The Financial Markets Conduct Amendment Bill (FMCAB) has passed its first reading, proposing a significant new change-of-control regime for financial sector mergers and acquisitions. This proposed regime will require Financial Markets Authority (FMA) approval for transactions involving a change of control of Financial Markets Conduct Act (FMCA) licensees or their authorised bodies. The FCMAB aims to enhance regulatory oversight and ensure market integrity in the financial services sector.
The Bill can be found here.
Who needs to read it? Why?
This alert is relevant to anyone who may look to acquire an interest in a licensed entity or authorised body such as:
- Fund managers and trustees of retail funds.
- Financial advice providers.
- Discretionary investment management service (DIMS) providers.
- Derivatives issuers.
These groups should be aware of the new approval requirements as the changes proposed may impact transaction timelines and deal structures.
What does it cover?
The FMCAB outlines three types of “proposed changes” to the control of a licensee or authorised body that will require FMA approval. These include:
- Obtaining of significant influence over a licensee or an authorised body. “Significant influence” includes acquiring 25% or more of voting rights or the right to appoint 50% or more of the board.
- Entering into a significant transaction. A significant transaction is one where a licensee or authorised body, whether overseas or domestic, either transfers or acquires all or a material part of a business, such that the transaction materially affects the scope or scale of their operations in New Zealand.
- The amalgamation of a licensee or authorised body with one or more other persons.
A notification (but not approval) requirement applies to overseas licensees undergoing a change of control, unless they are selling a material part of their New Zealand business.
The FMA will assess whether the licensee or authorised body will continue to meet regulatory requirements after the proposed change. It may consult the Reserve Bank if applicable and must decide—approving with or without conditions, or refusing—within 20 working days of receiving all necessary information and reports.
While failure to obtain approval does not invalidate the change, it may result in civil liability, and any conditions imposed by the FMA must be complied with.
Our view
This change aligns the FMCA regime with existing controls for banks and insurers together with the new regime in the Deposit Takers Act 2023. It enhances regulatory scrutiny over who controls licensed financial entities, which is crucial for maintaining trust and stability in the sector. However, it may introduce additional complexity and timing considerations for M&A transactions. In practice, we generally advise engaging with the FMA early, and in any event, we recommend initiating contact during the deal planning process.
What next?
The FMCAB is currently before the Finance and Expenditure Committee. Public submissions are open and must be made by 23 June 2025. Submissions can be made here. If you have any questions about the proposed changes, how they may affect your business, or would like assistance in making a submission on the Bill, please contact one of our experts.
This article was co-authored by Olivia Maher, a Law Clerk in our Financial Services team.
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