FMCA and FMC regulations implementation update - Financial Services

The Ministry for Business, Innovation and Employment has today published a progress update on regulations to fully implement the Financial Markets Conduct Act ( FMCA) from 1 December 2014.

We highlight the key milestones to come.

Key developments

Formal consultation on three earlier exposure drafts is nearing completion, and MBIE is now working to compile the full set of FMC regulations.
Cabinet will make further policy decisions soon, and MBIE will provide a further update at that point.
MBIE plans to publish a near-final version of the FMC Regulations before the election, to assist planning by industry, with the final regulations to be made in October 2014 ahead of the 1 December 2014 commencement.
FMA recently advised it plans to consult on exemptions and guidance for offers in August 2014.

Summary of timetable for implementation

1 April 2014	Phase 1 of FMCA commenced comprising general fair dealing obligations and the key growth-focussed initiatives (same class offers, employee share schemes, crowd-funding)
1 December 2014	FMCA fully commences, comprising the new disclosure requirements, go-live of the online registers, licensing obligations and the remainder of the Act
by 1 June 2015	Existing DIMS providers may apply for a licence, and will have until 1 December 2015 to update their client documentation. New providers will need to comply from 1 December 2014
December 2015	Transitional period ends for most equity, debt issuers
December 2016	Transitional period ends for managed investment products, non-bank deposit takers, other continuous issuers of securities, and futures contracts

New KiwiSaver schemes and superannuation schemes must register under the FCMA and comply with the new regime from 1 December 2014.

Appendix: Overview of the key elements of the full FMC Regulations

Part 1 – Preliminary provisions

Part 2 – Fair dealing (part 2 of first exposure draft of regulations)

Part 3 – Disclosure of offers of financial products

Disclosure process (part 3 of first exposure draft of regulations)
Disclosure content (part 1 of third exposure draft of regulations)

Part 4 – Governance of financial products (part 4 of second exposure draft of regulations)

Part 5 – Dealing in financial products of markets (part 5 of second exposure draft of regulations)

Part 6 – Licensing and other regulation of market services

Licensing (part 4 of phase 1 regulations)

Disclosure obligations for discretionary investment management services (DIMS supplement to third exposure draft of regulations)

Disclosure obligations for peer-to-peer and crowd funding services (part 4 of phase 1 regulations)

Conduct obligations for discretionary investment management services (part 6 of second exposure draft of regulations)

Part 7 – Financial Reporting (part 5 of phase 1 regulations)

Part 8 – Enforcement, liability, and appeals (part 6 of phase 1 regulations)

Part 9 – Mutual recognition and miscellaneous matters (part 2 of third exposure draft regulations)

Schedules

Transitional provisions (part 7 of phase 1 regulations, but modifications and additions will be required, DIMS supplement to third exposure draft)

Disclosure schedules for financial products and discretionary investment management services (Schedules in third exposure draft of regulations and DIMS supplement)
Limited disclosure schedule and other provisions for Schedule 1 of Act (Schedule 1 of first exposure draft of regulations and phase 1 regulations. Note that some of this schedule was commenced in phase 1 of the regulations (eg, exemption for small offers), but other provisions, particularly those requiring disclosure documents, were held over to commence in phase 2 eg, requirements for a "Schedule 1 disclosure document" for government bonds.)
Other schedules for governance (Schedules in second exposure draft of regulations)
Other schedules for financial product markets (Schedules in second exposure draft of regulations)

Other schedules for enforcement (Schedules in phase 1 regulations)

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.