure FMA has access to real-time trading and other information 356Waiver of notification and disclosure obligations 357Licensed market operator must give FMA or Takeovers Panel other information and assistance on request 358Power to disclose further information 359Licensed market operator must give notice and have regard to submissions on continuous disclosure determinations 360Limited notice and submissions for urgent determinations 361FMA may give directions to licensed market operators 362Grounds for continuous disclosure direction 363Grounds for other directions 364Notice, opportunity for licensed market operator to act, and submissions before FMA gives directions 365Limited notice and submissions for urgent continuous disclosure directions 366Notice and opportunity to be heard and represented after FMA gives direction 367Effect of directions to licensed market operator 368Provisions as to directions 369Contracting out of or modification of continuous disclosure process requirements 370Offence for failing to comply with direction

Transfer of transferable financial products

371Financial products to which this subpart applies

Transfer of specified financial products using transfers in prescribed form or containing prescribed information

372Transfer of specified financial products by products transfer 373Transfer of specified financial products by products transfer and brokers transfer 374Products transfer does not need to be witnessed 375Transfers to be instruments of transfer for purposes of other enactments and instruments

Transfer of specified financial products by electronic means

376Approval of electronic transfer system 377Specified financial products may be transferred under approved system 378Minor technical modifications to system

Registration may not be refused

379Registration may not be refused on ground that financial products have been transferred under this subpart 380Effect of this Act on other enactments

Unsolicited offers to purchase financial products off-market

381Definitions relating to unsolicited offer regulations and related provisions 382Regulations concerning unsolicited offers 383Specific provisions for regulations concerning unsolicited offers 384Protection from liability in connection with unsolicited offer provisions

Civil liability for certain contraventions of this Part

385Part 5 market provisions

Part 6:
Licensing and other regulation of market services

386Overview 387Territorial scope for licensing and other regulation of certain market services 387AOther provisions relating to financial advice services and client money or property services

Key provisions

388When provider of market services needs to be licensed 389Exemptions from need for market services licence 390When providers of other market services may be licensed 391Prohibitions on holding out 392Meaning of discretionary investment management service and related terms

Issue of licences, conditions, and duration

393Principles guiding the exercise of FMA powers

Issue of licences

394FMA may issue licence 395Application for licence 396When licence must be issued 397Procedural requirements 398Notice of decision 399Licence must be issued for particular market services 400Licence may cover authorised bodies 401FMA must send licence details to Registrar

Conditions of licence

402Conditions of licence 403When FMA may impose permitted conditions 404Licensee may apply for variation of conditions 405Procedure for variation of conditions 406Consequences of contravening conditions 406AEffect of condition requiring giver of advice or interposed person to be authorised by licence or registered

Expiry, suspension, or cancellation of licences

407Duration of licence 408When FMA may suspend or cancel licence 409Effect of expiry, suspension, or cancellation of licence on appointments 409ARestriction on suspending or cancelling licence to act as financial institution

Monitoring and enforcement of licences

410Meaning of material change of circumstances

Reports

411Licensee must deliver reports to FMA 412Licensee must report certain matters 413Restriction on use of report

FMA's powers in case of contravention of market services licensee obligation, material change, etc

414FMA's powers in case of contravention of market services licensee obligation, material change, etc 415Procedure for exercising powers 416Notice requirements

Action plan

417Action plan 418Approval, amendment, or rejection of action plan 419Consequences of failure to submit action plan, rejection of action plan, or failure to comply with action plan

Directions

420Directions 421Consequences of failure to comply with directions

Disclosure obligations for certain services provided to retail investors

422Application of subpart 423Disclosure must be made to retail investor 424Timing and method of disclosure 425Purpose of disclosure statement 426Disclosure statement 426AFurther prescribed information to be made available 427False or misleading statements and omissions 428Miscellaneous provisions relating to false or misleading statements and omissions

Requirement for certain services to be provided under client agreements

429Application of subpart 430Need for client agreement 431Contents, form, and effect of client agreement

Additional regulation of financial advice and financial advice services

Preliminary matters

431AOverview of financial advice and financial advice services regime 431BAdditional purpose of subpart

Interpretation

431CMeaning of financial advice and regulated financial advice 431DWhen financial advice service is provided 431EMeaning of engaged

