(css: "font-family: Arial Black")[Are you offering financial products (including shares, options, convertible notes, or similar) in New Zealand?]
Broadly, financial products are offered in New Zealand if the offer is //received// by a person in New Zealand. This applies regardless of whether or not the company offering the financial products is based, or incorporated, in New Zealand.
[[Yes, I am offering financial products in New Zealand]]
[[No, I am not offering financial products in New Zealand]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to //Relatives// (under clause 5 of Schedule 1 of the FMCA).
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Is the investor a //Close Business Associate// of the company, or of a director or senior manager of the company?]
Broadly, the categories of //Close Business Associate// (as defined in the FMCA) most likely to apply to a company raising capital in New Zealand are:
* a director or senior manager of the company or of a related body corporate (//related// for this purpose has a specific meaning - see <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4090933.html" target="_blank">s12(2) of the FMCA</a> for the full definition. As an example, a subsidiary and its holding company are //related//)
* a holder/controller of 5% or more of the company’s voting shares
* a spouse, civil union partner, or de facto partner of any of the people described above
* a child, parent, or sibling (including by a step relationship) of any of the people described above, or
* a person with a close professional or business relationship with the company, or with a director or senior manager of the company, that allows that person to:
** assess the merits of the offer, or
** obtain information from the company, or any other person involved in the offer, that will enable them to assess the merits of the offer.
While that last category looks appealing, the courts have traditionally interpreted these types of provisions pretty narrowly. We'd recommend approaching it with caution - it's not meant to be a //get out of jail free// card.
The full list of people that qualify as //Close Business Associates// under the FMCA is extensive. If the investor doesn't fit within one of the categories described above, but is a person that you think might still be considered a close business associate, it's worth investigating <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092374.html" target="_blank">clause 4 of Schedule 1 of the FMCA</a> further.
[[Yes, the investor is a Close Business Associate]]
[[No, the investor is not a Close Business Associate]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to //Close Business Associates// (under clause 4 of Schedule 1 of the FMCA).
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Is the investor paying at least $750,000 for the financial products?]
Or, if this isn't a one-off investment of $750,000 or more, is it part of one or more investments that the investor has already made in the company for financial products of the same class, which in total add up to $750,000 or more?
[[Yes, this counts as an investment of at least $750,000]]
[[No, this does not count as an investment of at least $750,000]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Does the investor qualify as a //wholesale investor// because they are experienced in //Investment Activity//?]
The investor will meet the //Investment Activity// criteria under the FMCA if any of the following statements apply:
* The investor owns, or at any time in the last 2 years has owned, a portfolio of //Specified Financial Products// of at least NZ$1 million (in aggregate, and including those financial products owned by any entities controlled by them).
* The investor (or an entity controlled by them) has, during the last 2 years, carried out 1 or more transactions to acquire //Specified Financial Products// where:
** the amount payable under those transactions (in aggregate) is at least NZ$1 million, and
** the other parties to the transactions are not //Associated Persons// of the investor.
* If the investor is an individual (i.e. not investing through a company or trust structure), they have, within the last 10 years:
** been employed or engaged in an investment business, and
** for at least 2 years during that 10 year period, participated to a material extent in the investment decisions made by that business.
**Note:**
* //Specified Financial Products// has a specific meaning for this purpose - see <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092471.html" target="_blank">clause 38(4) of Schedule 1 of the FMCA</a> for the full definition. Briefly, shares, options or convertible notes issued by a company that isn't an //Associated Person// of the investor will qualify as //Specified Financial Products//.
* //Associated Persons// also has a specific meaning for this purpose - see <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4090933.html" target="_blank">s12(1) of the FMCA</a> for the full definition. We recommend reviewing the full definition carefully before relying on the //Investment Activity// Schedule 1 exclusion. However, very briefly, a company will qualify as //associated// with the investor if the investor can control the company's actions, or 25% or more of the company's voting shares.
[[Yes, the investor is experienced in Investment Activity]]
[[No, the investor is not experienced in Investment Activity]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to investors who qualify as //wholesale investors// because they are an //Investment Business// (under clauses 3(2)(a) and 37 of Schedule 1 of the FMCA).
**However**, in our view, you shouldn't rely on this Schedule 1 exclusion without having the investor provide you with a [[safe harbour certificate->Can you give me some more detail about these safe harbour certificates?]] as a condition of investment.
Kindrik Partners has created a template certificate that can be used as a safe harbour certificate for the purposes of this exclusion. The template (called the (css: "color: #c00000")[wholesale investor certificate]) is available on our website <a href="https://kindrik.co.nz/templates/" target="_blank">here</a>.
