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Deposit Takers Act 2023

Consequential amendments

Schedule 2: Deposit takers

You could also call this:

"People or businesses that borrow or lend money in New Zealand"

Illustration for Deposit Takers Act 2023

The Deposit Takers Act 2023 has rules about who is a deposit taker. You are a deposit taker if you carry on business in New Zealand and do things like borrow and lend money. This can include making offers to investors to lend you money or providing credit to people. The Act says what kinds of businesses are included and what kinds are not.

You are carrying on business in New Zealand if you are incorporated here, live here, or are registered to do business here. The Act also explains what it means to receive money from a conduit issuer of debt securities. This is when someone raises money for you through an offer of debt securities.

There are rules about when a person is considered to be ordinarily resident in New Zealand. You are ordinarily resident if you live in New Zealand and this is where you usually stay. The Act also talks about declarations that can be made by the Governor-General. These declarations can say who is a deposit taker and who is not.

The Bank has to follow certain steps before making a recommendation for a declaration. They have to think about whether the declaration is necessary and consult with people who will be affected. The Bank's reasons for making a recommendation have to be published. This is so you can understand why they made their decision.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS490113.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
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Schedule 1: Transitional, savings, and related provisions, or

"Special rules to help the new law work with old laws and rules during a changeover period"

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Schedule 3: Consequential amendments, or

"Changes to other laws because of the Deposit Takers Act 2023"

2Deposit takers Empowered by s 476

1Interpretation

  1. In this schedule,—

    business includes any profession, trade, or undertaking, whether or not carried on with the intention of making a pecuniary profit

      credit has the same meaning as in section 6 of the Credit Contracts and Consumer Finance Act 2003

        credit contract—

        1. has the same meaning as in section 7 of the Credit Contracts and Consumer Finance Act 2003; but
          1. does not include—
            1. a contract under which no interest charges, and no credit fees, as defined in section 5 of that Act, are payable; or
              1. a contract of a class that is declared by Order in Council not to be a credit contract for the purposes of this schedule (see clause 6)

              DT regulated offer—

              1. means a regulated offer within the meaning of section 41 of the FMCA; and
                1. includes an offer of debt securities that would be a regulated offer within the meaning of that section if clause 21 of Schedule 1 of the FMCA were not in force

                  issuer has the same meaning as in section 6(1) of the FMCA

                    offer has the same meaning as in section 6(1) of the FMCA

                      specified overseas entity means a bank or any other entity that—

                      1. is licensed, registered, or otherwise authorised to accept deposits under the law of an overseas jurisdiction; and
                        1. meets the criteria prescribed by the regulations for the purposes of this definition (if any).

                        2. In this schedule, a person is carrying on business in New Zealand if the person is any of the following:

                        3. a body corporate or an association of persons incorporated or formed in New Zealand:
                          1. a person who carries on business while being ordinarily resident in New Zealand:
                            1. an overseas company that is, or is required to be, registered under the Companies Act 1993:
                              1. an association of persons formed outside New Zealand that is carrying on business in New Zealand within the meaning of section 332 of the Companies Act 1993 (applied with all necessary modifications).

                                1. In this schedule, a person is ordinarily resident in New Zealand if that person—

                                2. is domiciled in New Zealand; or
                                  1. is living in New Zealand and the place where that person usually lives is, and has been for the immediately preceding 12 months, in New Zealand, whether or not that person has on occasions been away from New Zealand during that period.

                                    2Meaning of deposit taker

                                    1. In this Act, deposit taker—

                                    2. means a person carrying on business in New Zealand that is any of the following:
                                      1. a person that carries on the business of borrowing and lending money:
                                        1. a specified overseas entity:
                                          1. a person, or a member of a class of persons, that is declared by Order in Council to be a deposit taker for the purposes of this Act (see clause 6); but
                                          2. does not include any of the following:
                                            1. a local authority:
                                              1. the New Zealand Local Government Funding Agency Limited (see section 7 of the Local Government Borrowing Act 2011):
                                                1. the Crown (as defined in the Public Finance Act 1989):
                                                  1. a Crown entity under section 7(1)(a) of the Crown Entities Act 2004:
                                                    1. the Bank or any subsidiary of the Bank:
                                                      1. a person, or a member of a class of persons, that is declared by Order in Council not to be a deposit taker for the purposes of this Act (see clause 6).

                                                      2. A person carries on the business of borrowing and lending money if the person—

                                                        Borrowing

                                                      3. carries on a business that includes doing 1 or more of the following:
                                                        1. making DT regulated offers of debt securities:
                                                          1. making, in New Zealand, offers of any debt securities of a class that is declared by Order in Council to be debt securities for the purposes of this subparagraph:
                                                            1. receiving money from a conduit issuer of debt securities; and

                                                              2. Lending

                                                            2. carries on a business of providing credit under credit contracts.