Limitations on giving regulated financial advice and holding out

431FLimitation on who can give regulated financial advice to retail clients on behalf of financial advice provider 431GProhibitions on holding out in relation to giving financial advice

Duties on persons giving regulated financial advice

431HLiability for duties 431IDuty to meet standards of competence, knowledge, and skill 431JDuty to ensure client understands nature and scope of advice 431KDuty to give priority to client’s interests 431LDuty to exercise care, diligence, and skill 431MDuty to comply with code of conduct 431NDuty relating to offer that contravenes Act or regulations 431ODuty to make prescribed information available 431PFalse or misleading statements and omissions

Additional duties on financial advice providers and interposed persons that engage others to give advice

431QPersons engaging others to give advice must ensure compliance with duties 431RDuties of persons who engage nominated representatives

Miscellaneous provisions

431SProtection of individual who reports breach 431TNomination of nominated representatives 431ULimitation on pecuniary penalty orders against financial advice providers

Regulation of client money or property services

431VOverview of client money or property services regime

Interpretation

431WMeaning of client money or property service and certain other terms

Disclosure obligations for services for retail clients

431XProvider must make disclosure before receiving client money or client property from retail client 431YFalse or misleading statements and omissions

Conduct obligations

431ZApplication of conduct obligations 431ZAProvider must exercise care, diligence, and skill 431ZBProvider must not receive client money if offer contravenes Act or regulations

Obligations for handling client money and client property

431ZCProvider must pay client money into separate trust account and hold client property on trust 431ZDProvider must account for client money and client property 431ZEProvider must keep records of client money and client property 431ZFProvider must report on client money and client property 431ZGRestrictions on use of client money and client property 431ZHProtection of client money and client property held on trust

Persons acting in course of business of employers or principals

431ZIWho is responsible for obligations

Application of Trusts Act 2019

431ZJApplication of Trusts Act 2019

Additional regulation of discretionary investment management services

432Application of subpart 432AMeaning of discretionary investment management service and related terms

Duties of DIMS licensee

433DIMS licensee's duties 434Duties of directors and senior managers of DIMS licensee 435Duty of DIMS licensee to comply with professional standard of care 436Limits on permitted indemnities 437Requirement for agreed investment authority 438Action that must be taken on limit breaks

Related party transactions

439Definition of related party benefits 440General prohibition on transactions giving related party benefits 441Certain related party benefits permitted 442Requirements for certificates as to related party benefits 443General duties still apply

Broking and custodial service performed as part of discretionary investment management service

444Meaning of investor money and investor property 445Requirements for custodian 446Certain client money or property service obligations under subpart 5B apply

Regulating conduct of financial institutions

446AOverview 446BTerritorial scope of subpart

Fair conduct principle

446CWhat is the fair conduct principle 446DWhen fair conduct principle applies

Key definitions

446EMeaning of financial institution 446FMeaning of relevant service and associated product

Fundamental duties to meet fair conduct principle

446GDuty to establish, implement, and maintain effective fair conduct programme 446HDuty to make information about fair conduct programme publicly available 446IDuty to comply with fair conduct programme 446JMinimum requirements for fair conduct programme

Duties relating to incentives regulations

446KFinancial institution must comply with incentives regulations 446LIntermediary must comply with incentives regulations 446MMeaning of incentive

Miscellaneous provisions

446NFMA must obtain consent of Commerce Commission before commencing certain proceedings 446OPecuniary penalty order may not be made if failure relates only to certain legal obligations 446POther definitions used in subpart 446QMeaning of intermediary 446RProtection of person who reports contravention or failure to comply 446SPresumption relating to consumer insurance contract 446TEffect of certificate from policyholder or client 446URevocation of certification 446VApplication of subpart to Lloyd's underwriters 446WReview of subpart and licensing requirement for financial institutions

Holding and application of investor funds and property by derivatives issuers

447Application of regulations made under this subpart 448Regulations regulating holding and application of investor funds and property by derivatives issuers

Additional regulation of licences relating to financial benchmarks

448AApplication of subpart 448BAdditional purposes for licences relating to financial benchmarks 448CFMA’s powers to direct contributor to provide information or data 448DFMA’s powers to direct administration of financial benchmark 448EDuration of direction 448FFMA must follow steps for giving direction 448GFMA may give interim direction pending exercise of power 448HFMA must give notice after giving interim direction 448IGeneral provisions on FMA’s directions 448JProtection for persons in respect of provision of material, information, or data under this subpart

