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We have regulatory powers to grant financial reporting exemptions and vary public accountability designations.
Our aim is to find a balance between ensuring businesses provide appropriate financial information for those who need it and to minimise undue costs for those providing it.
The FMA grants 2 types of exemptions:
- individual exemptions for a specific business and related parties
- class exemptions that cover a broad type of businesses.
Below is an overview of our key policies.
Exemptions for overseas FMC reporting entities
We may grant overseas issuers an exemption to prepare financial statements under NZ generally accepted accounting practice if:
- the business is required to prepare high quality financial reporting
- the business is subject to appropriate financial reporting regulation.
The table below details the accounting standards that, provide high quality information to investors (specified GAAP) and the jurisdictions with appropriate financial reporting regulation.
- Australian IFRS
- US GAAP
- Canadian IFRS
- EU IFRS
- IFRS (unmodified international standards)
- Singapore Financial Reporting Standards
- Hong Kong FRS
- United States of America
- Ontario, Canada
- United Kingdom
- Republic of Ireland
- The Netherlands
- South Africa
We consider additional GAAP and jurisdictions based on demand.
We also need to determine whether we can get co-operation from the relevant overseas regulator. This is more likely if the relevant regulator is a signatory to the International Organisation of Securities Commissions’ Multilateral Memorandum of Understanding on Consultation and Cooperation.
Overseas businesses who have made incidental offers or have a secondary listing in NZ may be exempt from having to use a NZ licensed auditor.
However, exemptions are unlikely to be granted for offers made solely or primarily in NZ, unless we are satisfied that both your business and your auditor have the same level of regulation and oversight as a NZ issuer and their auditor. Overseas auditors can apply to become licensed by us. See our licensing section for more details.
Overseas businesses who've made offers that involve relatively few New Zealanders, may be exempt from having to lodge financial statements in NZ.
Branch financial statements
Overseas FMC reporting entities conducting business in NZ will still be required to prepare, have audited and lodge branch financial statements for their NZ operations. This information is used by Inland Revenue and the Reserve Bank for their monitoring purposes.
Other exemptions for New Zealand and overseas businesses
Recipients of funds from conduit issuers
Sometimes businesses make regulated offers through special purpose vehicles or finance subsidiaries known as ‘conduit issuers.’ These issuers loan most of the funds to relatedparties. In these situations, the related parties are considered ‘recipients of funds from a conduit issuer’ and become FMC reporting entities in their own right. The cost of complying with the FMC reporting requirements for all the related parties can be extensive and unnecessary, when more relevant information for investors can be provided or is already available.
For example, a finance subsidiary raises debt and on-lends the funds to its parent and other subsidiaries. All the companies provide unconditional unlimited cross-guarantees and the group financial statements are audited and publicly available. In this case, the group financial statements are likely to be a good representation of the group’s ability to meet the interest and principal payments. We also may exempt the other subsidiaries from having to each prepare, have audited and lodge financial statements.
Exemptions to extending lodgement deadlines
We may extend the deadline for lodging financial statements. However thresholds are high and exemptions are rare.
You’ll need to have a compelling reason why you can’t comply with the 4 month period, or specific circumstances that make it inappropriate. Overseas businesses may have longer timeframes to prepare financial statements under overseas law, however, we don’t consider this sufficient on its own to grant exemptions.
Exemptions are not available if you haven’t made arrangements to comply with the timeframes in the FMC Act.
Partial and technical exemptions
We may consider exemptions if there are:
- technical difficulties complying with the requirements
- difficulties with specific aspects of the requirements.
Applications are rare and usually arise from specific circumstances.
Class FMC Act exemptions in place
The descriptions below summarise the current relevant class exemptions in place. Before relying on an exemption, you will need to meet all the conditions.
If you wish to apply for an exemption you will need to include a draft exemption notice with your application. We recommend reviewing other financial reporting exemptions as your starting point. These exemptions reflect our approach and can be adapted to your individual circumstances.
Financial Markets Conduct (Financial Reporting – DIMS licensees) Exemption 2015
This exemption relieves small and medium-sized providers of DIMS from certain financial reporting obligations. The extent of the exemptions depends on the size of the licensees’ business based on the retail funds under management (FUM). It does not apply if; a DIMS licensee is a FMC reporting entity for any other reason, doesn’t have an independent custodian, or the licensee has more than $250 million in retail FUM.
Financial Markets Conduct (Dual-listed FMC Reporting Entities) Exemption Notice 2015
This exemption applies to overseas-incorporated FMC reporting entities that have a primary listing in specified jurisdictions and a secondary listing in NZ. The exemption allows these businesses to use their overseas financial reporting to comply in NZ. It allows overseas businesses to use a specified overseas GAAP and their overseas auditor to meet their financial reporting obligations for their NZ business (if any).
The specified jurisdictions are Australia, Ontario (Canada), Singapore, the UK, and the US.
Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2016
This exemption permits certain overseas banks and insurers that are registered /licensed in NZ to use their overseas financial reporting to comply in NZ. The exemption does not remove any obligation to prepare and have audited separate branch financial statements for their NZ business. The auditor may be an overseas auditor or a NZ auditor.
Financial Markets Conduct (Financial Reporting: Balance Dates of Managers and Registered Schemes) Exemption Notice 2015
Managers must register scheme financial statements within 4 months of their balance date. Where a manager's balance date is not the same as its various schemes’ balance dates, this makes compliance difficult or impossible. This exemption allows managers to register scheme financial statements within 4 months after the balance date of the scheme.
FMC Act public accountability designations
All FMC reporting entities have a designated level of public accountability. This impacts which tier of the External Reporting Board Accounting Standards Framework the FMC reporting entity must report under. The tier determines whether the reporting entity must use full accounting standards (eg, NZ IFRS) or reduced disclosure standards (eg, NZ reduced disclosure regime) when preparing its financial statements.
The FMC Act identifies classes of FMC reporting entities it deems to have higher public accountability. All other classes of FMC reporting entities have lower public accountability. The FMC Act also allows us to vary designations for either individual or classes of FMC reporting entities. Generally speaking FMC reporting entities which investors have a direct investment in, have higher public accountability than other FMC reporting entities. See the table below that summarises this.
Public accountability at a glance
Higher public accountability
Based on XRB Accounting Standards Framework full accounting standards will apply
Full NZ IFRS for for-profit entities, or full PBE standards for public benefit entities
- Equity issuers who make a regulated offer (and have more than 50 shareholders)
- Debt issuers who make a regulated
- Licensed derivative issuers*
- Licensed MIS managers (for the financial statements of the MIS they manage)
- Listed issuers
- Recipients of money from a conduit issuer*
- Registered banks
- Licensed insurers
- Credit unions
- Building societies
Lower public accountability
Based on XRB Accounting Standards Framework reduced accounting standards will apply
NZ IFRS RDR for for-profit entities, or PBE standards RDR for most public benefit entities
- Licensed MIS managers (for the manager’s own
- financial statements)
- Licensed providers of DIMS (under the FMC Act)
- Licensed peer-to-peer lending service providers
- Licensed crowd funding service providers
- Licensed supervisors
- Licensed market operators (domestic)
*The FMA has issued a notice to re-designate recipients of funds from conduit issuers and licensed derivative issuers to having higher public accountability.
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