High Court Ruling Brings Certainty to New Zealands Wholesale Investor Framework

Highlights:

• The High Court ruling clarifies how “eligible investor” certificates must be applied under the Financial Markets Conduct Act.
• Professionals such as lawyers and accountants must verify that investor certifications are credible and may seek further details if needed.
• If a certificate is unreliable, issuers must treat the offer as retail, triggering full disclosure obligations.

Regulatory Update

New Zealand’s Financial Markets Authority (FMA) has welcomed a recent High Court judgment that clarifies how “eligible investor” certificates should be applied under the Financial Markets Conduct Act. The decision, delivered by Justice Sally Fitzgerald, provides greater certainty for both wholesale offerors and investors operating in this space.

Key Takeaways from the Ruling

At the time of writing, the Court highlighted several important points:

• Investor certificates must outline the basis for eligibility. While the explanation does not need to provide extensive investment history, it must be credible enough to support the claim.
• Lawyers, accountants, and financial advisers — often referred to as “confirmers” — are required to check that investors understand the implications of declaring themselves eligible and ensure there are no obvious issues with the certification. Where grounds appear insufficient, confirmers can request further details.
• If a certificate cannot be reasonably relied upon, the issuer must treat the investment as a retail offer, triggering full disclosure requirements.

Impact on the Industry

The ruling offers valuable guidance for financial product issuers, developers, and professionals tasked with confirming eligibility. It preserves the wholesale investor pathway while reducing the risk of misclassification or misuse of certificates.

Future Outlook

Market participants are now assessing how the decision may influence industry behaviour — from whether issuers strengthen due diligence practices to whether confirmers adopt a more cautious stance. At the time of writing, the FMA has signalled that it will continue to monitor compliance closely, reinforcing the importance of investor safeguards even in wholesale market settings.

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