Page 25 - English-DBINZ brochure-2019

Buddle Findlay 22

and requirements relating to the corporate governance of the registered bank. Banks that become
systematically important (ie the bank’s New Zealand liabilities exceed NZ$15b) are subject to additional
requirements.
Registered banks must also publish quarterly disclosure statements and the credit rating of the
registered bank.

Other financial institutions

Financial institutions that are in the business of borrowing and lending money or providing financial
services (or both) and offer debt securities to the public (a “non-bank deposit taker”) are also regulated
by the Reserve Bank in accordance with the Non-bank Deposit Takers Act 2013. A financial institution
can be declared to be a non-bank deposit taker by regulation (and therefore be subject to the non-bank
deposit takers regime).

Any financial institution that wants to carry out the activities of a non-bank deposit taker (as defined
above) needs to obtain a licence before providing these activities. Non-bank deposit takers can apply
for a licence from the Reserve Bank by submitting a licence application form, a suitability notice for each
director and senior officer and providing financial information (and in some circumstances, information
about the non-bank deposit taker’s controller).
As with registered banks, the Reserve Bank imposes various restrictions on non-bank deposit takers in
relation to their corporate governance structure and their compliance with credit rating requirements,
capital adequacy requirements and related party transaction restrictions. These restrictions may be
imposed as conditions on the licence granted by the Reserve Bank to the non-bank deposit taker.
The Reserve Bank largely relies on the trustee of the non-bank deposit taker (as required by the FMCA
for issuers of debt securities) to monitor whether the non-bank deposit taker is complying with these
prudential requirements (which will form part of the relevant trust deed). The trustee is obliged to report
to the Reserve Bank if the trustee believes that there has, or may have been, or is likely to be, a material
breach of these prudential requirements.
Financial institutions that take deposits from the public must also comply with the FMCA. For further
discussions on the requirements of these enactments, see the section on securities regulation on
page 13.

Financial institutions that provide consumer finance in New Zealand but do not offer debt securities
in New Zealand (eg because they only raise funds in wholesale markets or from banks or their parent
companies) are not prudentially regulated. The only registration requirement is as a Financial Service
Provider (see the separate section on Financial Service Providers on page 19). The obligations of
Financial Service Providers are not typically particularly onerous.

Raising finance in New Zealand

New Zealand operates a relatively unrestricted system for raising and providing finance, both
domestically and internationally, with no specific approvals or similar regulatory restrictions or controls
for onshore or foreign borrowing or lending (with the exception of the law relating to the issue of
securities, which is outlined on page 13).