Crowdfunding service providers

The type of crowd funding covered by a licence

The FMC Act covers equity-based crowd funding. Equity crowd funding is where companies raise money from the public by issuing shares. The FMC Act does not cover rewards-based crowd funding, where companies only offer a reward (for example, tickets, goods, credits on a website) to people who are providing money. It is not a crowd funding service under the FMC Act if the service is only used for charitable or philanthropic fundraising where donors don't receive shares.

The FMC Act enables companies to raise up to $2 million in any rolling 12 month period, without having to issue a product disclosure statement.  

Why get a licence

Equity crowd funding must be done through a licensed crowd funding service provider if the issuer of shares wants to take advantage of the lighter disclosure obligations that apply to crowd funded share offers.

With a licence, a service provider can help companies who want to offer shares without having to prepare and supply a product disclosure statement. By using the licensed service, these companies can rely on an exemption in the FMC Act that exempts them from providing product disclosure statements, although they must still meet all their other legal obligations. 

Before you apply for a licence

There are some things you can do to ensure your application runs as smoothly as possible:

• review the licensing guides and documents below as they contain all the information you need to know so you can complete and submit your application
• set up your RealMe®login details early 
• focus on the minimum standards – we will assess your business against them when processing your application
• Contact the FMA if you have any questions

Licensing guides

Licensing guide PART A

This guide contains information about the licensing process and includes many FAQs you might have; create a RealMe® identity, if you don’t already have one; and pay your licensing fee.

Download the licensing guide Part A: How do I apply for a licence? PDF.

Licensing guide PART B

This guide contains all the specific questions you’ll be asked and the minimum standards you’ll need to show you meet. It also details the information and supporting documents you’ll need to provide when you submit your application. 

Download the licensing guide Part B: Crowdfunding Service Providers

Standard conditions for Crowdfunding service provider licences

In your application, you'll need to demonstrate how you can meet the minimum standards and conditions for your licence - or ask us for a limit or variation using the forms below.  This is very important because when a licence is granted, they contain conditions that support your licensee obligations. They include conditions imposed by the FMC Act, the regulations, and any conditions imposed by the FMA.

Download the Standard Conditions for Crowdfunding Service Providers PDF

How to apply

Please contact us to get a copy of a licence application by emailing [email protected]

Licence application forms

Please download all forms related to your application and email to [email protected]

Licensing declarations and certificates

For applicants

SD1.0  Certificate of compliance and authority to apply (applicant or their authorised person)

SD1.1  Declaration by current/proposed director of licence applicant

SD1.2  Declaration by current/proposed senior manager of licence applicant

SD1.3  Curriculum vitae of management team member of licence applicant

SD1.4  Declaration  by Independent trustee (individual) -  a combined certificate and declaration

For related bodies of the applicant

SD2.1  Declaration by executive director of related body to licence applicant

SD2.2  Declaration by senior manager of related body to licence applicant

For relevant parties to the applicant

SD3.1  Declaration by director of relevant party to licence applicant

SD3.2  Declaration by senior manager of relevant party to licence applicant

SD3.3  Declaration by individual relevant party to licence applicant (such as owner)

How to cancel an FMCA Licence

Guidance on how to cancel an FMCA licence

The basic licensing fee payable to apply for a crowd funding services licence is $6,238.75 (incl. GST). 

We may charge an additional fee where the time to assess a licence application exceeds 40 hours, as set by the Financial Markets Conduct (Fees) Regulations 2014. For an FMA staff member this is set at $178.25 per hour, or part-hour pro rata, of work carried out.  Please refer to the regulations for further information.

If an additional fee will be incurred for your application, we will notify you in advance, including the reason why. 

Applications to vary conditions on an existing licence will incur an application fee of $115 plus $178.25 per hour, or part-hour pro rata, of work carried out.

Please refer to the Financial Markets Conduct (Fees) Regulations 2014 for more information. 

All amounts are GST inclusive. 

This payment is to apply for a crowd funding licence; it does not include any annual levies, or fees to register on the Financial Service Providers Register.

Levies

The Financial Markets Authority (Levies) Regulations 2012 (the Regulations), as amended in 2020, set out the levies payable by industry. The levies are set by the Ministry of Business, Innovation, and Employment (MBIE).

The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.

Levy Classes

A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.

• A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
• Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
• Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
• Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
• The following levy classes are invoiced directly by the FMA: Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.

You should be familiar with levies and Schedule 2 of the Levy Regulations.

Levy waivers

We have discretionary power to waive a levy (in whole or part).

We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.

The waiver power is not intended to be used to revisit settled policy positions.

Once we receive a waiver application and the fee, we will assess it.  If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.

How to apply for a levy to be waived

You will need to email the following information to [email protected] with the subject line ‘Levy waiver application’.

• Name of person or entity applying for the waiver.
• Contact person for correspondence concerning the application including address, phone number and email.
• Indicate the persons/entity who will receive the benefit of any waiver granted.
• Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
• Let us know your preferred date for any waiver to take effect.
• Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
• Provide all relevant facts in support of your application.
• Explain any regulatory benefit of FMA granting the waiver.
• Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.