Miscellaneous provisions

Civil liability

449Part 6 services provisions

Requirements relating to exemption for Lloyd’s underwriters

449ALloyd’s, Lloyd’s underwriter, or Lloyd’s managing agent must comply with term or condition of licensing exemption for Lloyd’s underwriters

Part 7:
Financial reporting

Overview, application, and interpretation

450Overview 451Meaning of FMC reporting entity 452Company that issues equity securities not FMC reporting entity if fewer than 50 shareholders 453Recipients of money from conduit issuers 454Miscellaneous provisions relating to application

Accounting records

455FMC reporting entities must keep proper accounting records 456Place where accounting records to be kept 457Accounting records to be in English 458Period for which accounting records to be kept 459Inspection of accounting records

Preparation, audit, and lodgement of financial statements

Preparation of financial statements

460Financial statements must be prepared 461Group financial statements must be prepared 461AFinancial statements for registered schemes and funds 461BFinancial statements for overseas FMC reporting entity to include financial statements for New Zealand business 461CFailure to comply with authoritative notice does not give rise to pecuniary penalty

Audit of financial statements

461DFinancial statements must be audited 461EMeaning of qualified FMC auditor 461FAudit must be carried out in accordance with auditing and assurance standards 461GAuditor's report

Lodgement of financial statements

461HLodgement of financial statements

Offences

461IOffence to knowingly fail to comply with financial reporting standards

FMC reporting entities with higher level of public accountability

461JExternal Reporting Board must have regard to indication of level of public accountability 461KFMC reporting entities considered to have higher level of public accountability 461LFMA may issue notice relating to level of public accountability

Civil liability for certain contraventions of this Part

461MPart 7 financial reporting provisions

Part 7A:
Climate-related disclosures for certain FMC reporting entities with higher level of public accountability

Overview, application, and interpretation

461NOverview 461OMeaning of climate reporting entity 461PDefinitions relating to listed issuers 461QMeaning of large (in relation to registered banks, licensed insurers, credit unions, and building societies)461RMeaning of large after amalgamation 461SMeaning of large manager 461TApplication if person’s status changes during accounting period 461UMiscellaneous provision relating to application

CRD records

461VClimate reporting entities must keep proper CRD records 461WManner in which CRD records to be kept 461XPeriod for which CRD records to be kept 461YInspection of CRD records

Preparation of climate statements

Climate statements of climate reporting entities

461ZClimate statements must be prepared 461ZAGroup climate statements must be prepared 461ZBClimate statements for overseas climate reporting entities

Climate statements relating to registered schemes

461ZCClimate statements for separate funds of registered schemes, etc 461ZDApplication if manager of registered scheme changes and new manager is not large manager

Miscellaneous

461ZEClimate statements may be combined in single document 461ZFFailure to comply with authoritative notice does not give rise to pecuniary penalty

Offences

461ZGOffence to knowingly fail to comply with climate standards

Assurance engagements

461ZHAssurance engagement required for parts of climate statements relating to greenhouse gas emissions 461ZHAAssurance engagement must be carried out in accordance with auditing and assurance standards 461ZHBAssurance practitioner’s report 461ZHCAssurance engagement may cover other parts of climate statements

Assurance practitioner access to information

461ZHDClimate reporting entity must give assurance practitioner access to information 461ZHEAssurance practitioner may require information and explanations from director or employee

Lodgement of climate statements

461ZILodgement of climate statements 461ZJInformation about climate statements of climate reporting entities to be made available in annual report

Civil liability for certain contraventions of this Part

461ZKPart 7A climate-related disclosure provisions

Part 8:
Enforcement, liability, and appeals

FMA's enforcement powers

Stop orders

462When FMA may make stop orders 463Terms of stop order 464Meaning of restricted communication 465FMA may make interim stop order pending exercise of powers 466Persons to whom stop orders and interim stop orders may apply 467Extended application of subpart

