Deposit Takers Bill

Hon Grant Robertson

Deposit Takers Bill

Government Bill

162—1

Contents

Explanatory note
1Title
2Commencement
3Purposes
4Principles to be taken into account under this Act
5Overview
6Interpretation
7Meaning of associated person and holding entity
8Transitional, savings, and related provisions
9Act binds the Crown
10Deposit taker must be licensed
11Offence for deposit taker to carry on business without licence
12Liquidation of deposit taker that carries on business without licence
13No holding out as licensed
14Offence for holding out
15Bank may issue licence
16Application for licence
17When licence must be issued
18Additional criteria for overseas applicants
19Overseas requirements may be treated as appropriate
20Consultation requirements
21Notice of decision
22Bank must keep register of licensed deposit takers
23Form and content of register
24Bank may impose conditions on licence
25Bank may modify conditions of licence
26Licensed deposit taker must obtain Bank’s approval before new director or senior manager is appointed
27Offence to appoint new director or senior manager without approval
28Bank’s decision on approval
29Bank may suspend director or senior manager if approval not obtained
30Overseas licensed deposit taker must notify Bank if new director or senior manager is appointed
31Bank may require further fit and proper certificate
32Deposit taker’s duty on becoming aware of fit and proper concerns
33Offence to fail to disclose fit and proper concerns
34Power to remove directors and senior managers
35Bank may direct that person may not be reappointed
36Offence to contravene direction
37Further provisions about power to remove
38How power to remove is exercised
39Person who obtains control over licensed deposit taker must obtain Bank’s approval
40Overseas licensed deposit taker must notify Bank if person obtains control
41Licensed deposit taker must obtain Bank’s approval before entering into significant transaction
42Licensed deposit taker must obtain Bank’s approval before amalgamation
43Overseas licensed deposit taker must notify Bank if it amalgamates with another person
44Offence to fail to get approval
45Failure to get approval does not invalidate proposed change
46Meaning of proposed change
47Request for approval
48Report on proposal
49Bank must consider whether it would still be satisfied of licensing matters
50Bank’s decision on approval
51Offence to contravene condition of approval
52Requirement for approval is in addition to other requirements
53Cancellation of licence
54Process for cancelling licence
55Notice of cancellation
56Appeals against licensing and fit and proper decisions
57Appeals against other decisions of Bank on questions of law only
58Appeal does not operate as stay
59Licensed deposit taker must have current credit rating
60Offence to fail to have current credit rating
61Bank may approve rating agencies
62List of approved rating agencies
63Bank may review approval
64Licensed deposit taker must notify Bank of change in rating
65Licensed deposit taker must notify Bank of credit watch warning
66Disclosure of credit rating on licensed deposit taker’s Internet site
67Other advertising of credit ratings
68Licensed deposit taker must not disclose or advertise credit ratings from non-approved agencies
69Licensed deposit taker must give public notice of downgrade
70Bank may grant exemptions from credit rating requirements
71Restriction on Bank’s exemption power
72Bank may issue standards
73Licensed deposit taker must comply with applicable standards
74Application of standards
75Procedure for issuing standards
76When procedural requirements do not apply
77Governance, incorporation structure, and ownership
78Capital, liquidity, security interests, and credit ratings
79Bail-in standards
80Fit and proper persons
81Lending and other exposures
82Classes of lending must be prescribed by regulations
83Application of lending standards may extend to non-deposit-taking lenders
84Risk management, business continuity planning, and problem assets
85Depositor compensation
86Covered bonds and securitisation
87Disclosure of information
88Contingency and recovery plans and facilitating resolution under Part 7
89Other matters
90Standards may require Bank’s approval
91Standards may provide for matters to be specified by conditions
92Duty of directors of licensed deposit takers
93Meaning of due diligence
94Prohibition on indemnities or insurance
95Permitted indemnities for certain liabilities or costs
96Permitted insurance for certain liability or costs
97Details of indemnity or insurance must be entered in interests register
98Prudential supervision
99Bank may require person to supply information for purposes of Act
100Offence to fail to supply information
101Bank may require report relating to licensed deposit taker or associated person
102Associated person must supply information
103Bank may require report to be published
104Offence to fail to give or publish report
105Requirement that information be audited or reviewed
106Offence to fail to obtain audit or review
