Deposit Takers Act 2023

Crisis management and resolution - Bank may give directions, approve sales, and replace directors - Bank may remove, replace, or appoint director

270: Power to remove, replace, or appoint director of licensed deposit taker

You could also call this:

"The Bank can remove or appoint a director of a company that takes deposits if it's in trouble."

Illustration for Deposit Takers Act 2023

The Bank can remove or replace a director of a company that takes deposits, or appoint a new director, if the Bank thinks the company is in trouble. You might be wondering what kind of trouble - it could be that the company is insolvent, or its situation is bad for the whole financial system, or it has broken important rules. The Bank can only do this if it believes it is necessary or a good idea.

The Bank's power to remove or replace a director does not apply to directors of companies based overseas. If the Bank decides to remove or replace a director, it can do so even if there are agreements or rules that say otherwise, as stated in section 271.

The Bank has this power to help keep the financial system safe and sound, and it can use it when it thinks it is needed, as long as it follows the rules set out in the law.

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This page was last updated on 6 August 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS529208.

Topics:

Money and consumer rights > Banking and loansBusiness > Industry rules

269: Bank may approve sale or disposition, or

"The Bank can say yes to someone selling a business or assets under certain conditions."

271: How Bank exercises power to remove, replace, or appoint director, or

"How the Bank removes, replaces, or appoints a director of a company."

Part 7Crisis management and resolution
Bank may give directions, approve sales, and replace directors: Bank may remove, replace, or appoint director

270Power to remove, replace, or appoint director of licensed deposit taker

The Bank may remove or replace a director of a licensed deposit taker (A), or appoint a person as a director of a licensed deposit taker (A), if the Bank—
has reasonable grounds to believe that 1 or more of the following apply:
1. A is insolvent or is likely to become insolvent:
2. the circumstances of A are such as to be prejudicial to the soundness of the financial system:
3. A has contravened, may have contravened, or is likely to contravene any prudential obligation in a material respect; and
considers that exercising a power under this section is necessary or desirable.

This section does not apply to a director of an overseas person.
This section and section 271 have effect despite any agreement, legislation, or rule of law, or the terms of the constitution of a licensed deposit taker.