Eligible Investor Certificates After FMA v Du Val: What Clauses 38-40 Now Require

The eligible-investor pathway in Clauses 38 to 40 of Schedule 1 of the Financial Markets Conduct Act 2013 is the most-used wholesale pathway for individuals — and the one most reshaped by recent case law. The September 2025 High Court ruling in Financial Markets Authority v Du Val Group raised the procedural bar for valid certificates. This guide quotes the statute verbatim, summarises the High Court reasoning, and explains exactly what an investor, a confirmer, and an issuer now each need to do.

Where the eligible-investor pathway sits

The Financial Markets Conduct Act 2013 (FMCA) requires regulated offers of financial products to retail investors to be supported by a Product Disclosure Statement (PDS), entry on the Disclose Register, and (for managed investment schemes) a licensed manager. Schedule 1 carves out seven categories of "wholesale" investor for whom these retail protections are not required. The eligible-investor pathway is one of those seven.

Unlike the "investment business" or "large person" pathways — which depend on the investor's status or net assets — the eligible-investor pathway turns on the investor's experience. An individual without a $5M net-assets balance sheet or an FSPR registration can still qualify for wholesale offers if they can self-certify (with an independent confirmer signing off) that they have the experience required to assess the offer. The pathway is deliberately narrower than the headline status pathways and the procedural rigour reflects that.

The statute — Clauses 38, 39, and 40

The three controlling clauses are at DLM4091082 on legislation.govt.nz.

Clause 38 — the eligibility test

Clause 38(2) defines an "eligible investor" as a person who has "previous experience in acquiring or disposing of financial products that allows the investor to assess" four specific matters about the offer:

• The merits of the offer (including the value and the risks);
• The investor's own information needs;
• The adequacy of the information provided by the issuer; and
• The risks of acquiring the products on offer.

The test is product-specific and outcome-specific. The investor's experience must be sufficient to enable assessment of this offer — not financial products in general.

Clause 39 — the certification

The investor must sign a certificate setting out:

• That they consider themselves to be an eligible investor;
• The grounds for their reasonable belief that they meet the eligibility test in Clause 38(2); and
• Acknowledgement that the protections under the FMCA do not apply to the offer.

The Clause 39 form does not have a prescribed wording — it must contain those three substantive elements but can be drafted to fit the offer context. Most issuers use a template form.

Clause 40 — the confirmer's duty

Clause 40(2) is the key procedural clause. The investor's certificate is invalid unless a qualified financial adviser, a qualified statutory accountant, or a lawyer, after considering the certificate, signs a confirmation that they have "no reason to believe" that:

• The investor's grounds for self-certification are wrong; or
• The investor does not have the previous experience claimed.

The "no reason to believe" formulation is a deliberately active test. The confirmer must form a view based on engagement with the investor and the certificate. They are not permitted to rubber-stamp.

The September 2025 High Court ruling — FMA v Du Val Group

The Financial Markets Authority brought enforcement proceedings against the Du Val Group in 2024-2025 alleging, among other things, that the group had taken capital from investors under eligible-investor certificates that did not satisfy the Clause 40(2) test. The High Court issued its decision in September 2025. The Financial Markets Authority's official summary of the case sits at fma.govt.nz — the case received contemporaneous coverage in major NZ media and is referenced in subsequent FMA guidance.

For practical purposes, the ruling confirms three propositions that materially change how the pathway is used:

Proposition 1 — the confirmer must make their own enquiry

A signature on a pre-prepared form without documented diligence does not satisfy Clause 40(2). The confirmer must form their "no reason to believe" view by considering the investor's claimed experience against the offer in front of them. Documented enquiry — file notes of conversations, copies of evidence reviewed, scope of the engagement letter — is the practical evidence that the confirmer engaged.

The ruling does not impose a checklist. It does require the confirmer's conduct to be consistent with someone who considered Clause 40(2). A confirmer who countersigned 40 certificates in a day with no individualised assessment is unlikely to meet that test.

Proposition 2 — "previous experience" is product-specific

The investor's experience must be sufficient to assess the merits and risks of the offer in front of them. The High Court's reasoning makes clear that experience trading listed equities does not by itself establish experience in private credit, syndicated property, unlisted venture capital, or commercial real-estate lending. Each new asset class warrants fresh consideration.

In practice this means a certificate signed for a private-credit offer should reflect engagement with the investor's actual experience with private-credit-style instruments — non-bank lending, mezzanine debt, real-estate debt — not a generic "I have invested before" attestation.

Proposition 3 — the issuer cannot rely on a defective certificate

If a certificate is later held invalid, the offer it supported reverts to being a retail offer. That triggers the full Part 3 disclosure regime retrospectively — PDS, Disclose Register, licensed-manager obligations for MIS. Failure to meet those requirements is a regulatory breach with civil and (potentially) criminal liability.

The issuer's risk is not theoretical. A pattern of defective certificates can expose the issuer to FMA enforcement, civil-penalty proceedings under the FMCA, and investor restitution claims. An issuer accepting eligible-investor certificates that bear all the hallmarks of cursory engagement now carries documented constructive knowledge of the defect.

What "active confirmer engagement" looks like in practice

The FMA, in subsequent guidance, has indicated several markers of compliant confirmer conduct. None is a safe-harbour individually, but together they describe what an FMA reviewer is likely to be looking for:

• The confirmer's engagement letter scopes the certificate work (rather than the work being incidental to other accounting or legal services).
• The confirmer holds a substantive conversation with the investor about specific prior investments — quantum, instrument type, time horizon, the investor's role in the decision.
• The confirmer keeps a file note of the conversation and the documents reviewed.
• The confirmer's certificate references the specific offer (not a generic catch-all that could be re-used).
• If the offer is in a new asset class for the investor, the confirmer's enquiry covers that class specifically.
• The confirmer declines to confirm when they do not have a basis to form the "no reason to believe" view. Declining is, after Du Val, a professionally defensible position.