107Disclosure of information to Bank by auditors
108Auditor to inform of intention to disclose
109Protection of auditor
110Admissibility of information
111Purpose
112Bank may conduct on-site inspection
113Person may be required to answer questions or give information
114Offence relating to on-site inspection
115Licensed deposit taker must monitor compliance
116Licensed deposit taker must report contraventions
117Offence to fail to monitor compliance and report contraventions
118Restriction on use of report
119Bank may require licensed deposit taker to take action in relation to contravention
120Bank’s consideration of remedial plan
121Bank may require amendment of remedial plan
122Remedial plan may also be amended with Bank’s approval
123Licensed deposit taker must comply with remedial plan
124Other provisions relating to remedial notices and plans
125Offence to contravene remedial notice, fail to give amended remedial plan, or fail to take steps to comply with remedial plan
126Bank may appoint investigator
127Power to obtain information
128Power to enter and search place
129Offences in relation to investigations
130Bank may make confidentiality order
131Disclosure with Bank’s consent
132Offence to contravene confidentiality order
133Bank may require its warning to be disclosed
134Procedural matters relating to order
135Other provisions relating to order
136Bank must give notice of orders
137Offence to fail to comply with order
138Access to information by overseas supervisor
139Bank must give notice of authorisation
140Authorisation may relate to particular customer or client
141Restriction on authorisation
142Duties of licensed deposit taker
143Offence to contravene duties
144Privilege against self-incrimination no excuse
145Admissibility of self-incriminating statements
146Effect of final decision that exercise of powers under section 99 or 127 unlawful
147Bank may accept voluntary undertaking
148When undertaking is enforceable
149What undertaking may include
150Undertakings that include payment of money
151Offence to contravene undertaking
152Court may enforce undertaking
153Court must take into account certain matters
154Proceedings for alleged contravention
155Licensed deposit taker or other person may withdraw or amend undertaking
156When court may make pecuniary penalty orders
157Maximum amount of pecuniary penalty
158Considerations for court
159Defences for person that contravenes prudential obligation
160Defence for person that is involved in contravention
161Court must order that recovery from pecuniary penalty be applied to Bank’s actual costs
162Rules of civil procedure and civil standard of proof apply
163Limitation
164Only 1 pecuniary penalty order may be made for same conduct
165No pecuniary penalty and criminal penalty for same conduct
166Relationship between concurrent pecuniary penalty proceeding and criminal proceeding
167Infringement offences
168When infringement notice may be issued
169Revocation of infringement notice before payment made
170What infringement notice must contain
171How infringement notice may be served
172Payment of infringement fees
173Reminder notices
174False or misleading declarations, representations, or other information
175Liability of directors if licensed deposit taker or associated person commits offence
176Power to ban certain persons from participating in deposit-taking business
177Type of order
178Other provisions relating to order
179Offence to contravene banning order
180Effect of appeal
181Appeal to High Court
182State of mind of directors, employees, or agents attributed to body corporate or other principal
183Conduct of directors, employees, or agents attributed to body corporate or other principal
184General defence for offences
185Time for filing charging document for certain offences
186Jurisdiction of courts in New Zealand
187Orders to secure compliance
188General provisions as to court’s orders
189Additional purpose of this Part
190Interpretation in this Part
191Meaning of protected deposit and related terms
192Licensed deposit taker must publish list of protected deposits
193When Bank may issue specified event notice
194Bank’s function under this Part
195Depositor Compensation Fund established
196Fund owned and managed on behalf of Crown
197What fund consists of
198Payments out of fund
199Bank may apportion expenditure
200Investments
201General entitlement rule
202Calculation of entitlement
203Protected deposit held by or on behalf of 2 or more persons jointly
204Protected deposit held by or on behalf of 2 or more persons other than jointly
205District Court may make order about shares
206Partnerships
207Bare trustees and providers of relevant arrangement not entitled to compensation
208Entitlement rule for deposits held on trust
209Protected deposit held under different trusts
210Trustee that is ineligible in own personal capacity does not prevent compensation being payable in relation to trust
211Regulations may provide for calculation of amount of person’s protected deposits or share of protected deposits
