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Company Law

The Companies Act 1993 provides the framework for the formation, governance and winding up of companies.

Securities Law

The Securities Act 1978 applies to securities that are advertised or offered to the public. The Act places restrictions on advertisements of offers of securities and requires a prospectus to be prepared before securities can be offered. It also requires an investment statement, which summarises the key features of the offer, to be provided to an investor before they subscribe to the securities. The Act regulates other aspects of the offer and governance relating to securities, such as requiring a trustee to be appointed in respect of debt securities issued to the public.

The Securities Markets Act 1988 regulates the operation of securities markets and trading behaviour on those markets. The Act establishes a system for registration and approval of the rules of markets operated by securities exchanges and provides for oversight of exchanges by the Financial Markets Authority. It contains prohibitions on insider trading and requires exchanges to have specific rules for continuous disclosure of price-sensitive information. It also requires disclosure of substantial security holdings and directors' and officers' shareholdings.

The Financial Markets Authority Act 2011 established the Financial Markets Authority (FMA) as New Zealand's market conduct regulator. The FMA is an independent Crown entity whose main objective is to promote and facilitate the development of fair, efficient and transparent financial markets. The FMA has powers to issue warnings, provide guidance, grant exemptions to some securities law requirements, and investigate potential breaches of the law. The FMA enforces financial markets legislation, including the Securities Act and Securities Markets Act. It also enforces corporate governance legislation, including the Companies Act and Financial Reporting Act, in respect of financial markets participants such as issuers of securities and banks.

The Financial Markets Conduct Act 2013 was passed in September 2013. The Act will replace financial market conduct regulation contained in a number of statutes, including the Securities Act and the Securities Markets Act, allowing for a more coherent regime.

The purpose of the Financial Markets Conduct Act is to provide an enduring financial market conduct regulatory regime that promotes confident and informed participation in New Zealand's financial markets. The regime provided by the Act does this by:

  • ensuring that investors are provided with understandable and accurate information to guide their decision making;
  • ensuring that governance arrangements in respect of financial products available to the public are robust;
  • minimising unnecessary compliance costs for those raising capital; and
  • promoting innovation and effective competition.

The Act will begin to come into force during 2014, with all of its provisions in force by December 2014. The Act provides for a transitional period of up to two years for existing products to transition to the new regime.

The Takeovers Act 1993 applies to takeovers of listed companies and those with 50 or more shareholders. The Takeovers Code, established under the Act, regulates acquisitions of control of more than 20% of the securities and further acquisitions by a person who controls 20% of the securities in those companies. The Code seeks to ensure that all shareholders are treated fairly and, on the basis of proper disclosure, are able to make an informed decision as to whether to accept or reject an offer made under the Code.

The Financial Advisers Act 2008 regulates financial advisers, controlling who may provide financial advice and what information they must disclose to their clients. This Act also makes financial advisers accountable for the advice that they provide through a code of conduct and a disciplinary committee and provides the FMA with the ability to apply to the Court for various orders and seek civil penalties and remedies for a breach of the Act.

The Financial Service Providers (Registration and Dispute Resolution) Act 2008 establishes a registration process for all financial service providers. The Act also establishes a requirement for financial service providers who provide services to retail clients to be members of a consumer dispute resolution scheme, which is aimed at facilitating the orderly resolution of disputes in the financial sector.

The Securities Trustees and Statutory Supervisors Act establishes a licensing regime administered by the FMA for:

  • trustees of debt securities issued to the public under the Securities Act;
  • trustees of unit trusts registered under the Unit Trusts Act;
  • trustees of retail KiwiSaver schemes registered under the KiwiSaver Act;
  • statutory supervisors of issues of participatory securities under the Securities Act;
  • statutory supervisors of retirement villages registered under the Retirement Villages Act.

The Act requires trustees and statutory supervisors (other than retirement villages, who report to the Registrar of Retirement Villages) to report in certain circumstances about matters that they are supervising.

