Most Read Contributor in New Zealand, September 2016
There's a lot to read but not much new in the 623
draft regulations for phase 2 implementation of the Financial
Markets Conduct Act (FMCA) on 1 December this
They extend the unsolicited offer regime to crowd
funding and peer-to-peer lending and reflect some further thinking
in relation to disclosure, governance and the transitional
provisions but the changes are largely technical.
The release is intended to assist planning by business,
not to seek further feedback as the consultation is now
The prescribed page lengths and font sizes for Product
Disclosure Statements (PDS) are unchanged and the general
approach is consistent with the final Cabinet decisions. However
the final detailed disclosure requirements reflect improvements
from the most recent consultative round. For example, more
flexibility is provided for equity forecasts and for debt,
comparable pricing charts are now optional.
Other changes identified by the Ministry for Business,
Innovation and Employment (MBIE) are:
the limited disclosure required for same or prior ranking
offers of debt securities (refer to regulation 22 of the
the ability of DIMS providers to omit historic returns or to
disclose "model" historic performance of their investment
strategies on a go-forward basis (refer to clauses 29 to 36 of
Schedule 21 of the regulations), and
the introduction of ongoing disclosure requirements for
convertible financial products with an investor option to convert.
Disclosure must be kept up-to-date during the conversion period
(refer to regulation 54).
The frequency and content of supervisor reporting can be set
outside the governing document (refer to regulation 83).
Quarterly reporting on related party certificates will be
required (refer to regulation 100).
The protections against low ball offers have been extended to
crowd funding and peer-to-peer lending (refer to regulations 160
A detailed description by Chapman Tripp of the low ball offer
regime is available
The transitional provisions are still being worked through and
are subject to further change. Changes thus far include:
provisions to allow old "wholesale offers" exemptions
to be relied on for a further six months (refer to clause 16 of
Schedule 1 of the regulations), and
extension for six months to new futures dealers (not authorised
under the Securities Markets Act) of the transitional relief
provided to derivatives issuers (refer to clause 17 of Schedule 1
of the regulations).
Timeline from here
The regulations will absorb and replace the Phase 1
regulations, issued on 24 February this year. They will come
into effect on 1 December 2014. MBIE hopes to have addressed most
of the outstanding matters before this date.
However some issues will need to be dealt with outside this
deadline. They include:
short-form disclosures for offers of shares or other products
that rank equally or in priority to existing quoted financial
products (other than the "same class" disclosure
an alternative version of the managed fund PDS which
incorporates or allows use of fund updates, and
a version of the fund update for non-fund investment
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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