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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 Financial Markets Conduct Act 2013 (FMC Act) regulates the offering and trading of investments and the provision of certain financial services. The Act requires firms offering financial products (equity securities, debt securities, managed investment schemes and derivatives) to retail investors to prepare a product disclosure statement that summarises the key features of the offer. This must be provided to retail investors before they acquire the financial product, with further information available on an online register of offers ( The Act regulates other aspects of the offer and governance relating to financial products, such as requiring a trustee to be to be appointed in respect of regulated debt securities. It also provides general prohibitions on misleading and deceptive conduct in financial markets.

The FMC Act regulates the operation of securities and derivatives exchanges and trading behaviour on those exchanges. The Act establishes a system for licensing of market operators and approval of the rules of 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 FMC Act provides a licensing regime for a number of financial services, including funds managers' discretionary investment management services and derivatives issuers. Providers who offer these services to retail investors are licensed and supervised by the Financial Markets Authority.

The FMC Act replaced previous New Zealand securities law - the Securities Act 1978 and the Securities Markets Act 1988.

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 FMC 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 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 Financial Markets Supervisors Act 2011 establishes a licensing regime administered by the FMA for:

  • trustees of debt securities issued to the public under the FMC Act;
  • supervisors of managed investment schemes under the FMC Act; and
  • 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

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.

In December 2013, the Financial Reporting Act 2013 (FRA 2013) was passed replacing the 1993 Act. The new Act updated the statutory reporting obligations of entities in New Zealand. At the same time the Financial Reporting (Amendments to Other Enactments) Act 2013 made amendments to a number of enactments (e.g. Companies Act 1993) in relation to the financial reporting obligations of a range of entities.

The FRA 2013 places obligations on certain organisations (issuers as defined under the Financial Markets Conduct Act 2013, large entities, public entities and entities that “opt-in”) to prepare general purpose financial statements that comply with Generally Accepted Accounting Practice (GAAP) within five months (or in the case of issuers, four months) from their balance date. Smaller companies that meet prescribed criteria no longer have a statutory obligation to prepare general-purpose financial statements.

The FRA 2013 also defines key concepts, for example, GAAP, financial statements and group financial statements.

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.

In April 2012, the XRB issued a new Accounting Standards Framework. The new Framework is based on a multi-sector, multi-tiers reporting approach and is being rolled-out progressively during the 2012-2015 period. More information about the new Accounting Standards Frameworks can be found on the Accounting Standards Framework page.

The new Accounting Standards Framework consists of different suites of standards for for-profit entities and public benefit entities (including registered charities), and for tiers within those sectors.

Issuers of securities and large for-profit entities will continue to apply New Zealand International Financial Reporting Standards (NZ IFRS).

The new suite of accounting standards applicable to the Public Sector (called Public Sector PBE Accounting Standards) applies to the Financial Statements of the Government for the financial year beginning 1 July 2014. At the broad level, the impact of moving from NZ IFRS as applied by PBEs to PBE Standards (based mainly on International Public Sector Accounting Standards) is not expected to be significant as there is a strong degree of convergence between the Standards.

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