Competition Law

The purpose of the Commerce Act 1986 is to promote competition in markets for the long-term benefit of consumers within New Zealand. The Act:

  • prohibits anti-competitive behaviour, both unilateral and collusive (Part 2);
  • prohibits mergers that would substantially lessen competition (Part 3);
  • empowers the Minister of Commerce to impose regulatory control on monopolies (Part 4): electricity lines, gas pipeline businesses and the three main airport companies are regulated under Part 4; and
  • constitutes the Commerce Commission as an independent crown entity and empowers it:
    • to investigate possible contraventions of the competition provisions of the Act and take enforcement action in the High Court;
    • to clear or authorise trade practices and mergers, the effect of which is to immunise the conduct or merger from legal challenge; and
    • to regulate monopolies that are subject to regulatory control.

Financial Reporting Legislation in New Zealand

Issuers of securities and large for-profit reporting entities in New Zealand fully comply with International Financial Reporting Standards (IFRS). The arrangements to achieve this and to cater for entities pursuing public benefit rather than profit and small and medium-sized entities are described below.

The Financial Reporting Act 1993 applies to “reporting entities”, which are defined as issuers of securities under the Securities Act, companies and other entities whose legislation requires them to comply with the Act.

The Act places obligations on such organisations to prepare general purpose financial statements that comply with generally accepted accounting practice (GAAP) within five months of their financial year or balance date. Smaller companies that meet prescribed criteria (except issuers of securities and overseas companies) can comply with less stringent reporting requirements, as the benefits of full financial reporting are unlikely to justify the costs for small, privately held companies.

The Act also requires issuers of securities and overseas companies to have their financial statements audited and to file those financial statements with the Registrar of Companies on a public register. However, small overseas companies are exempt from this obligation. The auditing requirements for other entities are found in other legislation (for example the auditing requirements for New Zealand companies are found in the Companies Act 1993).

A new Financial Reporting Bill was introduced to Parliament in 2012 and will eventually replace the current Act. The aim of the new Bill is to reduce compliance costs and to streamline the financial reporting requirements for entities required to prepare general purpose financial statements.

The Bill is in the early stages of the parliamentary process. There will be no change to companies' financial reporting requirements until the Bill becomes law. For more information on the progress of the Bill, refer to the New Zealand Parliament internet site:

It should be noted that the financial reporting requirements for issuers of securities remain largely unchanged under the Bill. There are additional financial reporting obligations for issuers of securities in the Financial Markets Conducts Act 2013. This Act was enacted on 13 September 2013 but the provisions relating to financial reporting have not yet come into force.

The External Reporting Board and New Zealand Accounting Standards

The Financial Reporting Act 1993 establishes the External Reporting Board (XRB), an independent Crown Entity, which is responsible for the development and issuing of accounting, and auditing and assurance standards in New Zealand. The XRB is also responsible for setting the overall Financial Reporting Strategy Framework. More details of the XRB's responsibilities can be found at the following site:

The XRB has two standard-setting boards, the New Zealand Accounting Standards Board (NZASB) and the New Zealand Auditing and Assurance Standards Board (NZAuASB). The NZASB has delegated authority from the XRB Board to develop or adopt and issue accounting standards for general purpose financial reporting in New Zealand. In doing so, the NZASB must operate within the financial reporting strategy established by the XRB Board.

Current accounting standards require large for-profit reporting entities to fully comply with the IFRS. A number of amendments to these standards cater for financial reporting requirements of public sector entities and not-for-profit entities (defined as 'public benefit entities')[2]. The set of approved standards are collectively known as “New Zealand equivalents to International Financial Reporting Standards”.

Small entities had the option to delay the adoption of the New Zealand equivalents to IFRS. The Government is proposing under the Financial Reporting Bill 2012 that small and medium-sized for-profit companies that are not issuers will no longer have to prepare general purpose financial reports.

The New Zealand Accounting Standards Board has issued a new suite of accounting standards (called Public Sector PBE Accounting Standards) that will apply to the Financial Statements of the Government for the financial year beginning 1 July 2014. At the broad level, the impact of moving from IFRS to PBE Standards is not expected to be significant as there is a strong degree of convergence between the Standards.

Discussion on the new accounting standards framework can be found at:


  • [2]Public benefit entities are reporting entities whose primary objective is to provide goods or services for community or social benefit and where any equity has been provided with a view to supporting that primary objective rather than for a financial return to equity holders. They include not-for profit organisations and most public sector entities (excluding state owned enterprises and local authority trading enterprises).
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