Monday, 15 August 2011

New Zealand: securities law reform - draft of the Financial Markets Conduct Bill published

An exposure draft of the Financial Markets Conduct Bill has been published for consultation by the Ministry of Economic Development (MED): see here (pdf). Explanatory notes are available here (pdf). Background information is available here.

There is much in the draft Bill including some proposed amendments to the Companies Act (1993). Whether these amendments make it into the final Bill remains to be seen because MED has stated that they may be introduced in a separate Bill amending the 1993 Act. The first of these, in clauses 550 to 551, will increase the maximum period for which a person may be prohibited by the Financial Markets Authority or Registrar of Companies from managing a company from five to ten years; the court is to be given the power to disqualify directors for an indefinite period.

The draft Bill also makes provision, in clause 548, for the introduction of a new criminal offence in respect of the acts or omissions of directors which breach Section 131 (the duty to act in good faith and in best interests of company) of the Companies Act (1993) in circumstances where the director knew that the act or omission was seriously detrimental to the interests of the company. The penalties on conviction are those set out in Section 373(4) of the 1993 Act, which will be amended to include a reference to this new offence.

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