NEW ZEALAND Law and Practice Contributed by: Deemple Budhia, Ling Yan Pang, Fred Ward and Matt Kersey, Russell McVeagh
Zealand regardless of where the resulting issue or transfer occurs or where the issuer is resi - dent, incorporated or carries on business. The FMC Act sets out the disclosure requirements for offers of financial products, which includes the debt securities offered in a securitisation. “Retail” and “Wholesale” Investors For an offer of financial products to “retail inves - tors” (a regulated offer), among other require - ments, a product disclosure statement (PDS) must be prepared and certain information relat - ing to the offer must be contained in a publicly available register entry for the offer. Securitisations in New Zealand are not marketed to retail investors. Other than a registered bank’s internal RMBS and covered bond programmes, the market is dominated by warehouse securiti - sations and, depending on market conditions, term outs of those warehouse securitisations. Accordingly, the obligations imposed on regu - lated offers do not apply. Instead, securitisations are marketed to sophisticated “wholesale inves - tors”, in particular: • “investment businesses”; • “large entities” (those with net assets exceed - ing NZD5 million or consolidated turnover exceeding NZD5 million in each of the two most recently completed financial years); and • “government agencies”, each as defined in the FMC Act. Securitisations are not marketed to all categories of wholesale investors, as capturing certain other investors would trigger other regulatory requirements. Fair Dealing Provisions An offer that is not a regulated offer will still be subject to the general fair dealing provisions in
the FMC Act. Broadly, these fair dealing provi - sions prohibit an issuer from engaging in con - duct that is misleading or deceptive or likely to mislead or deceive in relation to a financial prod - uct, from making a false or misleading represen - tation in relation to certain aspects of a financial product, or from making “unsubstantiated” rep - resentations. Contraventions of a fair dealing provision in the FMC Act may give rise to civil liability in respect of which a court or the Financial Markets Author - ity (FMA) may make certain declarations and orders. Such orders include a pecuniary penalty not exceeding the greatest of: • the consideration for the relevant transaction; • three times the amount of the gain made or the loss avoided; and • NZD1 million in the case of an individual or NZD5 million in any other case. Regulatory Bodies The principal regulatory bodies for securitisa - tions are: • the FMA – whose functions include moni - toring compliance with, and investigating conduct that constitutes or may constitute breaches of, financial markets legislation; and • the RBNZ – which is responsible for the pru - dential regulation of banks, non-bank deposit takers and insurance providers. Registered banks in New Zealand are regulated by the RBNZ, and a registered bank’s exposure to any securitisations will impact on its capital adequacy requirements, as discussed in 4.3 Credit Risk Retention and 4.6 Treatment of Securitisation in Financial Entities .
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