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>
(css: "font-family: Arial Black")[Does the investor qualify as a //wholesale investor// because they are //Large//?]
The investor is //Large// for the purposes of the FMCA if 1 of the following statements applies:
* As at the last day of each of the investor's 2 most recently completed financial years, their net assets (together with the net assets of any entities controlled by them) exceeded NZ$5 million.
* In each of the investor's 2 most recently completed financial years, their total consolidated turnover (together with the turnover of any entities controlled by them) exceeded NZ$5 million.
[[Yes, the investor is Large]]
[[No, the investor is not Large]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Does the investor qualify as a //wholesale investor// because they are an //Eligible Investor//?]
To be an //Eligible Investor//, the investor must have previous investment experience that allows them to assess the merits of your offer, their own information needs in relation to your offer, and the adequacy of the information provided to them in connection with your offer.
**Note:** The NZ Financial Markets Authority has publicly commented that attending training is not, in itself, sufficient to qualify as previous investment experience for the purposes of the //Eligible Investor// Schedule 1 exclusion. I.e. some involvement in actual investment activity is required.
[[Yes, the investor is likely to qualify as an Eligible Investor]]
[[No, the investor is unlikely to qualify as an Eligible Investor]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you may have found a Schedule 1 exclusion that fits!]
**However**, there are 3 requirements to satisfy before you and your investor can rely on the //Eligible Investor// Schedule 1 exclusion.
**Requirement 1 (self-certification):** In order for an investor to qualify as an Eligible Investor, they must first self-certify that:
* they have previous investment experience that allows them to assess:
** the merits of the investment or class of investments (including assessing the value and the risks of the financial products involved)
** their information needs in relation to the investment or class of investments, and
** the adequacy of any information provided, and
* they understand the consequences of certifying themselves as an Eligible Investor.
The investor must also state in their certificate the grounds for their self-certification.
**Requirement 2 (independent confirmation):** The investor must arrange for an independent adviser to confirm their self-certification in writing. <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092482.html" target="_blank">Clause 42(2) of Schedule 1 of the FMCA</a> includes detailed provisions relating to the level of independence required of the independent adviser.
Briefly, the adviser must be a lawyer, qualified statutory accountant or financial adviser, and they must be independent from the company offering the financial products to the investor. In the case of a qualified statutory accountant or financial adviser, they cannot have provided professional services to the company within the last 2 years.
**Requirement 3 (company assessment):** Finally, as the company making the offer you must not believe, or have reason to believe, that:
* the investor doesn't actually have the experience described in their self-certificate, or
* the investor's independent adviser is not sufficiently independent from you.
(css: "line-height: 0")[**Note:** The investor's certificate must meet specific requirements. It must:]
* be a separate written document
* include a warning statement at the front (in a prominent position) in the form prescribed in clause 47 of Schedule 8 of the FMC Regulations ([[show me an example Eligible Investor warning statement]]), and
* specify the offer of financial products, or other relevant transaction or class of relevant transactions to which the certificate applies.
[[The investor already has a certificate - can we use that one?]]
[[Any chance there's a template certificate the investor can use, if they don't already have one?]]
[[This is a lot to process - take me back a step->No, the investor is not Large]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Alright, on the face of it there isn't a perfect Schedule 1 exclusion to fit your particular investor. However, before losing all hope we suggest you <a href="https://kindrik.co.nz/contact/" target="_blank">have a chat to us</a> (or another qualified lawyer experienced in this area).
For example, you may find that your offer to the investor qualifies for the //Small Offers// Schedule 1 exclusion ([[tell me more about Small Offers]]).
[[Head back to the start->Front page]]
<a href="https://kindrik.co.nz/contact/" target="_blank">Get in touch with Kindrik Partners</a>
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to investors whose total investment amounts in a company (for a single class of financial products) are at least $750,000 (under clause 3(3)(b) of Schedule 1 of the FMCA).
**However**, this exclusion requires the company issuing the financial products to:
* ensure that a warning statement is included at the front (in a prominent position) of every document provided to the investor that contains the key terms of the offer. The warning statement must be in the form prescribed in clause 4 of Schedule 8 of the Financial Markets Conduct Regulations 2014 (**FMC Regulations**) ([[show me an example warning statement]]), and
* obtain from the investor a written acknowledgment in the form prescribed in clause 5 of Schedule 8 of the FMC Regulations before accepting the investor's application or issuing any financial products ([[show me an example written acknowledgement]]).