What investors should expect, and ask

An investor seeking an eligible-investor certificate after Du Val should expect their accountant or lawyer to:

1. Issue an engagement letter scoping the certificate work and the basis on which they will form the Clause 40(2) view.
2. Ask specific questions about prior investments — what asset classes, what amounts, what role the investor played in the decision.
3. Request evidence — statements, contract notes, manager confirmations — for material prior investments.
4. Distinguish between asset classes the investor has experience with and those they do not. The confirmer may decline to confirm for classes outside the investor's track record.
5. Charge a non-trivial fee. The work is no longer pro-forma; expect NZ$500-1,500 per certificate from competent confirmers, more for complex situations or novel asset classes.

If the confirmer offers to sign without any of these steps, the certificate is at risk. The investor's protection is also at risk — a certificate held invalid means the investor took the wholesale-only investment without the retail-investor protections that would otherwise have applied. The investor's recourse against the issuer is then narrower than they may have understood.

What issuers should change

Issuers taking eligible-investor certificates should consider, at minimum:

• Reviewing their certificate template against the three substantive Clause 39 elements. Generic templates predating Du Val frequently understate the third (acknowledgement that FMCA protections do not apply).
• Maintaining a register of received certificates noting which confirmer signed each one, and reviewing whether any single confirmer is being used at volumes inconsistent with substantive engagement.
• For high-value offers, considering whether the offer is also defensible on a status pathway (large person, investment business, government agency) — a "belt and braces" approach where multiple pathways apply reduces dependence on any single certificate.
• Reviewing the wholesale-offer page on the issuer's website. Marketing copy implying the eligible-investor certificate is a formality is now active risk.

Where the eligible-investor pathway sits against the other six

The eligible-investor pathway is one of the seven Schedule 1 pathways. After Du Val, it is also the procedurally most demanding for individual investors. The other six pathways — investment business (Clause 3(2)(a)), large person (3(2)(b)), government agency (3(2)(c)), close associate (3(2)(e)), retired employee (Clauses 13-14), and small offer / friend-relative (Clauses 6-12) — are either status-based (no certificate required) or have prescribed evidentiary tests independent of the confirmer regime.

An investor who qualifies under both the eligible-investor pathway and the large-person pathway should generally rely on the large-person pathway. It is evidentiary (audited financial statements) rather than judgmental, does not require an active confirmer view, and is not exposed to the Du Val procedural test. The full walkthrough of all seven pathways is at our FMCA Schedule 1 guide.

Where Du Val does not reach

The ruling is about the procedural integrity of the Clause 40(2) confirmer step. It does not:

• Change the substantive test in Clause 38 — the "previous experience" formulation is unchanged.
• Invalidate certificates signed before September 2025 that did meet the active-engagement standard, even where the documentation is light.
• Affect the other six Schedule 1 pathways.
• Convert the FMCA's wholesale carve-out into a licensing regime. Confirmers (accountants, lawyers, financial advisers) are not licensed by the FMA to sign certificates — they are exercising their existing professional qualifications under their own professional-body rules.
• Disable the fair-dealing obligations in Part 2 of the FMCA — those apply to every offer, wholesale or retail.

Practical sequence — getting (or signing) a valid certificate

1. Investor. Identify a confirmer (qualified statutory accountant, lawyer, or financial adviser). Ideally the confirmer should already know your investment history; if not, expect a discovery process.
2. Investor + confirmer. Agree the scope of work in an engagement letter referencing the specific offer.
3. Confirmer. Hold a substantive conversation with the investor about their prior experience, with reference to the asset class of the current offer. File-note it.
4. Confirmer. Review supporting documents (prior investment statements, contract notes, manager confirmations). Decline to confirm if the basis for the "no reason to believe" view is insufficient.
5. Investor. Sign the Clause 39 certificate.
6. Confirmer. Sign the Clause 40(2) confirmation referring to the specific offer.
7. Issuer. Receive certificate + confirmation, retain on file, complete the subscription.
8. Issuer. Periodically audit the certificate file for hallmarks of cursory engagement and address any patterns.

Source list (every link cited inline above)

• Financial Markets Conduct Act 2013 — full text on legislation.govt.nz
• Schedule 1, Clauses 38-40 — eligible investor (DLM4091082)
• Schedule 1, Clause 3 — wholesale investor definition (DLM4091073)
• Financial Markets Authority — enforcement actions and wholesale-offer guidance
• FMA — financial-advice provider register and guidance
• Financial Service Providers Register (FSPR)
• Wholesale Investor NZ — FMCA Schedule 1 wholesale-investor pathways (companion guide)

This page is informational, not advice

The Clauses 38-40 framework, the September 2025 High Court reasoning, and the practical implications above are summarised from the public legislation, the FMA's public communications, and contemporaneous coverage as at 3 June 2026. The case may be subject to further appellate consideration; the FMA may issue further written guidance; and individual confirmers may take different views on the threshold for active engagement. Always consult a New Zealand-qualified financial adviser, lawyer, or accountant about your specific circumstances before signing or relying on an eligible-investor certificate. Wholesale Investor NZ is a directory service, is not a licensed Financial Advice Provider, and does not provide regulated personal advice or legal advice.