Most Read Contributor in New Zealand, September 2016
The Reserve Bank last week released a consultation paper seeking
comment on policy proposals for a second non-bank deposit takers
(NBDTs) Bill. The Bill will complete the
legislative framework for the Reserve Bank's regulation of
the NBDT sector.
The policy proposals are intended to boost investor confidence
and increase investor participation in NBDTs. If implemented, NBDTs
will be subject to prudential requirements similar to those of
registered banks and insurers. The Reserve Bank considers the cost
of compliance with the new regime will be relatively minor.
This Brief Counsel discusses the five key elements of the
consultation paper. Submissions close on 5 November
1 Licensing of NBDTs
NBDTs will be required to hold a licence to operate. Licences
will only be granted to entities that comply with the other
prudential requirements set down by the Reserve Bank. Submissions
are sought on whether the Reserve Bank should have the power to
impose conditions on the grant of any licence, similar to the
position with registered banks.
2 Fit and proper requirements for directors and senior officer
In addition to the requirements of the Financial Service
Providers (Registration and Dispute Resolution) Act, directors
and senior officers of NBDTs will be required to meet prescribed
experience, skills and qualification requirements. The Reserve Bank
is proposing that it have the power to apply to the courts to have
persons banned from participating in an NBDT for up to five
3 Controls on changes of ownership
The consultation paper asks for views on whether Reserve Bank
consent should be required to a transaction which would result in a
person having "Significant Influence over an
NBDT". The suggested definition of "Significant
Influence" is a person owning, or having the power to
control, directly or indirectly, 20% or more of the NBDT's
voting securities or 25% or more of the NBDT's governing
body. The Reserve Bank is also considering whether it is
appropriate that an NBDT should be able to operate as a branch of
an overseas entity.
4 Distress and failure management powers for the Reserve
Submissions are sought on whether the Reserve Bank should have
broader powers to gather information from NBDTs and their
associated persons for general regulatory purposes, as well as
having powers to give directions to NBDTs. These directions could
include to cease paying dividends, to remove directors, to cease
raising funds or to cease undertaking related party transactions.
The paper also considers which regime would form the most
appropriate statutory management regime.
5 Refinements to part 5D of the Reserve Bank of New Zealand Act
Changes are proposed to refine certain provisions of part 5D of
the Act including in relation to exemptions, obtaining information
from trustees, defences and the liability of directors.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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