212Regulations may take into account transactions that have not been processed at quantification time
213Regulations may take into account funds that are withdrawn or available to eligible investors during resolution
214Regulations may impose conditions
215Liabilities owed to licensed deposit taker must be disregarded
216Bank may rely on licensed deposit taker’s records and information from eligible investors and other persons
217Bank may determine interest accrued
218Payment of entitlements
219Bank not required to pay compensation if cannot act with reasonable certainty
220Bank may establish account on behalf of eligible investor
221Persons may disclose information to Bank to facilitate payment of compensation
222Bank may disclose information to facilitate payment of compensation
223Restrictions on entitlement to compensation under scheme
224Protected deposit subject to security interest
225Recovery of compensation paid in excess or in error under scheme
226Bank’s right of subrogation
227Bank may apportion compensation to determine respective rights and remedies
228Subpart does not limit or affect other rights or remedies
229Bank may use fund to support resolution
230Bank must calculate maximum amount
231Maximum amount based on net amount of compensation payable in hypothetical liquidation
232Bank may apply fund money in manner it thinks fit
233Review of assessment
234Licensed deposit takers must pay levy for scheme
235Certain deposit takers not required to pay levy
236Interest on unpaid levy
237Levy regulations
238Minister must also have regard to other levy principles
239Minister must also have regard to statement of funding approach and Bank’s advice
240Bank must give advice about levy regulations
241Process for developing Bank’s advice
242Bank must publish levy advice
243Effect of failure to comply
244Minister must publish statement of funding approach
245Minister must consult Bank and seek views of public
246Contents of statement
247Deficiency in fund
248Financial statements of fund
249Statement of responsibility
250Auditor-General is auditor of fund
251Audit of financial statements
252Board must ensure that proper accounting records are kept
253Financial information about fund consolidated into Bank’s financial statements only if required by financial reporting standards
254Liquidator must give reasonable assistance to Bank
255Offence to hold out that product is protected deposit
256Additional purposes of this Part
257Bank must prepare and maintain orderly resolution plan for each licensed deposit taker
258Bank must publish statement of approach to resolution
259Content of statement of approach
260Review of statement of approach
261Failure to comply with subpart does not affect validity of Bank’s actions
262Bank may give directions to licensed deposit taker
263Bank may give directions to associated person
264Scope of directions
265Direction must be in writing and state grounds
266Bank may approve sale or disposition
267Power to remove, replace, or appoint director of licensed deposit taker
268How Bank exercises power to remove, replace, or appoint director
269Prohibition on disclosing or publishing direction or notice
270Offence to contravene prohibition
271Resolution of licensed deposit takers and associated persons
272Resolution of subsidiaries
273Resolution for overseas persons
274Date on which, and time at which, resolution starts
275Questions about whether transactions are before or after resolution
276Limitation on application of provisions to covered bond and certain other securitisation SPVs
277Grounds on which licensed deposit taker may be declared to be in resolution
278Grounds on which associated person may be declared to be in resolution
279End of resolution
280Application of resolution provisions to other persons in resolution
281Moratorium
282Period of moratorium
283Bank must publish notice on Internet site
284Restriction on resolution trigger
285Person may commence or continue proceeding with leave
286Bank may waive application of moratorium and restriction on resolution trigger
287Moratorium and restriction on resolution trigger do not affect existence or priority of security interest
288Moratorium does not limit or prevent obligations incurred or rights granted after deposit taker enters resolution
289Moratorium and restriction on resolution trigger do not limit or affect certain rights under netting agreement or rights under rules of designated FMI
290Moratorium does not limit or prevent certain things in relation to derivatives, etc
291Restriction on resolution trigger does not limit or prevent certain things in relation to derivatives, etc, after stay
292Bank may reduce or extend stay
293Matters Bank must be satisfied of when reducing or extending stay
294Publication of notice
295Bank is resolution authority
296Function of resolution authority
297Bank must supervise resolution manager
298Bank must regularly report to Minister on conduct of resolution
299Management of licensed deposit taker vests in resolution manager
300Directors, managers, and other persons may act only with resolution manager’s permission
