New Zealand: Asia Region Funds Passport will facilitate the cross-border offering of managed funds

Brief Counsel
Last Updated: 4 July 2016
Article by Tim Williams, Penny Sheerin, Mike Woodbury, Bradley Kidd, Roger Wallis and Sanna Boow

Most Read Contributor in New Zealand, September 2016

The Asia Region Funds Passport will provide a multilaterally agreed framework for offering high quality regulated managed funds across participating economies without having to go through a full regulatory approval process.

Most New Zealand fund managers will not meet the size requirements so the passport's attractiveness will be limited until offering documentation and tax treatment are covered or aligned. But at least it is a start.

What is the Asia Region Funds Passport?

The Memorandum of Cooperation between New Zealand, Australia, Japan and South Korea came into effect last week (Thursday, 30 June 2016). It sets out the internationally agreed rules and cooperation mechanisms for the Asia Region Funds Passport. Participating economies will need to implement the arrangements through their national laws by 31 December 2017.

The Asia Region Funds Passport provides a framework under which an operator of an eligible managed fund in a Passport member economy will be able to offer interests in that fund to investors in other Passport member economies.

It relieves the operator of the Passport Fund from the need to obtain certain regulatory approvals that would otherwise be required under the host economy laws in respect of the issue or offer of interests in the Passport Fund, provided that the issue or offer is done through a qualified distributor.

The Passport does not, however, go as far as the trans-Tasman mutual recognition scheme. For example, the operator of a Passport Fund must still prepare offer documents in accordance with regulatory requirements of each host economy where the Passport Fund is offered.

What is not covered under the Asia Region Funds Passport?

Each participant economy may still impose additional requirements on the Passport Funds that apply in addition to the Passport Rules, in areas such as:

  • disclosure documents and annual and periodic reporting to members
  • licensing requirements relating to distribution, provision of financial advice, custody services and dealing in financial products
  • advertising of financial products
  • anti-money laundering and countering of financial of terrorism, and
  • any rules on registration as a foreign company or appointing a local representative.

What are the eligibility criteria for an operator of a Passport Fund?

One of the specific goals of the Passport is to promote investor protection. Therefore, in order to be able to take advantage of the Passport, both the operator and the managed fund itself must comply with strict eligibility criteria.

When the proposed regime is adopted, an operator of a regulated managed fund may lodge an application to register the fund, or its sub fund, as a Passport Fund with the home regulator.

The operator of the regulated managed fund must:

  • have its principal place of business in the home economy and be regulated by the home regulator for the operation of the CIS (i.e. any New Zealand based fund manager must be licensed under the Financial Markets Conduct Act (FMCA) as a manager of a managed investment scheme)
  • have the minimum of US$500 million (approximately NZ$715 million) assets under management
  • have at least US$1 million (approximately NZ$1.4 million) additional capital (with further amounts depending on the size of the fund)
  • have officers that meet the qualification requirements
  • meet certain organisational requirements
  • have a minimum of five years track record, and
  • meet the good standing test.

What are the eligibility criteria for the Passport Fund?

The Passport Fund must:

  • be offered to the public generally in the home economy (i.e. any New Zealand based Passport Fund must be a managed investment scheme registered under the FMCA)
  • invest in only simple financial products (such as currency, deposits, depository receipts over gold, transferable securities (e.g. shares and bonds) and money market instruments)
  • be highly diversified
  • comply with the restrictions on derivatives, securities lending and borrowing, and
  • restrict the ability to charge performance fees and prohibit short-selling.

Before offering interests in a host economy, the Passport Fund must apply to the host regulator for entry. The application for entry can be refused by the host regulator only under certain limited circumstances.

Who will regulate the Passport Funds and the operator?

The operator and the Passport Fund must comply with both the home economy and host economy laws and regulations. That means any offshore fund manager offering funds in New Zealand under the Passport must comply with the FMCA (including having a PDS and a register entry on the Disclose register).


The Memorandum of Cooperation came into effect on 30 June 2016. Participating economies will need to implement the arrangements through their national laws by 31 December 2017.

Our view

The Passport will bring limited benefits for the New Zealand fund managers, only some of whom will be able to take advantage of the bigger Asian markets. For foreign fund managers outside the Asia Pacific region, the Passport offers the opportunity to access the market via a single "home regulator" in one of the participating economies.

Currently only four countries have signed up for the Passport. If it is to be successful, more will need to join. Two big challenges will be the high barriers to entry and the possibility for participating economies to impose additional requirements.

The Passport does, however, start the process of gradually aligning the laws and regulations of the home and host economies, and may lead to more streamlined processes in the future.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Penny Sheerin
Bradley Kidd
Roger Wallis
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.