The regulations to support the Financial Markets Conduct Act 2013 (FMCA) have now been signed off and were released by the Ministry of Business, Innovation and Employment (MBIE) yesterday.
The journey which brought us to this point began in mid-2010 with the release of a discussion document which, at over 200 pages, was considered long at the time but is dwarfed by the more than 700 pages of regulation to bring the FMCA into effect.
We provide some comments on the transition to the new regime.
The Financial Markets Conduct Regulations 2014
contain most of the detailed rules behind the FMCA but there are another eighteen sets of regulations to support the new law and to allow other legislation to work throughout the transition to the new regime.
The table below shows, at a high level, how the transition provisions (as modified by the final regulations) work for various circumstances.
|New “wholesale offers” (see clause 16 of Schedule 1 of the regulations) ||Can be made under the old law up until 1 June 2015 |
|New “offers to the public” of equity, debt or managed investment products using an investment statement and prospectus ||Can be made under the old law up until 1 December 2015 (unless a continuous debt or managed investment product issue, in which case can be made up until 1 December 2016), unless the issuer chooses FMCA |
|New “regulated offers” using a product disclosure statement and register entry ||Available from 1 December 2014 |
|Transitioning existing products and schemes to new governance and accountability regime ||Transition can be any time between 1 December 2014 and 1 December 2016, provided at least 20 working days' notice is given to the Registrar of Financial Service Providers and the FMAOn transition, issuers will need to comply with ongoing disclosure requirements, governance requirements and financial reporting requirements|
|New superannuation and KiwiSaver schemes ||From 1 December 2014 (with no transition period)|
While issuers can transition their existing financial products and schemes to be governed by FMCA, rather than the old law, we do not expect there will be a rush to do so.
Continuous issuers of debt securities and managed investment schemes will need to consider carefully whether they will be able to meet the new governance and accountability requirements before giving notice to transition to the new law.
Given the significantly improved liability regime, we expect most public issuers of equity securities or new tranches of debt securities will proceed under the new law soon after 1 December 2014, rather than rely on the transition.