Finance company bill introduced to Parliament
A foreshadowed bill bringing finance companies and other non-bank deposit takers under the regulatory wing of the Reserve Bank has been introduced into Parliament.
Friday, November 23rd 2007, 7:20AM
The companies will be subject to the current securities regulations in regards to their prospectuses.
Finance Minister Michael Cullen announced the decision earlier this year after the collapse of a number financial companies.
The regulations will cover, finance companies, building societies and credit unions.
The requirements will include:
- A credit rating from a rating agency approved by the Reserve Bank
- A minimum $2 million of capital
- The need for a standard ratio of capital to debt;
- Restrictions on lending to people related to the deposit-takers; and
- Fit and proper requirements for the directors and senior managers of deposit-takers.
The new regulations would work in tandem with the current regime under the Securities Act but the need for public disclosure under that act would be strengthened.
Dr Cullen said he hoped the new law could be passed in 2008 with some of the new requirements coming into force in 2009 with a transition period to allow deposit takers to meet the new requirements.
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