A Survey of Legal and Regulatory Trends
Edited by P. M. Vasudev and Susan Watson
Chapter 8: A critical examination of crowdfunding within the ‘Long White Cloud’ (New Zealand)
The enactment of the Financial Markets Conduct Act 2013 (‘FMC Act’) marked a significant shift in the focus and objectives of New Zealand’s capital-raising laws. In contrast to the previous regime, where the predominant focus was investor protection through full disclosure, the FMC Act adopts a multi-participant perspective. In addition, the promotion of innovation and flexibility in financial markets is an express objective of the new regime. An illustration of this objective is that the FMC Act and associated regulations expressly permit equity crowdfunding in New Zealand. Any offer of equity securities to the public through or by a crowdfunding intermediary is an exception to the disclosure requirements for regulated offers of financial products set out in Part 3 of the FMC Act. The focus of crowdfunding regulation under the FMC Act is on the licensing of crowdfunding intermediaries, as any service provider who operates a crowdfunding platform must hold a market service licence issued by New Zealand’s Financial Markets Authority. This chapter reviews the licensing and operational requirements for crowdfunding intermediaries in New Zealand. The FMC Act and FMC Regulations place primary responsibility for managing the risks arising in equity crowdfunding on service providers, whose responsibilities include the selection of issuers and investor protection warnings for investors. The chapter also considers the adequacy of these measures. Keywords: • New Zealand crowdfunding regulation • New Zealand Financial Markets Conduct Act 2013 • New Zealand Financial Markets Authority • Crowdfunding Service Providers • Investor protection • Reporting requirements
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