301Resolution manager’s general powers
302Resolution manager has powers of deposit taker and of its shareholders, members, and board
303Resolution manager may carry on business of licensed deposit taker
304Resolution manager may pay creditors and compromise claims
305Resolution manager may offer and issue deposit taker’s financial products
306Resolution manager may disclaim onerous property
307Resolution manager may trace property improperly disposed of
308Order may not deprive good-faith purchaser for value
309Resolution manager may change balance date
310Bank’s investigation powers
311Bank may form body corporate to acquire New Zealand business
312Vesting does not affect deposit taker’s obligations or place it in breach
313Body corporate is also subject to resolution
314Vesting of property or rights subject to security interest
315Proof of vesting
316Bank’s disposal power
317Bank may dispose of business undertaking, etc, to bridge institution or asset management vehicle
318Body corporate is also subject to resolution
319Consents not required under other legislation or agreement, and transactions do not constitute breach
320Bank may sell, transfer, or dispose of property despite security interest
321When proceeds of sale of licensed deposit taker’s property must be paid to holder of security interest
322When property continues to be subject to security interest
323When proceeds of sale of shares or property of new body corporate must be paid to holder of security interest
324Kind of security interest referred to in various sections
325Proof of transactions
326Provisions applying where liabilities included in sale
327Bank may suspend payment of money owing
328Bank may not suspend or cancel obligation incurred after deposit taker enters resolution
329Bank may not suspend payment of amount included in netted balance
330Bank’s or resolution manager’s powers under regulations
331Court may give directions
332Application of certain provisions of Companies Act 1993
333Application of other Acts
334Bank, resolution manager, and other persons are not directors under any legislation
335Prior insolvency process must cease
336Continuation of resolution if restored
337Appointment of auditors
338Existing auditor ceases to hold office
339Bank may remove auditor from office
340Auditor’s fees
341Auditor’s rights
342Offence to remove property
343Offence to destroy, alter, or conceal records
344Expenses of resolution
345Rules relating to subsidiaries do not apply
346When this subpart applies
347Minister may direct Bank relating to exercise of resolution power
348Procedural requirements
349Resolution manager must act to further purposes of this Part
350Resolution manager must comply with directions of Bank
351Resolution manager must consult and have regard to Bank advice
352Resolution manager must regularly report as required by Bank
353Resolution manager must report annually on conduct of resolution
354Bank may appoint resolution manager
355Bank may appoint itself as resolution manager
356Bank holds office as resolution manager if no other person holds office
357How this Part applies if Bank holds office as resolution manager
358How 2 or more resolution managers may act
359Bank may terminate appointment of resolution manager
360Resolution manager may resign
361Bank may appoint replacement
362Resolution manager continues in office
363Licensed deposit taker continues to be in resolution
364Interpretation in this subpart
365Eligibility for compensation under this subpart
366Minister must appoint valuer
367Functions of valuer
368Valuer must act in manner prescribed by regulations
369Valuer must prepare list of pre-resolution creditors and shareholders
370Valuer must determine compensation by reference to difference between liquidation value and resolution value
371Liquidation value
372Resolution value
373Discount rate
374Valuer’s draft report
375Valuer must give draft report to Minister and Bank
376Minister or Bank may require valuer to reconsider
377Valuer must finalise and publish report
378Valuer must send compensation notice
379Bank must make available public information if compensation notice cannot be sent
380Bank must manage and administer payments of compensation
381Bank must pay in accordance with regulations
382Crown must provide money necessary to pay compensation
383Transfer of entitlement by assignment or operation of law
384Valuer may require person to supply information for purposes of this subpart
385Offence to fail to supply information
386Person required to give information has same privileges as witnesses in court
387Use of information and confidentiality
388Appeal against valuer’s decision on question of law
389Time for bringing appeal
390Appeals to Court of Appeal
391No limit on judicial review
392Who may be appointed as valuer
393Application of this subpart to joint valuers
394Appointment notice must be published
395Minister may terminate appointment of valuer
396Valuer may resign
397Valuer continues in office
398Valuer’s costs, charges, and expenses
