This page aims to help trustees, potential non-bank deposit takers (NBDTs) and other stakeholders identify whether an entity is a non-bank deposit taker under the Non-bank Deposit Takers Act 2013 (the NBDT Act).
The NBDT Act defines an NBDT as any of the following person, other than a registered bank, that:
NBDTs include finance companies that raise funds from the public, as well as most building societies and credit unions.
Managed investment schemes are not included. Nor are finance companies and other entities that fund solely from related parties, or from corporate or wholesale sources.
the Crown (as defined in the Public Finance Act 1989)
Read Section 5 of the NBDT Act
When identifying an NBDT, you need to clearly identify the person who is issuing debt securities and carrying on the business of borrowing and lending or providing financial services.
Example:
A manufacturing business wishes to raise debt to fund its operations and potentially the operations of other members of its corporate group. The manufacturer could:
The corporate issuer is not covered by the definition in Section 5(1)(a) of the NBDT Act. While it issues debt securities, the amounts raised are used to fund its manufacturing business (rather than to fund lending to other persons). Therefore, the corporate issuer does not carry on the business of borrowing and lending money or providing financial services.
The funding conduit would meet the NBDT definition. It issues debt securities and on-lends to another person, such as its parent and/or members of the group. The funding conduit is therefore considered to be in 'the business of borrowing and lending money'. In addition, in some circumstances, a funding conduit may also provide financial services to members of the group.
However, as the economic substance of the two models is the same, funding conduits have been declared out of the definition of NBDT by the Non-bank Deposit Takers (Declared-out Entities) Regulations 2015.
As well as issuing debt securities to the public, to be an NBDT a person must 'carry on the business' of borrowing and lending money, or providing financial services, or both.
Whether an entity meets the 'carries on the business' test will depend upon the specific context. The test may be met if:
It is important to note that the business need not be the only or the primary activity carried on by the entity, but it should be a distinct and identifiable business that is more than an occasional or incidental activity.
Incidental activities are unlikely to meet the 'carrying on the business’ test. For example, isolated and incidental extensions of credit to purchasers of goods sold by a person do not normally mean that person carries on the business of lending money or providing financial services.
Overseas NBDTs operating in New Zealand are subject to New Zealand law and are required to comply with the prudential requirements established by or under the NBDT Act.
The above information is intended as guidance only. It is not a substitute for legal advice for the benefit of a deposit taker, a trustee or any other person. It does not claim to be definitive as the issues have not been considered by a court of law. We may revise our approach in light of new information, although we do not expect to have to do so in the absence of a judicial ruling.
Determining whether a given person is a deposit taker must be assessed on a case-by-case basis.