Deposit Takers Act 2023

The Deposit Takers Act 2023 is a principal New Zealand Act administered by the Reserve Bank of New Zealand. The official legislation website records it as an Act in force, and the consolidated version available is current as at 31 July 2025.

This is not just a licensing statute. It sets the prudential framework for deposit takers and then follows through with rules on governance, approvals, standards, supervision, enforcement, depositor compensation and resolution.

For a business owner, the first practical question is whether your business is carrying on business in New Zealand in a way that could make it a deposit taker. If the answer may be yes, this Act can affect launch timing, governance appointments, ownership changes, public statements and internal controls.

The Act is especially important where a business model involves borrowing money and lending money as a business. It is also important when a business is dealing with a licensed deposit taker through investment, group restructuring, management changes or transactions that may need Reserve Bank approval.

The Act is not aimed at every business that handles money. Its scope is more specific than that.

The Act says a deposit taker means a person carrying on business in New Zealand that is one of the following: a person that carries on the business of borrowing and lending money, a specified overseas entity, or a person or class declared by Order in Council to be a deposit taker for the Act’s purposes.

The Act also lists categories that are not deposit takers for these purposes. These include a local authority, the New Zealand Local Government Funding Agency Limited, the Crown, a Crown entity under the Crown Entities Act 2004, the Reserve Bank and its subsidiaries, and a person or class declared not to be a deposit taker by Order in Council.

The New Zealand connection also matters. The schedule text points to bodies corporate or associations formed in New Zealand, people ordinarily resident in New Zealand who carry on business, overseas companies that are or must be registered under the Companies Act 1993, and some overseas associations carrying on business in New Zealand.

Most businesses do not need to read this Act every day. The practical issue is spotting the moments when it becomes relevant.

The first trigger point is business model design. If you plan to raise repayable money and use it in a borrowing and lending business, licensing needs to be checked before launch. This is not something to leave until after customers, investors or counterparties are already committed.

The second trigger point is market entry or expansion. If an overseas entity is moving into New Zealand, or a New Zealand business is changing its structure, the Act’s scope and licensing rules should be checked early.

The third trigger point is change inside a licensed deposit taker. Director appointments, senior manager appointments, significant influence changes, significant transactions and amalgamations can all trigger approval or notification obligations.

The fourth trigger point is public communications. The Act restricts holding out as licensed and holding out that a product is a protected deposit. It also regulates how licensed deposit takers disclose and advertise credit ratings.

The Act starts with a hard rule. A deposit taker must be licensed. Carrying on business without a licence is an offence, and the Act also deals with liquidation of a deposit taker that carries on business without one.

The Act also stops businesses from holding out as licensed when they are not. That means status claims in public-facing material need to be accurate and checked before publication.

Once licensed, governance changes become a regulated area. A licensed deposit taker must obtain the Reserve Bank’s approval before a new director or senior manager is appointed. The Act also requires action if fit and proper concerns arise.

Ownership and structural changes are another major area. A person who obtains significant influence over a licensed deposit taker must obtain the Reserve Bank’s approval. Licensed deposit takers also need approval before entering into a significant transaction or before an amalgamation.

Credit ratings are specifically regulated. A licensed deposit taker must have a current credit rating, notify the Reserve Bank of a change in rating and of a credit watch warning, and comply with the Act’s rules on disclosure and advertising of credit ratings.

The Act also allows the Reserve Bank to issue standards. Licensed deposit takers must comply with applicable standards. The contents show those standards can cover governance, ownership, capital, liquidity, lending, risk management, business continuity planning, depositor compensation, covered bonds, securitisation, disclosure, and contingency and recovery planning.

Supervision is ongoing, not occasional. Licensed deposit takers must monitor compliance and report contraventions. The Reserve Bank can require information, reports, audits or reviews, conduct on-site inspections, and require remedial action.

The Act expects more than formal board appointments. It creates due diligence duties for directors of licensed deposit takers and for New Zealand chief executive officers of overseas licensed deposit takers. It also says the Reserve Bank must prepare guidance about those duties.

For a business, that means governance needs to be active and documented. Boards and senior leaders should be able to show how they identify prudential risks, monitor compliance, escalate issues and respond to Reserve Bank requirements.

Records and information quality matter. The Act gives the Reserve Bank broad information-gathering powers. It can require a person to supply information, require reports relating to a licensed deposit taker or associated person, require audits or reviews, and conduct on-site inspections.

The Act also creates offences for false or misleading declarations, representations or other information given for a purpose relating to the Act. The text provided includes specific penalties for that offence, including up to 1 year imprisonment or a fine up to $100,000 for an individual, and a fine up to $2,500,000 in any other case.

Directors can also face liability in some circumstances if a licensed deposit taker or associated person commits that offence and the statutory conditions are met.

The Act gives the Reserve Bank a broad enforcement toolkit. The contents show powers to accept voluntary undertakings, seek pecuniary penalty orders, issue infringement notices, investigate, require remedial plans and seek court orders to secure compliance.

There are also banning powers. On the Reserve Bank’s application, the District Court may ban a person from participating in deposit-taking business in specified ways. The Act text provided shows this can include being a director, taking part in management, being a shareholder, being an employee or agent, acting under a contract for services, or otherwise participating in the business of a licensed deposit taker or group member.

The grounds for a banning order include serious wrongdoing, failure to comply with a suspension order, persistent or serious failure to comply with due diligence duties, persistent or serious prudential contraventions in some cases, and certain overseas prohibitions.

The Act also establishes a depositor compensation scheme. It deals with protected deposits, a Depositor Compensation Fund, entitlement rules, payment mechanics and levies. Licensed deposit takers must publish a list of protected deposits, and the Act makes it an offence to hold out that a product is a protected deposit.

Part 7 then deals with crisis management and resolution. The Reserve Bank must prepare and maintain an orderly resolution plan for each licensed deposit taker and publish a statement of approach to resolution. The Act also gives powers to issue directions, approve sales or dispositions, replace directors, and place licensed deposit takers and some associated persons into resolution.

For most businesses, these parts matter less in day-to-day trading than the licensing and governance rules. But they still affect planning, because group structure, records, disclosure settings and contingency arrangements can all matter if a business later comes under stress.

Example 1: A finance business wants to raise money from the public and use it to fund loans. The first legal question is whether it is carrying on business in New Zealand as a person that carries on the business of borrowing and lending money. If yes, licensing needs to be checked before launch.

Example 2: A licensed deposit taker wants to appoint a new chief executive or director. The Act requires approval before appointing a new director or senior manager. The approval work should be built into the recruitment and board timetable.

Example 3: An investor wants to acquire a stake that gives significant influence over a licensed deposit taker. The transaction documents and timetable should allow for Reserve Bank approval before completion.

Example 4: A licensed deposit taker receives a credit watch warning or rating downgrade. The Act contains notification and disclosure rules, so legal, treasury and communications teams need a coordinated response.

Example 5: A business wants to market a product as protected. The Act specifically prohibits holding out that a product is a protected deposit, so product wording and promotional claims need careful checking.

The Act received assent on 6 July 2023. The official legislation website records it as an Act in force and shows the latest consolidated version as at 31 July 2025.

Before acting, businesses should check the current official version of the Act for the exact part they are dealing with. That is especially important if you are planning a transaction, appointment, launch, disclosure step or restructuring that may need prior approval or follow a prescribed process.

You should also check whether regulations, standards, licence conditions or related Reserve Bank requirements apply alongside the Act. In practice, many of the operational rules for a licensed deposit taker will sit across more than one document.