Direction orders

468When FMA may make direction orders 469Terms of direction orders

Order to prohibit use of simplified disclosure PDS

470FMA may order that simplified disclosure PDS may not be used

Order to prohibit offer under recognition regime

471FMA may order that offer may not be made under recognition regime

Unsolicited offer orders

472When FMA may make unsolicited offer orders 473Terms of unsolicited offer orders

Orders that exclusion does not apply

474FMA may order that exclusion for offers of products of same class as quoted products does not apply

Process for FMA's orders

475FMA must follow steps before making orders 476FMA may shorten steps for specified orders 477FMA must give notice after making orders

General provisions

478General provisions on FMA's orders 479Consequences of failing to comply with FMA's orders

High Court's enforcement powers

Injunctions

480Court may grant injunctions 481When court may grant injunctions and interim injunctions 482Undertaking as to damages not required by FMA

Court may make FMA orders under this Part

483Court may make FMA orders under this Part

Civil liability

Overview of civil liability

484Overview of civil liability 485What are civil liability provisions

Declarations of contravention and pecuniary penalty orders

486When court may make declarations of contravention 487Purpose and effect of declarations of contravention 488What declarations of contravention must state 489When court may make pecuniary penalty orders 490Maximum amount of pecuniary penalty 491Guidance for court on how to determine gains made or losses avoided for purposes of maximum amount 492Considerations for court in determining pecuniary penalty 493Court must order that recovery from pecuniary penalty be applied to FMA's actual costs

Compensatory orders

494When court may make compensatory orders 495Terms of compensatory orders 496Person treated as suffering loss or damage in case of defective disclosure

Other civil liability orders

497When court may make other civil liability orders 498Terms of other civil liability orders

Defences for person in contravention of civil liability provisions

499General defences for person in contravention 500Disclosure defences for person in contravention 501Additional disclosure or financial reporting or climate-related disclosure defence for directors who are treated as contravening 501AAdditional defence for licensees who are treated as contravening 502Conduct still contravenes even if defence is available

Defences for person involved in contravention of civil liability provisions

503General defences for person involved in contravention

Miscellaneous provisions relating to defences

504Defendant must identify other person

Interrelationship of civil liability orders

505More than 1 civil liability order may be made for same conduct 506Only 1 pecuniary penalty may be imposed for same conduct 507No pecuniary penalty and fine for same conduct

Limitation defences

508Limitation defences

General

509Rules of civil procedure and civil standard of proof apply to civil liability

Offences relating to defective disclosure and false statements

510Offence of knowingly or recklessly contravening prohibition on offers where defective disclosure in PDS or register entry 511Offence of knowingly or recklessly contravening other provisions relating to defective disclosure 512General offence for false or misleading statements

Infringement offences

513Infringement offences 514Infringement notices 515Procedural requirements for infringement notices 516Payment of infringement fee

Banning orders

517When court may make banning orders 518Terms of banning orders 519Offence of contravening banning order 520Only 1 banning order may be made for same conduct 521General provisions for banning orders

Orders to protect interests of aggrieved persons in case of financial markets investigations or proceedings

522When court may make order to protect interests of aggrieved persons 523What orders may be made 524Interim orders 525Relationship with other law

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 527Permitted indemnities for certain liabilities or costs 528Permitted insurance for certain liability or costs 529Prohibition on indemnity or insurance for auditors of issuers, offerors, or licensees 530Interpretation for this subpart

Appeals

531Appeals against market services licence decisions 532Appeals against other decisions of FMA on questions of law only 532AAppeals against decisions of disciplinary committee 532BOrders as to publication of names 532CAppeal on question of law

Miscellaneous

Accessories and attribution of liability

533Involvement in contraventions 534Directors treated as having contravened in case of defective disclosure, financial reporting contravention, or climate-related disclosure contravention 535State of mind of directors, employees, or agents attributed to body corporate or other principal 536Conduct of directors, employees, or agents attributed to body corporate or other principal

Miscellaneous

537Time for filing charging document for certain offences 538Jurisdiction of courts in New Zealand 539Orders to secure compliance 540General provisions as to court's orders 541Persons entitled to appear before court 542Saving of liability under Crimes Act 1961 and general law