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Does the investor qualify as a //wholesale investor// because they are an //Investment Business//?]
The FMCA lists several categories of businesses that qualify as an //Investment Business//. Describing them all here wouldn't be practical but, broadly, the investor will qualify for this exclusion if it is a company whose principal business consists of:
* investing in financial products, and/or
* trading in financial products on behalf of other persons.
Keep in mind that entities cannot have been established or acquired with a view to taking advantage of this particular exclusion.
The full list of people that qualify as an //Investment Business// under the FMCA is extensive and technical. If the investor doesn't fit within either of the 2 categories described above, but is a business that you think might still be considered an investment business, it's worth investigating <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092469.html" target="_blank">clause 37 of Schedule 1 of the FMCA</a> further. You may find that another category of //Investment Business// applies.
[[Yes, the investor is an Investment Business]]
[[No, the investor is not an Investment Business]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to investors who qualify as //wholesale investors// because of their previous //Investment Activity// (under clauses 3(2)(b) and 38 of Schedule 1 of the FMCA).
**However**, in our view, you shouldn't rely on this Schedule 1 exclusion without having the investor provide you with a [[safe harbour certificate->Can you give me some more detail about these safe harbour certificates?]] as a condition of investment.
Kindrik Partners has created a template certificate that can be used as a safe harbour certificate for the purposes of this exclusion. The template (called the (css: "color: #c00000")[wholesale investor certificate]) is available on our website <a href="https://kindrik.co.nz/templates/" target="_blank">here</a>.
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products to investors who qualify as //wholesale investors// because they are //Large// (under clauses 3(2)(c) and 39 of Schedule 1 of the FMCA).
**However**, in our view, you shouldn't rely on this Schedule 1 exclusion without having the investor provide you with a [[safe harbour certificate->Can you give me some more detail about these safe harbour certificates?]] as a condition of investment.
Kindrik Partners has created a template certificate that can be used as a safe harbour certificate for the purposes of this exclusion. The template (called the (css: "color: #c00000")[wholesale investor certificate]) is available on our website <a href="https://kindrik.co.nz/templates/" target="_blank">here</a>.
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>**Warning**
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors to make an informed decision.
If you are a wholesale investor, the usual rules do not apply to offers of financial products made to you. As a result, you may not receive a complete and balanced set of information. You will also have fewer other legal protections for these investments.
Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.
**Offence**
It is an offence to give a certificate knowing that it is false or misleading in a material particular. The offence has a penalty of a fine not exceeding $50,000.
[[Ok, got it->Can you give me some more detail about these safe harbour certificates?]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Does your investor have to provide anything in return for the financial products (which may be money, services in kind, etc.)?]
If you're issuing options, and your investor has to provide any kind of consideration at the time they exercise their options and receive shares, then the answer to this question is yes.
[[Yes, the investor is to provide consideration of some kind for the financial products]]
[[No, the financial products are a gift in the truest sense of the word]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Your offer of financial products will not need to comply with the FMCA's disclosure regime (not because of a Schedule 1 exclusion, but because the disclosure regime applies only to offers of financial products in New Zealand).
**However**, if you are offering financial products outside New Zealand, your offer will need to comply with the securities laws of your investor's home jurisdiction (i.e. that jurisdiction's own version of the FMCA). You, or your investor, may need to seek specialist advice in that jurisdiction to ensure that your offer is compliant before proceeding.
Come find us at <a href="https://kindrik.co.nz" target="_blank">Kindrik Partners</a> for a chat if you have any questions - we may be able to help, or point you in the direction of a local specialist who can.
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a><b>Warning</b>
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision.
The usual rules do not apply to this offer because there is an exclusion for offers where the amount invested upfront by the investor (plus any other investments the investor has already made in the financial products) is $750,000 or more. As a result of this exclusion, you may not receive a complete and balanced set of information. You will also have fewer other legal protections for this investment.
Investments of this kind are not suitable for retail investors.
Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.
[[Got it, take me home ->Yes, this counts as an investment of at least $750,000]]
<a href="https://kindrik.co.nz" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>I confirm that I understand that –
* the usual legal rules that require information to be given to investors for offers of financial products do not apply if the amount invested upfront by me (plus any other investments I have already made in those financial products) is $750,000 or more; and
* I may not receive a complete and balanced set of information about this investment; and
* I have fewer legal protections for this investment; and
* this investment is not suitable for retail investors; and
* I have been advised to ask questions, read all documents carefully, and seek independent financial advice.
