The relevant previous experience must relate to “financial products”. The full definition of “financial product” is set out in section 8 of the Financial Markets Conduct Act 2013.
In summary, a “financial product” means:
1. a debt security – examples of debt securities include:
- debentures, bonds, convertible notes and redeemable preference shares issued by corporate issuers;
- a term deposit with a bank or other financial institution;
- an interest bearing savings account with a bank or other financial institutions;
- acting as a private lender (including taking a mortgage as security for a loan); and
- any right to be repaid money or paid interest on money that is, or is to be, deposited with, lent to, or otherwise owing by, any person.
2. an equity security – this means:
- a share in a company (including a share in a co-operative company)
- a share in an industrial and provident society; and
- a share in a building society.
3. a managed investment product – this means having an interest in a managed investment scheme where investors’ funds are pooled together and managed by a third party. Examples include:
- managed funds, such as a listed exchange-trade fund (ETF) or a unit trust;
- property syndicates;
- superannuation schemes, such as Kiwisaver ; and
- private equity funds.
4. derivatives – this means complex financial instruments which derive their value from an underlying asset. Examples include:
- futures contracts
- options contracts
- and contracts for difference
Please note that direct ownership of real estate is not an investment in a “financial product”. It is also not a “financial product” to take out a loan or credit card or to give security for a loan (such as a mortgage).
To qualify as an eligible investor, you must have “previous experience “ in “acquiring or disposing” of financial products’ which allows you to assess the factors listed above. This means you must have bought and sold a financial product. For example, if your only investment in a financial product is your Kiwisaver fund, you will not qualify unless you have withdrawn some or all of your Kiwisaver funds.
Simply attending training (irrespective of the nature and quality of that training) is not, in itself, enough because you cannot be said to be experienced in acquiring or disposing financial products, and cannot certify yourself as an ‘eligible investor’.
After you have experience in acquiring or selling financial products, it is up to you to determine whether those acquisitions or disposals have given them sufficient experience to sign an eligible investor certificate. If you believe you have sufficient experience to assess the factors listed above, then you may sign an eligible investor certificate.