Offers of financial products

• a debt security - the person that is liable to repay money or pay interest or other returns under the security (other than as a guarantor).See Section 8 (1)
• an equity security - the company, industrial and provident society, building society, or other entity to which the security relates. See Section 8 (2)
• a managed investment product - the manager of the managed investment scheme (MIS) to which the product relates, See Section 9 of FMCA and Regulation 5 of Financial Markets Conduct Regulations 2014.
• a derivative -  the derivatives issuer that entered into the derivative. See Section 8(4).

We do not offer a pre-registration review service other than for initial public offerings of equity.

Read more information about Pre-Registration Reviews for initial public offerings of equity

Schedule 1 offers

Schedule 1 of the FMC Act sets out a series of statutory exclusions where lighter compliance paths are appropriate. These include exclusions that are due to the circumstances of the:

• offer - for example, an offer through a licensed crowdfunding platform
• investor - for example, an offer to a wholesale investor
• issuer - for example, an offer by a registered bank.

Depending on the exclusion, limited or no disclosure may be required.

Our Schedule 1 offers table, summarises the circumstances where the disclosure exclusions in Part 1 of Schedule 1 are available and what the associated limited disclosure and other requirements (if any) are for each exclusion. 

Offers under Schedule 1, in general, do not trigger the ongoing financial reporting obligations in Part 7 of the FMC Act. 

Failure to comply with the Schedule 1 exclusion limited disclosure and other requirements in the FMC Regulations may incur civil and criminal liability consequences. However, your offer won't be invalidated, and the financial products offered won't be invalid, void or voidable.

Peer-to-peer lending service providers obligations

Normally if you want to borrow money direct from the public, the FMC Act requires you to issue a product disclosure statement (PDS).

• You do not need to prepare these documents if you are using a licensed peer-to-peer lending provider. Instead you will provide information about your loan request to your provider so they can present your request for investors to read.
• Licensed providers are not obligated to accept you as a borrower. They will run some checks on you and if you've got a bad credit history they may decide they won't help you find money.
• If you are accepted, you will become a client of the peer-to-peer lending service. The provider will ask you to sign a client agreement that details what you need to do so the provider can monitor and check you.
• The service provider can charge for their services.

More information about Peer-to-peer lending service providers obligations and compliance

Crowd funding issuers obligations

Under exemptions in financial markets law:

• crowd funding issuers don't need to prepare a product disclosure statement.
• your crowd funding service provider may be able to help you make a compliant offer. 
• the provider will ask you to sign a client agreement that details what you need to do so the provider can monitor and check you.
• they may charge you for their services. 

More information about Crowdfunding obligations and compliance

Small personal offers

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.

Crowdfunded companies

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.

Offers disclosure requirements

• Information about ‘regulated offers’ must be disclosed in a product disclosure statement (PDS) and on the Disclose Register. 
• Information must include all material information about the offer of a financial product and be up-to-date, accurate and understandable. 
• The purpose of the information is to assist investors with their investment decisions.

Schedule 1 of the FMC Act sets out a series of statutory exclusions where lighter compliance paths are appropriate.

PDS registration

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. 

Download the Content and form of Disclose register information PDF.

Ongoing register and record-keeping duties

These obligations vary depending upon the type of issuer or offer, but generally include: 

• maintaining a register of regulated financial products they have issued
• ensuring the register is audited or reviewed by a qualified auditor
• keeping accounting records to support the preparation of compliant financial statements
• ensuring their financial statements are audited at least once a year by a licensed auditor or registered audit firm
• providing certain information (such as annual reports or financial statements) to investors on request.

Financial reporting

As an FMC reporting entity, you must do all of the following:

• keep proper accounting records to help you prepare compliant financial statements — records must be kept in English and a copy must be kept in NZ
• prepare financial statements for your group's operations — those financial statements must comply with generally accepted accounting practice in NZ
• have your financial statements audited by a licensed auditor or registered audit firm
• lodge your financial statements and the auditor’s report on them with the Companies Office within 4 months after your balance date.

If you are an FMC reporting entity at any point during an accounting period, you are required to comply with these requirements for the full accounting period.

Fair dealing

The FMC Act sets out minimum compliance standards of behaviour for people operating in the financial markets.

It prohibits:

• misleading or deceptive conduct
• false or misleading representations
• unsubstantiated representations
• offers of financial products in the course of unsolicited meetings.

Read more about fair dealing

AML/CFT 

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) imposes several obligations:

• You must provide a written risk assessment of the money laundering and financing of terrorism activity you could expect in the course of running your business.
• You are required to implement an anti-money laundering and countering financing of terrorism programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
• You are required to appoint a compliance officer to administer and maintain your programme.
• You are required to perform due diligence processes on your customers. This includes customer identification and verification of identity.
• You are required to report suspicious transactions. 

The FMA supervises designated business groups (DBGs) and reporting entities listed in Section 130 of the Act. 

Read more about the Anti-Money Laundering and Countering Financing of Terrorism Act AML/CFT