                                                              1. Subclauses (1)(a)(i) and (2) apply whether or not the business of borrowing and lending money is the person’s only business or the person’s principal business.

                                                              3Receiving money from conduit issuer of debt securities

                                                              1. In this schedule, a person (A) receives money from a conduit issuer of debt securities if—

                                                              2. A is an associated person of another person (the conduit issuer); and
                                                                1. the conduit issuer raises an amount of money under an offer of a kind referred to in clause 2(2)(a)(i) or (ii); and
                                                                  1. that money is raised as part of an agreement under which 50% or more of that money is provided, directly or indirectly and whether by 1 transaction or a series of transactions, for the use of—
                                                                    1. A; or
                                                                      1. A and 1 or more third persons that are associated persons of A; and
                                                                      2. the money that is provided to A under paragraph (c) is 10% or more of the money that is raised under paragraph (b); and
                                                                        1. all or part of the money that is provided under paragraph (c) has not yet been repaid or returned to the conduit issuer; and
                                                                          1. all other requirements prescribed in the regulations for the purposes of this clause (if any) are satisfied.

                                                                            4Miscellaneous matters relating to territorial scope

                                                                            1. For the purposes of clause 2(2)(a)(ii), debt securities are offered in New Zealand if an offer of the debt securities is received by a person in New Zealand, unless the offeror demonstrates that it has taken all reasonable steps to ensure that persons in New Zealand may not accept the offer.

                                                                            2. The following must be disregarded when considering whether debt securities are offered in New Zealand:

                                                                            3. where any resulting issue or transfer occurs:
                                                                              1. where the issuer or offeror is resident, incorporated, or carries on business.

                                                                                1. Clause 2(2)(b) applies regardless of whether the business of providing credit under credit contracts is wholly or partly in a country outside New Zealand.

                                                                                  Example

                                                                                  An overseas company in the business of borrowing and lending makes DT regulated offers of debt securities to investors in New Zealand. The extent of its business in New Zealand is above the threshold (if any) prescribed by the regulations (see clause 5).

                                                                                  The overseas company lends money only to overseas borrowers.

                                                                                  Despite lending only to overseas borrowers, the company is still a deposit taker under this Act (unless clause 2(1)(b) applies).

                                                                                5Person may not carry on business of borrowing and lending money if extent of business in New Zealand is below threshold prescribed in regulations

                                                                                1. For the purposes of this schedule, a person does not carry on the business of borrowing and lending money if—

                                                                                2. either or both of the following apply:
                                                                                  1. the extent to which the person offers debt securities to persons in New Zealand is less than a threshold prescribed in the regulations:
                                                                                    1. the extent to which the person otherwise provides banking and related financial services to persons in New Zealand is less than a threshold prescribed in the regulations; and
                                                                                    2. all other requirements prescribed in the regulations for the purposes of this clause (if any) are satisfied.

                                                                                      1. Clause 2(2) is subject to this clause.

                                                                                      6Declarations for purposes of this schedule

                                                                                      1. The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank,—

                                                                                      2. declare that a person or a person of a particular class—
                                                                                        1. is a deposit taker for the purposes of this Act; or
                                                                                          1. is not a deposit taker for the purposes of this Act:
                                                                                          2. declare that a contract of a particular class is not a credit contract for the purposes of this schedule:
                                                                                            1. declare that debt securities of a particular class are debt securities for the purposes of clause 2(2)(a)(ii).

                                                                                              1. An Order in Council made under this clause is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

                                                                                              Notes

                                                                                                7Procedural requirements for recommendation

                                                                                                1. The Bank may give a recommendation under clause 6 only if the Bank—

                                                                                                2. is satisfied that the declaration is necessary or desirable in order to promote the main purpose of this Act, or any of the additional purposes, specified in section 3; and
                                                                                                  1. in the case of clause 6(1)(a), has had regard to the nature of the business activities carried on by the person or class of persons that are the subject of the declaration; and
                                                                                                    1. in the case of clause 6(1)(b), has had regard to the economic substance of the contracts that are the subject of the declaration; and
                                                                                                      1. in the case of clause 6(1)(c), has had regard to the economic substance of the debt securities that are the subject of the declaration; and
                                                                                                        1. has consulted the persons or representatives of the persons that the Bank considers will be substantially affected by the declaration.

                                                                                                          1. A failure to comply with subclause (1)(e) does not affect the validity of the Order in Council.

                                                                                                          8Bank’s reasons

                                                                                                          1. The Bank’s reasons for making a recommendation under clause 6 (including why the declaration is appropriate) must be published together with the Order in Council.