How to pay your waiver application fee

You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.

How to pay your waiver application fee

You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.

The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.

We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.

* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.

What are the fees

• A payment of $1,265 should accompany each application.
• This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
• These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
• These regulations are set by MBIE.

How long does it take

• Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
• This may be longer if any policy questions arise.
• If your application is urgent, please provide the date you need the decision by.
• You must also provide reasons for requesting urgent consideration.

Offences

It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.

Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:

• provide services you are not registered for or state you are registered for a particular financial service when you are not
• make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.

These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.

It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.

Standard conditions

All crowdfunding service providers have a number of obligations, in addition to the minimum standards and standard conditions set out in their licence. These obligations include meeting the relevant professional standard of care; monitoring your compliance; identifying material changes of circumstances; meeting reporting obligations and notifying the FMA of certain events and providing us with information. A list of your obligations can be viewed below. 

Read the Standard Conditions for crowd funding service licences to fully understand these obligations.

Your licence may also have specific conditions attached to it, additional to the above. Entities should understand all conditions that apply. Individual licences, including specific conditions, can be found on the Disclose register.

Notifying the FMA

All notifications should be emailed to the FMA (unless we state that the relevant notification form is available on our Online Services portal) at [email protected] noting the relevant obligation in the subject line of your email.

Regulatory reporting

Every licensed crowd funding provider is required to complete and submit an annual regulatory return which is a series of questions about your business and how your licensed service is used. The information you provide us through the annual return helps us to:

• better understand your business and the services you offer;
• ensure the information we have on your business is current; and
• focus our monitoring activities more effectively.

Submit your regulatory returns online at FMA's Online Services portal

To complete the return, you will need to log into Real Me. After logging in you should select “Complete a regulatory return” and enter the FSPR number of the entity the return is being completed for. Please follow the instructions included in the form to complete the return, you may save and come back to the form at any time.

If you have any questions on completing the new form, please contact the FMA on [email protected].

Minimum standards

Licensed crowd funding service providers will have to meet and maintain certain minimum standards. The key standards in section 396 of the FMC Act including the following:

• You must be a fit and proper person for the role of independent trustee.
• You or your business must be capable of performing the service effectively and in keeping with your licence conditions.
• We must have no reason to think you’re likely to contravene your licensee obligations.
• There are other important requirements.

Download the crowd funding licensing guide to understand the minimum standards

You’ll need to show you meet, and information about the details and supporting documents you’ll need to provide.

Fair dealing

The fair dealing provisions of the FMC Act prohibit misleading or deceptive conduct, false, misleading or unsubstantiated representations, and offers of financial products in the course of an unsolicited meeting.

The FMA has issued a guide to fair dealing in advertising and communications specific to crowd funding and peer-to-peer lending service licence. The purpose of this guidance document is to ensure licensed crowd funding and peer-to-peer lending service providers understand their obligations when advertising or communicating with customers.

Crowdfunding issuers fair dealing

Under exemptions in financial markets law, crowdfunding issuers don't need to prepare a product disclosure statement if you are using a licensed crowdfunding service provider. Instead, you will provide more limited information about your business when you make offers. 

You will need to comply with the general fair dealing provisions in Part 2 of the FMC Act. The basic obligations you will have include not making:

• false or misleading representations, for example, you must be honest about who you are and what you're going to use the money for
• unsubstantiated representations, for example, you must ensure you have a reasonable grounds for any financial projections provided to potential investors.

Other laws will also apply. For example, you will need to provide financial information to your shareholders under the Companies Act.  And, where you have 50 or more shareholders those shareholders may have to comply with the Takeovers Code when buying shares.

Anti-money laundering and countering financing of terrorism

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 imposes several obligations on crowd funding licence holders;

• You must provide a written risk assessment of the money laundering and financing of terrorism activity you could expect in the course of running your business.
• You are required to implement an anti-money laundering and countering financing of terrorism programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism.
• You are required to appoint a compliance officer to administer and maintain your programme.
• You are required to perform due diligence processes on your customers. This includes customer identification and verification of identity.
• You are required to report suspicious transactions.

Read more about AML/CFT reporting obligations

Financial reporting

Crowd funding service providers are FMC reporting entities and must comply with the following:

• Keep proper accounting records to assist with the preparation of compliant financial statements. Records must be kept in English and a copy must be kept in New Zealand.  
• Prepare financial statements for the group's operation.  Financial statements must comply with generally accepted accounting practices in New Zealand.
• Ensure that financial statements are audited by a licensed auditor or registered audit firm. 
• Lodge financial statements and the auditor’s report with the Companies Office within 4 months of the balance date.

The FMA has wide powers to exempt persons or transactions from some financial markets law requirements. These powers enable us to remove rigidities in the law and ensure requirements for businesses are reasonable and cost-effective. Find out more about exemptions you can apply for under the FMC Act and current exemption notices.