Financial Markets Conduct Regulations issued

Wednesday 5 November 2014

Author: Glenn Joblin

​​The second phase of the implementation of the Financial Markets Conduct Act 2013 (FMCA) regime is on schedule for 1 December with yesterday’s gazetting of the Financial Markets Conduct Regulations 2014 (FMC Regulations) and the Financial Markets Legislation (Phase 2) Commencement Order 2014.

As noted by the new Minister of Commerce, Paul Goldsmith, in his press release: “The approval of these regulations represents the last major step in the once-in-a-generation reform of our financial markets”.

A copy of the FMC Regulations is available here and the Commencement Order is available here.

The FMC Regulations are largely the same as the unofficial draft of the FMC Regulations which was released in September. Details of the unofficial draft are set out in our earlier client updates​, which includes an overview of the content of the regulations here. The final version of the FMC Regulations incorporates changes made to remove errors and inconsistencies in the unofficial draft, and also includes:

  • new clauses to address the form of notice required to be given in respect of an offer made under the trans-Tasman mutual recognition regime (see clause 278) and the classification status of a product disclosure statement registered on the offers register (see clause 280);

  • some further transition provisions relating to the continuing application of the Securities Act 1978 and convertible securities (in Schedule 1);

  • additional disclosure requirements relating to a scheme’s financial information in the product disclosure statement (PDS) for managed investment products in other schemes (in Schedule 5); and

  • new prescribed circumstances for matters relating to sale offers (in Schedule 8).

What happens on 1 December?

On 1 December the Financial Markets Conduct (Phase 1) Regulations 2014, which were enacted for the first implementation phase of the FMCA, will be revoked by the FMC Regulations and the second phase of the implementation of the FMCA will begin. Phase 2 will see the remaining provisions of the FMCA being brought into force subject to various transition measures which will be in place until 1 December 2016 for the new disclosure and governance requirements.

A summary of the provisions being brought in on 1 December is available on FMA’s website here.

Transition measures

There are a number of measures included in the FMCA and accompanying regulations to provide for a smooth transition from the existing securities law regime to the new FMCA regime. For example:

  • Continuous issuers can continue to offer and allot securities under the Securities Act 1978 until 1 December 2016.

  • One-off issues of debt or equity securities can still be made under the Securities Act if the prospectus is registered before December 2015 and the allotment is completed before 1 December 2016.

  • Existing providers of discretionary investment management services (DIMS) have until December 2015 to be licensed (but must have put in a licensing application or have updated their adviser business statement by 1 June 2015).

  • There is transitional relief for licensed derivatives issuers of between 6 and 12 months from new disclosure, financial adviser, and client funds handling requirements (with some additional short-term relief while licence applications received before December 2014 are being processed).

Further changes still to come

The Ministry of Business, Innovation and Employment (MBIE) have acknowledged that there will be many technical issues that will emerge once the FMC Regulations are in force, and the Ministry are encouraging market participants to raise any issues by using the “Ask a Question form” on FMA’s website here.

MBIE have also compiled a list of substantial issues that they have decided not to address until after 1 December 2014. These issues include matters such as:

  • short-form disclosures for offers of shares or other products that rank equally or in priority to existing quoted financial products (other than the ‘same class’ disclosure requirements that will be in place on 1 December 2014 for the clause 19, Schedule 1 quoted financial products exemption);

  • specific offer document rules for convertible financial products;

  • an alternative version of the managed fund product disclosure statement which incorporates, or allows use of, fund updates; and

  • a version of the fund update for non-fund investment options.

Companies Office launches new FMC register – “Disclose”

The new Financial Markets Conduct Register for financial products (split into debt, equity, managed investment and derivative products) and managed investment schemes under the FMCA is open for viewing on the Companies Office website. It is to be known as “Disclose” when it is launched on 1 December 2014. You can visit to read the supporting content for this new register and material on how to use the new register.

The register will essentially be empty when it launches on 1 December 2014 and it will have simple, basic search capability. More sophisticated search and compare functionality will be developed as the register becomes more populated.

Other regulations released for Phase 2 of the FMCA

Consequential amendments to a number of other regulations have also been enacted to cater for the implementation of Phase 2 of the FMCA. These include the following regulations:


This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Glenn Joblin

    Partner Auckland
Related areas of expertise
  • Financial sector regulation
  • Equity capital markets