Part 9:
Regulations, transitional provisions, and miscellaneous provisions

Regulations

543Regulations for purposes of Part 3 (Disclosure of offers of financial products)544Regulations for purposes of Part 4 (governance of financial products)545Regulations for purposes of Part 5 (dealing in financial products on markets)546Regulations for purposes of Part 6 (market services)547Transitionals, savings, and orderly implementation of Act and related enactments 548Other regulations 549Minister must consult FMA about regulations 550Procedural requirements for regulations relating to exemptions, exclusions, and definitions 551Miscellaneous provisions relating to exemptions 552Miscellaneous provisions relating to fees and charges 552AValidation of fees used to recover costs of other Companies Office registers, etc 553Miscellaneous provisions relating to implied provisions 554Regulations or exemptions may require compliance with generally accepted accounting practice, standards, frameworks, or FMA methodologies 555Different matters may be prescribed in respect of different circumstances

Exemptions

556FMA may grant exemptions 557Restriction on FMA's exemption power 558Exemption in force for not more than 5 years 559Breach of exemption conditions 560Exemptions in respect of specified overseas jurisdictions 561Effect of exemptions on regulated offers 561AFinancial reporting and climate-related disclosure exemptions

FMA's designation power

562FMA's designation power 563Procedural requirements 564Transitional matters 565FMA may make interim orders pending exercise of powers 566Period in which interim order is in force

Frameworks or methodologies

567Purpose 568FMA may specify frameworks or methodologies 569Consultation

General provisions relating to certain FMA instruments

570Application of subpart 571Status and publication of instruments 571ADeferral of obligations to publish, notify, and make available non-class exemptions 572Variation and revocation

Recognition and application regimes

573Purpose of this subpart 574Definition of country in this subpart

Exemption from Act and regulations for New Zealand offers under recognition regime

575Exemption from Act and regulations for New Zealand offers under recognition regime 576Power to exempt from Act and regulations under recognition regime 577Matters that must be stated in regulations implementing recognition regime 578FMA may declare failure to meet preconditions of recognition regime to be non-material 579Offence for breach of regulations implementing recognition regime

Extension of Act and regulations to overseas offers under application regime

580Extension of Act and regulations to overseas offers under application regime 581Power to extend Act and regulations under application regime 582Matters that must be stated in regulations implementing application regime

Enforcement of overseas pecuniary penalties under application regime

583Purpose of this subpart 584Enforcement of overseas pecuniary penalties under application regime 585Power to enforce overseas penalties under application regime 586Interpretation 587Registration of judgment 588Effect of registration 589Enforceability of registered judgment 590Stay may be granted 591Costs 592Interest 593Rules of private international law not to apply 594Other regulations for registration of judgments under application regime

Miscellaneous provisions

595Registers 596Schedule 3 schemes 597Transitional provisions

Schedule 1:
Provisions relating to when disclosure is required and exclusions for offers and services

Schedule 2:
Registers

Schedule 3:
Schedule 3 schemes

Schedule 4:
Transitional, savings, and related provisions

Schedule 5:
Other provisions relating to financial advice services and client money or property services

Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Regulating conduct of financial institutions - Miscellaneous provisions

446O: Pecuniary penalty order may not be made if failure relates only to certain legal obligations

You could also call this:

"No fine if you break a small rule about certain legal obligations."

Illustration for Financial Markets Conduct Act 2013

If you break a rule, a pecuniary penalty order may not be made against you. This is if the rule you broke is about section 446I and you failed to meet a legal obligation mentioned in section 446J(1)(a). You can read more about these rules in section 446I and section 446J(1)(a).

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This page was last updated on 15 July 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS1428478.

Topics:

Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading

446N: FMA must obtain consent of Commerce Commission before commencing certain proceedings, or

"Before taking action, the FMA must ask the Commerce Commission for permission in certain cases."

446P: Other definitions used in subpart, or

"Special words and their meanings in this part of the law"

Part 6Licensing and other regulation of market services
Regulating conduct of financial institutions: Miscellaneous provisions

446OPecuniary penalty order may not be made if failure relates only to certain legal obligations

A pecuniary penalty order may not be made for a contravention, or involvement in a contravention, of section 446I if the contravention arises only in relation to a failure to meet a legal obligation referred to in section 446J(1)(a).

Notes

Section 446O: inserted, on 31 March 2025, by section 12 of the Financial Markets (Conduct of Institutions) Amendment Act 2022 (2022 No 36).