Normally if you want to borrow money direct from the public, the FMC Act requires you to issue a product disclosure statement (PDS).
Under exemptions in financial markets law:
There are exclusions under Schedule 1 of the FMC Act that allow some offers to be made without having to provide all the usual documentation required, ie product disclosure statements.
One of those exclusions is for small personal offers of debt and equity - see clause 12 of Schedule 1. It allows you to make small offers over a 12-month period that can, in total, involve up to 20 investors and raise up to $2 million without having to produce full documentation. Any offer that would result in you exceeding either or both those limits requires full documentation under part 3 of the FMC Act.
If, over several 12-month periods, you gain more than 50 shareholders from small offers, you'll become a FMC reporting entity.
There is also a requirement to give written notice to the FMA if you have relied on the small offers exclusion. Notifications must be made within 1 month after the end of the accounting period in which the offer was made. Refer to clause 17 of Schedule 8 to the Financial Market Conduct Regulations 2014 for the notification requirements. There is not a specific prescribed form to be completed. Notifications should be sent to the FMA at [email protected] with a subject line “Notification of small offer”. There is no need to notify us if you intend to raise capital using any of the other exclusions.
Companies that raise capital through a licensed crowdfunding platform, relying on classe 6 of Schedule 1, are not considered FMC reporting entities. This is because the offer is not considered a ‘regulated offer’ under the FMC Act.
Instead, these companies will be subject to the financial reporting requirements under the Companies Act 1993.
The Financial Markets Conduct Act 2013 (FMC Act) introduces new requirements for financial product offer information. This section outlines the new requirements, and provides information about when they don’t apply.
Schedule 1 of the FMC Act sets out a series of statutory exclusions where lighter compliance paths are appropriate.
Material information about a regulated offer not included in a PDS needs to be uploaded to the Disclose Register. It also has online registers for managed investment schemes split into managed funds and other managed investments schemes.
The Disclose Register provides supporting information for investors and enables advisers and analysts to carry out more in-depth research and analysis. We published guidance on the content and form of the Disclose Register information.
These obligations vary depending upon the type of issuer or offer, but generally include:
The FMC Act sets out minimum compliance standards of behaviour for people operating in the financial markets.
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) imposes several obligations:
New Zealand, Australia, Japan, Korea and Thailand have agreed to establish and implement what is known as the Asia Region Funds Passport. Once implemented, the passport will allow a managed fund based in one jurisdiction to be offered more easily to investors in other participating jurisdictions.
The FMA has wide powers under the FMC Act to exempt persons or transactions from compliance obligations under financial markets law. This allows us to provide a tailored approach and ensure requirements for businesses are reasonable and cost-effective. We are aware that issues may arise for market participants operating under the FMC Act regime, and exemptions may be required in some cases.
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