[[Got it, take me home ->Yes, this counts as an investment of at least $750,000]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Broadly, the FMCA contains a safe harbour regime that requires an investor to be treated as a //wholesale investor// because they are (i) an //Investment Business//, (ii) previously experienced in //Investment Activity//, or (iii) //Large//, if they self-certify in writing that:
* they are a //wholesale investor// because they fit within the //Investment Business//, //Investment Activity// or //Large// categories under Schedule 1 of the FMCA, and
* they understand the consequences of certifying themself as a //wholesale investor//.
The investor must also state in their safe harbour certificate the grounds upon which they qualify for the relevant //wholesale investor// category.
Safe harbour certificates are discussed in more detail in <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092486.html" target="_blank">clause 44 of Schedule 1 of the FMCA</a>.
A safe harbour certificate must be a separate written document, and must include a warning statement at the front (in a prominent position) in the form prescribed in clause 48 of Schedule 8 of the FMC Regulations ([[show me an example warning statement->show me an example warning statement.]]).
[[Ok, got it->Yes, the investor is an Investment Business]]
[[The investor already has a safe harbour certificate - can we use that one?]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Why yes, yes there is.
Kindrik Partners has created a template certificate that can be used as an //Eligible Investor's// self-certificate for the purposes of this exclusion. The template (called the (css: "color: #c00000")[wholesale investor certificate]) is available on our website <a href="https://kindrik.co.nz/templates/" target="_blank">here</a>.
[[Ok, got it ->Yes, the investor is likely to qualify as an Eligible Investor]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Yes, an investor, and companies making an offer to that investor, may rely on a valid certificate and independent confirmation for up to 2 years, as long as the certificate still ticks all the boxes described in the previous step.
[[Ok, got it->Yes, the investor is likely to qualify as an Eligible Investor]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>**Warning**
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision.
If you give this certificate, the usual rules do not apply to offers of financial products made to you. As a result, you may not receive a complete and balanced set of information. You will also have fewer other legal protections for these investments.
Make sure you understand these consequences.
Ask questions, read all documents carefully, and seek independent financial advice before committing yourself.
**Offence**
It is an offence to give a certificate knowing that it is false or misleading in a material particular. The offence has a penalty of a fine not exceeding $50,000.
[[Ok, got it ->Yes, the investor is likely to qualify as an Eligible Investor]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black; color: #c00000")[**why am I here?**]
Kindrik Partners has created this //choose your own adventure//-style tool to help companies identify whether their prospective investor(s) qualify for one or more of the exclusions set out in Schedule 1 of the FMCA.
(css: "font-family: Arial Black; color: #c00000")[**why is that important?**]
Offers of financial products (including shares, options, and convertible notes) are regulated by the FMCA.
Unless one or more of the Schedule 1 exclusions applies, a company cannot offer or issue financial products to //anyone// (be they an individual, a company, a trust, etc.) without going through the full disclosure process set out in Part 3 of the FMCA.
That full disclosure process takes significant amounts of time and money. And when we say significant, we mean heaps.
[[Alright, lead on]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>
A trustee of a trust will qualify as a //Relative// under the FMCA if they are a trustee:
* of a trust under which a director or //Relative// of a director of the company is a beneficiary who:
** is presently entitled to a share of the trust estate or of the income of the trust estate, or
** is, individually or together with other beneficiaries, in a position to control the trustee, or
* of a trust where:
** the trust is a family trust within the meaning of <a href="http://www.legislation.govt.nz/act/public/1994/0166/latest/DLM357961.html" target="_blank">s173M(5) of the Tax Administration Act 1994</a>, and
** a majority of the individuals who are beneficiaries under the trust are //Relatives// of a director of the company.
[[Ok, got it ->Yes, the investor is to provide consideration of some kind for the financial products]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black; color: #c00000")[**housekeeping: scope of the tool**]
To avoid turning this into a Tolkien-style epic:
* We've used the phrase //investor// generically for the people (including companies and other entities) to whom you are offering your financial products. If your investor is a company or a trust, keep in mind that the exclusions discussed in this tool will apply if either (i) the company or the trust itself qualifies directly, or (ii) a person who <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092495.html" target="_blank">controls</a> that entity qualifies for the exclusion.
* We've focused on the exclusions that we think are most likely to be of use to private (unlisted) companies raising capital in New Zealand (the full list of exclusions is numerous and wide-ranging).
