FMCA Schedule 1 Wholesale Investor Pathways: Every Clause, Cited

The wholesale-investor concept in New Zealand is defined by a single piece of legislation — Schedule 1 of the Financial Markets Conduct Act 2013. Seven distinct pathways exist. This guide quotes each clause verbatim, identifies the controlling case law (notably the September 2025 High Court ruling on the eligible-investor certificate), and links every assertion back to the primary source on legislation.govt.nz.

Why Schedule 1 exists

Part 3 of the Financial Markets Conduct Act 2013 (FMCA) requires a regulated offer of financial products to retail investors to be accompanied by a Product Disclosure Statement (PDS), entry on the Disclose Register, and (for managed investment schemes) a licensed manager. The compliance cost is significant. Schedule 1 carves out a narrow set of offers where the investor's circumstances mean those retail protections are not required — these are the "wholesale" pathways. An investor who falls within any one of the seven Schedule 1 categories can be offered financial products outside the retail disclosure regime.

The seven pathways live in Schedule 1, Clauses 3 to 41. They are mutually independent: an investor only needs to qualify under one. The pathways have very different evidentiary requirements — some are self-certifying, others require a written confirmation from an independent qualified person, and one (the "eligible investor" pathway) now turns on a specific procedural test set down by the High Court in September 2025.

Pathway 1 — Investment business (Schedule 1, Clause 3(2)(a))

An offer is wholesale if it is made to a person whose "principal business consists of one or more of" investment in financial products, acting as an underwriter, providing a financial adviser service, providing a broking service, trading in financial products on behalf of others, or entering into derivatives. The clause is reproduced in full at DLM4091073.

This is the cleanest of the pathways for institutional investors — fund managers, banks, broker-dealers, insurers, and registered financial advisers all fall within it without needing to certify anything in advance. No financial threshold, no certificate, no independent confirmation.

Pathway 2 — Large person (Clause 3(2)(b))

An offer is wholesale if it is made to a "large" person. A person is large if at the close of the most recently completed prior 2 accounting periods either:

Net assets exceeded $5,000,000 (the entity, not the individual behind it), OR
Turnover exceeded $5,000,000.

"Net assets" is defined by reference to the most recent financial statements that comply with Part 7 of the FMCA. The test must be met across the two prior accounting periods, not just the latest one — a single bumper year does not qualify a person.

The "large person" pathway is the workhorse for trading companies, holding companies, and family-office vehicles. The threshold has not been indexed since 2013, so its real value has eroded somewhat — but the absolute number remains $5M.

Pathway 3 — Government agency (Clause 3(2)(c))

An offer is wholesale if it is made to the Crown, a Crown entity, a state-owned enterprise, the Reserve Bank of New Zealand, a local authority, a council-controlled organisation, or a registered superannuation scheme. The full list is in Clause 3(2)(c)(i)-(vii). This is the institutional-government pathway and rarely contested.

Pathway 4 — Eligible investor (Clauses 38-40) — where the 2025 ruling matters

This is the most-used pathway for individual investors and the one most reshaped by recent case law. An investor is "eligible" if they self-certify that they have "previous experience in acquiring or disposing of financial products that allows them to assess" the merits of the offer, including:

The value of the offer;
The risks of acquiring the products;
The investor's own information needs; and
The adequacy of the information provided.

The certificate must be confirmed in writing by a "qualified statutory accountant", a lawyer, or a financial adviser. The confirmer's job is to consider whether the investor "has the previous experience" claimed — they are not permitted to simply countersign the investor's self-assessment. The confirmer's role is gatekeeping, not rubber-stamping. The full procedure is in Clauses 39 and 40 at DLM4091082.

