Supervision For Trustees To Improve With New Bill
New laws is pleased to bring you this post on a new Bill to improve the supervision of trustees and to attempt to plug gaps which were highlighted by the collapse of so many companies in the finance sector in recent years. With the continuing earthquakes in the Christchurch region it is opportune to be able to focus on other aspects of the economic recovery in New Zealand.
The Bill, to be known as the Securities Trustees and Statutory Supervisors Bill will mean that all corporate trustees, including Statutory supervisors for retirement villages and non restricted KiwiSaver schemes will henceforth be required to be licensed. It will be an important addition to New Zealand Laws.
“The licensing regime addresses the performance problems of trustees, which were highlighted in the finance company collapses, and will help to protect investors’ interests and enhance market confidence,” Minister, Simon Power said.
New Laws understands that the scheme is to be overseen by the Financial Markets Authority (FMA) which will have the power to grant licenses to applicants which satisfy certain conditions to include evidencing that they have suitable monitoring systems as well as the requisite experience, processes and policies along with the necessary infrastructure and financial resources.
Directors and those in senior management of trustee companies will henceforth also be investigated against ‘good character’ requirements.
“This bill will protect the interests of investors by requiring trustees and statutory supervisors to be competent, perform their functions effectively, and be held accountable by the FMA if they fail to meet expected standards.
“The FMA will keep a close eye on trustees, which will have to provide regular reports on their compliance with the terms of their licence. The FMA will also have increased powers to require information from trustees and order them to act in situations when investors’ interests are at risk.”
The powers of the FMA for breach will include the ability for it to impose financial penalties and orders for compensation on behalf of investors. Any failure to comply with an order of the FMA will be an offence under the Bill and come with a possible penalty of up to $200,000.
“The penalties and compensation orders in the bill go a long way towards ensuring that if a trustee acts negligently, investors will be able to obtain proper redress.”
The new regime is expected to come into law effective from 1 October as the Government pushes through a number of new laws prior to the election including the expected abolition of gift duty signalled some time ago.
This new laws blog aims to bring you relevant posts on chnages to New Zealand Laws as they come are introduced to the house and eventually pass into new law. If you require specific legal advice then you should contact your Christchurch Lawyer or in the case of property, your expert in property law.