Changes for investment companies offering shares to protect investors
Wednesday 17 May 17 2:42pm
FMA: Investors will benefit from greater protection due to a change in the way the Financial Markets Authority (FMA) will treat certain companies offering shares.
Under the Financial Markets Conduct Act 2013, the FMA is able to designate products based on their economic substance, rather than their legal form.
From May 19, a class designation comes into effect so that the FMA will treat newly issued shares in investment companies as a managed investment products (MIP). Shares will fall within the designation if they are issued by an investment company, and there are reduced powers for shareholders and/or entrenched key service provider arrangements.
Investors will benefit because of enhanced disclosure, governance and licensing requirements for managed investment products when compared to the rules governing shares. The requirements include having a licensed manager and a licensed supervisor, who have a statutory duty to act honestly and in the best interests of investors. More>