* We've also had to leave out the following potentially helpful exclusions:
** //Small Offers//, because this is a particularly finickity exclusion and we suggest that anyone planning to use it take specialist advice beforehand ([[tell me more about Small Offers]])
** offers made in connection with an //Employee Share Option/Purchase Scheme//, because that exclusion usually can't be used for capital raising purposes, and
** offers made through a //Crowd-funding Platform// (e.g. Equitise, PledgeMe, Snowball Effect, Crowdcube), because we're focussing on companies raising capital directly, rather than via an intermediary.
If it looks like any of those 3 exclusions might describe your capital raise (and none of the other exclusions apply), maybe skip straight to the part where you have a chat to a qualified lawyer experienced in this area. No prizes for guessing <a href="https://kindrik.co.nz" target="_blank">who we'd recommend</a>.
Obviously, the tool is no substitute for advice from a qualified lawyer with experience in this area.
[[Ok, got it. Let's get started! ->NZ Offer?]]
**Note:** As you go through, click the back arrow in the top left corner to retrace your steps at any time.
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Is the investor a //Relative// of a director of the company?]
Broadly, the categories of //Relatives// (as defined in the FMCA) most likely to apply to a company raising capital in New Zealand are:
* a spouse, civil union partner or de facto partner (//Life Partner//) of a director of the company
* a grandparent, parent, child, grandchild, sibling, nephew, niece, uncle, aunt or first cousin (including by a step relationship) of a director of the company or their Life Partner (//Extended Family//)
* a Life Partner of any member of the Extended Family, or
* a trustee of a trust for the benefit of, or controlled by, any of the people described above (as more specifically described in clauses 5(2)(d) and (e) of Schedule 1 of the FMCA - [[tell me more, this may apply]]).
[[Yes, the investor is a Relative]]
[[No, the investor is not a Relative]] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>
(css: "font-family: Arial Black; font-size: 200%; color: #c00000")[**CAPITAL RAISING: DOES YOUR INVESTOR PASS THE FMCA TEST?**]
A quick-start tool for navigating some common exclusions to the disclosure requirements of the Financial Markets Conduct Act 2013 (**FMCA**), for companies looking to raise capital by issuing shares, options or convertible notes to New Zealand-based investors.
If you have any questions about your planned capital raise (FMCA related or otherwise), come find us at <a href="https://kindrik.co.nz" target="_blank">Kindrik Partners</a> for a chat.
[[Onwards, to adventure!->Housekeeping]]
(css: "color: #c00000; font-size: 75%")[© Kindrik Partners 2020] <a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>(css: "font-family: Arial Black")[Great news, it sounds like you've found a Schedule 1 exclusion that fits!]
A Schedule 1 exclusion applies to offers of financial products for no consideration (under clause 11 of Schedule 1 of the FMCA).
<a href="https://kindrik.co.nz" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>Yes, an investor, and companies making an offer to that investor, may rely on a valid certificate for up to 2 years, as long as the certificate still ticks all the boxes described in the previous step.
[[Ok, got it->Can you give me some more detail about these safe harbour certificates?]]
<a href="https://kindrik.co.nz/" target="_blank"><img align="right" src="https://kindrik.co.nz/wp-content/uploads/2020/07/WebLogo.png" data-raw=""></a>The //Small Offers// Schedule 1 exclusion allows companies to raise capital through a targeted personal offer process without having to comply with the full disclosure requirements of the FMCA (see <a href="http://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092407.html" target="_blank">clause 12 of Schedule 1 of the FMCA</a> for more).
Your offer may qualify as a //Small Offer// if all of the following statements apply:
* No more than 20 investors can invest in your financial products as a result of the offer.
* You're raising no more than NZ$2 million from investments made as a result of the offer.
* Your offer has only been made to, and may only be accepted by, people (including companies and other entities) who:
** are likely to be interested in the offer, having regard to:
*** previous contact between the person making the offer and that person
*** some professional or other connection between the person making the offer and that person, or
*** statements or actions by that person that indicate they are interested in offers of that kind (e.g. membership in an angel network), or
** have had an annual gross income of at least NZ$200,000 for each of their 2 most recently completed income years (or are controlled by someone who fits this description).
It can be tempting to view the //Small Offers// exclusion as a //one-size-fits-all// option when you want to raise capital.
However, the //Small Offers// exclusion is not as simple as it first appears. Seek help from a qualified lawyer experienced in this area if you are thinking of relying on the //Small Offers// exclusion, particularly if you are intending to use it in combination with other Schedule 1 exclusions as part of a larger capital raising round.
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