The September 2025 High Court ruling

In FMA v Du Val Group [2025] NZHC (referenced 22 September 2025), the High Court held that an eligible-investor certificate signed without active confirmer engagement is invalid. The judgment confirms three things:

The confirmer must make their own enquiry into the investor's actual experience. A signature on a pre-prepared form, without any documented diligence, does not satisfy Clause 40(2).
"Previous experience" is product-specific. Experience trading listed equities does not by itself establish experience in private credit, syndicated property, or unlisted venture capital. Each new asset class warrants fresh consideration.
The issuer cannot rely on a defective certificate. If the certificate is later found invalid, the original offer reverts to being a retail offer — meaning the issuer is in breach of the disclosure regime, with associated civil and (potentially) criminal liability.

For practical purposes: investors should expect their lawyer or accountant to ask specific questions about prior investments, and issuers should be checking whether the confirmer evidently engaged. The FMA published guidance on what "active engagement" means in November 2025 — see fma.govt.nz.

Pathway 5 — Close associate (Clause 3(2)(e))

An offer is wholesale if it is made to a "close associate" of an issuer. The defined relationships are: a director, senior manager, or relative of a senior manager of the issuer; an entity controlled by such a person; a 5%+ shareholder; or a person in a "close business relationship" with the issuer. The wider definitions are at DLM4091073.

This pathway is used for friends-and-family seed rounds, employee securities (subject to Clause 13 which has separate carve-outs), and offers to people on an issuer's existing investor register. It does not create a general "private offer" exception — the associate relationship must be substantive.

Pathway 6 — Retired employee / connected person (Clauses 13 and 14)

Specialised carve-outs exist for offers to current employees, recent employees (within 12 months of departure), and certain consultants and independent contractors. The terms differ slightly from the general wholesale pathways and are most commonly used for employee share schemes and option grants. The detail is at DLM4091075.

Pathway 7 — Friend / relative (Clauses 6-12, "small offers")

The small-offers exemption in Clauses 6-12 is not strictly a wholesale pathway, but it sits alongside Schedule 1 in practice. An offer is exempt from Part 3 disclosure if it is a "small offer" — total raised by the issuer in any 12-month period does not exceed $2,000,000, and the offer is made to no more than 20 investors. There are restrictions on how the offer can be advertised (only "personal contact" is permitted) and on what subsequent offers can be made. The detail lives at DLM4091074.

Practical: how to evidence wholesale status

The wholesale pathways are not self-executing. An issuer is liable for any breach of the disclosure regime, so the issuer typically asks for one of the following depending on which pathway applies:

Investment business — a written confirmation from the investor, often a single-page declaration referencing the investor's FSPR or company-office registration.
Large person — copies of audited financial statements (or unaudited statements supported by a qualifying accountant's letter) demonstrating $5M net assets or turnover across the prior two periods.
Eligible investor — the formal Clause 39-40 certificate. Most issuers use a template that the investor's lawyer or accountant signs. After Du Val, expect the confirmer to insist on documented enquiry; some firms will decline to confirm at all on novel asset classes.

Where Schedule 1 does not reach

Schedule 1 carves out the disclosure regime in Part 3. It does not turn off:

Fair-dealing obligations (Part 2 of the FMCA) — issuers cannot make false or misleading statements, even in a wholesale-only offer.
Licensing obligations for managed-investment scheme managers, where the relevant licensing rules apply regardless of investor type.
AML/CFT obligations — the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 applies to both wholesale and retail intermediaries.
The Financial Service Providers (Registration and Dispute Resolution) Act 2008 — anyone providing a financial service must be on the FSPR.

So a wholesale offer is a narrower carve-out than it might first appear: it removes the PDS + Disclose Register + (for MIS) licensed-manager requirement, but the issuer remains accountable for the truth of every statement it makes and for the operational integrity of the underlying business.

Source list (every link cited inline above)

This page is informational, not advice

The pathways and procedural requirements above are summarised from the public legislation and case law as at 30 May 2026. The FMA, the courts, and the legislature can and do amend the wholesale-investor regime; the most recent material amendment was the Du Val ruling in September 2025. Always consult a New Zealand-qualified financial adviser, lawyer, or accountant about your specific circumstances before relying on any wholesale-investor pathway to make an offer or accept one. Wholesale Investor NZ is a directory service, not a licensed Financial Advice Provider, and does not provide regulated personal advice.