NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
Act or registered under the FSPA (see 2.1 Licensing and Regulatory Approval ) then it will be subject to limited notification, compliance and financial reporting requirements. The AMLA may also apply. The AMLA does not spec - ify a territorial scope. However, guidance from the rel - evant regulators states that: • an overseas financial institution carrying on busi - ness in New Zealand (including if required to be registered under the Companies Act) will be a reporting entity under the AMLA and subject to the general requirements noted above; and • a financial institution that is not registered or required to be registered under the Companies Act is unlikely to be a reporting entity under the AMLA. 2.5 Club Lending and Antitrust There are no general restrictions on club lending by private credit providers in New Zealand. Although the Commerce Commission (New Zealand’s antitrust regulator) has recently taken interest in the broader banking and finance sector, it does not appear to be specifically focused on club lending arrangements. That said, there are certain provisions of the Com - merce Act 1986 (Commerce Act) that will be relevant to how club lending arrangements are initiated and structured. In particular, the Commerce Act prohibits contracts, arrangements and understandings that either: • contain a “cartel provision”, being a provision that has the purpose, effect or likely effect of fixing prices, restricting output or allocating markets for goods and services that two or more parties to the agreement supply or acquire in competition with each other; and/or • have the purpose, effect or likely effect of sub - stantially lessening competition in a market in New Zealand. The threshold for finding an “understanding” is low, and includes any informal conversations or informa - tion exchanges that give rise to an expectation (on the part of the other parties to the understanding) that
a particular party will act or refrain from acting in a particular manner. Nonetheless, the Commerce Act recognises that com - petitors may have legitimate reasons to collaborate, and, in such cases, the inclusion of a cartel provision in that collaboration may be appropriate. Accordingly, the Commerce Act provides an exception for cartel provisions that are reasonably necessary for the pur - pose of a “collaborative activity”, being an enterprise, venture or other activity in trade that is carried on in co-operation by two or more parties, provided it is not carried on for the dominant purpose of lessening com - petition between them. This exception is highly tech - nical, and lenders operating in New Zealand should seek legal advice to ensure that the exception applies for any particular transaction. As a general rule, lenders engaging in club or syn - dicated lending in New Zealand need to be careful about pricing and borrower information exchanged with competitors. At a minimum, a comprehensive confidentiality agreement setting out the informa - tion that may be disclosed, with whom, and for what purpose, should be put in place with all potential co- lenders before sharing any information. Certain New Zealand-specific provisions are typically included in New Zealand syndicated facility agree - ments in relation to New Zealand competition laws. 3. Structuring and Documentation 3.1 Common Structures Common deal structures for private credit can take the following form: • a bilateral senior loan; • a private credit fund participating in a senior syn - dicated/club facility alongside banks and/or other funds; deals of this nature have become more common due to increased distress levels, making a solely bank refinancing unattainable for some bor - rowers; these transactions also offer an attractive deployment opportunity for newly established New Zealand-based funds;
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