399Valuer’s duties in relation to records
400Interpretation
401Meaning of covered bond SPV
402Meaning of issuer
403Issuer may issue covered bond only under registered programme
404Register of registered covered bond programmes
405When programme must remain or be removed from register
406Other matters relating to registration
407Application for registration of covered bond programme
408Determination of application for registration of covered bond programme
409Bank must approve or decline application
410Bank must give notice of approval
411Bank must give notice of proposal to decline application
412Bank and issuer may agree to modify time limits
413Requirements relating to registered covered bond programmes
414Bank may require corrective action
415Offence to fail to take corrective action
416Cover pool monitor
417Cover pool monitor must perform certain services under contract
418Limitation on application of resolution, statutory management, etc, provisions to covered bond SPV
419Liquidation of licensed deposit takers and associated persons
420When court may appoint liquidator
421Licensed deposit taker not entitled to be informed about exercise of powers under this Part
422Limit on use of restricted words in name or title
423Offence to contravene limit on use of restricted words
424When restriction does not apply
425Bank may authorise particular persons to use restricted words in name or title
426Bank may authorise class of persons to use restricted words in name or title
427Authorisation extends to Registrar of Companies, etc
428Bank’s policies for giving authorisation
429Conditions
430Application of Companies Act 1993
431Limit on use of restricted words in advertisement
432Offence to contravene advertising limit
433Power to require change of name, etc
434Offence to contravene requirement to change name, etc
435Interpretation in this subpart
436Trans-Tasman co-operation
437Bank’s duty to consult
438Failure to comply with subpart does not affect validity of Bank’s actions
439Disclosure of information by Bank
440Relationship with other Acts
441Offence to make unauthorised disclosure
442Conditions relating to disclosure of information
443Restrictions on further disclosure of information
444Offence for unauthorised disclosure or use
445When subpart applies
446Bank may require particular persons to comply with specified requirements
447Bank may require class of persons to comply with requirements
448Requirements that may be specified
449Bank may also require further information
450Bank may refuse to act if requirements not complied with
451General regulations
452Regulations relating to depositor compensation scheme
453Regulations prescribing classes of persons that are not eligible investors
454Regulations prescribing matters relating to protected deposits
455Regulations providing for licensed deposit takers that do not issue protected deposits
456Bank must give advice about regulations providing for licensed deposit takers that do not issue protected deposits
457Regulations providing for temporary high balance limits
458Bank must give advice about regulations for temporary high balance limits
459Regulations providing for calculation of amount of person’s protected deposits or share of protected deposits
460Regulations providing for transactions that have not been processed
461Regulations providing for taking into account funds that are withdrawn or available to eligible investors during resolution
462Licensed deposit takers must pay levy to allow Crown to recover cost of public support
463Bank or prescribed person collects levy on behalf of Crown
464Interest on unpaid levy
465Levy regulations
466Process matters for recommendation
467Consultation about proposed levy regulations
468Effect of failure to comply
469How notices, directions, and other documents must be given
470When certain notices, directions, or documents treated as given
471Meaning of deposit taker
472Repeals
473Principal Act
474Section 10 amended (Bank’s functions)
475Section 74 amended (Ability to delegate)
476Section 182 amended (Protection for certain persons)
477Section 189 amended (Crown indemnities in relation to statutory management)
478New section 190A and cross-heading inserted
190ABank’s warnings, reports, guidelines, or comments protected by qualified privilege
479Section 240 amended (Form and content of annual report)
480Principal Act
481Section 6 amended (Interpretation)
482Section 22 amended (False or misleading representations)
483Schedule 1 amended
484Principal Act
485Section 8 amended (Appropriation limited by amount)
486New sections 25B and 25C inserted
25BWhen Minister may exercise certain powers in connection with financial institution in serious financial difficulties
25CExpenses or capital expenditure in connection with financial institution in serious financial difficulties
487Section 27 amended (Annual financial statements of Government)
488Principal Act
489Section 8 amended (Meaning of carrying on insurance business in New Zealand)
490Consequential amendments

The Parliament of New Zealand enacts as follows: